Florida Senate - 2007 CONFERENCE COMMITTEE AMENDMENT
Bill No. CS/HB 1-A (c1)
Barcode 574486
CHAMBER ACTION
Senate House
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01/22/2007 05:29 PM .
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11 The Conference Committee on CS/HB 1-A, CS/CS/HB 3-A, CS/CS/HB
12 5-A, HB 7-A, and CS/HB 9-A recommended the following amendment
13 :
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15 Conference Committee Amendment (with title amendment)
16 Delete everything after the enacting clause
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18 and insert:
19 Section 1. Paragraph (b) of subsection (3) and
20 paragraph (e) of subsection (7) of section 163.01, Florida
21 Statutes, are amended, and paragraph (h) is added to
22 subsection (7) of that section, to read:
23 163.01 Florida Interlocal Cooperation Act of 1969.--
24 (3) As used in this section:
25 (b) "Public agency" means a political subdivision,
26 agency, or officer of this state or of any state of the United
27 States, including, but not limited to, state government,
28 county, city, school district, single and multipurpose special
29 district, single and multipurpose public authority,
30 metropolitan or consolidated government, a separate legal
31 entity or administrative entity created under subsection (7),
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Bill No. CS/HB 1-A (c1)
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1 an independently elected county officer, any agency of the
2 United States Government, a federally recognized Native
3 American tribe, and any similar entity of any other state of
4 the United States.
5 (7)
6 (e)1. Notwithstanding the provisions of paragraph (c),
7 any separate legal entity, created pursuant to the provisions
8 of this section and controlled by counties or municipalities
9 of this state, the membership of which consists or is to
10 consist only of public agencies of this state, may, for the
11 purpose of financing the provision or acquisition of liability
12 or property coverage contracts for or from one or more local
13 government liability or property pools to provide liability or
14 property coverage for counties, municipalities, or other
15 public agencies of this state, exercise all powers in
16 connection with the authorization, issuance, and sale of
17 bonds. All of the privileges, benefits, powers, and terms of
18 s. 125.01 relating to counties and s. 166.021 relating to
19 municipalities shall be fully applicable to such entity and
20 such entity shall be considered a unit of local government for
21 all of the privileges, benefits, powers, and terms of part I
22 of chapter 159. Bonds issued by such entity shall be deemed
23 issued on behalf of counties, municipalities, or public
24 agencies which enter into loan agreements with such entity as
25 provided in this paragraph. Proceeds of bonds issued by such
26 entity may be loaned to counties, municipalities, or other
27 public agencies of this state, whether or not such counties,
28 municipalities, or other public agencies are also members of
29 the entity issuing the bonds, and such counties,
30 municipalities, or other public agencies may in turn deposit
31 such loan proceeds with a separate local government liability
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Florida Senate - 2007 CONFERENCE COMMITTEE AMENDMENT
Bill No. CS/HB 1-A (c1)
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1 or property pool for purposes of providing or acquiring
2 liability or property coverage contracts.
3 2. Counties or municipalities of this state are
4 authorized pursuant to this section, in addition to the
5 authority provided by s. 125.01, part II of chapter 166, and
6 other applicable law, to issue bonds for the purpose of
7 acquiring liability coverage contracts from a local government
8 liability pool. Any individual county or municipality may, by
9 entering into interlocal agreements with other counties,
10 municipalities, or public agencies of this state, issue bonds
11 on behalf of itself and other counties, municipalities, or
12 other public agencies, for purposes of acquiring a liability
13 coverage contract or contracts from a local government
14 liability pool. Counties, municipalities, or other public
15 agencies are also authorized to enter into loan agreements
16 with any entity created pursuant to subparagraph 1., or with
17 any county or municipality issuing bonds pursuant to this
18 subparagraph, for the purpose of obtaining bond proceeds with
19 which to acquire liability coverage contracts from a local
20 government liability pool. No county, municipality, or other
21 public agency shall at any time have more than one loan
22 agreement outstanding for the purpose of obtaining bond
23 proceeds with which to acquire liability coverage contracts
24 from a local government liability pool. Obligations of any
25 county, municipality, or other public agency of this state
26 pursuant to a loan agreement as described above may be
27 validated as provided in chapter 75. Prior to the issuance of
28 any bonds pursuant to subparagraph 1. or this subparagraph for
29 the purpose of acquiring liability coverage contracts from a
30 local government liability pool, the reciprocal insurer or the
31 manager of any self-insurance program shall demonstrate to the
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1 satisfaction of the Office of Insurance Regulation of the
2 Financial Services Commission that excess liability coverage
3 for counties, municipalities, or other public agencies is
4 reasonably unobtainable in the amounts provided by such pool
5 or that the liability coverage obtained through acquiring
6 contracts from a local government liability pool, after taking
7 into account costs of issuance of bonds and any other
8 administrative fees, is less expensive to counties,
9 municipalities, or special districts than similar commercial
10 coverage then reasonably available.
11 3. Any entity created pursuant to this section or any
12 county or municipality may also issue bond anticipation notes,
13 as provided by s. 215.431, in connection with the
14 authorization, issuance, and sale of such bonds. In addition,
15 the governing body of such legal entity or the governing body
16 of such county or municipality may also authorize bonds to be
17 issued and sold from time to time and may delegate, to such
18 officer, official, or agent of such legal entity as the
19 governing body of such legal entity may select, the power to
20 determine the time; manner of sale, public or private;
21 maturities; rate or rates of interest, which may be fixed or
22 may vary at such time or times and in accordance with a
23 specified formula or method of determination; and other terms
24 and conditions as may be deemed appropriate by the officer,
25 official, or agent so designated by the governing body of such
26 legal entity. However, the amounts and maturities of such
27 bonds and the interest rate or rates of such bonds shall be
28 within the limits prescribed by the governing body of such
29 legal entity and its resolution delegating to such officer,
30 official, or agent the power to authorize the issuance and
31 sale of such bonds. Any series of bonds issued pursuant to
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1 this paragraph for liability coverage shall mature no later
2 than 7 years following the date of issuance thereof. A series
3 of bonds issued pursuant to this paragraph for property
4 coverage shall mature no later than 30 years following the
5 date of issuance.
6 4. Bonds issued pursuant to subparagraph 1. may be
7 validated as provided in chapter 75. The complaint in any
8 action to validate such bonds shall be filed only in the
9 Circuit Court for Leon County. The notice required to be
10 published by s. 75.06 shall be published in Leon County and in
11 each county which is an owner of the entity issuing the bonds,
12 or in which a member of the entity is located, and the
13 complaint and order of the circuit court shall be served only
14 on the State Attorney of the Second Judicial Circuit and on
15 the state attorney of each circuit in each county or
16 municipality which is an owner of the entity issuing the bonds
17 or in which a member of the entity is located.
18 5. Bonds issued pursuant to subparagraph 2. may be
19 validated as provided in chapter 75. The complaint in any
20 action to validate such bonds shall be filed in the circuit
21 court of the county or municipality which will issue the
22 bonds. The notice required to be published by s. 75.06 shall
23 be published only in the county where the complaint is filed,
24 and the complaint and order of the circuit court shall be
25 served only on the state attorney of the circuit in the county
26 or municipality which will issue the bonds.
27 6. The participation by any county, municipality, or
28 other public agency of this state in a local government
29 liability pool shall not be deemed a waiver of immunity to the
30 extent of liability coverage, nor shall any contract entered
31 regarding such a local government liability pool be required
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1 to contain any provision for waiver.
2 (h)1. Notwithstanding the provisions of paragraph (c),
3 any separate legal entity consisting of an alliance, as
4 defined in s. 395.106(2)(a), created pursuant to this
5 paragraph and controlled by and whose members consist of
6 eligible entities comprised of special districts created
7 pursuant to a special act and having the authority to own or
8 operate one or more hospitals licensed in this state or
9 hospitals licensed in this state that are owned, operated, or
10 funded by a county or municipality, for the purpose of
11 providing property insurance coverage as defined in s.
12 395.106(2)(c), for such eligible entities, may exercise all
13 powers under this subsection in connection with borrowing
14 funds for such purposes, including, without limitation, the
15 authorization, issuance, and sale of bonds, notes, or other
16 obligations of indebtedness. Borrowed funds, including, but
17 not limited to, bonds issued by such alliance shall be deemed
18 issued on behalf of such eligible entities that enter into
19 loan agreements with such separate legal entity as provided in
20 this paragraph.
21 2. Any such separate legal entity shall have all the
22 powers that are provided by the interlocal agreement under
23 which the entity is created or that are necessary to finance,
24 operate, or manage the alliance's property insurance coverage
25 program. Proceeds of bonds, notes, or other obligations issued
26 by such an entity may be loaned to any one or more eligible
27 entities. Such eligible entities are authorized to enter into
28 loan agreements with any separate legal entity created
29 pursuant to this paragraph for the purpose of obtaining moneys
30 with which to finance property insurance coverage or claims.
31 Obligations of any eligible entity pursuant to a loan
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1 agreement as described in this paragraph may be validated as
2 provided in chapter 75.
3 3. Any bonds, notes, or other obligations to be issued
4 or incurred by a separate legal entity created pursuant to
5 this paragraph shall be authorized by resolution of the
6 governing body of such entity and bear the date or dates;
7 mature at the time or times, not exceeding 30 years from their
8 respective dates; bear interest at the rate or rates, which
9 may be fixed or vary at such time or times and in accordance
10 with a specified formula or method of determination; be
11 payable at the time or times; be in the denomination; be in
12 the form; carry the registration privileges; be executed in
13 the manner; be payable from the sources and in the medium of
14 payment and at the place; and be subject to redemption,
15 including redemption prior to maturity, as the resolution may
16 provide. The bonds, notes, or other obligations may be sold at
17 public or private sale for such price as the governing body of
18 the separate legal entity shall determine. The bonds may be
19 secured by such credit enhancement, if any, as the governing
20 body of the separate legal entity deems appropriate. The bonds
21 may be secured by an indenture of trust or trust agreement. In
22 addition, the governing body of the separate legal entity may
23 delegate, to such officer or official of such entity as the
24 governing body may select, the power to determine the time;
25 manner of sale, public or private; maturities; rate or rates
26 of interest, which may be fixed or may vary at such time or
27 times and in accordance with a specified formula or method of
28 determination; and other terms and conditions as may be deemed
29 appropriate by the officer or official so designated by the
30 governing body of such separate legal entity. However, the
31 amounts and maturities of such bonds, the interest rate or
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1 rates, and the purchase price of such bonds shall be within
2 the limits prescribed by the governing body of such separate
3 legal entity in its resolution delegating to such officer or
4 official the power to authorize the issuance and sale of such
5 bonds.
6 4. Bonds issued pursuant to this paragraph may be
7 validated as provided in chapter 75. The complaint in any
8 action to validate such bonds shall be filed only in the
9 Circuit Court for Leon County. The notice required to be
10 published by s. 75.06 shall be published in Leon County and in
11 each county in which an eligible entity that is a member of an
12 alliance is located. The complaint and order of the circuit
13 court shall be served only on the state attorney of the Second
14 Judicial Circuit and on the state attorney of each circuit in
15 each county in which an eligible entity receiving bond
16 proceeds is located.
17 5. The accomplishment of the authorized purposes of a
18 separate legal entity created under this paragraph is deemed
19 in all respects for the benefit, increase of the commerce and
20 prosperity, and improvement of the health and living
21 conditions of the people of this state. Inasmuch as the
22 separate legal entity performs essential public functions in
23 accomplishing its purposes, the separate legal entity is not
24 required to pay any taxes or assessments of any kind upon any
25 property acquired or used by the entity for such purposes or
26 upon any revenues at any time received by the entity. The
27 bonds, notes, and other obligations of such separate legal
28 entity, the transfer of and income from such bonds, notes, and
29 other obligations, including any profits made on the sale of
30 such bonds, notes, and other obligations, are at all times
31 free from taxation of any kind of the state or by any
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1 political subdivision or other agency or instrumentality if
2 the state. The exemption granted in this paragraph does not
3 apply to any tax imposed by chapter 220 on interest, income,
4 or profits on debt obligations owned by corporations.
5 6. The participation by any eligible entity in an
6 alliance or a separate legal entity created pursuant to this
7 paragraph may not be deemed a waiver of immunity to the extent
8 of liability or any other coverage and a contract entered
9 regarding such alliance is not required to contain any
10 provision for waiver.
11 Section 2. Paragraphs (b), (c), and (d) of subsection
12 (4), paragraph (b) of subsection (5), and paragraph (a) of
13 subsection (7) of section 215.555, Florida Statutes, are
14 amended, and subsections (16) and (17) are added to that
15 section, to read:
16 215.555 Florida Hurricane Catastrophe Fund.--
17 (4) REIMBURSEMENT CONTRACTS.--
18 (b)1. The contract shall contain a promise by the
19 board to reimburse the insurer for 45 percent, 75 percent, or
20 90 percent of its losses from each covered event in excess of
21 the insurer's retention, plus 5 percent of the reimbursed
22 losses to cover loss adjustment expenses.
23 2. The insurer must elect one of the percentage
24 coverage levels specified in this paragraph and may, upon
25 renewal of a reimbursement contract, elect a lower percentage
26 coverage level if no revenue bonds issued under subsection (6)
27 after a covered event are outstanding, or elect a higher
28 percentage coverage level, regardless of whether or not
29 revenue bonds are outstanding. All members of an insurer group
30 must elect the same percentage coverage level. Any joint
31 underwriting association, risk apportionment plan, or other
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1 entity created under s. 627.351 must elect the 90-percent
2 coverage level.
3 3. The contract shall provide that reimbursement
4 amounts shall not be reduced by reinsurance paid or payable to
5 the insurer from other sources.
6 4. Notwithstanding any other provision contained in
7 this section, the board shall make available to insurers that
8 participated in 2006, insurers qualifying as limited
9 apportionment companies under s. 627.351(6)(c) which began
10 writing property insurance in 2007, and insurers that were
11 approved to participate in 2006 or that are approved in 2007
12 for the Insurance Capital Build-Up Incentive Program pursuant
13 to s. 215.5595, a contract or contract addendum that provides
14 an additional amount of reimbursement coverage of up to $10
15 million. The premium to be charged for this additional
16 reimbursement coverage shall be 50 percent of the additional
17 reimbursement coverage provided, which shall include one
18 prepaid reinstatement. The minimum retention level that an
19 eligible participating insurer must retain associated with
20 this additional coverage layer is 30 percent of the insurer's
21 surplus as of December March 31, 2006. This coverage shall be
22 in addition to all other coverage that may be provided under
23 this section. The coverage provided by the fund under this
24 subsection shall be in addition to the claims-paying capacity
25 as defined in subparagraph (c)1., but only with respect to
26 those insurers that select the additional coverage option and
27 meet the requirements of this subsection. The claims-paying
28 capacity with respect to all other participating insurers and
29 limited apportionment companies that do not select the
30 additional coverage option shall be limited to their
31 reimbursement premium's proportionate share of the actual
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1 claims-paying capacity otherwise defined in subparagraph (c)1.
2 and as provided for under the terms of the reimbursement
3 contract. Coverage provided in the reimbursement contract for
4 participating insurers will not be affected by the additional
5 premiums paid by participating insurers limited apportionment
6 companies exercising the additional coverage option allowed in
7 this subparagraph. This subparagraph expires on May 31, 2008
8 2007.
9 (c)1. The contract shall also provide that the
10 obligation of the board with respect to all contracts covering
11 a particular contract year shall not exceed the actual
12 claims-paying capacity of the fund up to a limit of $15
13 billion for that contract year adjusted based upon the
14 reported exposure from the prior contract year to reflect the
15 percentage growth in exposure to the fund for covered policies
16 since 2003, provided the dollar growth in the limit may not
17 increase in any year by an amount greater than the dollar
18 growth of the balance of the fund as of December 31, less any
19 premiums or interest attributable to optional coverage, as
20 defined by rule which occurred over the prior calendar year.
21 2. In May before the start of the upcoming contract
22 year and in October during the contract year, the board shall
23 publish in the Florida Administrative Weekly a statement of
24 the fund's estimated borrowing capacity and the projected
25 balance of the fund as of December 31. After the end of each
26 calendar year, the board shall notify insurers of the
27 estimated borrowing capacity and the balance of the fund as of
28 December 31 to provide insurers with data necessary to assist
29 them in determining their retention and projected payout from
30 the fund for loss reimbursement purposes. In conjunction with
31 the development of the premium formula, as provided for in
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1 subsection (5), the board shall publish factors or multiples
2 that assist insurers in determining their retention and
3 projected payout for the next contract year. For all
4 regulatory and reinsurance purposes, an insurer may calculate
5 its projected payout from the fund as its share of the total
6 fund premium for the current contract year multiplied by the
7 sum of the projected balance of the fund as of December 31 and
8 the estimated borrowing capacity for that contract year as
9 reported under this subparagraph.
10 (d)1. For purposes of determining potential liability
11 and to aid in the sound administration of the fund, the
12 contract shall require each insurer to report such insurer's
13 losses from each covered event on an interim basis, as
14 directed by the board. The contract shall require the insurer
15 to report to the board no later than December 31 of each year,
16 and quarterly thereafter, its reimbursable losses from covered
17 events for the year. The contract shall require the board to
18 determine and pay, as soon as practicable after receiving
19 these reports of reimbursable losses, the initial amount of
20 reimbursement due and adjustments to this amount based on
21 later loss information. The adjustments to reimbursement
22 amounts shall require the board to pay, or the insurer to
23 return, amounts reflecting the most recent calculation of
24 losses.
25 2. In determining reimbursements pursuant to this
26 subsection, the contract shall provide that the board shall:
27 a. Next pay to each insurer such insurer's projected
28 payout, which is the amount of reimbursement it is owed, up to
29 an amount equal to the insurer's share of the actual premium
30 paid for that contract year, multiplied by the actual
31 claims-paying capacity available for that contract year;
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1 provided, entities created pursuant to s. 627.351 shall be
2 further reimbursed in accordance with sub-subparagraph b.
3 b. Thereafter, establish the prorated reimbursement
4 level at the highest level for which any remaining fund
5 balance or bond proceeds are sufficient to reimburse entities
6 created pursuant to s. 627.351 based on reimbursable losses
7 exceeding the amounts payable pursuant to sub-subparagraph a.
8 for the current contract year.
9 (5) REIMBURSEMENT PREMIUMS.--
10 (b) The State Board of Administration shall select an
11 independent consultant to develop a formula for determining
12 the actuarially indicated premium to be paid to the fund. The
13 formula shall specify, for each zip code or other limited
14 geographical area, the amount of premium to be paid by an
15 insurer for each $1,000 of insured value under covered
16 policies in that zip code or other area. In establishing
17 premiums, the board shall consider the coverage elected under
18 paragraph (4)(b) and any factors that tend to enhance the
19 actuarial sophistication of ratemaking for the fund, including
20 deductibles, type of construction, type of coverage provided,
21 relative concentration of risks, and other such factors deemed
22 by the board to be appropriate. The formula may provide for a
23 procedure to determine the premiums to be paid by new insurers
24 that begin writing covered policies after the beginning of a
25 contract year, taking into consideration when the insurer
26 starts writing covered policies, the potential exposure of the
27 insurer, the potential exposure of the fund, the
28 administrative costs to the insurer and to the fund, and any
29 other factors deemed appropriate by the board. The formula
30 shall include a factor of 25 percent of the fund's actuarially
31 indicated premium in order to provide for more rapid cash
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1 buildup in the fund. The formula must be approved by unanimous
2 vote of the board. The board may, at any time, revise the
3 formula pursuant to the procedure provided in this paragraph.
4 (7) ADDITIONAL POWERS AND DUTIES.--
5 (a) The board may procure reinsurance from reinsurers
6 acceptable to the Office of Insurance Regulation for the
7 purpose of maximizing the capacity of the fund and may enter
8 into capital market transactions, including, but not limited
9 to, industry loss warranties, catastrophe bonds, side-car
10 arrangements, or financial contracts permissible for the
11 board's usage under s. 215.47(10) and (11), consistent with
12 prudent management of the fund.
13 (16) TEMPORARY EMERGENCY OPTIONS FOR ADDITIONAL
14 COVERAGE.--
15 (a) Findings and intent.--
16 1. The Legislature finds that:
17 a. Because of temporary disruptions in the market for
18 catastrophic reinsurance, many property insurers were unable
19 to procure reinsurance for the 2006 hurricane season with an
20 attachment point below the insurers' respective Florida
21 Hurricane Catastrophe Fund attachment points, were unable to
22 procure sufficient amounts of such reinsurance, or were able
23 to procure such reinsurance only by incurring substantially
24 higher costs than in prior years.
25 b. The reinsurance market problems were responsible,
26 at least in part, for substantial premium increases to many
27 consumers and increases in the number of policies issued by
28 the Citizens Property Insurance Corporation.
29 c. It is likely that the reinsurance market
30 disruptions will not significantly abate prior to the 2007
31 hurricane season.
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1 2. It is the intent of the Legislature to create a
2 temporary emergency program, applicable to the 2007, 2008, and
3 2009 hurricane seasons, to address these market disruptions
4 and enable insurers, at their option, to procure additional
5 coverage from the Florida Hurricane Catastrophe Fund.
6 (b) Applicability of other provisions of this
7 section.--All provisions of this section and the rules adopted
8 under this section apply to the program created by this
9 subsection unless specifically superseded by this subsection.
10 (c) Optional coverage.--For the contract year
11 commencing June 1, 2007, and ending May 31, 2008, the contract
12 year commencing June 1, 2008, and ending May 31, 2009, and the
13 contract year commending June 1, 2009, and ending May 31,
14 2010, the board shall offer for each of such years the
15 optional coverage as provided in this subsection.
16 (d) Additional definitions.--As used in this
17 subsection, the term:
18 1. "TEACO options" means the temporary emergency
19 additional coverage options created under this subsection.
20 2. "TEACO insurer" means an insurer that has opted to
21 obtain coverage under the TEACO options in addition to the
22 coverage provided to the insurer under its reimbursement
23 contract.
24 3. "TEACO reimbursement premium" means the premium
25 charged by the fund for coverage provided under the TEACO
26 options.
27 4. "TEACO retention" means the amount of losses below
28 which a TEACO insurer is not entitled to reimbursement from
29 the fund under the TEACO option selected. A TEACO insurer's
30 retention options shall be calculated as follows:
31 a. The board shall calculate and report to each TEACO
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1 insurer the TEACO retention multiples. There shall be three
2 TEACO retention multiples for defining coverage. Each multiple
3 shall be calculated by dividing $3 billion, $4 billion, or $5
4 billion by the total estimated TEACO reimbursement premium
5 assuming all insurers selected that option. Total estimated
6 TEACO reimbursement premium for purposes of the calculation
7 under this sub-subparagraph shall be calculated using the
8 assumption that all insurers have selected a specific TEACO
9 retention multiple option and have selected the 90-percent
10 coverage level.
11 b. The TEACO retention multiples as determined under
12 sub-subparagraph a. shall be adjusted to reflect the coverage
13 level elected by the insurer. For insurers electing the
14 90-percent coverage level, the adjusted retention multiple is
15 100 percent of the amount determined under sub-subparagraph a.
16 For insurers electing the 75-percent coverage level, the
17 retention multiple is 120 percent of the amount determined
18 under sub-subparagraph a. For insurers electing the 45-percent
19 coverage level, the adjusted retention multiple is 200 percent
20 of the amount determined under sub-subparagraph a.
21 c. An insurer shall determine its provisional TEACO
22 retention by multiplying its provisional TEACO reimbursement
23 premium by the applicable adjusted TEACO retention multiple
24 and shall determine its actual TEACO retention by multiplying
25 its actual TEACO reimbursement premium by the applicable
26 adjusted TEACO retention multiple.
27 d. For TEACO insurers who experience multiple covered
28 events causing loss during the contract year, the insurer's
29 full TEACO retention shall be applied to each of the covered
30 events causing the two largest losses for that insurer. For
31 other covered events resulting in losses, the TEACO option
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1 does not apply and the insurer's retention shall be one-third
2 of the full retention as calculated under paragraph (2)(e).
3 5. "TEACO addendum" means an addendum to the
4 reimbursement contract reflecting the obligations of the fund
5 and TEACO insurers under the program created by this
6 subsection.
7 (e) TEACO addendum.--
8 1. The TEACO addendum shall provide for reimbursement
9 of TEACO insurers for covered events occurring during the
10 contract year, in exchange for the TEACO reimbursement premium
11 paid into the fund under paragraph (f). Any insurer writing
12 covered policies has the option of choosing to accept the
13 TEACO addendum for any of the three contract years that the
14 coverage is offered.
15 2. The TEACO addendum shall contain a promise by the
16 board to reimburse the TEACO insurer for 45 percent, 75
17 percent, or 90 percent of its losses from each covered event
18 in excess of the insurer's TEACO retention, plus 5 percent of
19 the reimbursed losses to cover loss adjustment expenses. The
20 percentage shall be the same as the coverage level selected by
21 the insurer under paragraph (4)(b).
22 3. The TEACO addendum shall provide that reimbursement
23 amounts shall not be reduced by reinsurance paid or payable to
24 the insurer from other sources.
25 4. The TEACO addendum shall also provide that the
26 obligation of the board with respect to all TEACO addenda
27 shall not exceed an amount equal to two times the difference
28 between the industry retention level calculated under
29 paragraph (2)(e) and the $3 billion, $4 billion, or $5 billion
30 industry TEACO retention level options actually selected, but
31 in no event may the board's obligation exceed the actual
17
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1 claims-paying capacity of the fund plus the additional
2 capacity created in paragraph (g). If the actual claims-paying
3 capacity and the additional capacity created under paragraph
4 (g) fall short of the board's obligations under the
5 reimbursement contract, each insurer's share of the fund's
6 capacity shall be pro rated based on the premium an insurer
7 pays for its normal reimbursement coverage and the premium
8 paid for its optional TEACO coverage as each such premium
9 bears to the total premiums paid to the fund times the
10 available capacity.
11 5. The priorities, schedule, and method of
12 reimbursements under the TEACO addendum shall be the same as
13 provided under subsection (4).
14 6. A TEACO insurer's maximum reimbursement under the
15 TEACO addendum shall be calculated by multiplying the
16 insurer's share of the estimated total TEACO reimbursement
17 premium as calculated under sub-subparagraph (d)4.a. by an
18 amount equal to two times the difference between the industry
19 retention level calculated under paragraph (2)(e) and the $3
20 billion, $4 billion, or $5 billion industry TEACO retention
21 level specified in sub-subparagraph (d)4.a. as selected by the
22 TEACO insurer.
23 (f) TEACO reimbursement premiums.--
24 1. Each TEACO insurer shall pay to the fund, in the
25 manner and at the time provided in the reimbursement contract
26 for payment of reimbursement premiums, a TEACO reimbursement
27 premium calculated as specified in this paragraph.
28 2. The TEACO reimbursement premiums shall be
29 calculated based on the assumption that, if all insurers
30 entering into reimbursement contracts under subsection (4)
31 also accepted the TEACO option:
18
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1 a. The industry TEACO reimbursement premium associated
2 with the $3 billion retention option would be equal to 85
3 percent of the difference between the industry retention level
4 calculated under paragraph (2)(e) and the $3 billion industry
5 TEACO retention level.
6 b. The TEACO reimbursement premium associated with the
7 $4 billion retention option would be equal to 80 percent of
8 the difference between the industry retention level calculated
9 under paragraph (2)(e) and the $4 billion industry TEACO
10 retention level.
11 c. The TEACO premium associated with the $5 billion
12 retention option would be equal to 75 percent of the
13 difference between the industry retention level calculated
14 under paragraph (2)(e) and the $5 billion industry TEACO
15 retention level.
16 3. Each insurer's TEACO premium shall be calculated
17 based on its share of the total TEACO reimbursement premiums
18 based on its coverage selection under the TEACO addendum.
19 (g) Effect on claims-paying capacity of the fund.--For
20 the contract term commencing June 1, 2007, the contract year
21 commencing June 1, 2008, and the contract term beginning June
22 1, 2009, the program created by this subsection shall increase
23 the claims-paying capacity of the fund as provided in
24 subparagraph (4)(c)1. by an amount equal to two times the
25 difference between the industry retention level calculated
26 under paragraph (2)(e) and the $3 billion industry TEACO
27 retention level specified in sub-subparagraph (d)4.a. The
28 additional capacity shall apply only to the additional
29 coverage provided by the TEACO option and shall not otherwise
30 affect any insurer's reimbursement from the fund.
31 (17) TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.--
19
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1 (a) Findings and intent.--
2 1. The Legislature finds that:
3 a. Because of temporary disruptions in the market for
4 catastrophic reinsurance, many property insurers were unable
5 to procure sufficient amounts of reinsurance for the 2006
6 hurricane season or were able to procure such reinsurance only
7 by incurring substantially higher costs than in prior years.
8 b. The reinsurance market problems were responsible,
9 at least in part, for substantial premium increases to many
10 consumers and increases in the number of policies issued by
11 Citizens Property Insurance Corporation.
12 c. It is likely that the reinsurance market
13 disruptions will not significantly abate prior to the 2007
14 hurricane season.
15 2. It is the intent of the Legislature to create
16 options for insurers to purchase a temporary increased
17 coverage limit above the statutorily determined limit in
18 subparagraph (4)(c)1., applicable for the 2007, 2008, and 2009
19 hurricane seasons, to address market disruptions and enable
20 insurers, at their option, to procure additional coverage from
21 the Florida Hurricane Catastrophe Fund.
22 (b) Applicability of other provisions of this
23 section.--All provisions of this section and the rules adopted
24 under this section apply to the coverage created by this
25 subsection unless specifically superseded by provisions in
26 this subsection.
27 (c) Optional coverage.--For the contract year
28 commencing June 1, 2007, and ending May 31, 2008, the contract
29 year commending June 1, 2008, and ending May 31, 2009, the
30 contract year commencing June 1, 2009, and ending May 31,
31 2010, the board shall offer, for each of such years, the
20
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1 optional coverage as provided in this subsection.
2 (d) Additional definitions.--As used in this
3 subsection, the term:
4 1. "FHCF" means Florida Hurricane Catastrophe Fund.
5 2. "FHCF reimbursement premium" means the premium paid
6 by an insurer for its coverage as a mandatory participant in
7 the FHCF, but does not include additional premiums for
8 optional coverages.
9 3. "Payout multiple" means the number or multiple
10 created by dividing the statutorily defined claims-paying
11 capacity as determined in subparagraph (4)(c)1. by the
12 aggregate reimbursement premiums paid by all insurers
13 estimated or projected as of calendar year-end.
14 4. "TICL" means the temporary increase in coverage
15 limit.
16 5. "TICL options" means the temporary increase in
17 coverage options created under this subsection.
18 6. "TICL insurer" means an insurer that has opted to
19 obtain coverage under the TICL options addendum in addition to
20 the coverage provided to the insurer under its FHCF
21 reimbursement contract.
22 7. "TICL reimbursement premium" means the premium
23 charged by the fund for coverage provided under the TICL
24 option.
25 8. "TICL coverage multiple" means the coverage
26 multiple when multiplied by an insurer's reimbursement premium
27 that defines the temporary increase in coverage limit.
28 9. "TICL coverage" means the coverage for an insurer's
29 losses above the insurer's statutorily determined
30 claims-paying capacity based on the claims-paying limit in
31 subparagraph (4)(c)1., which an insurer selects as its
21
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1 temporary increase in coverage from the fund under the TICL
2 options selected. A TICL insurer's increased coverage limit
3 options shall be calculated as follows:
4 a. The board shall calculate and report to each TICL
5 insurer the TICL coverage multiples based on twelve options
6 for increasing the insurer's FHCF coverage limit. Each TICL
7 coverage multiple shall be calculated by dividing $1 billion,
8 $2 billion, $3 billion, $4 billion, $5 billion, $6 billion, $7
9 billion, $8 billion, $9 billion, $10 billion, $11 billion, or
10 $12 billion by the total estimated aggregate FHCF
11 reimbursement premiums for the 2007-2008 contract year, the
12 2008-2009 contract year, and the 2009-2010 contract year.
13 b. The TICL insurer's increased coverage shall be the
14 FHCF reimbursement premium multiplied by the TICL coverage
15 multiple. In order to determine an insurer's total limit of
16 coverage, an insurer shall add its TICL coverage multiple to
17 its payout multiple. The total shall represent a number that,
18 when multiplied by an insurer's FHCF reimbursement premium for
19 a given reimbursement contract year, defines an insurer's
20 total limit of FHCF reimbursement coverage for that
21 reimbursement contract year.
22 10. "TICL options addendum" means an addendum to the
23 reimbursement contract reflecting the obligations of the fund
24 and insurers selecting an option to increase an insurer's FHCF
25 coverage limit.
26 (e) TICL options addendum.--
27 1. The TICL options addendum shall provide for
28 reimbursement of TICL insurers for covered events occurring
29 between June 1, 2007, May 31, 2008, and between June 1, 2008,
30 and May 31, 2009, or between June 1, 2009, and May 31, 2010,
31 in exchange for the TICL reimbursement premium paid into the
22
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1 fund under paragraph (e). Any insurer writing covered policies
2 has the option of selecting an increased limit of coverage
3 under the TICL options addendum and shall select such coverage
4 at the time that it executes the FHCF reimbursement contract.
5 2. The TICL addendum shall contain a promise by the
6 board to reimburse the TICL insurer for 45 percent, 75
7 percent, or 90 percent of its losses from each covered event
8 in excess of the insurer's retention, plus 5 percent of the
9 reimbursed losses to cover loss adjustment expenses. The
10 percentage shall be the same as the coverage level selected by
11 the insurer under paragraph (4)(b).
12 3. The TICL addendum shall provide that reimbursement
13 amounts shall not be reduced by reinsurance paid or payable to
14 the insurer from other sources.
15 4. The priorities, schedule, and method of
16 reimbursements under the TICL addendum shall be the same as
17 provided under subsection (4).
18 (f) TICL reimbursement premiums.--Each TICL insurer
19 shall pay to the fund, in the manner and at the time provided
20 in the reimbursement contract for payment of reimbursement
21 premiums, a TICL reimbursement premium determined as specified
22 in subsection (5).
23 (g) Effect on claims-paying capacity of the fund.--For
24 the contract terms commencing June 1, 2007, June 1, 2008, and
25 June 1, 2009, the program created by this subsection shall
26 increase the claims-paying capacity of the fund as provided in
27 subparagraph (4)(c)1. by an amount not to exceed $12 billion
28 dollars and shall depend on the TICL coverage options selected
29 and the number of insurers that select the TICL optional
30 coverage. The additional capacity shall apply only to the
31 additional coverage provided under the TICL options and shall
23
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1 not otherwise affect any insurer's reimbursement from the fund
2 if the insurer chooses not to select the temporary option to
3 increase its limit of coverage under the FHCF.
4 (h) Increasing the claims-paying capacity of the
5 fund.--For the contract years commencing June 1, 2007, June 1,
6 2008, and June 1, 2009, the board may increase the
7 claims-paying capacity of the fund as provided in paragraph
8 (g) by an amount not to exceed $4 billion in four $1 billion
9 options and shall depend on the TICL coverage options selected
10 and the number of insurers that select the TICL optional
11 coverage. Each insurer's TICL premium shall be calculated
12 based upon the additional limit of increased coverage that the
13 insurer selects. Such limit is determined by multiplying the
14 TICL multiple associated with one of the four options times
15 the insurer's FHCF reimbursement premium. The reimbursement
16 premium associated with the additional coverage provided in
17 this paragraph shall be determined as specified in subsection
18 (5).
19 Section 3. (1) Every residential property insurer
20 must make a rate filing with the Office of Insurance
21 Regulation, pursuant to the "file and use" provisions of s.
22 627.062(2)(a)1., Florida Statutes, which reflects the savings
23 or reduction in loss exposure to the insurer due to the
24 provisions of section 2 of this act. An insurer may not obtain
25 a rate increase due to the election of coverage options from
26 the Florida Hurricane Catastrophe Fund pursuant to s.
27 215.555(4), (16), or (17), Florida Statutes.
28 (2) The office shall specify, by order, the date or
29 dates on which the rate filings required by this section must
30 be made and be effective in order to provide rate relief to
31 policyholders a soon as practicable.
24
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1 (3) By March 15, 2007, the Office of Insurance
2 Regulation shall calculate a presumed factor or factors to be
3 used in the rate filings required by this section to reflect
4 the impact to rates of the changes made by section 2 of this
5 act and this section.
6 (4) In determining the presumed factor, the Office of
7 Insurance Regulation shall use generally accepted actuarial
8 techniques and standards in determining the expected impact on
9 losses, expenses, and investment income of insurers.
10 (5) The office may contract with an appropriate vendor
11 to advise the office in determining the presumed factor or
12 factors.
13 (6) Each residential property insurer shall reflect a
14 rate change that takes into account the presumed factor
15 determined under subsection (3) for any policy written or
16 renewed on or after June 1, 2007. Such factor must be taken
17 into account for the coverage options offered pursuant to s.
18 215.555(4), (16), and (17), Florida Statutes, for an insurer
19 eligible to elect such optional coverage, whether or not the
20 insurer purchases that coverage. Any additional cost for
21 private reinsurance or loss exposure that duplicates such
22 coverage options may not be factored in the rate, whether or
23 not such coverage options are purchased.
24 (7) The sum of $250,000 in nonrecurring funds is
25 appropriated from the Insurance Regulatory Trust Fund in the
26 Department of Financial Services to the Office of Insurance
27 Regulation for the 2006-2007 fiscal year for the purpose of
28 implementing this section.
29 Section 4. Paragraph (b) of subsection (1) and
30 subsection (2) of section 215.5586, Florida Statutes, are
31 amended, and subsections (7) and (8) are added to that
25
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1 section, to read:
2 215.5586 Florida Comprehensive Hurricane Damage
3 Mitigation Program.--There is established within the
4 Department of Financial Services the Florida Comprehensive
5 Hurricane Damage Mitigation Program. This section does not
6 create an entitlement for property owners or obligate the
7 state in any way to fund the inspection or retrofitting of
8 residential property in this state. Implementation of this
9 program is subject to annual legislative appropriations. The
10 program shall be administered by an individual with prior
11 executive experience in the private sector in the areas of
12 insurance, business, or construction. The program shall
13 develop and implement a comprehensive and coordinated approach
14 for hurricane damage mitigation that shall include the
15 following:
16 (1) WIND CERTIFICATION AND HURRICANE MITIGATION
17 INSPECTIONS.--
18 (b) To qualify for selection by the department as a
19 provider of wind certification and hurricane mitigation
20 inspections, the entity shall, at a minimum:
21 1. Use wind certification and hurricane mitigation
22 inspectors who:
23 a. Have prior experience in residential construction
24 or inspection and have received specialized training in
25 hurricane mitigation procedures.
26 b. Have undergone drug testing and level 2 background
27 checks pursuant to s. 435.04. The department is authorized to
28 conduct criminal record checks of inspectors. Inspectors must
29 submit a set of the fingerprints to the department for state
30 and national criminal history checks and must pay the
31 fingerprint processing fee set forth in s. 624.501. The
26
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1 fingerprints shall be sent by the department to the Department
2 of Law Enforcement and forwarded to the Federal Bureau of
3 Investigation for processing. The results shall be returned to
4 the department for screening. The fingerprints shall be taken
5 by a law enforcement agency, designated examination center, or
6 other department-approved entity. Wind certification and
7 hurricane mitigation inspectors participating in the program
8 on the effective date of this act shall have until June 1,
9 2007, to meet the requirements for a criminal record check.
10 c. Have been certified, in a manner satisfactory to
11 the department, to conduct the inspections.
12 2. Provide a quality assurance program including a
13 reinspection component.
14 (2) GRANTS.--Financial grants shall be used to
15 encourage single-family, site-built, owner-occupied,
16 residential property owners to retrofit their properties to
17 make them less vulnerable to hurricane damage.
18 (a) To be eligible for a grant, a residential property
19 must:
20 1. Have been granted a homestead exemption under
21 chapter 196.
22 2. Be a dwelling with an insured value of $500,000 or
23 less. Homeowners who are low-income persons, as defined in s.
24 420.0004(10), are exempt from this requirement.
25 3. Have undergone an acceptable wind certification and
26 hurricane mitigation inspection, if the property is an
27 existing structure.
28
29 A residential property which is part of a multifamily
30 residential unit may receive a grant only if all homeowners
31 participate and the total number of units does not exceed
27
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1 four.
2 (b) All grants must be matched on a dollar-for-dollar
3 basis for a total of $10,000 for the mitigation project with
4 the state's contribution not to exceed $5,000.
5 (c) The program shall create a process in which
6 mitigation contractors agree to participate and seek
7 reimbursement from the state and homeowners select from a list
8 of participating contractors. All mitigation must be based
9 upon the securing of all required local permits and
10 inspections. Mitigation projects are subject to random
11 reinspection of up to at least 10 percent of all projects.
12 (d) Matching fund grants shall also be made available
13 to local governments and nonprofit entities for projects that
14 will reduce hurricane damage to single-family, site-built,
15 owner-occupied, residential property.
16 (e) Grants may be used for the following improvements:
17 1. Roof deck attachment.;
18 2. Secondary water barrier.;
19 3. Roof covering.;
20 4. Brace gable ends.;
21 5. Reinforce roof-to-wall connections.;
22 6. Opening protection.; and
23 7. Exterior doors, including garage doors.
24 (f) Grants may be used on a previously inspected
25 existing structure or on a rebuild. A rebuild is defined as a
26 site-built, single-family dwelling under construction to
27 replace a home that was destroyed or significantly damaged by
28 a hurricane and deemed unlivable by a regulatory authority.
29 The homeowner must have had a homestead exemption prior to the
30 hurricane and maintained the homestead exemption.
31 (g)(f) Low-income homeowners, as defined in s.
28
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1 420.0004(10)(9), who otherwise meet the requirements of
2 paragraphs (a), and (c), (e), and (f) are eligible for a grant
3 of up to $5,000 and are not required to provide a matching
4 amount to receive the grant. Additionally, for low-income
5 homeowners, grant funding may be used for repair to existing
6 structures leading to any of the mitigation improvements
7 provided in paragraph (e), limited to 20 percent of the grant
8 value. Such grants shall be used to retrofit single-family,
9 site-built, owner-occupied, residential properties in order to
10 make them less vulnerable to hurricane damage.
11 (7) CONTRACTS WITH NOT-FOR-PROFIT CORPORATIONS.--The
12 Department of Financial Services is authorized to contract
13 with not-for-profit corporations to conduct all or portions of
14 the program and to increase the awareness of the benefits of
15 mitigation among homeowners in this state. The department
16 shall consider the not-for-profit corporation's ability to
17 raise funds from the private sector to provide for mitigation
18 grants, as well as administrative capabilities for conducting
19 other business related to the program.
20 (8) WIND CERTIFICATION AND HURRICANE MITIGATION
21 INSPECTOR LIST.--The department shall develop and maintain as
22 a public record a current list of wind certification and
23 hurricane mitigation inspectors authorized to conduct wind
24 certification and hurricane mitigation inspections pursuant to
25 this section.
26 Section 5. Paragraphs (a), (c), and (g) of subsection
27 (2) of section 215.5595, Florida Statutes, are amended, and
28 paragraph (i) is added to that subsection, to read:
29 215.5595 Insurance Capital Build-Up Incentive
30 Program.--
31 (2) The purpose of this section is to provide surplus
29
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1 notes to new or existing authorized residential property
2 insurers under the Insurance Capital Build-Up Incentive
3 Program administered by the State Board of Administration,
4 under the following conditions:
5 (a) The amount of the surplus note for any insurer or
6 insurer group, other than an insurer writing only manufactured
7 housing policies, may not exceed $25 million or 20 percent of
8 the total amount of funds available under the program,
9 whichever is greater. The amount of the surplus note for any
10 insurer or insurer group writing residential property
11 insurance covering only manufactured housing may not exceed $7
12 million.
13 (c) The insurer's surplus, new capital, and the
14 surplus note must total at least $50 million, except for
15 insurers writing residential property insurance covering only
16 manufactured housing. The insurer's surplus, new capital, and
17 the surplus note must total at least $14 million for insurers
18 writing only residential property insurance covering
19 manufactured housing policies as provided in paragraph (a).
20 (g) The total amount of funds available for the
21 program is limited to the amount appropriated by the
22 Legislature for this purpose. If the amount of surplus notes
23 requested by insurers exceeds the amount of funds available,
24 the board may prioritize insurers that are eligible and
25 approved, with priority for funding given to insurers writing
26 only manufactured housing policies, regardless of the date of
27 application, based on the financial strength of the insurer,
28 the viability of its proposed business plan for writing
29 additional residential property insurance in the state, and
30 the effect on competition in the residential property
31 insurance market.
30
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1 (i) Notwithstanding paragraph (d), a newly formed
2 manufactured housing insurer that is eligible for a surplus
3 note under this section shall meet the premium to surplus
4 ratio provisions of s. 624.4095.
5 Section 6. Section 395.106, Florida Statutes, is
6 created to read:
7 395.106 Risk pooling by certain hospitals and hospital
8 systems.--
9 (1) Notwithstanding any other provision of law, any
10 two or more hospitals licensed in this state and located in
11 this state may form an alliance for the purpose of pooling and
12 spreading liabilities of its members relative to property
13 exposure or securing such property insurance coverage for the
14 benefit of its members, provided an alliance that is created:
15 (a) Has annual premiums in excess of $3 million.
16 (b) Maintains a continuing program of premium
17 calculation and evaluation and reserve evaluation to protect
18 the financial stability of the alliance in an amount and
19 manner determined by consultants using catastrophic (CAT)
20 modeling criteria or other risk-estimating methodologies,
21 including those used by qualified and independent actuaries.
22 (c) Causes to be prepared annually a fiscal year-end
23 financial statement based upon generally accepted accounting
24 principles and audited by an independent certified public
25 accountant within 6 months after the end of the fiscal year.
26 (d) Has a governing body comprised entirely of member
27 entities whose representatives on such governing body are
28 specified by the organizational documents of the alliance.
29 (2) For purposes of this section, the term:
30 (a) "Alliance" means a corporation, association,
31 limited liability company, or partnership or any other legal
31
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1 entity formed by a group of eligible entities.
2 (b) "Property coverage" means property coverage
3 provided by self-insurance or insurance for real or personal
4 property of every kind and every interest in such property
5 against loss or damage from any hazard or cause and against
6 any loss consequential to such loss or damage.
7 (3) An alliance that meets the requirements of this
8 section is not subject to any provision of the Insurance Code.
9 (4) An alliance that meets the requirements of this
10 section is not an insurer for purposes of participation in or
11 coverage by the Florida Insurance Guaranty Association
12 established in part II of chapter 631. Alliance self-insured
13 coverage is not subject to insurance premium tax, and any such
14 alliance formed pursuant to this section may not be assessed
15 for purposes of s. 627.351 or s. 215.555.
16 Section 7. Section 553.73, Florida Statutes, is
17 amended to read:
18 553.73 Florida Building Code.--
19 (1)(a) The commission shall adopt, by rule pursuant to
20 ss. 120.536(1) and 120.54, the Florida Building Code which
21 shall contain or incorporate by reference all laws and rules
22 which pertain to and govern the design, construction,
23 erection, alteration, modification, repair, and demolition of
24 public and private buildings, structures, and facilities and
25 enforcement of such laws and rules, except as otherwise
26 provided in this section.
27 (b) The technical portions of the Florida
28 Accessibility Code for Building Construction shall be
29 contained in their entirety in the Florida Building Code. The
30 civil rights portions and the technical portions of the
31 accessibility laws of this state shall remain as currently
32
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1 provided by law. Any revision or amendments to the Florida
2 Accessibility Code for Building Construction pursuant to part
3 II shall be considered adopted by the commission as part of
4 the Florida Building Code. Neither the commission nor any
5 local government shall revise or amend any standard of the
6 Florida Accessibility Code for Building Construction except as
7 provided for in part II.
8 (c) The Florida Fire Prevention Code and the Life
9 Safety Code shall be referenced in the Florida Building Code,
10 but shall be adopted, modified, revised, or amended,
11 interpreted, and maintained by the Department of Financial
12 Services by rule adopted pursuant to ss. 120.536(1) and
13 120.54. The Florida Building Commission may not adopt a fire
14 prevention or lifesafety code, and nothing in the Florida
15 Building Code shall affect the statutory powers, duties, and
16 responsibilities of any fire official or the Department of
17 Financial Services.
18 (d) Conflicting requirements between the Florida
19 Building Code and the Florida Fire Prevention Code and Life
20 Safety Code of the state established pursuant to ss. 633.022
21 and 633.025 shall be resolved by agreement between the
22 commission and the State Fire Marshal in favor of the
23 requirement that offers the greatest degree of lifesafety or
24 alternatives that would provide an equivalent degree of
25 lifesafety and an equivalent method of construction. If the
26 commission and State Fire Marshal are unable to agree on a
27 resolution, the question shall be referred to a mediator,
28 mutually agreeable to both parties, to resolve the conflict in
29 favor of the provision that offers the greatest lifesafety, or
30 alternatives that would provide an equivalent degree of
31 lifesafety and an equivalent method of construction.
33
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1 (e) Subject to the provisions of this act,
2 responsibility for enforcement, interpretation, and regulation
3 of the Florida Building Code shall be vested in a specified
4 local board or agency, and the words "local government" and
5 "local governing body" as used in this part shall be construed
6 to refer exclusively to such local board or agency.
7 (2) The Florida Building Code shall contain provisions
8 or requirements for public and private buildings, structures,
9 and facilities relative to structural, mechanical, electrical,
10 plumbing, energy, and gas systems, existing buildings,
11 historical buildings, manufactured buildings, elevators,
12 coastal construction, lodging facilities, food sales and food
13 service facilities, health care facilities, including assisted
14 living facilities, adult day care facilities, hospice
15 residential and inpatient facilities and units, and facilities
16 for the control of radiation hazards, public or private
17 educational facilities, swimming pools, and correctional
18 facilities and enforcement of and compliance with such
19 provisions or requirements. Further, the Florida Building Code
20 must provide for uniform implementation of ss. 515.25, 515.27,
21 and 515.29 by including standards and criteria for residential
22 swimming pool barriers, pool covers, latching devices, door
23 and window exit alarms, and other equipment required therein,
24 which are consistent with the intent of s. 515.23. Technical
25 provisions to be contained within the Florida Building Code
26 are restricted to requirements related to the types of
27 materials used and construction methods and standards employed
28 in order to meet criteria specified in the Florida Building
29 Code. Provisions relating to the personnel, supervision or
30 training of personnel, or any other professional qualification
31 requirements relating to contractors or their workforce may
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1 not be included within the Florida Building Code, and
2 subsections (4), (5), (6), and (7), and (8) are not to be
3 construed to allow the inclusion of such provisions within the
4 Florida Building Code by amendment. This restriction applies
5 to both initial development and amendment of the Florida
6 Building Code.
7 (3) The commission shall select from available
8 national or international model building codes, or other
9 available building codes and standards currently recognized by
10 the laws of this state, to form the foundation for the Florida
11 Building Code. The commission may modify the selected model
12 codes and standards as needed to accommodate the specific
13 needs of this state. Standards or criteria referenced by the
14 selected model codes shall be similarly incorporated by
15 reference. If a referenced standard or criterion requires
16 amplification or modification to be appropriate for use in
17 this state, only the amplification or modification shall be
18 specifically set forth in the Florida Building Code. The
19 Florida Building Commission may approve technical amendments
20 to the code, subject to the requirements of subsections (7)
21 and (8), after the amendments have been subject to the
22 following conditions:
23 (a) The proposed amendment has been published on the
24 commission's website for a minimum of 45 days and all the
25 associated documentation has been made available to any
26 interested party before any consideration by any Technical
27 Advisory Committee;
28 (b) In order for a Technical Advisory Committee to
29 make a favorable recommendation to the commission, the
30 proposal must receive a three-fourths vote of the members
31 present at the Technical Advisory Committee meeting and at
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1 least half of the regular members must be present in order to
2 conduct a meeting;
3 (c) After Technical Advisory Committee consideration
4 and a recommendation for approval of any proposed amendment,
5 the proposal must be published on the commission's website for
6 not less than 45 days before any consideration by the
7 commission; and
8 (d) Any proposal may be modified by the commission
9 based on public testimony and evidence from a public hearing
10 held in accordance with chapter 120.
11
12 The commission shall incorporate within sections of the
13 Florida Building Code provisions which address regional and
14 local concerns and variations. The commission shall make every
15 effort to minimize conflicts between the Florida Building
16 Code, the Florida Fire Prevention Code, and the Life Safety
17 Code.
18 (4)(a) All entities authorized to enforce the Florida
19 Building Code pursuant to s. 553.80 shall comply with
20 applicable standards for issuance of mandatory certificates of
21 occupancy, minimum types of inspections, and procedures for
22 plans review and inspections as established by the commission
23 by rule. Local governments may adopt amendments to the
24 administrative provisions of the Florida Building Code,
25 subject to the limitations of this paragraph. Local amendments
26 shall be more stringent than the minimum standards described
27 herein and shall be transmitted to the commission within 30
28 days after enactment. The local government shall make such
29 amendments available to the general public in a usable format.
30 The State Fire Marshal is responsible for establishing the
31 standards and procedures required in this paragraph for
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1 governmental entities with respect to applying the Florida
2 Fire Prevention Code and the Life Safety Code.
3 (b) Local governments may, subject to the limitations
4 of this section, adopt amendments to the technical provisions
5 of the Florida Building Code which apply solely within the
6 jurisdiction of such government and which provide for more
7 stringent requirements than those specified in the Florida
8 Building Code, not more than once every 6 months. A local
9 government may adopt technical amendments that address local
10 needs if:
11 1. The local governing body determines, following a
12 public hearing which has been advertised in a newspaper of
13 general circulation at least 10 days before the hearing, that
14 there is a need to strengthen the requirements of the Florida
15 Building Code. The determination must be based upon a review
16 of local conditions by the local governing body, which review
17 demonstrates by evidence or data that the geographical
18 jurisdiction governed by the local governing body exhibits a
19 local need to strengthen the Florida Building Code beyond the
20 needs or regional variation addressed by the Florida Building
21 Code, that the local need is addressed by the proposed local
22 amendment, and that the amendment is no more stringent than
23 necessary to address the local need.
24 2. Such additional requirements are not discriminatory
25 against materials, products, or construction techniques of
26 demonstrated capabilities.
27 3. Such additional requirements may not introduce a
28 new subject not addressed in the Florida Building Code.
29 4. The enforcing agency shall make readily available,
30 in a usable format, all amendments adopted pursuant to this
31 section.
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1 5. Any amendment to the Florida Building Code shall be
2 transmitted within 30 days by the adopting local government to
3 the commission. The commission shall maintain copies of all
4 such amendments in a format that is usable and obtainable by
5 the public. Local technical amendments shall not become
6 effective until 30 days after the amendment has been received
7 and published by the commission.
8 6. Any amendment to the Florida Building Code adopted
9 by a local government pursuant to this paragraph shall be
10 effective only until the adoption by the commission of the new
11 edition of the Florida Building Code every third year. At such
12 time, the commission shall review such amendment for
13 consistency with the criteria in paragraph (8)(a) (7)(a) and
14 adopt such amendment as part of the Florida Building Code or
15 rescind the amendment. The commission shall immediately notify
16 the respective local government of the rescission of any
17 amendment. After receiving such notice, the respective local
18 government may readopt the rescinded amendment pursuant to the
19 provisions of this paragraph.
20 7. Each county and municipality desiring to make local
21 technical amendments to the Florida Building Code shall by
22 interlocal agreement establish a countywide compliance review
23 board to review any amendment to the Florida Building Code,
24 adopted by a local government within the county pursuant to
25 this paragraph, that is challenged by any substantially
26 affected party for purposes of determining the amendment's
27 compliance with this paragraph. If challenged, the local
28 technical amendments shall not become effective until time for
29 filing an appeal pursuant to subparagraph 8. has expired or,
30 if there is an appeal, until the commission issues its final
31 order determining the adopted amendment is in compliance with
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1 this subsection.
2 8. If the compliance review board determines such
3 amendment is not in compliance with this paragraph, the
4 compliance review board shall notify such local government of
5 the noncompliance and that the amendment is invalid and
6 unenforceable until the local government corrects the
7 amendment to bring it into compliance. The local government
8 may appeal the decision of the compliance review board to the
9 commission. If the compliance review board determines such
10 amendment to be in compliance with this paragraph, any
11 substantially affected party may appeal such determination to
12 the commission. Any such appeal shall be filed with the
13 commission within 14 days of the board's written
14 determination. The commission shall promptly refer the appeal
15 to the Division of Administrative Hearings for the assignment
16 of an administrative law judge. The administrative law judge
17 shall conduct the required hearing within 30 days, and shall
18 enter a recommended order within 30 days of the conclusion of
19 such hearing. The commission shall enter a final order within
20 30 days thereafter. The provisions of chapter 120 and the
21 uniform rules of procedure shall apply to such proceedings.
22 The local government adopting the amendment that is subject to
23 challenge has the burden of proving that the amendment
24 complies with this paragraph in proceedings before the
25 compliance review board and the commission, as applicable.
26 Actions of the commission are subject to judicial review
27 pursuant to s. 120.68. The compliance review board shall
28 determine whether its decisions apply to a respective local
29 jurisdiction or apply countywide.
30 9. An amendment adopted under this paragraph shall
31 include a fiscal impact statement which documents the costs
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1 and benefits of the proposed amendment. Criteria for the
2 fiscal impact statement shall include the impact to local
3 government relative to enforcement, the impact to property and
4 building owners, as well as to industry, relative to the cost
5 of compliance. The fiscal impact statement may not be used as
6 a basis for challenging the amendment for compliance.
7 10. In addition to subparagraphs 7. and 9., the
8 commission may review any amendments adopted pursuant to this
9 subsection and make nonbinding recommendations related to
10 compliance of such amendments with this subsection.
11 (c) Any amendment adopted by a local enforcing agency
12 pursuant to this subsection shall not apply to state or school
13 district owned buildings, manufactured buildings or
14 factory-built school buildings approved by the commission, or
15 prototype buildings approved pursuant to s. 553.77(3). The
16 respective responsible entities shall consider the physical
17 performance parameters substantiating such amendments when
18 designing, specifying, and constructing such exempt buildings.
19 (5) The initial adoption of, and any subsequent update
20 or amendment to, the Florida Building Code by the commission
21 is deemed adopted for use statewide without adoptions by local
22 government. For a building permit for which an application is
23 submitted prior to the effective date of the Florida Building
24 Code, the state minimum building code in effect in the
25 permitting jurisdiction on the date of the application governs
26 the permitted work for the life of the permit and any
27 extension granted to the permit.
28 (6)(a) The commission, by rule adopted pursuant to ss.
29 120.536(1) and 120.54, shall update the Florida Building Code
30 every 3 years. When updating the Florida Building Code, the
31 commission shall select the most current version of the
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1 International Building Code, the International Fuel Gas Code,
2 the International Mechanical Code, the International Plumbing
3 Code, and the International Residential Code, all of which are
4 adopted by the International Code Council, and the National
5 Electrical Code, which is adopted by the National Fire
6 Protection Association, to form the foundation codes of the
7 updated Florida Building Code, if the version has been adopted
8 by the applicable model code entity and made available to the
9 public at least 6 months prior to its selection by the
10 commission.
11 (b) Codes regarding noise contour lines shall be
12 reviewed annually, and the most current federal guidelines
13 shall be adopted.
14 (c) The commission may modify any portion of the
15 foundation codes only as needed to accommodate the specific
16 needs of this state, maintaining Florida-specific amendments
17 previously adopted by the commission and not addressed by the
18 updated foundation code. Standards or criteria referenced by
19 the codes shall be incorporated by reference. If a referenced
20 standard or criterion requires amplification or modification
21 to be appropriate for use in this state, only the
22 amplification or modification shall be set forth in the
23 Florida Building Code. The commission may approve technical
24 amendments to the updated Florida Building Code after the
25 amendments have been subject to the conditions set forth in
26 paragraphs (3)(a)-(d). Amendments to the foundation codes
27 which are adopted in accordance with this subsection shall be
28 clearly marked in printed versions of the Florida Building
29 Code so that the fact that the provisions are Florida-specific
30 amendments to the foundation codes is readily apparent.
31 (d) The commission shall further consider the
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1 commission's own interpretations, declaratory statements,
2 appellate decisions, and approved statewide and local
3 technical amendments and shall incorporate such
4 interpretations, statements, decisions, and amendments into
5 the updated Florida Building Code only to the extent that they
6 are needed to modify the foundation codes to accommodate the
7 specific needs of the state. A change made by an institute or
8 standards organization to any standard or criterion that is
9 adopted by reference in the Florida Building Code does not
10 become effective statewide until it has been adopted by the
11 commission. Furthermore, the edition of the Florida Building
12 Code which is in effect on the date of application for any
13 permit authorized by the code governs the permitted work for
14 the life of the permit and any extension granted to the
15 permit.
16 (e) A rule updating the Florida Building Code in
17 accordance with this subsection shall take effect no sooner
18 than 6 months after publication of the updated code. Any
19 amendment to the Florida Building Code which is adopted upon a
20 finding by the commission that the amendment is necessary to
21 protect the public from immediate threat of harm takes effect
22 immediately.
23 (f) Provisions of the foundation codes, including
24 those contained in referenced standards and criteria, relating
25 to wind resistance or the prevention of water intrusion may
26 not be modified to diminish those construction requirements;
27 however, the commission may, subject to conditions in this
28 subsection, modify the provisions to enhance those
29 construction requirements.
30 (7)(f) Upon the conclusion of a triennial update to
31 the Florida Building Code, notwithstanding the provisions of
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1 this subsection or subsection (3) or subsection (6), the
2 commission may address issues identified in this subsection
3 paragraph by amending the code pursuant only to the rule
4 adoption procedures contained in chapter 120. Provisions of
5 the Florida Building Code, including those contained in
6 referenced standards and criteria, relating to wind resistance
7 or the prevention of water intrusion may not be amended
8 pursuant to this subsection to diminish those construction
9 requirements; however, the commission may, subject to
10 conditions in this subsection, amend the provisions to enhance
11 those construction requirements. Following the approval of any
12 amendments to the Florida Building Code by the commission and
13 publication of the amendments on the commission's website,
14 authorities having jurisdiction to enforce the Florida
15 Building Code may enforce the amendments. The commission may
16 approve amendments that are needed to address:
17 (a)1. Conflicts within the updated code;
18 (b)2. Conflicts between the updated code and the
19 Florida Fire Prevention Code adopted pursuant to chapter 633;
20 (c)3. The omission of previously adopted
21 Florida-specific amendments to the updated code if such
22 omission is not supported by a specific recommendation of a
23 technical advisory committee or particular action by the
24 commission; or
25 (d)4. Unintended results from the integration of
26 previously adopted Florida-specific amendments with the model
27 code.
28 (8)(7)(a) The commission may approve technical
29 amendments to the Florida Building Code once each year for
30 statewide or regional application upon a finding that the
31 amendment:
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1 1. Is needed in order to accommodate the specific
2 needs of this state.
3 2. Has a reasonable and substantial connection with
4 the health, safety, and welfare of the general public.
5 3. Strengthens or improves the Florida Building Code,
6 or in the case of innovation or new technology, will provide
7 equivalent or better products or methods or systems of
8 construction.
9 4. Does not discriminate against materials, products,
10 methods, or systems of construction of demonstrated
11 capabilities.
12 5. Does not degrade the effectiveness of the Florida
13 Building Code.
14
15 Furthermore, the Florida Building Commission may approve
16 technical amendments to the code once each year to incorporate
17 into the Florida Building Code its own interpretations of the
18 code which are embodied in its opinions, final orders,
19 declaratory statements, and interpretations of hearing officer
20 panels under s. 553.775(3)(c), but shall do so only to the
21 extent that incorporation of interpretations is needed to
22 modify the foundation codes to accommodate the specific needs
23 of this state. Amendments approved under this paragraph shall
24 be adopted by rule pursuant to ss. 120.536(1) and 120.54,
25 after the amendments have been subjected to the provisions of
26 subsection (3).
27 (b) A proposed amendment shall include a fiscal impact
28 statement which documents the costs and benefits of the
29 proposed amendment. Criteria for the fiscal impact statement
30 shall be established by rule by the commission and shall
31 include the impact to local government relative to
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1 enforcement, the impact to property and building owners, as
2 well as to industry, relative to the cost of compliance.
3 (c) The commission may not approve any proposed
4 amendment that does not accurately and completely address all
5 requirements for amendment which are set forth in this
6 section. The commission shall require all proposed amendments
7 and information submitted with proposed amendments to be
8 reviewed by commission staff prior to consideration by any
9 technical advisory committee. These reviews shall be for
10 sufficiency only and are not intended to be qualitative in
11 nature. Staff members shall reject any proposed amendment that
12 fails to include a fiscal impact statement. Proposed
13 amendments rejected by members of the staff may not be
14 considered by the commission or any technical advisory
15 committee.
16 (d) Provisions of the Florida Building Code, including
17 those contained in referenced standards and criteria, relating
18 to wind resistance or the prevention of water intrusion may
19 not be amended pursuant to this subsection to diminish those
20 construction requirements; however, the commission may,
21 subject to conditions in this subsection, amend the provisions
22 to enhance those construction requirements.
23 (9)(8) The following buildings, structures, and
24 facilities are exempt from the Florida Building Code as
25 provided by law, and any further exemptions shall be as
26 determined by the Legislature and provided by law:
27 (a) Buildings and structures specifically regulated
28 and preempted by the Federal Government.
29 (b) Railroads and ancillary facilities associated with
30 the railroad.
31 (c) Nonresidential farm buildings on farms.
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1 (d) Temporary buildings or sheds used exclusively for
2 construction purposes.
3 (e) Mobile or modular structures used as temporary
4 offices, except that the provisions of part II relating to
5 accessibility by persons with disabilities shall apply to such
6 mobile or modular structures.
7 (f) Those structures or facilities of electric
8 utilities, as defined in s. 366.02, which are directly
9 involved in the generation, transmission, or distribution of
10 electricity.
11 (g) Temporary sets, assemblies, or structures used in
12 commercial motion picture or television production, or any
13 sound-recording equipment used in such production, on or off
14 the premises.
15 (h) Storage sheds that are not designed for human
16 habitation and that have a floor area of 720 square feet or
17 less are not required to comply with the mandatory
18 wind-borne-debris-impact standards of the Florida Building
19 Code.
20 (i) Chickees constructed by the Miccosukee Tribe of
21 Indians of Florida or the Seminole Tribe of Florida. As used
22 in this paragraph, the term "chickee" means an open-sided
23 wooden hut that has a thatched roof of palm or palmetto or
24 other traditional materials, and that does not incorporate any
25 electrical, plumbing, or other nonwood features.
26
27 With the exception of paragraphs (a), (b), (c), and (f), in
28 order to preserve the health, safety, and welfare of the
29 public, the Florida Building Commission may, by rule adopted
30 pursuant to chapter 120, provide for exceptions to the broad
31 categories of buildings exempted in this section, including
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1 exceptions for application of specific sections of the code or
2 standards adopted therein. The Department of Agriculture and
3 Consumer Services shall have exclusive authority to adopt by
4 rule, pursuant to chapter 120, exceptions to nonresidential
5 farm buildings exempted in paragraph (c) when reasonably
6 necessary to preserve public health, safety, and welfare. The
7 exceptions must be based upon specific criteria, such as
8 under-roof floor area, aggregate electrical service capacity,
9 HVAC system capacity, or other building requirements. Further,
10 the commission may recommend to the Legislature additional
11 categories of buildings, structures, or facilities which
12 should be exempted from the Florida Building Code, to be
13 provided by law.
14 (10)(9)(a) In the event of a conflict between the
15 Florida Building Code and the Florida Fire Prevention Code and
16 the Life Safety Code as applied to a specific project, the
17 conflict shall be resolved by agreement between the local
18 building code enforcement official and the local fire code
19 enforcement official in favor of the requirement of the code
20 which offers the greatest degree of lifesafety or alternatives
21 which would provide an equivalent degree of lifesafety and an
22 equivalent method of construction.
23 (b) Any decision made by the local fire official and
24 the local building official may be appealed to a local
25 administrative board designated by the municipality, county,
26 or special district having firesafety responsibilities. If the
27 decision of the local fire official and the local building
28 official is to apply the provisions of either the Florida
29 Building Code or the Florida Fire Prevention Code and the Life
30 Safety Code, the board may not alter the decision unless the
31 board determines that the application of such code is not
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1 reasonable. If the decision of the local fire official and
2 the local building official is to adopt an alternative to the
3 codes, the local administrative board shall give due regard to
4 the decision rendered by the local officials and may modify
5 that decision if the administrative board adopts a better
6 alternative, taking into consideration all relevant
7 circumstances. In any case in which the local administrative
8 board adopts alternatives to the decision rendered by the
9 local fire official and the local building official, such
10 alternatives shall provide an equivalent degree of lifesafety
11 and an equivalent method of construction as the decision
12 rendered by the local officials.
13 (c) If the local building official and the local fire
14 official are unable to agree on a resolution of the conflict
15 between the Florida Building Code and the Florida Fire
16 Prevention Code and the Life Safety Code, the local
17 administrative board shall resolve the conflict in favor of
18 the code which offers the greatest degree of lifesafety or
19 alternatives which would provide an equivalent degree of
20 lifesafety and an equivalent method of construction.
21 (d) All decisions of the local administrative board,
22 or if none exists, the decisions of the local building
23 official and the local fire official, are subject to review by
24 a joint committee composed of members of the Florida Building
25 Commission and the Fire Code Advisory Council. If the joint
26 committee is unable to resolve conflicts between the codes as
27 applied to a specific project, the matter shall be resolved
28 pursuant to the provisions of paragraph (1)(d).
29 (e) The local administrative board shall, to the
30 greatest extent possible, be composed of members with
31 expertise in building construction and firesafety standards.
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1 (f) All decisions of the local building official and
2 local fire official and all decisions of the administrative
3 board shall be in writing and shall be binding upon all
4 persons but shall not limit the authority of the State Fire
5 Marshal or the Florida Building Commission pursuant to
6 paragraph (1)(d) and ss. 663.01 and 633.161. Decisions of
7 general application shall be indexed by building and fire code
8 sections and shall be available for inspection during normal
9 business hours.
10 (11)(10) Except within coastal building zones as
11 defined in s. 161.54, specification standards developed by
12 nationally recognized code promulgation organizations to
13 determine compliance with engineering criteria of the Florida
14 Building Code for wind load design shall not apply to one or
15 two family dwellings which are two stories or less in height
16 unless approved by the commission for use or unless expressly
17 made subject to said standards and criteria by local ordinance
18 adopted in accordance with the provisions of subsection (4).
19 (12)(11) The Florida Building Code does not apply to,
20 and no code enforcement action shall be brought with respect
21 to, zoning requirements, land use requirements, and owner
22 specifications or programmatic requirements which do not
23 pertain to and govern the design, construction, erection,
24 alteration, modification, repair, or demolition of public or
25 private buildings, structures, or facilities or to
26 programmatic requirements that do not pertain to enforcement
27 of the Florida Building Code. Additionally, a local code
28 enforcement agency may not administer or enforce the Florida
29 Building Code to prevent the siting of any publicly owned
30 facility, including, but not limited to, correctional
31 facilities, juvenile justice facilities, or state
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1 universities, community colleges, or public education
2 facilities, as provided by law.
3 Section 8. Subsection (2) of section 553.775, Florida
4 Statutes, is amended to read:
5 553.775 Interpretations.--
6 (2) Local enforcement agencies, local building
7 officials, state agencies, and the commission shall interpret
8 provisions of the Florida Building Code in a manner that is
9 consistent with declaratory statements and interpretations
10 entered by the commission, except that conflicts between the
11 Florida Fire Prevention Code and the Florida Building Code
12 shall be resolved in accordance with s. 553.73(10)(c) and (d)
13 s. 553.73(9)(c) and (d).
14 Section 9. Upon the effective date of this act, each
15 jurisdiction having authority to enforce the Florida Building
16 Code shall, at a minimum, require wind-borne-debris protection
17 in accordance with s. 1609.1, International Building Code
18 (2006) and the International Residential Code (2006) within
19 the "wind-borne-debris region" as that term is defined in s.
20 1609.2, International Building Code (2006), and s. R301.2,
21 International Residential Code (2006).
22 Section 10. (1) The Florida Building Commission shall
23 amend the Florida Building Code to reflect the application of
24 provisions identified in section 9 of this act, and to
25 eliminate all exceptions that provide less stringent
26 requirements. The amendments by the commission shall apply
27 throughout the state with the exception of the High Velocity
28 Hurricane Zone, which shall be governed as currently provided
29 within the Florida Building Code. The commission shall fulfill
30 these obligations before July 1, 2007, pursuant only to the
31 provisions of chapter 120, Florida Statutes.
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1 (2) The Florida Building Commission shall develop
2 voluntary "Code Plus" guidelines for increasing the hurricane
3 resistance of buildings. The guidelines may be modeled on the
4 requirements for the High Velocity Hurricane Zone and must
5 identify products, systems, and methods of construction that
6 the commission anticipates could result in stronger
7 construction. The commission shall include these guidelines in
8 its report to the 2008 Legislature.
9 Section 11. Subsection (1) of section 624.407, Florida
10 Statutes, is amended to read:
11 624.407 Capital funds required; new insurers.--
12 (1) To receive authority to transact any one kind or
13 combinations of kinds of insurance, as defined in part V of
14 this chapter, an insurer applying for its original certificate
15 of authority in this state after the effective date of this
16 section shall possess surplus as to policyholders not less
17 than the greater of:
18 (a) Five million dollars for a property and casualty
19 insurer, or $2.5 million for any other insurer;
20 (b) For life insurers, 4 percent of the insurer's
21 total liabilities;
22 (c) For life and health insurers, 4 percent of the
23 insurer's total liabilities, plus 6 percent of the insurer's
24 liabilities relative to health insurance; or
25 (d) For all insurers other than life insurers and life
26 and health insurers, 10 percent of the insurer's total
27 liabilities;
28
29 however, a domestic insurer that transacts residential
30 property insurance and is a wholly owned subsidiary of an
31 insurer authorized to do business in any other state shall
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1 possess surplus as to policyholders of at least $50 million,
2 but no insurer shall be required under this subsection to have
3 surplus as to policyholders greater than $100 million.
4 Section 12. Paragraph (a) of subsection (2) of section
5 624.462, Florida Statutes, is amended to read:
6 624.462 Commercial self-insurance funds.--
7 (2) As used in ss. 624.460-624.488, "commercial
8 self-insurance fund" or "fund" means a group of members,
9 operating individually and collectively through a trust or
10 corporation, that must be:
11 (a) Established by:
12 1. A not-for-profit trade association, industry
13 association, or professional association of employers or
14 professionals which has a constitution or bylaws, which is
15 incorporated under the laws of this state, and which has been
16 organized for purposes other than that of obtaining or
17 providing insurance and operated in good faith for a
18 continuous period of 1 year;
19 2. A self-insurance trust fund organized pursuant to
20 s. 627.357 and maintained in good faith for a continuous
21 period of 1 year for purposes other than that of obtaining or
22 providing insurance pursuant to this section. Each member of a
23 commercial self-insurance trust fund established pursuant to
24 this subsection must maintain membership in the self-insurance
25 trust fund organized pursuant to s. 627.357;
26 3. A group of 10 or more health care providers, as
27 defined in s. 627.351(4)(h), for purposes of providing medical
28 malpractice coverage; or
29 4. A not-for-profit group comprised of one or more
30 community no less than 10 condominium associations responsible
31 for operating at least 50 residential parcels or units created
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1 and operating under chapter 718, chapter 719, chapter 720,
2 chapter 721, or chapter 723 as defined in s. 718.103(2), which
3 is incorporated under the laws of this state, which restricts
4 its membership to community condominium associations only, and
5 which has been organized and maintained in good faith for the
6 purpose of pooling and spreading the liabilities of its group
7 members relating to property or casualty risk or surety a
8 continuous period of 1 year for purposes other than that of
9 obtaining or providing insurance.
10 Section 13. Subsection (1) of section 624.4622,
11 Florida Statutes, is amended to read:
12 624.4622 Local government self-insurance funds.--
13 (1) Any two or more local governmental entities may
14 enter into interlocal agreements for the purpose of securing
15 the payment of benefits under chapter 440, or insuring or
16 self-insuring real or personal property of every kind and
17 every interest in such property against loss or damage from
18 any hazard or cause and against any loss consequential to such
19 loss or damage, provided the local government self-insurance
20 fund that is created must:
21 (a) Have annual normal premiums in excess of $5
22 million;
23 (b) Maintain a continuing program of excess insurance
24 coverage and reserve evaluation to protect the financial
25 stability of the fund in an amount and manner determined by a
26 qualified and independent actuary;
27 (c) Submit annually an audited fiscal year-end
28 financial statement by an independent certified public
29 accountant within 6 months after the end of the fiscal year to
30 the office; and
31 (d) Have a governing body which is comprised entirely
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1 of local elected officials.
2 Section 14. Section 624.4625, Florida Statutes, is
3 created to read:
4 624.4625 Corporation not-for-profit self-insurance
5 funds.--
6 (1) Notwithstanding any other provision of law, any
7 two or more corporations not for profit located in and
8 organized under the laws of this state may form a
9 self-insurance fund for the purpose of pooling and spreading
10 liabilities of its group members in any one or combination of
11 property or casualty risk, provided the corporation not for
12 profit self-insurance fund that is created:
13 (a) Has annual normal premiums in excess of $5
14 million.
15 (b) Requires for qualification that each participating
16 member receive at least 75 percent of its revenues from local,
17 state, or federal governmental sources or a combination of
18 such sources.
19 (c) Uses a qualified actuary to determine rates using
20 accepted actuarial principles and annually submits to the
21 office a certification by the actuary that the rates are
22 actuarially sound and are not inadequate, as defined in s.
23 627.062.
24 (d) Uses a qualified actuary to establish reserves for
25 loss and loss adjustment expenses and annually submits to the
26 office a certification by the actuary that the loss and loss
27 adjustment expense reserves are adequate. If the actuary
28 determines that reserves are not adequate, the fund shall file
29 with the office a remedial plan for increasing the reserves or
30 otherwise addressing the financial condition of the fund,
31 subject to a determination by the office that the fund will
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1 operate on an actuarially sound basis and the fund does not
2 pose a significant risk of insolvency.
3 (e) Maintains a continuing program of excess insurance
4 coverage and reserve evaluation to protect the financial
5 stability of the fund in an amount and manner determined by a
6 qualified actuary. At a minimum, this program must:
7 1. Purchase excess insurance from authorized insurance
8 carriers.
9 2. Retain a per-loss occurrence that does not exceed
10 $350,000.
11 (f) Submits to the office annually an audited fiscal
12 year-end financial statement by an independent certified
13 public accountant within 6 months after the end of the fiscal
14 year.
15 (g) Has a governing body that is comprised entirely of
16 officials from corporations not for profit that are members of
17 the corporation not-for-profit self-insurance fund.
18 (h) Uses knowledgeable persons or business entities to
19 administer or service the fund in the areas of claims
20 administration, claims adjusting, underwriting, risk
21 management, loss control, policy administration, financial
22 audit, and legal areas. Such persons must meet all applicable
23 requirements of law for state licensure and must have at least
24 5 years' experience with commercial self-insurance funds
25 formed under s. 624.462, self-insurance funds formed under s.
26 624.4622, or domestic insurers.
27 (i) Submits to the office copies of contracts used for
28 its members that clearly establish the liability of each
29 member for the obligations of the fund.
30 (j) Annually submits to the office a certification by
31 the governing body of the fund that, to the best of its
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1 knowledge, the requirements of this section are met.
2 (2) As used in this section, the term "qualified
3 actuary" means an actuary that is a member of the Casualty
4 Actuarial Society or the American Academy of Actuaries.
5 (3) A corporation not-for-profit self-insurance fund
6 that meets the requirements of this section is not:
7 (a) An insurer for purposes of participation in or
8 coverage by any insurance guaranty association established by
9 chapter 631; or
10 (b) Subject to s. 624.4621 and is not required to file
11 any report with the department under s. 440.38(2)(b) that is
12 uniquely required of group self-insurer funds qualified under
13 s. 624.4621.
14 (4) Premiums, contributions, and assessments received
15 by a corporation not-for-profit self-insurance fund are
16 subject to ss. 624.509(1) and (2) and 624.5092, except that
17 the tax rate shall be 1.6 percent of the gross amount of such
18 premiums, contributions, and assessments.
19 (5) If any of the requirements of subsection (1) are
20 not met, a corporation not-for-profit self-insurance fund is
21 subject to the requirements of s. 624.4621 if the fund
22 provides only workers' compensation coverage or is subject to
23 the requirements of ss. 624.460-624.488 if the fund provides
24 coverage for other property, casualty, or surety risks.
25 Section 15. Subsection (3) of section 624.610, Florida
26 Statutes, is amended to read:
27 624.610 Reinsurance.--
28 (3)(a) Credit must be allowed when the reinsurance is
29 ceded to an assuming insurer that is authorized to transact
30 insurance or reinsurance in this state.
31 (b)1. Credit must be allowed when the reinsurance is
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1 ceded to an assuming insurer that is accredited as a reinsurer
2 in this state. An accredited reinsurer is one that:
3 a. Files with the office evidence of its submission to
4 this state's jurisdiction;
5 b. Submits to this state's authority to examine its
6 books and records;
7 c. Is licensed or authorized to transact insurance or
8 reinsurance in at least one state or, in the case of a United
9 States branch of an alien assuming insurer, is entered
10 through, licensed, or authorized to transact insurance or
11 reinsurance in at least one state;
12 d. Files annually with the office a copy of its annual
13 statement filed with the insurance department of its state of
14 domicile any quarterly statements if required by its state of
15 domicile or such quarterly statements if specifically
16 requested by the office, and a copy of its most recent audited
17 financial statement; and
18 (I) Maintains a surplus as regards policyholders in an
19 amount not less than $20 million and whose accreditation has
20 not been denied by the office within 90 days after its
21 submission; or
22 (II) Maintains a surplus as regards policyholders in
23 an amount not less than $20 million and whose accreditation
24 has been approved by the office.
25 2. The office may deny or revoke an assuming insurer's
26 accreditation if the assuming insurer does not submit the
27 required documentation pursuant to subparagraph 1., if the
28 assuming insurer fails to meet all of the standards required
29 of an accredited reinsurer, or if the assuming insurer's
30 accreditation would be hazardous to the policyholders of this
31 state. In determining whether to deny or revoke accreditation,
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1 the office may consider the qualifications of the assuming
2 insurer with respect to all the following subjects:
3 a. Its financial stability;
4 b. The lawfulness and quality of its investments;
5 c. The competency, character, and integrity of its
6 management;
7 d. The competency, character, and integrity of persons
8 who own or have a controlling interest in the assuming
9 insurer; and
10 e. Whether claims under its contracts are promptly and
11 fairly adjusted and are promptly and fairly paid in accordance
12 with the law and the terms of the contracts.
13 3. Credit must not be allowed a ceding insurer if the
14 assuming insurer's accreditation has been revoked by the
15 office after notice and the opportunity for a hearing.
16 4. The actual costs and expenses incurred by the
17 office to review a reinsurer's request for accreditation and
18 subsequent reviews must be charged to and collected from the
19 requesting reinsurer. If the reinsurer fails to pay the actual
20 costs and expenses promptly when due, the office may refuse to
21 accredit the reinsurer or may revoke the reinsurer's
22 accreditation.
23 (c)1. Credit must be allowed when the reinsurance is
24 ceded to an assuming insurer that maintains a trust fund in a
25 qualified United States financial institution, as defined in
26 paragraph (5)(b), for the payment of the valid claims of its
27 United States ceding insurers and their assigns and successors
28 in interest. To enable the office to determine the sufficiency
29 of the trust fund, the assuming insurer shall report annually
30 to the office information substantially the same as that
31 required to be reported on the NAIC Annual Statement form by
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1 authorized insurers. The assuming insurer shall submit to
2 examination of its books and records by the office and bear
3 the expense of examination.
4 2.a. Credit for reinsurance must not be granted under
5 this subsection unless the form of the trust and any
6 amendments to the trust have been approved by:
7 (I) The insurance regulator of the state in which the
8 trust is domiciled; or
9 (II) The insurance regulator of another state who,
10 pursuant to the terms of the trust instrument, has accepted
11 principal regulatory oversight of the trust.
12 b. The form of the trust and any trust amendments must
13 be filed with the insurance regulator of every state in which
14 the ceding insurer beneficiaries of the trust are domiciled.
15 The trust instrument must provide that contested claims are
16 valid and enforceable upon the final order of any court of
17 competent jurisdiction in the United States. The trust must
18 vest legal title to its assets in its trustees for the benefit
19 of the assuming insurer's United States ceding insurers and
20 their assigns and successors in interest. The trust and the
21 assuming insurer are subject to examination as determined by
22 the insurance regulator.
23 c. The trust remains in effect for as long as the
24 assuming insurer has outstanding obligations due under the
25 reinsurance agreements subject to the trust. No later than
26 February 28 of each year, the trustee of the trust shall
27 report to the insurance regulator in writing the balance of
28 the trust and list the trust's investments at the preceding
29 year end, and shall certify that the trust will not expire
30 prior to the following December 31.
31 3. The following requirements apply to the following
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1 categories of assuming insurer:
2 a. The trust fund for a single assuming insurer
3 consists of funds in trust in an amount not less than the
4 assuming insurer's liabilities attributable to reinsurance
5 ceded by United States ceding insurers, and, in addition, the
6 assuming insurer shall maintain a trusteed surplus of not less
7 than $20 million. Not less than 50 percent of the funds in the
8 trust covering the assuming insurer's liabilities attributable
9 to reinsurance ceded by United States ceding insurers and
10 trusteed surplus shall consist of assets of a quality
11 substantially similar to that required in part II of chapter
12 625. Clean, irrevocable, unconditional, and evergreen letters
13 of credit, issued or confirmed by a qualified United States
14 financial institution, as defined in paragraph (5)(a),
15 effective no later than December 31 of the year for which the
16 filing is made and in the possession of the trust on or before
17 the filing date of its annual statement, may be used to fund
18 the remainder of the trust and trusteed surplus.
19 b.(I) In the case of a group including incorporated
20 and individual unincorporated underwriters:
21 (A) For reinsurance ceded under reinsurance agreements
22 with an inception, amendment, or renewal date on or after
23 August 1, 1995, the trust consists of a trusteed account in an
24 amount not less than the group's several liabilities
25 attributable to business ceded by United States domiciled
26 ceding insurers to any member of the group;
27 (B) For reinsurance ceded under reinsurance agreements
28 with an inception date on or before July 31, 1995, and not
29 amended or renewed after that date, notwithstanding the other
30 provisions of this section, the trust consists of a trusteed
31 account in an amount not less than the group's several
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1 insurance and reinsurance liabilities attributable to business
2 written in the United States; and
3 (C) In addition to these trusts, the group shall
4 maintain in trust a trusteed surplus of which $100 million
5 must be held jointly for the benefit of the United States
6 domiciled ceding insurers of any member of the group for all
7 years of account.
8 (II) The incorporated members of the group must not be
9 engaged in any business other than underwriting of a member of
10 the group, and are subject to the same level of regulation and
11 solvency control by the group's domiciliary regulator as the
12 unincorporated members.
13 (III) Within 90 days after its financial statements
14 are due to be filed with the group's domiciliary regulator,
15 the group shall provide to the insurance regulator an annual
16 certification by the group's domiciliary regulator of the
17 solvency of each underwriter member or, if a certification is
18 unavailable, financial statements, prepared by independent
19 public accountants, of each underwriter member of the group.
20 (d) Credit must be allowed when the reinsurance is
21 ceded to an assuming insurer not meeting the requirements of
22 paragraph (a), paragraph (b), or paragraph (c), but only as to
23 the insurance of risks located in jurisdictions in which the
24 reinsurance is required to be purchased by a particular entity
25 by applicable law or regulation of that jurisdiction.
26 (e) If the reinsurance is ceded to an assuming insurer
27 not meeting the requirements of paragraph (a), paragraph (b),
28 paragraph (c), or paragraph (d), the commissioner may allow
29 credit, but only if the assuming insurer holds surplus in
30 excess of $100 million and has a secure financial strength
31 rating from at least two nationally recognized statistical
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1 rating organizations deemed acceptable by the commissioner. In
2 determining whether credit should be allowed, the commissioner
3 shall consider the following:
4 1. The domiciliary regulatory jurisdiction of the
5 assuming insurer.
6 2. The structure and authority of the domiciliary
7 regulator with regard to solvency regulation requirements and
8 the financial surveillance of the reinsurer.
9 3. The substance of financial and operating standards
10 for reinsurers in the domiciliary jurisdiction.
11 4. The form and substance of financial reports
12 required to be filed by the reinsurers in the domiciliary
13 jurisdiction or other public financial statements filed in
14 accordance with generally accepted accounting principles.
15 5. The domiciliary regulator's willingness to
16 cooperate with United States regulators in general and the
17 office in particular.
18 6. The history of performance by reinsurers in the
19 domiciliary jurisdiction.
20 7. Any documented evidence of substantial problems
21 with the enforcement of valid United States judgments in the
22 domiciliary jurisdiction.
23 8. Any other matters deemed relevant by the
24 commissioner. The commissioner shall give appropriate
25 consideration to insurer group ratings that may have been
26 issued. The commissioner may, in lieu of granting full credit
27 under this subsection, reduce the amount required to be held
28 in trust under paragraph (c).
29 (f)(e) If the assuming insurer is not authorized or
30 accredited to transact insurance or reinsurance in this state
31 pursuant to paragraph (a) or paragraph (b), the credit
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1 permitted by paragraph (c) or paragraph (d) must not be
2 allowed unless the assuming insurer agrees in the reinsurance
3 agreements:
4 1.a. That in the event of the failure of the assuming
5 insurer to perform its obligations under the terms of the
6 reinsurance agreement, the assuming insurer, at the request of
7 the ceding insurer, shall submit to the jurisdiction of any
8 court of competent jurisdiction in any state of the United
9 States, will comply with all requirements necessary to give
10 the court jurisdiction, and will abide by the final decision
11 of the court or of any appellate court in the event of an
12 appeal; and
13 b. To designate the Chief Financial Officer, pursuant
14 to s. 48.151, or a designated attorney as its true and lawful
15 attorney upon whom may be served any lawful process in any
16 action, suit, or proceeding instituted by or on behalf of the
17 ceding company.
18 2. This paragraph is not intended to conflict with or
19 override the obligation of the parties to a reinsurance
20 agreement to arbitrate their disputes, if this obligation is
21 created in the agreement.
22 (g)(f) If the assuming insurer does not meet the
23 requirements of paragraph (a) or paragraph (b), the credit
24 permitted by paragraph (c) or paragraph (d) is not allowed
25 unless the assuming insurer agrees in the trust agreements, in
26 substance, to the following conditions:
27 1. Notwithstanding any other provisions in the trust
28 instrument, if the trust fund is inadequate because it
29 contains an amount less than the amount required by paragraph
30 (c), or if the grantor of the trust has been declared
31 insolvent or placed into receivership, rehabilitation,
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1 liquidation, or similar proceedings under the laws of its
2 state or country of domicile, the trustee shall comply with an
3 order of the insurance regulator with regulatory oversight
4 over the trust or with an order of a United States court of
5 competent jurisdiction directing the trustee to transfer to
6 the insurance regulator with regulatory oversight all of the
7 assets of the trust fund.
8 2. The assets must be distributed by and claims must
9 be filed with and valued by the insurance regulator with
10 regulatory oversight in accordance with the laws of the state
11 in which the trust is domiciled which are applicable to the
12 liquidation of domestic insurance companies.
13 3. If the insurance regulator with regulatory
14 oversight determines that the assets of the trust fund or any
15 part thereof are not necessary to satisfy the claims of the
16 United States ceding insurers of the grantor of the trust, the
17 assets or part thereof must be returned by the insurance
18 regulator with regulatory oversight to the trustee for
19 distribution in accordance with the trust agreement.
20 4. The grantor shall waive any right otherwise
21 available to it under United States law which is inconsistent
22 with this provision.
23 Section 16. Paragraph (a) of subsection (3) of section
24 626.2815, Florida Statutes, is amended to read:
25 626.2815 Continuing education required; application;
26 exceptions; requirements; penalties.--
27 (3)(a) Each person subject to the provisions of this
28 section must, except as set forth in paragraphs (b), (c), and
29 (d), complete a minimum of 24 hours of continuing education
30 courses every 2 years in basic or higher-level courses
31 prescribed by this section or in other courses approved by the
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1 department. Each person subject to the provisions of this
2 section must complete, as part of his or her required number
3 of continuing education hours, 3 hours of continuing
4 education, approved by the department, every 2 years on the
5 subject matter of ethics. Each licensed general lines agent
6 and customer representative subject to this section must
7 complete, as part of his or her required number of continuing
8 education hours, 1 hour of continuing education, approved by
9 the department, every 2 years on the subject matter of premium
10 discounts available on property insurance policies based on
11 various hurricane mitigation options and the means for
12 obtaining the discounts.
13 Section 17. Section 627.0613, Florida Statutes, is
14 amended to read:
15 627.0613 Consumer advocate.--The Chief Financial
16 Officer must appoint a consumer advocate who must represent
17 the general public of the state before the department and the
18 office. The consumer advocate must report directly to the
19 Chief Financial Officer, but is not otherwise under the
20 authority of the department or of any employee of the
21 department. The consumer advocate has such powers as are
22 necessary to carry out the duties of the office of consumer
23 advocate, including, but not limited to, the powers to:
24 (1) Recommend to the department or office, by
25 petition, the commencement of any proceeding or action; appear
26 in any proceeding or action before the department or office;
27 or appear in any proceeding before the Division of
28 Administrative Hearings or arbitration panel specified in s.
29 627.062(6) relating to subject matter under the jurisdiction
30 of the department or office.
31 (2) Have access to and use of all files, records, and
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1 data of the department or office.
2 (3) Examine rate and form filings submitted to the
3 office, hire consultants as necessary to aid in the review
4 process, and recommend to the department or office any
5 position deemed by the consumer advocate to be in the public
6 interest.
7 (4) Prepare an annual report card for each authorized
8 property insurer, on a form and using a letter-grade scale
9 developed by the commission by rule, which grades each insurer
10 based on the following factors:
11 1. The number and nature of consumer complaints
12 received by the department against the insurer.
13 2. The disposition of all complaints received by the
14 department.
15 3. The average length of time for payment of claims by
16 the insurer.
17 4. Any other factors the commission identifies as
18 assisting policyholders in making informed choices about
19 homeowner's insurance.
20 (5)(4) Prepare an annual budget for presentation to
21 the Legislature by the department, which budget must be
22 adequate to carry out the duties of the office of consumer
23 advocate.
24 Section 18. Subsection (2) and paragraph (a) of
25 subsection (6) of section 627.062, Florida Statutes, are
26 amended, present subsection (9) of that section is
27 redesignated as subsection (10), and a new subsection (9) is
28 added to that section, to read:
29 627.062 Rate standards.--
30 (2) As to all such classes of insurance:
31 (a) Insurers or rating organizations shall establish
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1 and use rates, rating schedules, or rating manuals to allow
2 the insurer a reasonable rate of return on such classes of
3 insurance written in this state. A copy of rates, rating
4 schedules, rating manuals, premium credits or discount
5 schedules, and surcharge schedules, and changes thereto, shall
6 be filed with the office under one of the following procedures
7 except as provided in subparagraph 3.:
8 1. If the filing is made at least 90 days before the
9 proposed effective date and the filing is not implemented
10 during the office's review of the filing and any proceeding
11 and judicial review, then such filing shall be considered a
12 "file and use" filing. In such case, the office shall
13 finalize its review by issuance of a notice of intent to
14 approve or a notice of intent to disapprove within 90 days
15 after receipt of the filing. The notice of intent to approve
16 and the notice of intent to disapprove constitute agency
17 action for purposes of the Administrative Procedure Act.
18 Requests for supporting information, requests for mathematical
19 or mechanical corrections, or notification to the insurer by
20 the office of its preliminary findings shall not toll the
21 90-day period during any such proceedings and subsequent
22 judicial review. The rate shall be deemed approved if the
23 office does not issue a notice of intent to approve or a
24 notice of intent to disapprove within 90 days after receipt of
25 the filing.
26 2. If the filing is not made in accordance with the
27 provisions of subparagraph 1., such filing shall be made as
28 soon as practicable, but no later than 30 days after the
29 effective date, and shall be considered a "use and file"
30 filing. An insurer making a "use and file" filing is
31 potentially subject to an order by the office to return to
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1 policyholders portions of rates found to be excessive, as
2 provided in paragraph (h).
3 3. For all filings made on or before December 31,
4 2008, an insurer seeking a rate that is greater than the rate
5 most recently approved by the office shall make a "file and
6 use" filing.
7 (b) Upon receiving a rate filing, the office shall
8 review the rate filing to determine if a rate is excessive,
9 inadequate, or unfairly discriminatory. In making that
10 determination, the office shall, in accordance with generally
11 accepted and reasonable actuarial techniques, consider the
12 following factors:
13 1. Past and prospective loss experience within and
14 without this state.
15 2. Past and prospective expenses.
16 3. The degree of competition among insurers for the
17 risk insured.
18 4. Investment income reasonably expected by the
19 insurer, consistent with the insurer's investment practices,
20 from investable premiums anticipated in the filing, plus any
21 other expected income from currently invested assets
22 representing the amount expected on unearned premium reserves
23 and loss reserves. The commission may adopt rules utilizing
24 reasonable techniques of actuarial science and economics to
25 specify the manner in which insurers shall calculate
26 investment income attributable to such classes of insurance
27 written in this state and the manner in which such investment
28 income shall be used in the calculation of insurance rates.
29 Such manner shall contemplate allowances for an underwriting
30 profit factor and full consideration of investment income
31 which produce a reasonable rate of return; however, investment
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1 income from invested surplus shall not be considered.
2 5. The reasonableness of the judgment reflected in the
3 filing.
4 6. Dividends, savings, or unabsorbed premium deposits
5 allowed or returned to Florida policyholders, members, or
6 subscribers.
7 7. The adequacy of loss reserves.
8 8. The cost of reinsurance.
9 9. Trend factors, including trends in actual losses
10 per insured unit for the insurer making the filing.
11 10. Conflagration and catastrophe hazards, if
12 applicable.
13 11. A reasonable margin for underwriting profit and
14 contingencies. For that portion of the rate covering the risk
15 of hurricanes and other catastrophic losses for which the
16 insurer has not purchased reinsurance and has exposed its
17 capital and surplus to such risk, the office must approve a
18 rating factor that provides the insurer a reasonable rate of
19 return that is commensurate with such risk.
20 12. The cost of medical services, if applicable.
21 13. Other relevant factors which impact upon the
22 frequency or severity of claims or upon expenses.
23 (c) In the case of fire insurance rates, consideration
24 shall be given to the availability of water supplies and the
25 experience of the fire insurance business during a period of
26 not less than the most recent 5-year period for which such
27 experience is available.
28 (d) If conflagration or catastrophe hazards are given
29 consideration by an insurer in its rates or rating plan,
30 including surcharges and discounts, the insurer shall
31 establish a reserve for that portion of the premium allocated
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1 to such hazard and shall maintain the premium in a catastrophe
2 reserve. Any removal of such premiums from the reserve for
3 purposes other than paying claims associated with a
4 catastrophe or purchasing reinsurance for catastrophes shall
5 be subject to approval of the office. Any ceding commission
6 received by an insurer purchasing reinsurance for catastrophes
7 shall be placed in the catastrophe reserve.
8 (e) After consideration of the rate factors provided
9 in paragraphs (b), (c), and (d), a rate may be found by the
10 office to be excessive, inadequate, or unfairly discriminatory
11 based upon the following standards:
12 1. Rates shall be deemed excessive if they are likely
13 to produce a profit from Florida business that is unreasonably
14 high in relation to the risk involved in the class of business
15 or if expenses are unreasonably high in relation to services
16 rendered.
17 2. Rates shall be deemed excessive if, among other
18 things, the rate structure established by a stock insurance
19 company provides for replenishment of surpluses from premiums,
20 when the replenishment is attributable to investment losses.
21 3. Rates shall be deemed inadequate if they are
22 clearly insufficient, together with the investment income
23 attributable to them, to sustain projected losses and expenses
24 in the class of business to which they apply.
25 4. A rating plan, including discounts, credits, or
26 surcharges, shall be deemed unfairly discriminatory if it
27 fails to clearly and equitably reflect consideration of the
28 policyholder's participation in a risk management program
29 adopted pursuant to s. 627.0625.
30 5. A rate shall be deemed inadequate as to the premium
31 charged to a risk or group of risks if discounts or credits
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1 are allowed which exceed a reasonable reflection of expense
2 savings and reasonably expected loss experience from the risk
3 or group of risks.
4 6. A rate shall be deemed unfairly discriminatory as
5 to a risk or group of risks if the application of premium
6 discounts, credits, or surcharges among such risks does not
7 bear a reasonable relationship to the expected loss and
8 expense experience among the various risks.
9 (f) In reviewing a rate filing, the office may require
10 the insurer to provide at the insurer's expense all
11 information necessary to evaluate the condition of the company
12 and the reasonableness of the filing according to the criteria
13 enumerated in this section.
14 (g) The office may at any time review a rate, rating
15 schedule, rating manual, or rate change; the pertinent records
16 of the insurer; and market conditions. If the office finds on
17 a preliminary basis that a rate may be excessive, inadequate,
18 or unfairly discriminatory, the office shall initiate
19 proceedings to disapprove the rate and shall so notify the
20 insurer. However, the office may not disapprove as excessive
21 any rate for which it has given final approval or which has
22 been deemed approved for a period of 1 year after the
23 effective date of the filing unless the office finds that a
24 material misrepresentation or material error was made by the
25 insurer or was contained in the filing. Upon being so
26 notified, the insurer or rating organization shall, within 60
27 days, file with the office all information which, in the
28 belief of the insurer or organization, proves the
29 reasonableness, adequacy, and fairness of the rate or rate
30 change. The office shall issue a notice of intent to approve
31 or a notice of intent to disapprove pursuant to the procedures
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1 of paragraph (a) within 90 days after receipt of the insurer's
2 initial response. In such instances and in any administrative
3 proceeding relating to the legality of the rate, the insurer
4 or rating organization shall carry the burden of proof by a
5 preponderance of the evidence to show that the rate is not
6 excessive, inadequate, or unfairly discriminatory. After the
7 office notifies an insurer that a rate may be excessive,
8 inadequate, or unfairly discriminatory, unless the office
9 withdraws the notification, the insurer shall not alter the
10 rate except to conform with the office's notice until the
11 earlier of 120 days after the date the notification was
12 provided or 180 days after the date of the implementation of
13 the rate. The office may, subject to chapter 120, disapprove
14 without the 60-day notification any rate increase filed by an
15 insurer within the prohibited time period or during the time
16 that the legality of the increased rate is being contested.
17 (h) In the event the office finds that a rate or rate
18 change is excessive, inadequate, or unfairly discriminatory,
19 the office shall issue an order of disapproval specifying that
20 a new rate or rate schedule which responds to the findings of
21 the office be filed by the insurer. The office shall further
22 order, for any "use and file" filing made in accordance with
23 subparagraph (a)2., that premiums charged each policyholder
24 constituting the portion of the rate above that which was
25 actuarially justified be returned to such policyholder in the
26 form of a credit or refund. If the office finds that an
27 insurer's rate or rate change is inadequate, the new rate or
28 rate schedule filed with the office in response to such a
29 finding shall be applicable only to new or renewal business of
30 the insurer written on or after the effective date of the
31 responsive filing.
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1 (i) Except as otherwise specifically provided in this
2 chapter, the office shall not prohibit any insurer, including
3 any residual market plan or joint underwriting association,
4 from paying acquisition costs based on the full amount of
5 premium, as defined in s. 627.403, applicable to any policy,
6 or prohibit any such insurer from including the full amount of
7 acquisition costs in a rate filing.
8 (j) With respect to residential property insurance
9 rate filings, the rate filing must account for mitigation
10 measures undertaken by policyholders to reduce hurricane
11 losses.
12 (j) Effective July 1, 2007, notwithstanding any other
13 provision of this section:
14 1. With respect to any residential property insurance
15 subject to regulation under this section for any area for
16 which the office determines a reasonable degree of competition
17 exists, a rate filing, including, but not limited to, any rate
18 changes, rating factors, territories, classification,
19 discounts, and credits, with respect to any policy form,
20 including endorsements issued with the form, that results in
21 an overall average statewide premium increase or decrease of
22 no more than 5 percent above or below the premium that would
23 result from the insurer's rates then in effect shall not be
24 subject to a determination by the office that the rate is
25 excessive or unfairly discriminatory except as provided in
26 subparagraph 3., or any other provision of law, provided all
27 changes specified in the filing do not result in an overall
28 premium increase of more than 10 percent for any one
29 territory, for reasons related solely to the rate change. As
30 used in this subparagraph, the term "insurer's rates then in
31 effect" includes only rates that have been lawfully in effect
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1 under this section or rates that have been determined to be
2 lawful through administrative proceedings or judicial
3 proceedings.
4 2. An insurer may not make filings under this
5 paragraph with respect to any policy form, including
6 endorsements issued with the form, if the overall premium
7 changes resulting from such filings exceed the amounts
8 specified in this paragraph in any 12-month period. An insurer
9 may proceed under other provisions of this section or other
10 provisions of law if the insurer seeks to exceed the premium
11 or rate limitations of this paragraph.
12 3. This paragraph does not affect the authority of the
13 office to disapprove a rate as inadequate or to disapprove a
14 filing for the unlawful use of unfairly discriminatory rating
15 factors that are prohibited by the laws of this state. An
16 insurer electing to implement a rate change under this
17 paragraph shall submit a filing to the office at least 40 days
18 prior to the effective date of the rate change. The office
19 shall have 30 days after the filing's submission to review the
20 filing and determine if the rate is inadequate or uses
21 unfairly discriminatory rating factors. Absent a finding by
22 the office within such 30-day period that the rate is
23 inadequate or that the insurer has used unfairly
24 discriminatory rating factors, the filing is deemed approved.
25 If the office finds during the 30-day period that the filing
26 will result in inadequate premiums or otherwise endanger the
27 insurer's solvency, the office shall suspend the rate
28 decrease. If the insurer is implementing an overall rate
29 increase, the results of which continue to produce an
30 inadequate rate, such increase shall proceed pending
31 additional action by the office to ensure the adequacy of the
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1 rate.
2 4. This paragraph does not apply to rate filings for
3 any insurance other than residential property insurance.
4
5 The provisions of this subsection shall not apply to workers'
6 compensation and employer's liability insurance and to motor
7 vehicle insurance.
8
9 The provisions of this subsection shall not apply to workers'
10 compensation and employer's liability insurance and to motor
11 vehicle insurance.
12 (6)(a) After any action with respect to a rate filing
13 that constitutes agency action for purposes of the
14 Administrative Procedure Act, except for a rate filing for
15 medical malpractice, an insurer may, in lieu of demanding a
16 hearing under s. 120.57, require arbitration of the rate
17 filing. However, the arbitration option provision in this
18 subsection does not apply to a rate filing that is made on or
19 after the effective date of this act until January 1, 2009.
20 Arbitration shall be conducted by a board of arbitrators
21 consisting of an arbitrator selected by the office, an
22 arbitrator selected by the insurer, and an arbitrator selected
23 jointly by the other two arbitrators. Each arbitrator must be
24 certified by the American Arbitration Association. A decision
25 is valid only upon the affirmative vote of at least two of the
26 arbitrators. No arbitrator may be an employee of any insurance
27 regulator or regulatory body or of any insurer, regardless of
28 whether or not the employing insurer does business in this
29 state. The office and the insurer must treat the decision of
30 the arbitrators as the final approval of a rate filing. Costs
31 of arbitration shall be paid by the insurer.
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1 (9)(a) Effective March 1, 2007, the chief executive
2 officer or chief financial officer of a property insurer and
3 the chief actuary of a property insurer must certify under
4 oath and subject to the penalty of perjury, on a form approved
5 by the commission, the following information, which must
6 accompany a rate filing:
7 1. The signing officer and actuary have reviewed the
8 rate filing;
9 2. Based on the signing officer's and actuary's
10 knowledge, the rate filing does not contain any untrue
11 statement of a material fact or omit to state a material fact
12 necessary in order to make the statements made, in light of
13 the circumstances under which such statements were made, not
14 misleading;
15 3. Based on the signing officer's and actuary's
16 knowledge, the information and other factors described in s.
17 627.062(2)(b), including, but not limited to, investment
18 income, fairly present in all material respects the basis of
19 the rate filing for the periods presented in the filing; and
20 4. Based on the signing officer's and actuary's
21 knowledge, the rate filing reflects all premium savings that
22 are reasonably expected to result from legislative enactments
23 and are in accordance with generally accepted and reasonable
24 actuarial techniques.
25 (b) A signing officer or actuary knowingly making a
26 false certification under this subsection commits a violation
27 of s. 626.9541(1)(e) and is subject to the penalties under s.
28 626.9521.
29 (c) Failure to provide such certification by the
30 officer and actuary shall result in the rate filing being
31 disapproved without prejudice to be refiled.
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1 (d) The commission may adopt rules and forms pursuant
2 to ss. 120.536(1) and 120.54 to administer this subsection.
3 Section 19. Subsection (1) of section 627.0629,
4 Florida Statutes, is amended to read:
5 627.0629 Residential property insurance; rate
6 filings.--
7 (1) It is the intent of the Legislature that insurers
8 must provide savings to consumers who install or implement
9 windstorm damage mitigation techniques, alterations, or
10 solutions to their properties to prevent windstorm losses.
11 Effective June 1, 2002, A rate filing for residential property
12 insurance must include actuarially reasonable discounts,
13 credits, or other rate differentials, or appropriate
14 reductions in deductibles, for properties on which fixtures or
15 construction techniques demonstrated to reduce the amount of
16 loss in a windstorm have been installed or implemented. The
17 fixtures or construction techniques shall include, but not be
18 limited to, fixtures or construction techniques which enhance
19 roof strength, roof covering performance, roof-to-wall
20 strength, wall-to-floor-to-foundation strength, opening
21 protection, and window, door, and skylight strength. Credits,
22 discounts, or other rate differentials, or appropriate
23 reductions in deductibles, for fixtures and construction
24 techniques which meet the minimum requirements of the Florida
25 Building Code must be included in the rate filing. All
26 insurance companies must make a rate filing which includes the
27 credits, discounts, or other rate differentials or reductions
28 in deductibles by February 28, 2003. By July 1, 2007, the
29 office shall reevaluate the discounts, credits, other rate
30 differentials, and appropriate reductions in deductibles for
31 fixtures and construction techniques that meet the minimum
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1 requirements of the Florida Building Code, based upon actual
2 experience or any other loss relativity studies available to
3 the office. The office shall determine the discounts, credits,
4 other rate differentials, and appropriate reductions in
5 deductibles that reflect the full actuarial value of such
6 revaluation, which may be used by insurers in rate filings.
7 Section 20. Section 627.0655, Florida Statutes, is
8 created to read:
9 627.0655 Policyholder loss or expense-related premium
10 discounts.--An insurer or person authorized to engage in the
11 business of insurance in this state may include, in the
12 premium charged an insured for any policy, contract, or
13 certificate of insurance, a discount based on the fact that
14 another policy, contract, or certificate of any type has been
15 purchased by the insured.
16 Section 21. Paragraphs (a), (b), (c), (m), (p), and
17 (s) of subsection (6) of section 627.351, Florida Statutes,
18 are amended, and paragraph (ee) is added to that subsection,
19 to read:
20 627.351 Insurance risk apportionment plans.--
21 (6) CITIZENS PROPERTY INSURANCE CORPORATION.--
22 (a)1. The Legislature finds that actual and threatened
23 catastrophic losses to property in this state from hurricanes
24 have caused insurers to be unwilling or unable to provide
25 property insurance coverage to the extent sought and needed.
26 It is in the public interest and a public purpose to assist in
27 assuring that property in the state is insured so as to
28 facilitate the remediation, reconstruction, and replacement of
29 damaged or destroyed property in order to reduce or avoid the
30 negative effects otherwise resulting to the public health,
31 safety, and welfare; to the economy of the state; and to the
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1 revenues of the state and local governments needed to provide
2 for the public welfare. It is necessary, therefore, to provide
3 property insurance to applicants who are in good faith
4 entitled to procure insurance through the voluntary market but
5 are unable to do so. The Legislature intends by this
6 subsection that property insurance be provided and that it
7 continues, as long as necessary, through an entity organized
8 to achieve efficiencies and economies, while providing service
9 to policyholders, applicants, and agents that is no less than
10 the quality generally provided in the voluntary market, all
11 toward the achievement of the foregoing public purposes.
12 Because it is essential for the corporation to have the
13 maximum financial resources to pay claims following a
14 catastrophic hurricane, it is the intent of the Legislature
15 that the income of the corporation be exempt from federal
16 income taxation and that interest on the debt obligations
17 issued by the corporation be exempt from federal income
18 taxation.
19 2. The Residential Property and Casualty Joint
20 Underwriting Association originally created by this statute
21 shall be known, as of July 1, 2002, as the Citizens Property
22 Insurance Corporation. The corporation shall provide insurance
23 for residential and commercial property, for applicants who
24 are in good faith entitled, but are unable, to procure
25 insurance through the voluntary market. The corporation shall
26 operate pursuant to a plan of operation approved by order of
27 the Financial Services Commission. The plan is subject to
28 continuous review by the commission. The commission may, by
29 order, withdraw approval of all or part of a plan if the
30 commission determines that conditions have changed since
31 approval was granted and that the purposes of the plan require
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1 changes in the plan. The corporation shall continue to operate
2 pursuant to the plan of operation approved by the Office of
3 Insurance Regulation until October 1, 2006. For the purposes
4 of this subsection, residential coverage includes both
5 personal lines residential coverage, which consists of the
6 type of coverage provided by homeowner's, mobile home owner's,
7 dwelling, tenant's, condominium unit owner's, and similar
8 policies, and commercial lines residential coverage, which
9 consists of the type of coverage provided by condominium
10 association, apartment building, and similar policies.
11 3. For the purposes of this subsection, the term
12 "homestead property" means:
13 a. Property that has been granted a homestead
14 exemption under chapter 196;
15 b. Property for which the owner has a current, written
16 lease with a renter for a term of at least 7 months and for
17 which the dwelling is insured by the corporation for $200,000
18 or less;
19 c. An owner-occupied mobile home or manufactured home,
20 as defined in s. 320.01, which is permanently affixed to real
21 property, is owned by a Florida resident, and has been granted
22 a homestead exemption under chapter 196 or, if the owner does
23 not own the real property, the owner certifies that the mobile
24 home or manufactured home is his or her principal place of
25 residence;.
26 d. Tenant's coverage;
27 e. Commercial lines residential property; or
28 f. Any county, district, or municipal hospital; a
29 hospital licensed by any not-for-profit corporation qualified
30 under s. 501(c)(3) of the United States Internal Revenue Code;
31 or a continuing care retirement community that is certified
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1 under chapter 651 and that receives an exemption from ad
2 valorem taxes under chapter 196.
3 4. For the purposes of this subsection, the term
4 "nonhomestead property" means property that is not homestead
5 property.
6 5. Effective July 1, 2008, a personal lines
7 residential structure that has a dwelling replacement cost of
8 $1 million or more, or a single condominium unit that has a
9 combined dwelling and content replacement cost of $1 million
10 or more is not eligible for coverage by the corporation. Such
11 dwellings insured by the corporation on June 30, 2008, may
12 continue to be covered by the corporation until the end of the
13 policy term. However, such dwellings that are insured by the
14 corporation and become ineligible for coverage due to the
15 provisions of this subparagraph may reapply and obtain
16 coverage in the high-risk account and be considered
17 "nonhomestead property" if the property owner provides the
18 corporation with a sworn affidavit from one or more insurance
19 agents, on a form provided by the corporation, stating that
20 the agents have made their best efforts to obtain coverage and
21 that the property has been rejected for coverage by at least
22 one authorized insurer and at least three surplus lines
23 insurers. If such conditions are met, the dwelling may be
24 insured by the corporation for up to 3 years, after which time
25 the dwelling is ineligible for coverage. The office shall
26 approve the method used by the corporation for valuing the
27 dwelling replacement cost for the purposes of this
28 subparagraph. If a policyholder is insured by the corporation
29 prior to being determined to be ineligible pursuant to this
30 subparagraph and such policyholder files a lawsuit challenging
31 the determination, the policyholder may remain insured by the
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1 corporation until the conclusion of the litigation.
2 6. For properties constructed on or after January
3 1,2009, the corporation may not insure any property located
4 within 2,500 feet landward of the coastal construction control
5 line created pursuant to s. 161.053 unless the property meets
6 the requirements of the code-plus building standards developed
7 by the Florida Building Commission.
8 6. Effective March 1, 2007, nonhomestead property is
9 not eligible for coverage by the corporation and is not
10 eligible for renewal of such coverage unless the property
11 owner provides the corporation with a sworn affidavit from one
12 or more insurance agents, on a form provided by the
13 corporation, stating that the agents have made their best
14 efforts to obtain coverage and that the property has been
15 rejected for coverage by at least one authorized insurer and
16 at least three surplus lines insurers.
17 7. It is the intent of the Legislature that
18 policyholders, applicants, and agents of the corporation
19 receive service and treatment of the highest possible level
20 but never less than that generally provided in the voluntary
21 market. It also is intended that the corporation be held to
22 service standards no less than those applied to insurers in
23 the voluntary market by the office with respect to
24 responsiveness, timeliness, customer courtesy, and overall
25 dealings with policyholders, applicants, or agents of the
26 corporation.
27 (b)1. All insurers authorized to write one or more
28 subject lines of business in this state are subject to
29 assessment by the corporation and, for the purposes of this
30 subsection, are referred to collectively as "assessable
31 insurers." Insurers writing one or more subject lines of
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1 business in this state pursuant to part VIII of chapter 626
2 are not assessable insurers, but insureds who procure one or
3 more subject lines of business in this state pursuant to part
4 VIII of chapter 626 are subject to assessment by the
5 corporation and are referred to collectively as "assessable
6 insureds." An authorized insurer's assessment liability shall
7 begin on the first day of the calendar year following the year
8 in which the insurer was issued a certificate of authority to
9 transact insurance for subject lines of business in this state
10 and shall terminate 1 year after the end of the first calendar
11 year during which the insurer no longer holds a certificate of
12 authority to transact insurance for subject lines of business
13 in this state.
14 2.a. All revenues, assets, liabilities, losses, and
15 expenses of the corporation shall be divided into three
16 separate accounts as follows:
17 (I) A personal lines account for personal residential
18 policies issued by the corporation or issued by the
19 Residential Property and Casualty Joint Underwriting
20 Association and renewed by the corporation that provide
21 comprehensive, multiperil coverage on risks that are not
22 located in areas eligible for coverage in the Florida
23 Windstorm Underwriting Association as those areas were defined
24 on January 1, 2002, and for such policies that do not provide
25 coverage for the peril of wind on risks that are located in
26 such areas;
27 (II) A commercial lines account for commercial
28 residential and commercial nonresidential policies issued by
29 the corporation or issued by the Residential Property and
30 Casualty Joint Underwriting Association and renewed by the
31 corporation that provide coverage for basic property perils on
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1 risks that are not located in areas eligible for coverage in
2 the Florida Windstorm Underwriting Association as those areas
3 were defined on January 1, 2002, and for such policies that do
4 not provide coverage for the peril of wind on risks that are
5 located in such areas; and
6 (III) A high-risk account for personal residential
7 policies and commercial residential and commercial
8 nonresidential property policies issued by the corporation or
9 transferred to the corporation that provide coverage for the
10 peril of wind on risks that are located in areas eligible for
11 coverage in the Florida Windstorm Underwriting Association as
12 those areas were defined on January 1, 2002. Subject to the
13 approval of a business plan by the Financial Services
14 Commission and Legislative Budget Commission as provided in
15 this sub-sub-subparagraph, but no earlier than March 31, 2007,
16 the corporation may offer policies that provide multiperil
17 coverage and the corporation shall continue to offer policies
18 that provide coverage only for the peril of wind for risks
19 located in areas eligible for coverage in the high-risk
20 account. In issuing multiperil coverage, the corporation may
21 use its approved policy forms and rates for the personal lines
22 account. An applicant or insured who is eligible to purchase a
23 multiperil policy from the corporation may purchase a
24 multiperil policy from an authorized insurer without prejudice
25 to the applicant's or insured's eligibility to prospectively
26 purchase a policy that provides coverage only for the peril of
27 wind from the corporation. An applicant or insured who is
28 eligible for a corporation policy that provides coverage only
29 for the peril of wind may elect to purchase or retain such
30 policy and also purchase or retain coverage excluding wind
31 from an authorized insurer without prejudice to the
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1 applicant's or insured's eligibility to prospectively purchase
2 a policy that provides multiperil coverage from the
3 corporation. It is the goal of the Legislature that there
4 would be an overall average savings of 10 percent or more for
5 a policyholder who currently has a wind-only policy with the
6 corporation, and an ex-wind policy with a voluntary insurer or
7 the corporation, and who then obtains a multiperil policy from
8 the corporation. It is the intent of the Legislature that the
9 offer of multiperil coverage in the high-risk account be made
10 and implemented in a manner that does not adversely affect the
11 tax-exempt status of the corporation or creditworthiness of or
12 security for currently outstanding financing obligations or
13 credit facilities of the high-risk account, the personal lines
14 account, or the commercial lines account. By March 1, 2007,
15 the corporation shall prepare and submit for approval by the
16 Financial Services Commission and Legislative Budget
17 Commission a report detailing the corporation's business plan
18 for issuing multiperil coverage in the high-risk account. The
19 business plan shall be approved or disapproved within 30 days
20 after receipt, as submitted or modified and resubmitted by the
21 corporation. The business plan must include: the impact of
22 such multiperil coverage on the corporation's financial
23 resources, the impact of such multiperil coverage on the
24 corporation's tax-exempt status, the manner in which the
25 corporation plans to implement the processing of applications
26 and policy forms for new and existing policyholders, the
27 impact of such multiperil coverage on the corporation's
28 ability to deliver customer service at the high level required
29 by this subsection, the ability of the corporation to process
30 claims, the ability of the corporation to quote and issue
31 policies, the impact of such multiperil coverage on the
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1 corporation's agents, the impact of such multiperil coverage
2 on the corporation's existing policyholders, and the impact of
3 such multiperil coverage on rates and premium. The high-risk
4 account must also include quota share primary insurance under
5 subparagraph (c)2. The area eligible for coverage under the
6 high-risk account also includes the area within Port
7 Canaveral, which is bordered on the south by the City of Cape
8 Canaveral, bordered on the west by the Banana River, and
9 bordered on the north by Federal Government property. The
10 office may remove territory from the area eligible for
11 wind-only and quota share coverage if, after a public hearing,
12 the office finds that authorized insurers in the voluntary
13 market are willing and able to write sufficient amounts of
14 personal and commercial residential coverage for all perils in
15 the territory, including coverage for the peril of wind, such
16 that risks covered by wind-only policies in the removed
17 territory could be issued a policy by the corporation in
18 either the personal lines or commercial lines account without
19 a significant increase in the corporation's probable maximum
20 loss in such account. Removal of territory from the area
21 eligible for wind-only or quota share coverage does not alter
22 the assignment of wind coverage written in such areas to the
23 high-risk account.
24 b. The three separate accounts must be maintained as
25 long as financing obligations entered into by the Florida
26 Windstorm Underwriting Association or Residential Property and
27 Casualty Joint Underwriting Association are outstanding, in
28 accordance with the terms of the corresponding financing
29 documents. When the financing obligations are no longer
30 outstanding, in accordance with the terms of the corresponding
31 financing documents, the corporation may use a single account
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1 for all revenues, assets, liabilities, losses, and expenses of
2 the corporation. Consistent with the requirement of this
3 subparagraph and prudent investment policies that minimize the
4 cost of carrying debt, the board shall exercise its best
5 efforts to retire existing debt or to obtain approval of
6 necessary parties to amend the terms of existing debt, so as
7 to structure the most efficient plan to consolidate the three
8 separate accounts into a single account. By February 1, 2007,
9 the board shall submit a report to the Financial Services
10 Commission, the President of the Senate, and the Speaker of
11 the House of Representatives which includes an analysis of
12 consolidating the accounts, the actions the board has taken to
13 minimize the cost of carrying debt, and its recommendations
14 for executing the most efficient plan.
15 c. Creditors of the Residential Property and Casualty
16 Joint Underwriting Association shall have a claim against, and
17 recourse to, the accounts referred to in sub-sub-subparagraphs
18 a.(I) and (II) and shall have no claim against, or recourse
19 to, the account referred to in sub-sub-subparagraph a.(III).
20 Creditors of the Florida Windstorm Underwriting Association
21 shall have a claim against, and recourse to, the account
22 referred to in sub-sub-subparagraph a.(III) and shall have no
23 claim against, or recourse to, the accounts referred to in
24 sub-sub-subparagraphs a.(I) and (II).
25 d. Revenues, assets, liabilities, losses, and expenses
26 not attributable to particular accounts shall be prorated
27 among the accounts.
28 e. The Legislature finds that the revenues of the
29 corporation are revenues that are necessary to meet the
30 requirements set forth in documents authorizing the issuance
31 of bonds under this subsection.
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1 f. No part of the income of the corporation may inure
2 to the benefit of any private person.
3 3. With respect to a deficit in an account:
4 a. When the deficit incurred in a particular calendar
5 year is not greater than 10 percent of the aggregate statewide
6 direct written premium for the subject lines of business for
7 the prior calendar year, the entire deficit shall be recovered
8 through regular assessments of assessable insurers under
9 paragraph (p) and assessable insureds.
10 b. When the deficit incurred in a particular calendar
11 year exceeds 10 percent of the aggregate statewide direct
12 written premium for the subject lines of business for the
13 prior calendar year, the corporation shall levy regular
14 assessments on assessable insurers under paragraph (p) and on
15 assessable insureds in an amount equal to the greater of 10
16 percent of the deficit or 10 percent of the aggregate
17 statewide direct written premium for the subject lines of
18 business for the prior calendar year. Any remaining deficit
19 shall be recovered through emergency assessments under
20 sub-subparagraph d.
21 c. Each assessable insurer's share of the amount being
22 assessed under sub-subparagraph a. or sub-subparagraph b.
23 shall be in the proportion that the assessable insurer's
24 direct written premium for the subject lines of business for
25 the year preceding the assessment bears to the aggregate
26 statewide direct written premium for the subject lines of
27 business for that year. The assessment percentage applicable
28 to each assessable insured is the ratio of the amount being
29 assessed under sub-subparagraph a. or sub-subparagraph b. to
30 the aggregate statewide direct written premium for the subject
31 lines of business for the prior year. Assessments levied by
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1 the corporation on assessable insurers under sub-subparagraphs
2 a. and b. shall be paid as required by the corporation's plan
3 of operation and paragraph (p). Notwithstanding any other
4 provision of this subsection, the aggregate amount of a
5 regular assessment for a deficit incurred in a particular
6 calendar year shall be reduced by the estimated amount to be
7 received by the corporation from the Citizens policyholder
8 surcharge under subparagraph (c)11. and the amount collected
9 or estimated to be collected from the assessment on Citizens
10 policyholders pursuant to sub-subparagraph i. Assessments
11 levied by the corporation on assessable insureds under
12 sub-subparagraphs a. and b. shall be collected by the surplus
13 lines agent at the time the surplus lines agent collects the
14 surplus lines tax required by s. 626.932 and shall be paid to
15 the Florida Surplus Lines Service Office at the time the
16 surplus lines agent pays the surplus lines tax to the Florida
17 Surplus Lines Service Office. Upon receipt of regular
18 assessments from surplus lines agents, the Florida Surplus
19 Lines Service Office shall transfer the assessments directly
20 to the corporation as determined by the corporation.
21 d. Upon a determination by the board of governors that
22 a deficit in an account exceeds the amount that will be
23 recovered through regular assessments under sub-subparagraph
24 a. or sub-subparagraph b., the board shall levy, after
25 verification by the office, emergency assessments, for as many
26 years as necessary to cover the deficits, to be collected by
27 assessable insurers and the corporation and collected from
28 assessable insureds upon issuance or renewal of policies for
29 subject lines of business, excluding National Flood Insurance
30 policies. The amount of the emergency assessment collected in
31 a particular year shall be a uniform percentage of that year's
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1 direct written premium for subject lines of business and all
2 accounts of the corporation, excluding National Flood
3 Insurance Program policy premiums, as annually determined by
4 the board and verified by the office. The office shall verify
5 the arithmetic calculations involved in the board's
6 determination within 30 days after receipt of the information
7 on which the determination was based. Notwithstanding any
8 other provision of law, the corporation and each assessable
9 insurer that writes subject lines of business shall collect
10 emergency assessments from its policyholders without such
11 obligation being affected by any credit, limitation,
12 exemption, or deferment. Emergency assessments levied by the
13 corporation on assessable insureds shall be collected by the
14 surplus lines agent at the time the surplus lines agent
15 collects the surplus lines tax required by s. 626.932 and
16 shall be paid to the Florida Surplus Lines Service Office at
17 the time the surplus lines agent pays the surplus lines tax to
18 the Florida Surplus Lines Service Office. The emergency
19 assessments so collected shall be transferred directly to the
20 corporation on a periodic basis as determined by the
21 corporation and shall be held by the corporation solely in the
22 applicable account. The aggregate amount of emergency
23 assessments levied for an account under this sub-subparagraph
24 in any calendar year may not exceed the greater of 10 percent
25 of the amount needed to cover the original deficit, plus
26 interest, fees, commissions, required reserves, and other
27 costs associated with financing of the original deficit, or 10
28 percent of the aggregate statewide direct written premium for
29 subject lines of business and for all accounts of the
30 corporation for the prior year, plus interest, fees,
31 commissions, required reserves, and other costs associated
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1 with financing the original deficit.
2 e. The corporation may pledge the proceeds of
3 assessments, projected recoveries from the Florida Hurricane
4 Catastrophe Fund, other insurance and reinsurance
5 recoverables, policyholder surcharges and other surcharges,
6 and other funds available to the corporation as the source of
7 revenue for and to secure bonds issued under paragraph (p),
8 bonds or other indebtedness issued under subparagraph (c)3.,
9 or lines of credit or other financing mechanisms issued or
10 created under this subsection, or to retire any other debt
11 incurred as a result of deficits or events giving rise to
12 deficits, or in any other way that the board determines will
13 efficiently recover such deficits. The purpose of the lines of
14 credit or other financing mechanisms is to provide additional
15 resources to assist the corporation in covering claims and
16 expenses attributable to a catastrophe. As used in this
17 subsection, the term "assessments" includes regular
18 assessments under sub-subparagraph a., sub-subparagraph b., or
19 subparagraph (p)1. and emergency assessments under
20 sub-subparagraph d. Emergency assessments collected under
21 sub-subparagraph d. are not part of an insurer's rates, are
22 not premium, and are not subject to premium tax, fees, or
23 commissions; however, failure to pay the emergency assessment
24 shall be treated as failure to pay premium. The emergency
25 assessments under sub-subparagraph d. shall continue as long
26 as any bonds issued or other indebtedness incurred with
27 respect to a deficit for which the assessment was imposed
28 remain outstanding, unless adequate provision has been made
29 for the payment of such bonds or other indebtedness pursuant
30 to the documents governing such bonds or other indebtedness.
31 f. As used in this subsection, the term "subject lines
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1 of business" means insurance written by assessable insurers or
2 procured by assessable insureds for all property and casualty
3 lines of business in this state, but not including workers'
4 compensation or medical malpractice. As used in the
5 sub-subparagraph, the term "property and casualty lines of
6 business" includes all lines of business identified on Form 2,
7 Exhibit of Premiums and Losses, in the annual statement
8 required of authorized insurers by s. 624.424 and any rule
9 adopted under this section, except for those lines identified
10 as accident and health insurance and except for policies
11 written under the National Flood Insurance program or the
12 Federal Crop Insurance Program. For purposes of this
13 sub-subparagraph, the term "workers' compensation" includes
14 both workers' compensation insurance and excess workers'
15 compensation insurance. on real or personal property, as
16 defined in s. 624.604, including insurance for fire,
17 industrial fire, allied lines, farmowners multiperil,
18 homeowners multiperil, commercial multiperil, and mobile
19 homes, and including liability coverage on all such insurance,
20 but excluding inland marine as defined in s. 624.607(3) and
21 excluding vehicle insurance as defined in s. 624.605(1) other
22 than insurance on mobile homes used as permanent dwellings.
23 g. The Florida Surplus Lines Service Office shall
24 determine annually the aggregate statewide written premium in
25 subject lines of business procured by assessable insureds and
26 shall report that information to the corporation in a form and
27 at a time the corporation specifies to ensure that the
28 corporation can meet the requirements of this subsection and
29 the corporation's financing obligations.
30 h. The Florida Surplus Lines Service Office shall
31 verify the proper application by surplus lines agents of
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1 assessment percentages for regular assessments and emergency
2 assessments levied under this subparagraph on assessable
3 insureds and shall assist the corporation in ensuring the
4 accurate, timely collection and payment of assessments by
5 surplus lines agents as required by the corporation.
6 i. If a deficit is incurred in any account in 2008 or
7 thereafter, the board of governors shall levy an immediate
8 assessment against the premium of each nonhomestead property
9 policyholder in all accounts of the corporation, as a uniform
10 percentage of the premium of the policy of up to 10 percent of
11 such premium, which funds shall be used to offset the deficit.
12 If this assessment is insufficient to eliminate the deficit,
13 the board of governors shall levy an additional assessment
14 against all policyholders of the corporation, which shall be
15 collected at the time of issuance or renewal of a policy, as a
16 uniform percentage of the premium for the policy of up to 10
17 percent of such premium, which funds shall be used to further
18 offset the deficit.
19 j. The board of governors shall maintain separate
20 accounting records that consolidate data for nonhomestead
21 properties, including, but not limited to, number of policies,
22 insured values, premiums written, and losses. The board of
23 governors shall annually report to the office and the
24 Legislature a summary of such data.
25 (c) The plan of operation of the corporation:
26 1. Must provide for adoption of residential property
27 and casualty insurance policy forms and commercial residential
28 and nonresidential property insurance forms, which forms must
29 be approved by the office prior to use. The corporation shall
30 adopt the following policy forms:
31 a. Standard personal lines policy forms that are
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1 comprehensive multiperil policies providing full coverage of a
2 residential property equivalent to the coverage provided in
3 the private insurance market under an HO-3, HO-4, or HO-6
4 policy.
5 b. Basic personal lines policy forms that are policies
6 similar to an HO-8 policy or a dwelling fire policy that
7 provide coverage meeting the requirements of the secondary
8 mortgage market, but which coverage is more limited than the
9 coverage under a standard policy.
10 c. Commercial lines residential and nonresidential
11 policy forms that are generally similar to the basic perils of
12 full coverage obtainable for commercial residential structures
13 and commercial nonresidential structures in the admitted
14 voluntary market.
15 d. Personal lines and commercial lines residential
16 property insurance forms that cover the peril of wind only.
17 The forms are applicable only to residential properties
18 located in areas eligible for coverage under the high-risk
19 account referred to in sub-subparagraph (b)2.a.
20 e. Commercial lines nonresidential property insurance
21 forms that cover the peril of wind only. The forms are
22 applicable only to nonresidential properties located in areas
23 eligible for coverage under the high-risk account referred to
24 in sub-subparagraph (b)2.a.
25 f. The corporation may adopt variations of the policy
26 forms listed in sub-subparagraphs a.-e. that contain more
27 restrictive coverage.
28 2.a. Must provide that the corporation adopt a program
29 in which the corporation and authorized insurers enter into
30 quota share primary insurance agreements for hurricane
31 coverage, as defined in s. 627.4025(2)(a), for eligible risks,
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1 and adopt property insurance forms for eligible risks which
2 cover the peril of wind only. As used in this subsection, the
3 term:
4 (I) "Quota share primary insurance" means an
5 arrangement in which the primary hurricane coverage of an
6 eligible risk is provided in specified percentages by the
7 corporation and an authorized insurer. The corporation and
8 authorized insurer are each solely responsible for a specified
9 percentage of hurricane coverage of an eligible risk as set
10 forth in a quota share primary insurance agreement between the
11 corporation and an authorized insurer and the insurance
12 contract. The responsibility of the corporation or authorized
13 insurer to pay its specified percentage of hurricane losses of
14 an eligible risk, as set forth in the quota share primary
15 insurance agreement, may not be altered by the inability of
16 the other party to the agreement to pay its specified
17 percentage of hurricane losses. Eligible risks that are
18 provided hurricane coverage through a quota share primary
19 insurance arrangement must be provided policy forms that set
20 forth the obligations of the corporation and authorized
21 insurer under the arrangement, clearly specify the percentages
22 of quota share primary insurance provided by the corporation
23 and authorized insurer, and conspicuously and clearly state
24 that neither the authorized insurer nor the corporation may be
25 held responsible beyond its specified percentage of coverage
26 of hurricane losses.
27 (II) "Eligible risks" means personal lines residential
28 and commercial lines residential risks that meet the
29 underwriting criteria of the corporation and are located in
30 areas that were eligible for coverage by the Florida Windstorm
31 Underwriting Association on January 1, 2002.
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1 b. The corporation may enter into quota share primary
2 insurance agreements with authorized insurers at corporation
3 coverage levels of 90 percent and 50 percent.
4 c. If the corporation determines that additional
5 coverage levels are necessary to maximize participation in
6 quota share primary insurance agreements by authorized
7 insurers, the corporation may establish additional coverage
8 levels. However, the corporation's quota share primary
9 insurance coverage level may not exceed 90 percent.
10 d. Any quota share primary insurance agreement entered
11 into between an authorized insurer and the corporation must
12 provide for a uniform specified percentage of coverage of
13 hurricane losses, by county or territory as set forth by the
14 corporation board, for all eligible risks of the authorized
15 insurer covered under the quota share primary insurance
16 agreement.
17 e. Any quota share primary insurance agreement entered
18 into between an authorized insurer and the corporation is
19 subject to review and approval by the office. However, such
20 agreement shall be authorized only as to insurance contracts
21 entered into between an authorized insurer and an insured who
22 is already insured by the corporation for wind coverage.
23 f. For all eligible risks covered under quota share
24 primary insurance agreements, the exposure and coverage levels
25 for both the corporation and authorized insurers shall be
26 reported by the corporation to the Florida Hurricane
27 Catastrophe Fund. For all policies of eligible risks covered
28 under quota share primary insurance agreements, the
29 corporation and the authorized insurer shall maintain complete
30 and accurate records for the purpose of exposure and loss
31 reimbursement audits as required by Florida Hurricane
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1 Catastrophe Fund rules. The corporation and the authorized
2 insurer shall each maintain duplicate copies of policy
3 declaration pages and supporting claims documents.
4 g. The corporation board shall establish in its plan
5 of operation standards for quota share agreements which ensure
6 that there is no discriminatory application among insurers as
7 to the terms of quota share agreements, pricing of quota share
8 agreements, incentive provisions if any, and consideration
9 paid for servicing policies or adjusting claims.
10 h. The quota share primary insurance agreement between
11 the corporation and an authorized insurer must set forth the
12 specific terms under which coverage is provided, including,
13 but not limited to, the sale and servicing of policies issued
14 under the agreement by the insurance agent of the authorized
15 insurer producing the business, the reporting of information
16 concerning eligible risks, the payment of premium to the
17 corporation, and arrangements for the adjustment and payment
18 of hurricane claims incurred on eligible risks by the claims
19 adjuster and personnel of the authorized insurer. Entering
20 into a quota sharing insurance agreement between the
21 corporation and an authorized insurer shall be voluntary and
22 at the discretion of the authorized insurer.
23 3. May provide that the corporation may employ or
24 otherwise contract with individuals or other entities to
25 provide administrative or professional services that may be
26 appropriate to effectuate the plan. The corporation shall have
27 the power to borrow funds, by issuing bonds or by incurring
28 other indebtedness, and shall have other powers reasonably
29 necessary to effectuate the requirements of this subsection,
30 including, without limitation, the power to issue bonds and
31 incur other indebtedness in order to refinance outstanding
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1 bonds or other indebtedness. The corporation may, but is not
2 required to, seek judicial validation of its bonds or other
3 indebtedness under chapter 75. The corporation may issue bonds
4 or incur other indebtedness, or have bonds issued on its
5 behalf by a unit of local government pursuant to subparagraph
6 (g)2., in the absence of a hurricane or other weather-related
7 event, upon a determination by the corporation, subject to
8 approval by the office, that such action would enable it to
9 efficiently meet the financial obligations of the corporation
10 and that such financings are reasonably necessary to
11 effectuate the requirements of this subsection. The
12 corporation is authorized to take all actions needed to
13 facilitate tax-free status for any such bonds or indebtedness,
14 including formation of trusts or other affiliated entities.
15 The corporation shall have the authority to pledge
16 assessments, projected recoveries from the Florida Hurricane
17 Catastrophe Fund, other reinsurance recoverables, market
18 equalization and other surcharges, and other funds available
19 to the corporation as security for bonds or other
20 indebtedness. In recognition of s. 10, Art. I of the State
21 Constitution, prohibiting the impairment of obligations of
22 contracts, it is the intent of the Legislature that no action
23 be taken whose purpose is to impair any bond indenture or
24 financing agreement or any revenue source committed by
25 contract to such bond or other indebtedness.
26 4.a. Must require that the corporation operate subject
27 to the supervision and approval of a board of governors
28 consisting of eight individuals who are residents of this
29 state, from different geographical areas of this state. The
30 Governor, the Chief Financial Officer, the President of the
31 Senate, and the Speaker of the House of Representatives shall
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1 each appoint two members of the board. At least one of the two
2 members appointed by each appointing officer must have
3 demonstrated expertise in insurance. The Chief Financial
4 Officer shall designate one of the appointees as chair. All
5 board members serve at the pleasure of the appointing officer.
6 All members of the board of governors are subject to removal
7 at will by the officers who appointed them. All board members,
8 including the chair, must be appointed to serve for 3-year
9 terms beginning annually on a date designated by the plan. Any
10 board vacancy shall be filled for the unexpired term by the
11 appointing officer. The Chief Financial Officer shall appoint
12 a technical advisory group to provide information and advice
13 to the board of governors in connection with the board's
14 duties under this subsection. The executive director and
15 senior managers of the corporation shall be engaged by the
16 board and serve at the pleasure of the board. Any executive
17 director appointed on or after July 1, 2006, is subject to
18 confirmation by the Senate. The executive director is
19 responsible for employing other staff as the corporation may
20 require, subject to review and concurrence by the board.
21 b. The board shall create a Market Accountability
22 Advisory Committee to assist the corporation in developing
23 awareness of its rates and its customer and agent service
24 levels in relationship to the voluntary market insurers
25 writing similar coverage. The members of the advisory
26 committee shall consist of the following 11 persons, one of
27 whom must be elected chair by the members of the committee:
28 four representatives, one appointed by the Florida Association
29 of Insurance Agents, one by the Florida Association of
30 Insurance and Financial Advisors, one by the Professional
31 Insurance Agents of Florida, and one by the Latin American
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1 Association of Insurance Agencies; three representatives
2 appointed by the insurers with the three highest voluntary
3 market share of residential property insurance business in the
4 state; one representative from the Office of Insurance
5 Regulation; one consumer appointed by the board who is insured
6 by the corporation at the time of appointment to the
7 committee; one representative appointed by the Florida
8 Association of Realtors; and one representative appointed by
9 the Florida Bankers Association. All members must serve for
10 3-year terms and may serve for consecutive terms. The
11 committee shall report to the corporation at each board
12 meeting on insurance market issues which may include rates and
13 rate competition with the voluntary market; service, including
14 policy issuance, claims processing, and general responsiveness
15 to policyholders, applicants, and agents; and matters relating
16 to depopulation.
17 5. Must provide a procedure for determining the
18 eligibility of a risk for coverage, as follows:
19 a. Subject to the provisions of s. 627.3517, with
20 respect to personal lines residential risks, if the risk is
21 offered coverage from an authorized insurer at the insurer's
22 approved rate under either a standard policy including wind
23 coverage or, if consistent with the insurer's underwriting
24 rules as filed with the office, a basic policy including wind
25 coverage, for a new application to the corporation for
26 coverage, the risk is not eligible for any policy issued by
27 the corporation unless the premium for coverage from the
28 authorized insurer is more than 25 percent greater than the
29 premium for comparable coverage from the corporation. If the
30 risk is not able to obtain any such offer, the risk is
31 eligible for either a standard policy including wind coverage
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1 or a basic policy including wind coverage issued by the
2 corporation; however, if the risk could not be insured under a
3 standard policy including wind coverage regardless of market
4 conditions, the risk shall be eligible for a basic policy
5 including wind coverage unless rejected under subparagraph 8.
6 However, with regard to a policyholder of the corporation, the
7 policyholder remains eligible for coverage from the
8 corporation regardless of any offer of coverage from an
9 authorized insurer or surplus lines insurer. The corporation
10 shall determine the type of policy to be provided on the basis
11 of objective standards specified in the underwriting manual
12 and based on generally accepted underwriting practices.
13 (I) If the risk accepts an offer of coverage through
14 the market assistance plan or an offer of coverage through a
15 mechanism established by the corporation before a policy is
16 issued to the risk by the corporation or during the first 30
17 days of coverage by the corporation, and the producing agent
18 who submitted the application to the plan or to the
19 corporation is not currently appointed by the insurer, the
20 insurer shall:
21 (A) Pay to the producing agent of record of the
22 policy, for the first year, an amount that is the greater of
23 the insurer's usual and customary commission for the type of
24 policy written or a fee equal to the usual and customary
25 commission of the corporation; or
26 (B) Offer to allow the producing agent of record of
27 the policy to continue servicing the policy for a period of
28 not less than 1 year and offer to pay the agent the greater of
29 the insurer's or the corporation's usual and customary
30 commission for the type of policy written.
31
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1 If the producing agent is unwilling or unable to accept
2 appointment, the new insurer shall pay the agent in accordance
3 with sub-sub-sub-subparagraph (A).
4 (II) When the corporation enters into a contractual
5 agreement for a take-out plan, the producing agent of record
6 of the corporation policy is entitled to retain any unearned
7 commission on the policy, and the insurer shall:
8 (A) Pay to the producing agent of record of the
9 corporation policy, for the first year, an amount that is the
10 greater of the insurer's usual and customary commission for
11 the type of policy written or a fee equal to the usual and
12 customary commission of the corporation; or
13 (B) Offer to allow the producing agent of record of
14 the corporation policy to continue servicing the policy for a
15 period of not less than 1 year and offer to pay the agent the
16 greater of the insurer's or the corporation's usual and
17 customary commission for the type of policy written.
18
19 If the producing agent is unwilling or unable to accept
20 appointment, the new insurer shall pay the agent in accordance
21 with sub-sub-sub-subparagraph (A).
22 b. With respect to commercial lines residential risks,
23 for a new application to the corporation for coverage, if the
24 risk is offered coverage under a policy including wind
25 coverage from an authorized insurer at its approved rate, the
26 risk is not eligible for any policy issued by the corporation
27 unless the premium for coverage from the authorized insurer is
28 more than 25 percent greater than the premium for comparable
29 coverage from the corporation. If the risk is not able to
30 obtain any such offer, the risk is eligible for a policy
31 including wind coverage issued by the corporation. However,
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1 with regard to a policyholder of the corporation, the
2 policyholder remains eligible for coverage from the
3 corporation regardless of any offer of coverage from an
4 authorized insurer or surplus lines insurer.
5 (I) If the risk accepts an offer of coverage through
6 the market assistance plan or an offer of coverage through a
7 mechanism established by the corporation before a policy is
8 issued to the risk by the corporation or during the first 30
9 days of coverage by the corporation, and the producing agent
10 who submitted the application to the plan or the corporation
11 is not currently appointed by the insurer, the insurer shall:
12 (A) Pay to the producing agent of record of the
13 policy, for the first year, an amount that is the greater of
14 the insurer's usual and customary commission for the type of
15 policy written or a fee equal to the usual and customary
16 commission of the corporation; or
17 (B) Offer to allow the producing agent of record of
18 the policy to continue servicing the policy for a period of
19 not less than 1 year and offer to pay the agent the greater of
20 the insurer's or the corporation's usual and customary
21 commission for the type of policy written.
22
23 If the producing agent is unwilling or unable to accept
24 appointment, the new insurer shall pay the agent in accordance
25 with sub-sub-sub-subparagraph (A).
26 (II) When the corporation enters into a contractual
27 agreement for a take-out plan, the producing agent of record
28 of the corporation policy is entitled to retain any unearned
29 commission on the policy, and the insurer shall:
30 (A) Pay to the producing agent of record of the
31 corporation policy, for the first year, an amount that is the
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1 greater of the insurer's usual and customary commission for
2 the type of policy written or a fee equal to the usual and
3 customary commission of the corporation; or
4 (B) Offer to allow the producing agent of record of
5 the corporation policy to continue servicing the policy for a
6 period of not less than 1 year and offer to pay the agent the
7 greater of the insurer's or the corporation's usual and
8 customary commission for the type of policy written.
9
10 If the producing agent is unwilling or unable to accept
11 appointment, the new insurer shall pay the agent in accordance
12 with sub-sub-sub-subparagraph (A).
13 6. Must provide by July 1, 2007, that an application
14 for coverage for a new policy is subject to a waiting period
15 of 10 days before coverage is effective, during which time the
16 corporation shall make such application available for review
17 by general lines agents and authorized property and casualty
18 insurers. The board shall may approve an exception exceptions
19 that allows allow for coverage to be effective before the end
20 of the 10-day waiting period, for coverage issued in
21 conjunction with a real estate closing. The board may approve,
22 and for such other exceptions as the board determines are
23 necessary to prevent lapses in coverage.
24 7. Must include rules for classifications of risks and
25 rates therefor.
26 8. Must provide that if premium and investment income
27 for an account attributable to a particular calendar year are
28 in excess of projected losses and expenses for the account
29 attributable to that year, such excess shall be held in
30 surplus in the account. Such surplus shall be available to
31 defray deficits in that account as to future years and shall
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1 be used for that purpose prior to assessing assessable
2 insurers and assessable insureds as to any calendar year.
3 9. Must provide objective criteria and procedures to
4 be uniformly applied for all applicants in determining whether
5 an individual risk is so hazardous as to be uninsurable. In
6 making this determination and in establishing the criteria and
7 procedures, the following shall be considered:
8 a. Whether the likelihood of a loss for the individual
9 risk is substantially higher than for other risks of the same
10 class; and
11 b. Whether the uncertainty associated with the
12 individual risk is such that an appropriate premium cannot be
13 determined.
14
15 The acceptance or rejection of a risk by the corporation shall
16 be construed as the private placement of insurance, and the
17 provisions of chapter 120 shall not apply.
18 10. Must provide that the corporation shall make its
19 best efforts to procure catastrophe reinsurance at reasonable
20 rates, to cover its projected 100-year probable maximum loss
21 as determined by the board of governors.
22 11. Must provide that in the event of regular deficit
23 assessments under sub-subparagraph (b)3.a. or sub-subparagraph
24 (b)3.b., in the personal lines account, the commercial lines
25 residential account, or the high-risk account, the corporation
26 shall levy upon corporation policyholders in its next rate
27 filing, or by a separate rate filing solely for this purpose,
28 a Citizens policyholder surcharge arising from a regular
29 assessment in such account in a percentage equal to the total
30 amount of such regular assessments divided by the aggregate
31 statewide direct written premium for subject lines of business
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1 for the prior calendar year. For purposes of calculating the
2 Citizens policyholder surcharge to be levied under this
3 subparagraph, the total amount of the regular assessment to
4 which this surcharge is related shall be determined as set
5 forth in subparagraph (b)3., without deducting the estimated
6 Citizens policyholder surcharge. Citizens policyholder
7 surcharges under this subparagraph are not considered premium
8 and are not subject to commissions, fees, or premium taxes;
9 however, failure to pay a market equalization surcharge shall
10 be treated as failure to pay premium.
11 12. The policies issued by the corporation must
12 provide that, if the corporation or the market assistance plan
13 obtains an offer from an authorized insurer to cover the risk
14 at its approved rates, the risk is no longer eligible for
15 renewal through the corporation, except as otherwise provided
16 in this subsection.
17 13. Corporation policies and applications must include
18 a notice that the corporation policy could, under this
19 section, be replaced with a policy issued by an authorized
20 insurer that does not provide coverage identical to the
21 coverage provided by the corporation. The notice shall also
22 specify that acceptance of corporation coverage creates a
23 conclusive presumption that the applicant or policyholder is
24 aware of this potential.
25 14. May establish, subject to approval by the office,
26 different eligibility requirements and operational procedures
27 for any line or type of coverage for any specified county or
28 area if the board determines that such changes to the
29 eligibility requirements and operational procedures are
30 justified due to the voluntary market being sufficiently
31 stable and competitive in such area or for such line or type
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1 of coverage and that consumers who, in good faith, are unable
2 to obtain insurance through the voluntary market through
3 ordinary methods would continue to have access to coverage
4 from the corporation. When coverage is sought in connection
5 with a real property transfer, such requirements and
6 procedures shall not provide for an effective date of coverage
7 later than the date of the closing of the transfer as
8 established by the transferor, the transferee, and, if
9 applicable, the lender.
10 15. Must provide that, with respect to the high-risk
11 account, any assessable insurer with a surplus as to
12 policyholders of $25 million or less writing 25 percent or
13 more of its total countrywide property insurance premiums in
14 this state may petition the office, within the first 90 days
15 of each calendar year, to qualify as a limited apportionment
16 company. A regular assessment levied by the corporation on a
17 limited apportionment company for a deficit incurred by the
18 corporation for the high-risk account in 2006 or thereafter
19 may be paid to the corporation on a monthly basis as the
20 assessments are collected by the limited apportionment company
21 from its insureds pursuant to s. 627.3512, but the regular
22 assessment must be paid in full within 12 months after being
23 levied by the corporation. A limited apportionment company
24 shall collect from its policyholders any emergency assessment
25 imposed under sub-subparagraph (b)3.d. The plan shall provide
26 that, if the office determines that any regular assessment
27 will result in an impairment of the surplus of a limited
28 apportionment company, the office may direct that all or part
29 of such assessment be deferred as provided in subparagraph
30 (g)4. However, there shall be no limitation or deferment of an
31 emergency assessment to be collected from policyholders under
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1 sub-subparagraph (b)3.d.
2 16. Must provide that the corporation appoint as its
3 licensed agents only those agents who also hold an appointment
4 as defined in s. 626.015(3) with an insurer who at the time of
5 the agent's initial appointment by the corporation is
6 authorized to write and is actually writing personal lines
7 residential property coverage, commercial residential property
8 coverage, or commercial nonresidential property coverage
9 within the state.
10 17. Must provide, by July 1, 2007, a premium payment
11 plan option to its policyholders which allows for quarterly
12 and semiannual payment of premiums.
13 18. Must provide, effective June 1, 2007, that the
14 corporation contract with each insurer providing the non-wind
15 coverage for risks insured by the corporation in the high-risk
16 account, requiring that the insurer provide claims adjusting
17 services for the wind coverage provided by the corporation for
18 such risks. An insurer is required to enter into this contract
19 as a condition of providing non-wind coverage for a risk that
20 is insured by the corporation in the high-risk account unless
21 the board finds, after a hearing, that the insurer is not
22 capable of providing adjusting services at an acceptable level
23 of quality to corporation policyholders. The terms and
24 conditions of such contracts must be substantially the same as
25 the contracts that the corporation executed with insurers
26 under the "adjust-your-own" program in 2006, except as may be
27 mutually agreed to by the parties and except for such changes
28 that the board determines are necessary to ensure that claims
29 are adjusted appropriately. The corporation shall provide a
30 process for neutral arbitration of any dispute between the
31 corporation and the insurer regarding the terms of the
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1 contract. The corporation shall review and monitor the
2 performance of insurers under these contracts.
3 19. Must limit coverage on mobile homes or
4 manufactured homes built prior to 1994 to actual cash value of
5 the dwelling rather than replacement costs of the dwelling.
6 20. May provide such limits of coverage as the board
7 determines, consistent with the requirements of this
8 subsection.
9 21. May require commercial property to meet specified
10 hurricane mitigation construction features as a condition of
11 eligibility for coverage.
12 (m)1.
13 a. Rates for coverage provided by the corporation
14 shall be actuarially sound and subject to the requirements of
15 s. 627.062, except as otherwise provided in this paragraph.
16 The corporation shall file its recommended rates with the
17 office at least annually. The corporation shall provide any
18 additional information regarding the rates which the office
19 requires. The office shall consider the recommendations of the
20 board and issue a final order establishing the rates for the
21 corporation within 45 days after the recommended rates are
22 filed. The corporation may not pursue an administrative
23 challenge or judicial review of the final order of the office.
24 not competitive with approved rates charged in the admitted
25 voluntary market, so that the corporation functions as a
26 residual market mechanism to provide insurance only when the
27 insurance cannot be procured in the voluntary market. Rates
28 shall include an appropriate catastrophe loading factor that
29 reflects the actual catastrophic exposure of the corporation.
30 For policies in the personal lines account and the commercial
31 lines account issued or renewed on or after March 1, 2007, a
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1 rate is deemed inadequate if the rate, including investment
2 income, is not sufficient to provide for the procurement of
3 coverage under the Florida Hurricane Catastrophe Fund and
4 private reinsurance costs, whether or not reinsurance is
5 procured, and to pay all claims and expenses reasonably
6 expected to result from a 100-year probable maximum loss event
7 without resort to any regular or emergency assessments,
8 long-term debt, state revenues, or other funding sources. For
9 policies in the high-risk account issued or renewed on or
10 after March 1, 2007, a rate is deemed inadequate if the rate,
11 including investment income, is not sufficient to provide for
12 the procurement of coverage under the Florida Hurricane
13 Catastrophe Fund and private reinsurance costs, whether or not
14 reinsurance is procured, and to pay all claims and expenses
15 reasonably expected to result from a 70-year probable maximum
16 loss event with resort to any regular or emergency
17 assessments, long-term debt, state revenues, or other funding
18 sources. For policies in the high-risk account issued or
19 renewed in 2008 and 2009, the rate must be based upon an
20 85-year and 100-year probable maximum loss event,
21 respectively.
22 b. It is the intent of the Legislature to reaffirm the
23 requirement of rate adequacy in the residual market.
24 Recognizing that rates may comply with the intent expressed in
25 sub-subparagraph a. and yet be inadequate and recognizing the
26 public need to limit subsidies within the residual market, it
27 is the further intent of the Legislature to establish
28 statutory standards for rate adequacy. Such standards are
29 intended to supplement the standard specified in s.
30 627.062(2)(e)3., providing that rates are inadequate if they
31 are clearly insufficient to sustain projected losses and
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1 expenses in the class of business to which they apply.
2 2. For each county, the average rates of the
3 corporation for each line of business for personal lines
4 residential policies excluding rates for wind-only policies
5 shall be no lower than the average rates charged by the
6 insurer that had the highest average rate in that county among
7 the 20 insurers with the greatest total direct written premium
8 in the state for that line of business in the preceding year,
9 except that with respect to mobile home coverages, the average
10 rates of the corporation shall be no lower than the average
11 rates charged by the insurer that had the highest average rate
12 in that county among the 5 insurers with the greatest total
13 written premium for mobile home owner's policies in the state
14 in the preceding year.
15 3. Rates for personal lines residential wind-only
16 policies must be actuarially sound and not competitive with
17 approved rates charged by authorized insurers. If the filing
18 under this subparagraph is made at least 90 days before the
19 proposed effective date and the filing is not implemented
20 during the office's review of the filing and any proceeding
21 and judicial review, such filing shall be considered a "file
22 and use" filing. In such case, the office shall finalize its
23 review by issuance of a notice of intent to approve or a
24 notice of intent to disapprove within 90 days after receipt of
25 the filing. The notice of intent to approve and the notice of
26 intent to disapprove constitute agency action for purposes of
27 the Administrative Procedure Act. Requests for supporting
28 information, requests for mathematical or mechanical
29 corrections, or notification to the insurer by the office of
30 its preliminary findings shall not toll the 90-day period
31 during any such proceedings and subsequent judicial review.
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1 The rate shall be deemed approved if the office does not issue
2 a notice of intent to approve or a notice of intent to
3 disapprove within 90 days after receipt of the filing.
4 Corporation rate manuals shall include a rate surcharge for
5 seasonal occupancy. To ensure that personal lines residential
6 wind-only rates are not competitive with approved rates
7 charged by authorized insurers, the corporation, in
8 conjunction with the office, shall develop a wind-only
9 ratemaking methodology, which methodology shall be contained
10 in each rate filing made by the corporation with the office.
11 If the office determines that the wind-only rates or rating
12 factors filed by the corporation fail to comply with the
13 wind-only ratemaking methodology provided for in this
14 subsection, it shall so notify the corporation and require the
15 corporation to amend its rates or rating factors to come into
16 compliance within 90 days of notice from the office.
17 4. The requirements of this paragraph that rates not
18 be competitive with approved rates charged by authorized
19 insurers do not apply in a county or area for which the office
20 determines that no authorized insurer is offering coverage.
21 The corporation shall amend its rates or rating factors for
22 the affected county or area in conjunction with its next rate
23 filing after such determination is made.
24 5. For the purposes of establishing a pilot program to
25 evaluate issues relating to the availability and affordability
26 of insurance in an area where historically there has been
27 little market competition, the provisions of subparagraph 2.
28 do not apply to coverage provided by the corporation in Monroe
29 County if the office determines that a reasonable degree of
30 competition does not exist for personal lines residential
31 policies. The provisions of subparagraph 3. do not apply to
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1 coverage provided by the corporation in Monroe County if the
2 office determines that a reasonable degree of competition does
3 not exist for personal lines residential policies in the area
4 of that county which is eligible for wind-only coverage. In
5 this county, the rates for personal lines residential coverage
6 shall be actuarially sound and not excessive, inadequate, or
7 unfairly discriminatory and are subject to the other
8 provisions of the paragraph and s. 627.062. The commission
9 shall adopt rules establishing the criteria for determining
10 whether a reasonable degree of competition exists for personal
11 lines residential policies in Monroe County. By March 1, 2006,
12 the office shall submit a report to the Legislature providing
13 an evaluation of the implementation of the pilot program
14 affecting Monroe County.
15 6. Rates for commercial lines coverage shall not be
16 subject to the requirements of subparagraph 2., but shall be
17 subject to all other requirements of this paragraph and s.
18 627.062.
19 7. Nothing in this paragraph shall require or allow
20 the corporation to adopt a rate that is inadequate under s.
21 627.062.
22 8. The corporation shall certify to the office at
23 least twice annually that its personal lines rates comply with
24 the requirements of subparagraphs 1., 2., and 3. If any
25 adjustment in the rates or rating factors of the corporation
26 is necessary to ensure such compliance, the corporation shall
27 make and implement such adjustments and file its revised rates
28 and rating factors with the office. If the office thereafter
29 determines that the revised rates and rating factors fail to
30 comply with the provisions of subparagraphs 1., 2., and 3., it
31 shall notify the corporation and require the corporation to
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1 amend its rates or rating factors in conjunction with its next
2 rate filing. The office must notify the corporation by
3 electronic means of any rate filing it approves for any
4 insurer among the insurers referred to in subparagraph 2.
5 2.9. In addition to the rates otherwise determined
6 pursuant to this paragraph, the corporation shall impose and
7 collect an amount equal to the premium tax provided for in s.
8 624.509 to augment the financial resources of the corporation.
9 10. The corporation shall develop a notice to
10 policyholders or applicants that the rates of Citizens
11 Property Insurance Corporation are intended to be higher than
12 the rates of any admitted carrier and providing other
13 information the corporation deems necessary to assist
14 consumers in finding other voluntary admitted insurers willing
15 to insure their property.
16 3.11. After the public hurricane loss-projection model
17 under s. 627.06281 has been found to be accurate and reliable
18 by the Florida Commission on Hurricane Loss Projection
19 Methodology, that model shall serve as the minimum benchmark
20 for determining the windstorm portion of the corporation's
21 rates. This subparagraph does not require or allow the
22 corporation to adopt rates lower than the rates otherwise
23 required or allowed by this paragraph.
24 4. The rate filings for the corporation which were
25 approved by the office and which took effect January 1, 2007,
26 are rescinded, except for those rates that were lowered. As
27 soon as possible, the corporation shall begin using the lower
28 rates that were in effect on December 31, 2006, and shall
29 provide refunds to policyholders who have paid higher rates as
30 a result of that rate filing. The rates in effect on December
31 31, 2006, shall remain in effect for the 2007 calendar year
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1 except for any rate change that results in a lower rate. The
2 next rate change that may increase rates shall take effect
3 January 1, 2008, pursuant to a new rate filing recommended by
4 the corporation and established by the office, subject to the
5 requirements of this paragraph.
6 (p)1. The corporation shall certify to the office its
7 needs for annual assessments as to a particular calendar year,
8 and for any interim assessments that it deems to be necessary
9 to sustain operations as to a particular year pending the
10 receipt of annual assessments. Upon verification, the office
11 shall approve such certification, and the corporation shall
12 levy such annual or interim assessments. Such assessments
13 shall be prorated as provided in paragraph (b). The
14 corporation shall take all reasonable and prudent steps
15 necessary to collect the amount of assessment due from each
16 assessable insurer, including, if prudent, filing suit to
17 collect such assessment. If the corporation is unable to
18 collect an assessment from any assessable insurer, the
19 uncollected assessments shall be levied as an additional
20 assessment against the assessable insurers and any assessable
21 insurer required to pay an additional assessment as a result
22 of such failure to pay shall have a cause of action against
23 such nonpaying assessable insurer. Assessments shall be
24 included as an appropriate factor in the making of rates. The
25 failure of a surplus lines agent to collect and remit any
26 regular or emergency assessment levied by the corporation is
27 considered to be a violation of s. 626.936 and subjects the
28 surplus lines agent to the penalties provided in that section.
29 2. The governing body of any unit of local government,
30 any residents of which are insured by the corporation, may
31 issue bonds as defined in s. 125.013 or s. 166.101 from time
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1 to time to fund an assistance program, in conjunction with the
2 corporation, for the purpose of defraying deficits of the
3 corporation. In order to avoid needless and indiscriminate
4 proliferation, duplication, and fragmentation of such
5 assistance programs, any unit of local government, any
6 residents of which are insured by the corporation, may provide
7 for the payment of losses, regardless of whether or not the
8 losses occurred within or outside of the territorial
9 jurisdiction of the local government. Revenue bonds under this
10 subparagraph may not be issued until validated pursuant to
11 chapter 75, unless a state of emergency is declared by
12 executive order or proclamation of the Governor pursuant to s.
13 252.36 making such findings as are necessary to determine that
14 it is in the best interests of, and necessary for, the
15 protection of the public health, safety, and general welfare
16 of residents of this state and declaring it an essential
17 public purpose to permit certain municipalities or counties to
18 issue such bonds as will permit relief to claimants and
19 policyholders of the corporation. Any such unit of local
20 government may enter into such contracts with the corporation
21 and with any other entity created pursuant to this subsection
22 as are necessary to carry out this paragraph. Any bonds issued
23 under this subparagraph shall be payable from and secured by
24 moneys received by the corporation from emergency assessments
25 under sub-subparagraph (b)3.d., and assigned and pledged to or
26 on behalf of the unit of local government for the benefit of
27 the holders of such bonds. The funds, credit, property, and
28 taxing power of the state or of the unit of local government
29 shall not be pledged for the payment of such bonds. If any of
30 the bonds remain unsold 60 days after issuance, the office
31 shall require all insurers subject to assessment to purchase
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1 the bonds, which shall be treated as admitted assets; each
2 insurer shall be required to purchase that percentage of the
3 unsold portion of the bond issue that equals the insurer's
4 relative share of assessment liability under this subsection.
5 An insurer shall not be required to purchase the bonds to the
6 extent that the office determines that the purchase would
7 endanger or impair the solvency of the insurer.
8 3.a. The corporation shall adopt one or more programs
9 subject to approval by the office for the reduction of both
10 new and renewal writings in the corporation. Beginning January
11 1, 2008, any program the corporation adopts for the payment of
12 bonuses to an insurer for each risk the insurer removes from
13 the corporation shall comply with s. 627.3511(2) and may not
14 exceed the amount referenced in s. 627.3511(2) for each risk
15 removed. The corporation may consider any prudent and not
16 unfairly discriminatory approach to reducing corporation
17 writings, and may adopt a credit against assessment liability
18 or other liability that provides an incentive for insurers to
19 take risks out of the corporation and to keep risks out of the
20 corporation by maintaining or increasing voluntary writings in
21 counties or areas in which corporation risks are highly
22 concentrated and a program to provide a formula under which an
23 insurer voluntarily taking risks out of the corporation by
24 maintaining or increasing voluntary writings will be relieved
25 wholly or partially from assessments under sub-subparagraphs
26 (b)3.a. and b. However, any "take-out bonus" or payment to an
27 insurer must be conditioned on the property being insured for
28 at least 5 years by the insurer, unless canceled or nonrenewed
29 by the policyholder. If the policy is canceled or nonrenewed
30 by the policyholder before the end of the 5-year period, the
31 amount of the take-out bonus must be prorated for the time
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1 period the policy was insured. When the corporation enters
2 into a contractual agreement for a take-out plan, the
3 producing agent of record of the corporation policy is
4 entitled to retain any unearned commission on such policy, and
5 the insurer shall either:
6 (I) Pay to the producing agent of record of the
7 policy, for the first year, an amount which is the greater of
8 the insurer's usual and customary commission for the type of
9 policy written or a policy fee equal to the usual and
10 customary commission of the corporation; or
11 (II) Offer to allow the producing agent of record of
12 the policy to continue servicing the policy for a period of
13 not less than 1 year and offer to pay the agent the insurer's
14 usual and customary commission for the type of policy written.
15 If the producing agent is unwilling or unable to accept
16 appointment by the new insurer, the new insurer shall pay the
17 agent in accordance with sub-sub-subparagraph (I).
18 b. Any credit or exemption from regular assessments
19 adopted under this subparagraph shall last no longer than the
20 3 years following the cancellation or expiration of the policy
21 by the corporation. With the approval of the office, the board
22 may extend such credits for an additional year if the insurer
23 guarantees an additional year of renewability for all policies
24 removed from the corporation, or for 2 additional years if the
25 insurer guarantees 2 additional years of renewability for all
26 policies so removed.
27 c. There shall be no credit, limitation, exemption, or
28 deferment from emergency assessments to be collected from
29 policyholders pursuant to sub-subparagraph (b)3.d.
30 4. The plan shall provide for the deferment, in whole
31 or in part, of the assessment of an assessable insurer, other
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1 than an emergency assessment collected from policyholders
2 pursuant to sub-subparagraph (b)3.d., if the office finds that
3 payment of the assessment would endanger or impair the
4 solvency of the insurer. In the event an assessment against an
5 assessable insurer is deferred in whole or in part, the amount
6 by which such assessment is deferred may be assessed against
7 the other assessable insurers in a manner consistent with the
8 basis for assessments set forth in paragraph (b).
9 5. Effective July 1, 2007, in order to evaluate the
10 costs and benefits of approved take-out plans, if the
11 corporation pays a bonus or other payment to an insurer for an
12 approved take-out plan, it shall maintain a record of the
13 address or such other identifying information on the property
14 or risk removed in order to track if and when the property or
15 risk is later insured by the corporation.
16 6. Any policy taken out, assumed, or removed from the
17 corporation is, as of the effective date of the take-out,
18 assumption, or removal, direct insurance issued by the insurer
19 and not by the corporation, even if the corporation continues
20 to service the policies. This subparagraph applies to policies
21 of the corporation and not policies taken out, assumed, or
22 removed from any other entity.
23 (s) For the purposes of s. 199.183(1), the corporation
24 shall be considered a political subdivision of the state and
25 shall be exempt from the corporate income tax. The premiums,
26 assessments, investment income, and other revenue of the
27 corporation are funds received for providing property
28 insurance coverage as required by this subsection, paying
29 claims for Florida citizens insured by the corporation,
30 securing and repaying debt obligations issued by the
31 corporation, and conducting all other activities of the
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1 corporation, and shall not be considered taxes, fees,
2 licenses, or charges for services imposed by the Legislature
3 on individuals, businesses, or agencies outside state
4 government. Bonds and other debt obligations issued by or on
5 behalf of the corporation are not to be considered "state
6 bonds" within the meaning of s. 215.58(8). The corporation is
7 not subject to the procurement provisions of chapter 287, and
8 policies and decisions of the corporation relating to
9 incurring debt, levying of assessments and the sale, issuance,
10 continuation, terms and claims under corporation policies, and
11 all services relating thereto, are not subject to the
12 provisions of chapter 120. The corporation is not required to
13 obtain or to hold a certificate of authority issued by the
14 office, nor is it required to participate as a member insurer
15 of the Florida Insurance Guaranty Association. However, the
16 corporation is required to pay, in the same manner as an
17 authorized insurer, assessments levied pledged by the Florida
18 Insurance Guaranty Association to secure bonds issued or other
19 indebtedness incurred to pay covered claims arising from
20 insurer insolvencies caused by, or proximately related to,
21 hurricane losses. It is the intent of the Legislature that the
22 tax exemptions provided in this paragraph will augment the
23 financial resources of the corporation to better enable the
24 corporation to fulfill its public purposes. Any debt
25 obligations issued by the corporation, their transfer, and the
26 income therefrom, including any profit made on the sale
27 thereof, shall at all times be free from taxation of every
28 kind by the state and any political subdivision or local unit
29 or other instrumentality thereof; however, this exemption does
30 not apply to any tax imposed by chapter 220 on interest,
31 income, or profits on debt obligations owned by corporations
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1 other than the corporation.
2 (ee) The assets of the corporation may be invested and
3 managed by the State Board of Administration.
4 Section 22. It is the intent of the Legislature that
5 commercial nonresidential property insurance coverage be made
6 available from Citizens Property Insurance Corporation
7 (Citizens), under s. 627.351(6), Florida Statutes, as amended
8 by this act, rather than from the Property and Casualty Joint
9 Underwriting Association (PCJUA), under s. 627.351(5), Florida
10 Statutes. As soon as it is reasonably able to do so, Citizens
11 shall adopt, subject to approval of the Office of Insurance
12 Regulation, a plan providing for the transition of such
13 coverage from the PCJUA to Citizens under such forms, rates,
14 terms, and conditions as the board of Citizens considers
15 appropriate. The plan shall include any contractual agreements
16 between Citizens and the PCJUA which are required to effect
17 the transition. In the transition plan, Citizens may assume
18 policies or otherwise provide coverage for the commercial
19 nonresidential policyholders of the PCJUA and may also provide
20 for allocating to the appropriate account or accounts of
21 Citizens the revenues, assets, liabilities, losses, and
22 expenses associated with policies of the PCJUA which are
23 assumed or otherwise covered by Citizens. It is the intent of
24 the Legislature that the transition plan be implemented in a
25 manner that does not adversely affect the creditworthiness of
26 or security for currently outstanding financing obligations or
27 credit facilities of the high-risk account, the personal lines
28 account, or the commercial lines account. The order issued by
29 the Office of Insurance Regulation may allow the PCJUA to
30 continue to issue such coverage until the time that Citizens
31 begins issuing such coverage.
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1 Section 23. Subsection (3) is added to section
2 627.3515, Florida Statutes, to read:
3 627.3515 Market assistance plan; property and casualty
4 risks.--
5 (3)(a) The plan and the corporation shall develop a
6 business plan and present it to the Financial Services
7 Commission for approval by September 1, 2007, to provide for
8 the implementation of an electronic database for the purpose
9 of confirming eligibility pursuant to s. 627.351(6).
10 (b) There shall be no liability on the part of, and no
11 cause of action of any nature shall arise against, any
12 authorized insurer acting within the scope of its authority
13 under this subsection or its agents or employees for any
14 action taken by them in the performance of their duties or
15 responsibilities under this subsection.
16 Section 24. Subsection (1) of section 627.4035,
17 Florida Statutes, is amended to read:
18 627.4035 Cash payment of premiums; claims.--
19 (1) The premiums for insurance contracts issued in
20 this state or covering risk located in this state shall be
21 paid in cash consisting of coins, currency, checks, or money
22 orders or by using a debit card, credit card, automatic
23 electronic funds transfer, or payroll deduction plan. By July
24 1, 2007, insurers issuing personal lines residential and
25 commercial property policies shall provide a premium payment
26 plan option to their policyholders which allows for quarterly
27 and semiannual payment of premiums. Insurers issuing such
28 policies must submit their premium payment plan option to the
29 office for approval before use.
30 Section 25. Paragraph (b) of subsection (2) of section
31 627.4133, Florida Statutes, is amended to read:
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1 627.4133 Notice of cancellation, nonrenewal, or
2 renewal premium.--
3 (2) With respect to any personal lines or commercial
4 residential property insurance policy, including, but not
5 limited to, any homeowner's, mobile home owner's, farmowner's,
6 condominium association, condominium unit owner's, apartment
7 building, or other policy covering a residential structure or
8 its contents:
9 (b) The insurer shall give the named insured written
10 notice of nonrenewal, cancellation, or termination at least
11 100 90 days prior to the effective date of the nonrenewal,
12 cancellation, or termination. However, the insurer shall give
13 at least 100 days' written notice, or written notice by June
14 1, whichever is earlier, for any nonrenewal, cancellation, or
15 termination that would be effective between June 1 and
16 November 30. The notice must include the reason or reasons for
17 the nonrenewal, cancellation, or termination, except that:
18 1. When cancellation is for nonpayment of premium, at
19 least 10 days' written notice of cancellation accompanied by
20 the reason therefor shall be given. As used in this
21 subparagraph, the term "nonpayment of premium" means failure
22 of the named insured to discharge when due any of her or his
23 obligations in connection with the payment of premiums on a
24 policy or any installment of such premium, whether the premium
25 is payable directly to the insurer or its agent or indirectly
26 under any premium finance plan or extension of credit, or
27 failure to maintain membership in an organization if such
28 membership is a condition precedent to insurance coverage.
29 "Nonpayment of premium" also means the failure of a financial
30 institution to honor an insurance applicant's check after
31 delivery to a licensed agent for payment of a premium, even if
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1 the agent has previously delivered or transferred the premium
2 to the insurer. If a dishonored check represents the initial
3 premium payment, the contract and all contractual obligations
4 shall be void ab initio unless the nonpayment is cured within
5 the earlier of 5 days after actual notice by certified mail is
6 received by the applicant or 15 days after notice is sent to
7 the applicant by certified mail or registered mail, and if the
8 contract is void, any premium received by the insurer from a
9 third party shall be refunded to that party in full.
10 2. When such cancellation or termination occurs during
11 the first 90 days during which the insurance is in force and
12 the insurance is canceled or terminated for reasons other than
13 nonpayment of premium, at least 20 days' written notice of
14 cancellation or termination accompanied by the reason therefor
15 shall be given except where there has been a material
16 misstatement or misrepresentation or failure to comply with
17 the underwriting requirements established by the insurer.
18
19 After the policy has been in effect for 90 days, the policy
20 shall not be canceled by the insurer except when there has
21 been a material misstatement, a nonpayment of premium, a
22 failure to comply with underwriting requirements established
23 by the insurer within 90 days of the date of effectuation of
24 coverage, or a substantial change in the risk covered by the
25 policy or when the cancellation is for all insureds under such
26 policies for a given class of insureds. This paragraph does
27 not apply to individually rated risks having a policy term of
28 less than 90 days.
29 Section 26. A residential property insurer shall
30 return all excess profits to policyholders except as otherwise
31 directed by the Office of Insurance Regulation. A residential
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1 property insurer shall be deemed to have earned an excess
2 profit if its surplus exceeds its direct probable maximum loss
3 for a 1-in-250-year return period and it has earned a net
4 underwriting gain in Florida in excess of 10 percent of earned
5 premiums above its anticipated underwriting profit over the
6 most recent 10-year period.
7 Section 27. Section 627.4261, Florida Statutes, is
8 transferred and renumbered as section 627.70131, Florida
9 Statutes, and subsection (5) is added to that section, to
10 read:
11 627.70131 627.4261 Insurer's duty to acknowledge
12 communications regarding claims; investigation.--
13 (5) Within 90 days after an insurer receives notice of
14 a property insurance claim from a policyholder, the insurer
15 shall pay or deny such claim unless the failure to pay such
16 claim is caused by factors beyond the control of the insurer
17 which reasonably prevent such payment. Failure to comply with
18 this subsection constitutes a violation of this code.
19 Section 28. Subsections (3), (4), and (9) of section
20 627.701, Florida Statutes, are amended to read:
21 627.701 Liability of insureds; coinsurance;
22 deductibles.--
23 (3)(a) A policy of residential property insurance
24 shall include a deductible amount applicable to hurricane
25 losses no lower than $500 and no higher than 2 percent of the
26 policy dwelling limits with respect to personal lines
27 residential risks, and no higher than 3 percent of the policy
28 limits with respect to commercial lines residential risks;
29 however, if a risk was covered on August 24, 1992, under a
30 policy having a higher deductible than the deductibles allowed
31 by this paragraph, a policy covering such risk may include a
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1 deductible no higher than the deductible in effect on August
2 24, 1992. Notwithstanding the other provisions of this
3 paragraph, a personal lines residential policy covering a risk
4 valued at $50,000 or less may include a deductible amount
5 attributable to hurricane losses no lower than $250, and a
6 personal lines residential policy covering a risk valued at
7 $100,000 or more may include a deductible amount attributable
8 to hurricane losses no higher than 10 percent of the policy
9 limits unless subject to a higher deductible on August 24,
10 1992; however, no maximum deductible is required with respect
11 to a personal lines residential policy covering a risk valued
12 at more than $500,000. An insurer may require a higher
13 deductible, provided such deductible is the same as or similar
14 to a deductible program lawfully in effect on June 14, 1995.
15 In addition to the deductible amounts authorized by this
16 paragraph, an insurer may also offer policies with a copayment
17 provision under which, after exhaustion of the deductible, the
18 policyholder is responsible for 10 percent of the next $10,000
19 of insured hurricane losses.
20 (a)(b)1. Except as otherwise provided in this
21 subsection paragraph, prior to issuing a personal lines
22 residential property insurance policy on or after January 1,
23 2006, or prior to the first renewal of a residential property
24 insurance policy on or after January 1, 2006, the insurer must
25 offer alternative deductible amounts applicable to hurricane
26 losses equal to $500, 2 percent, 5 percent, and 10 percent of
27 the policy dwelling limits, unless the specific percentage
28 deductible is less than $500. The written notice of the offer
29 shall specify the hurricane or wind deductible to be applied
30 in the event that the applicant or policyholder fails to
31 affirmatively choose a hurricane deductible. The insurer must
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1 provide such policyholder with notice of the availability of
2 the deductible amounts specified in this paragraph in a form
3 approved by the office in conjunction with each renewal of the
4 policy. The failure to provide such notice constitutes a
5 violation of this code but does not affect the coverage
6 provided under the policy.
7 (b)2. This subsection paragraph does not apply with
8 respect to a deductible program lawfully in effect on June 14,
9 1995, or to any similar deductible program, if the deductible
10 program requires a minimum deductible amount of no less than 2
11 percent of the policy limits.
12 (c)3. With respect to a policy covering a risk with
13 dwelling limits of at least $100,000, but less than $250,000,
14 the insurer may, in lieu of offering a policy with a $500
15 hurricane or wind deductible as required by paragraph (a)
16 subparagraph 1., offer a policy that the insurer guarantees it
17 will not nonrenew for reasons of reducing hurricane loss for
18 one renewal period and that contains up to a 2 percent
19 hurricane or wind deductible as required by paragraph (a)
20 subparagraph 1.
21 (d)4. With respect to a policy covering a risk with
22 dwelling limits of $250,000 or more, the insurer need not
23 offer the $500 hurricane deductible as required by paragraph
24 (a) subparagraph 1., but must, except as otherwise provided in
25 this subsection, offer the other hurricane deductibles as
26 required by paragraph (a) subparagraph 1.
27 (4)(a) Any policy that contains a separate hurricane
28 deductible must on its face include in boldfaced type no
29 smaller than 18 points the following statement: "THIS POLICY
30 CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY
31 RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy
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1 containing a coinsurance provision applicable to hurricane
2 losses must on its face include in boldfaced type no smaller
3 than 18 points the following statement: "THIS POLICY CONTAINS
4 A CO-PAY PROVISION THAT MAY RESULT IN HIGH OUT-OF-POCKET
5 EXPENSES TO YOU."
6 (b) Beginning October 1, 2005, For any personal lines
7 residential property insurance policy containing a separate
8 hurricane deductible, the insurer shall compute and
9 prominently display the actual dollar value of the hurricane
10 deductible on the declarations page of the policy at issuance
11 and, for renewal, on the renewal declarations page of the
12 policy or on the premium renewal notice.
13 (c) Beginning October 1, 2005, For any personal lines
14 residential property insurance policy containing an inflation
15 guard rider, the insurer shall compute and prominently display
16 the actual dollar value of the hurricane deductible on the
17 declarations page of the policy at issuance and, for renewal,
18 on the renewal declarations page of the policy or on the
19 premium renewal notice. In addition, beginning October 1,
20 2005, for any personal lines residential property insurance
21 policy containing an inflation guard rider, the insurer shall
22 notify the policyholder of the possibility that the hurricane
23 deductible may be higher than indicated when loss occurs due
24 to application of the inflation guard rider. Such notification
25 shall be made on the declarations page of the policy at
26 issuance and, for renewal, on the renewal declarations page of
27 the policy or on the premium renewal notice.
28 (d)1. A personal lines residential property insurance
29 policy covering a risk valued at less than $500,000 may not
30 have a hurricane deductible in excess of 10 percent of the
31 policy dwelling limits, unless the following conditions are
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1 met:
2 a. The policyholder must personally write and provide
3 to the insurer the following statement in his or her own
4 handwriting and signs his or her name, which must also be
5 signed by every other named insured on the policy, and dated:
6 "I do not want the insurance on my home to pay for the first
7 (specify dollar value) of damage from hurricanes. I will pay
8 those costs. My insurance will not."
9 b. If the structure insured by the policy is subject
10 to a mortgage or lien, the policyholder must provide the
11 insurer with a written statement from the mortgageholder or
12 lienholder indicating that the mortgageholder or lienholder
13 approves the policyholder electing to have the specified
14 deductible.
15 2. A deductible subject to the requirements of this
16 paragraph applies for the term of the policy and for each
17 renewal unless the policyholder elects otherwise.
18 3. An insurer shall keep the original copy of the
19 signed statement required by this paragraph and provide a copy
20 to the policyholder providing the signed statement. A signed
21 statement meeting the requirements of this paragraph creates a
22 presumption that there was an informed, knowing election of
23 coverage.
24 4. The commission shall adopt rules providing
25 appropriate alternative methods for providing the statements
26 required by this section for policyholders who have a
27 handicapping or disabling condition that prevents them from
28 providing a handwritten statement.
29 (9) With respect to hurricane coverage provided in a
30 policy of residential coverage, when the policyholder has
31 taken appropriate hurricane mitigation measures regarding the
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1 residence covered under the policy, the insurer shall may
2 provide the insured the option of selecting an appropriate
3 reduction in the policy's hurricane deductible or in lieu of
4 selecting the appropriate discount credit or other rate
5 differential as provided in s. 627.0629. If made available by
6 the insurer, The insurer must provide the policyholder with
7 notice of the options available under this subsection on a
8 form approved by the office.
9 Section 29. Effective April 1, 2007, section 627.7018,
10 Florida Statutes, is created to read:
11 627.7018 Standards for determining risk of
12 coverage.--In determining the risk of providing property
13 insurance coverage, an insurer may not deny coverage solely on
14 the basis of the age of the structure and shall consider the
15 wind resistance of the structure and measures undertaken by
16 the owner to protect the structure against hurricane loss.
17 Section 30. Section 627.706, Florida Statutes, is
18 amended to read:
19 627.706 Sinkhole insurance; catastrophic ground cover
20 collapse; definitions.--
21 (1) Every insurer authorized to transact property
22 insurance in this state shall provide coverage for a
23 catastrophic ground cover collapse and shall make available,
24 for an appropriate additional premium, coverage for insurable
25 sinkhole losses on any structure, including contents of
26 personal property contained therein, to the extent provided in
27 the form to which the sinkhole coverage attaches. A policy for
28 residential property insurance may include a deductible amount
29 applicable to sinkhole losses equal to 1 percent, 2 percent, 5
30 percent, or 10 percent of the policy dwelling limits, with
31 appropriate premium discounts offered with each deductible
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1 amount.
2 (2) As used in ss. 627.706-627.7074, and as used in
3 connection with any policy providing coverage for a
4 catastrophic ground cover collapse or for sinkhole losses:
5 (a) "Catastrophic ground cover collapse" means
6 geological activity that results in all the following:
7 1. The abrupt collapse of the ground cover;
8 2. A depression in the ground cover clearly visible to
9 the naked eye;
10 3. Structural damage to the building, including the
11 foundation; and
12 4. The insured structure being condemned and ordered
13 to be vacated by the governmental agency authorized by law to
14 issue such an order for that structure.
15
16 Contents coverage applies if there is a loss resulting from a
17 catastrophic ground cover collapse. Structural damage
18 consisting merely of the settling or cracking of a foundation,
19 structure, or building does not constitute a loss resulting
20 from a catastrophic ground cover collapse.
21 (b)(a) "Sinkhole" means a landform created by
22 subsidence of soil, sediment, or rock as underlying strata are
23 dissolved by groundwater. A sinkhole may form by collapse into
24 subterranean voids created by dissolution of limestone or
25 dolostone or by subsidence as these strata are dissolved.
26 (c)(b) "Sinkhole loss" means structural damage to the
27 building, including the foundation, caused by sinkhole
28 activity. Contents coverage shall apply only if there is
29 structural damage to the building caused by sinkhole activity.
30 (d)(c) "Sinkhole activity" means settlement or
31 systematic weakening of the earth supporting such property
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1 only when such settlement or systematic weakening results from
2 movement or raveling of soils, sediments, or rock materials
3 into subterranean voids created by the effect of water on a
4 limestone or similar rock formation.
5 (e)(d) "Professional engineer" means a person, as
6 defined in s. 471.005, who has a bachelor's degree or higher
7 in engineering with a specialty in the geotechnical
8 engineering field. A professional engineer must have
9 geotechnical experience and expertise in the identification of
10 sinkhole activity as well as other potential causes of damage
11 to the structure.
12 (f)(e) "Professional geologist" means a person, as
13 defined by s. 492.102, who has a bachelor's degree or higher
14 in geology or related earth science with expertise in the
15 geology of Florida. A professional geologist must have
16 geological experience and expertise in the identification of
17 sinkhole activity as well as other potential geologic causes
18 of damage to the structure.
19 (3) On or before June 1, 2007, every insurer
20 authorized to transact property insurance in this state shall
21 make a proper filing with the office for the purpose of
22 extending the appropriate forms of property insurance to
23 include coverage for catastrophic ground cover collapse or for
24 sinkhole losses. Coverage for catastrophic ground cover
25 collapse may not go into effect until the effective date
26 provided for in the filing approved by the office.
27 (4) Insurers offering policies that exclude coverage
28 for sinkhole losses shall inform policyholders in bold type of
29 not less than 14 points as follows: "YOUR POLICY PROVIDES
30 COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS
31 IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE,
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1 YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU
2 MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN
3 ADDITIONAL PREMIUM."
4 Section 31. Effective March 1, 2007, section 627.711,
5 Florida Statutes, is amended to read:
6 627.711 Notice of premium discounts for hurricane loss
7 mitigation; uniform mitigation verification inspection form.--
8 (1) Using a form prescribed by the Office of Insurance
9 Regulation, the insurer shall clearly notify the applicant or
10 policyholder of any personal lines residential property
11 insurance policy, at the time of the issuance of the policy
12 and at each renewal, of the availability and the range of each
13 premium discount, credit, other rate differential, or
14 reduction in deductibles, and combinations of discounts,
15 credits, rate differentials, or reductions in deductibles, for
16 properties on which fixtures or construction techniques
17 demonstrated to reduce the amount of loss in a windstorm can
18 be or have been installed or implemented. The prescribed form
19 shall describe generally what actions the policyholders may be
20 able to take to reduce their windstorm premium. The prescribed
21 form and a list of such ranges approved by the office for each
22 insurer licensed in the state and providing such discounts,
23 credits, other rate differentials, or reductions in
24 deductibles for properties described in this subsection shall
25 be available for electronic viewing and download from the
26 Department of Financial Services' or the Office of Insurance
27 Regulation's Internet website. The Financial Services
28 Commission may adopt rules to implement this subsection.
29 (2) By July 1, 2007, the Financial Services Commission
30 shall develop by rule a uniform mitigation verification
31 inspection form that shall be used by all insurers when
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1 factoring discounts for wind insurance. In developing the
2 form, the commission shall seek input from insurance,
3 construction, and building code representatives. Further, the
4 commission shall provide guidance as to the length of time the
5 inspection results are valid.
6 Section 32. Effective July 1, 2007, section 627.712,
7 Florida Statutes, is created to read:
8 627.712 Residential hurricane coverage required;
9 availability of exclusions for windstorm or contents.--
10 (1) An insurer issuing a residential property
11 insurance policy must provide hurricane or windstorm coverage
12 as defined in s. 627.4025. This subsection does not apply with
13 respect to risks that are eligible for wind-only coverage from
14 Citizens Property Insurance Corporation under s. 627.351(6).
15 (2) An insurer that is subject to subsection (1) must
16 make available, at the option of the policyholder, an
17 exclusion of hurricane coverage or windstorm coverage. The
18 coverage may be excluded only if:
19 (a) The policyholder personally writes and provides to
20 the insurer the following statement in his or her own
21 handwriting and signs his or her name, which must also be
22 signed by every other named insured on the policy, and dated:
23 "I do not want the insurance on my (home / mobile home /
24 condominium unit) to pay for damage from windstorms or
25 hurricanes. I will pay those costs. My insurance will not."
26 (b) If the structure insured by the policy is subject
27 to a mortgage or lien, the policyholder must provide the
28 insurer with a written statement from the mortgageholder or
29 lienholder indicating that the mortgageholder or lienholder
30 approves the policyholder electing to exclude windstorm
31 coverage or hurricane coverage from his or her residential
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1 property insurance policy.
2 (3) An insurer issuing a residential property
3 insurance policy, except for a condominium unit owner's
4 policy, must make available, at the option of the
5 policyholder, an exclusion of coverage for the contents. The
6 coverage may be excluded only if the policyholder personally
7 writes and provides to the insurer the following statement in
8 his or her own handwriting and signs his or her signature,
9 which must also be signed by every other named insured on the
10 policy, and dated: "I do not want the insurance on my (home /
11 mobile home) to pay for the costs to repair or replace any
12 contents that are damaged. I will pay those costs. My
13 insurance will not."
14 (4) An insurer shall keep the original copy of a
15 signed statement required by this section and provide a copy
16 to the policyholder providing the signed statement. A signed
17 statement meeting the requirements of this section creates a
18 presumption that there was an informed, knowing rejection of
19 coverage.
20 (5) The exclusions authorized by this section are
21 valid for the term of the contract and for each renewal unless
22 the policyholder elects otherwise.
23 (6) The commission shall adopt rules providing
24 appropriate alternative methods for providing the statements
25 required by this section for policyholders who have a
26 handicapping or disabling condition that prevents them from
27 providing a handwritten statement.
28 (7) This section is effective July 1, 2007, but the
29 office may delay application of this section until a date no
30 later than October 1, 2007, upon approval by the Financial
31 Services Commission.
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1 Section 33. Section 627.713, Florida Statutes, is
2 created to read:
3 627.713 Report of hurricane loss data.--The office may
4 require property insurers to report data regarding hurricane
5 claims and underwriting costs, including, but not limited to:
6 (1) Number of claims.
7 (2) Amount of claim payments made.
8 (3) Number and amount of total-loss claims.
9 (4) Amount and percentage of losses covered by
10 reinsurance or other loss-transfer agreements.
11 (5) Amount of losses covered under specified
12 deductibles.
13 (6) Claims and payments for specified insured values.
14 (7) Claims and payments for specified dollar values.
15 (8) Claims and payments for specified types of
16 construction or mitigation features.
17 (9) Claims and payments for policies under specified
18 underwriting criteria.
19 (10) Claims and payments for contents, additional
20 living expense, and other specified coverages.
21 (11) Claims and payments by county for the information
22 specified in this section.
23 (12) Any other data that the office requires.
24 Section 34. Effective August 1, 2007, section
25 627.7277, Florida Statutes, is amended to read:
26 627.7277 Notice of renewal premium.--
27 (1) As used in this section, the terms "policy" and
28 "renewal" have the meaning ascribed in s. 627.728.
29 (2) An insurer shall mail or deliver to its
30 policyholder at least 30 days' advance written notice of the
31 renewal premium for the policy.
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1 (3) If the insurer fails to provide the 30 days'
2 notice of a renewal premium that results in a premium
3 increase, the coverage under the policy remains in effect at
4 the existing rates until 30 days after the notice is given or
5 until the effective date of replacement coverage obtained by
6 the insured, whichever occurs first.
7 (4) Every notice of renewal premium must specify:
8 (a) The dollar amounts recouped for assessments by the
9 Florida Hurricane Catastrophe Fund, the Citizens Property
10 Insurance Corporation, and the Florida Insurance Guaranty
11 Association. The actual names of the entities must appear next
12 to the dollar amounts.
13 (b) The dollar amount of any premium increase that is
14 due to a rate increase and the dollar amounts that are due to
15 coverage changes.
16 (5) The Financial Services Commission may adopt rules
17 pursuant to ss. 120.536(1) and 120.54 to implement this
18 section.
19 Section 35. Paragraph (e) of subsection (3) and
20 subsection (4) of section 631.57, Florida Statutes, are
21 amended to read:
22 631.57 Powers and duties of the association.--
23 (3)
24 (e)1.a. In addition to assessments otherwise
25 authorized in paragraph (a) and to the extent necessary to
26 secure the funds for the account specified in s. 631.55(2)(c)
27 for the direct payment of covered claims of insolvent
28 homeowners insurers and to pay the reasonable costs to
29 administer such claims, or to retire indebtedness, including,
30 without limitation, the principal, redemption premium, if any,
31 and interest on, and related costs of issuance of, bonds
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1 issued under s. 631.695 and the funding of any reserves and
2 other payments required under the bond resolution or trust
3 indenture pursuant to which such bonds have been issued, the
4 office, upon certification of the board of directors, shall
5 levy emergency assessments upon insurers holding a certificate
6 of authority. The emergency assessments payable under this
7 paragraph by any insurer shall not exceed in any single year
8 more than 2 percent of that insurer's direct written premiums,
9 net of refunds, in this state during the preceding calendar
10 year for the kinds of insurance within the account specified
11 in s. 631.55(2)(c).
12 b. Any emergency assessments authorized under this
13 paragraph shall be levied by the office upon insurers referred
14 to in sub-subparagraph a., upon certification as to the need
15 for such assessments by the board of directors. In the event
16 the board of directors participates in the issuance of bonds
17 in accordance with s. 631.695, emergency assessments shall be
18 levied, in each year that bonds issued under s. 631.695 and
19 secured by such emergency assessments are outstanding, in such
20 amounts up to such 2-percent limit as required in order to
21 provide for the full and timely payment of the principal of,
22 redemption premium, if any, and interest on, and related costs
23 of issuance of, such bonds. The emergency assessments provided
24 for in this paragraph are assigned and pledged to the
25 municipality, county, or legal entity issuing bonds under s.
26 631.695 for the benefit of the holders of such bonds, in order
27 to enable such municipality, county, or legal entity to
28 provide for the payment of the principal of, redemption
29 premium, if any, and interest on such bonds, the cost of
30 issuance of such bonds, and the funding of any reserves and
31 other payments required under the bond resolution or trust
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1 indenture pursuant to which such bonds have been issued,
2 without the necessity of any further action by the
3 association, the office, or any other party. To the extent
4 bonds are issued under s. 631.695 and the association
5 determines to secure such bonds by a pledge of revenues
6 received from the emergency assessments, such bonds, upon such
7 pledge of revenues, shall be secured by and payable from the
8 proceeds of such emergency assessments, and the proceeds of
9 emergency assessments levied under this paragraph shall be
10 remitted directly to and administered by the trustee or
11 custodian appointed for such bonds.
12 c. Emergency assessments under this paragraph may be
13 payable in a single payment or, at the option of the
14 association, may be payable in 12 monthly installments with
15 the first installment being due and payable at the end of the
16 month after an emergency assessment is levied and subsequent
17 installments being due not later than the end of each
18 succeeding month.
19 d. If emergency assessments are imposed, the report
20 required by s. 631.695(7) shall include an analysis of the
21 revenues generated from the emergency assessments imposed
22 under this paragraph.
23 e. If emergency assessments are imposed, the
24 references in sub-subparagraph (1)(a)3.b. and s. 631.695(2)
25 and (7) to assessments levied under paragraph (a) shall
26 include emergency assessments imposed under this paragraph.
27 2. In order to ensure that insurers paying emergency
28 assessments levied under this paragraph continue to charge
29 rates that are neither inadequate nor excessive, within 90
30 days after being notified of such assessments, each insurer
31 that is to be assessed pursuant to this paragraph shall submit
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1 a rate filing for coverage included within the account
2 specified in s. 631.55(2)(c) and for which rates are required
3 to be filed under s. 627.062. If the filing reflects a rate
4 change that, as a percentage, is equal to the difference
5 between the rate of such assessment and the rate of the
6 previous year's assessment under this paragraph, the filing
7 shall consist of a certification so stating and shall be
8 deemed approved when made. Any rate change of a different
9 percentage shall be subject to the standards and procedures of
10 s. 627.062.
11 3. In the event the board of directors participates in
12 the issuance of bonds in accordance with s. 631.695, an annual
13 assessment under this paragraph shall continue while the bonds
14 issued with respect to which the assessment was imposed are
15 outstanding, including any bonds the proceeds of which were
16 used to refund bonds issued pursuant to s. 631.695, unless
17 adequate provision has been made for the payment of the bonds
18 in the documents authorizing the issuance of such bonds.
19 4. Emergency assessments under this paragraph are not
20 premium and are not subject to the premium tax, to any fees,
21 or to any commissions. An insurer is liable for all emergency
22 assessments that the insurer collects and shall treat the
23 failure of an insured to pay an emergency assessment as a
24 failure to pay the premium. An insurer is not liable for
25 uncollectible emergency assessments.
26 (4) The department may exempt any insurer from any
27 regular or emergency an assessment if an assessment would
28 result in such insurer's financial statement reflecting an
29 amount of capital or surplus less than the sum of the minimum
30 amount required by any jurisdiction in which the insurer is
31 authorized to transact insurance.
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1 Section 36. It is the intent of the Legislature that
2 the amendments to s. 631.57, Florida Statutes, by s. 34,
3 chapter 2006-12, Laws of Florida, authorized the Florida
4 Insurance Guaranty Association to certify, and the Office of
5 Insurance Regulation to levy, an emergency assessment of up to
6 2 percent to directly pay the covered claims out of the
7 account specified in s. 631.55(2)(c), Florida Statutes, or use
8 such emergency assessment proceeds to retire the indebtedness
9 and costs of bonds issued to pay such claims and reasonable
10 claims administration costs.
11 Section 37. Subsection (11) of section 718.111,
12 Florida Statutes, is amended to read:
13 718.111 The association.--
14 (11) INSURANCE.--In order to protect the safety,
15 health, and welfare of the people of the State of Florida and
16 to ensure consistency in the provision of insurance coverage
17 to condominiums and their unit owners, paragraphs (b) and (c)
18 are deemed to apply to every residential condominium in the
19 state, regardless of the date of its declaration of
20 condominium. It is the intent of the Legislature to encourage
21 lower or stable insurance premiums for associations described
22 in this section. Therefore, the Legislature requires a report
23 to be prepared by the Office of Insurance Regulation of the
24 Department of Financial Services for publication 18 months
25 from the effective date of this act, evaluating premium
26 increases or decreases for associations, unit owner premium
27 increases or decreases, recommended changes to better define
28 common areas, or any other information the Office of Insurance
29 Regulation deems appropriate.
30 (a) A unit-owner controlled association operating a
31 residential condominium shall use its best efforts to obtain
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1 and maintain adequate insurance to protect the association,
2 the association property, the common elements, and the
3 condominium property required to be insured by the association
4 pursuant to paragraph (b). If the association is developer
5 controlled, the association shall exercise due diligence to
6 obtain and maintain such insurance. Failure to obtain and
7 maintain adequate insurance during any period of developer
8 control shall constitute a breach of fiduciary responsibility
9 by the developer-appointed members of the board of directors
10 of the association, unless said members can show that despite
11 such failure, they have exercised due diligence. The
12 declaration of condominium as originally recorded, or amended
13 pursuant to procedures provided therein, may require that
14 condominium property consisting of freestanding buildings
15 where there is no more than one building in or on such unit
16 need not be insured by the association if the declaration
17 requires the unit owner to obtain adequate insurance for the
18 condominium property. An association may also obtain and
19 maintain liability insurance for directors and officers,
20 insurance for the benefit of association employees, and flood
21 insurance for common elements, association property, and
22 units. Adequate insurance, regardless of any requirement in
23 the declaration of condominium for coverage by the association
24 for "full insurable value," "replacement cost," or the like,
25 may include reasonable deductibles as determined by the board
26 based upon available funds or predetermined assessment
27 authority at the time that the insurance is obtained.
28 1. Windstorm insurance coverage for a group of no
29 fewer than three communities created and operating under
30 chapter 718, chapter 719, chapter 720, or chapter 721 may be
31 obtained and maintained for the communities if the insurance
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1 coverage is sufficient to cover an amount equal to the
2 probable maximum loss for the communities for a 250-year
3 windstorm event. Such probable maximum loss must be determined
4 through the use of a competent model that has been accepted by
5 the Florida Commission on Hurricane Loss Project Methodology.
6 Such insurance coverage is deemed adequate windstorm insurance
7 for the purposes of this section.
8 2. An association or group of associations may
9 self-insure against claims against the association, the
10 association property, and the condominium property required to
11 be insured by an association, upon compliance with the
12 applicable provisions of ss. 624.460-624.488, which shall be
13 considered adequate insurance for the purposes of this
14 section. A copy of each policy of insurance in effect shall be
15 made available for inspection by unit owners at reasonable
16 times.
17 (b) Every hazard insurance policy issued or renewed on
18 or after January 1, 2004, to protect the condominium shall
19 provide primary coverage for:
20 1. All portions of the condominium property located
21 outside the units;
22 2. The condominium property located inside the units
23 as such property was initially installed, or replacements
24 thereof of like kind and quality and in accordance with the
25 original plans and specifications or, if the original plans
26 and specifications are not available, as they existed at the
27 time the unit was initially conveyed; and
28 3. All portions of the condominium property for which
29 the declaration of condominium requires coverage by the
30 association.
31
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1 Anything to the contrary notwithstanding, the terms
2 "condominium property," "building," "improvements," "insurable
3 improvements," "common elements," "association property," or
4 any other term found in the declaration of condominium which
5 defines the scope of property or casualty insurance that a
6 condominium association must obtain shall exclude all floor,
7 wall, and ceiling coverings, electrical fixtures, appliances,
8 air conditioner or heating equipment, water heaters, water
9 filters, built-in cabinets and countertops, and window
10 treatments, including curtains, drapes, blinds, hardware, and
11 similar window treatment components, or replacements of any of
12 the foregoing which are located within the boundaries of a
13 unit and serve only one unit and all air conditioning
14 compressors that service only an individual unit, whether or
15 not located within the unit boundaries. The foregoing is
16 intended to establish the property or casualty insuring
17 responsibilities of the association and those of the
18 individual unit owner and do not serve to broaden or extend
19 the perils of coverage afforded by any insurance contract
20 provided to the individual unit owner. Beginning January 1,
21 2004, the association shall have the authority to amend the
22 declaration of condominium, without regard to any requirement
23 for mortgagee approval of amendments affecting insurance
24 requirements, to conform the declaration of condominium to the
25 coverage requirements of this section.
26 (c) Every hazard insurance policy issued or renewed on
27 or after January 1, 2004, to an individual unit owner shall
28 provide that the coverage afforded by such policy is excess
29 over the amount recoverable under any other policy covering
30 the same property. Each insurance policy issued to an
31 individual unit owner providing such coverage shall be without
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1 rights of subrogation against the condominium association that
2 operates the condominium in which such unit owner's unit is
3 located. All real or personal property located within the
4 boundaries of the unit owner's unit which is excluded from the
5 coverage to be provided by the association as set forth in
6 paragraph (b) shall be insured by the individual unit owner.
7 (d) The association shall obtain and maintain adequate
8 insurance or fidelity bonding of all persons who control or
9 disburse funds of the association. The insurance policy or
10 fidelity bond must cover the maximum funds that will be in the
11 custody of the association or its management agent at any one
12 time. As used in this paragraph, the term "persons who control
13 or disburse funds of the association" includes, but is not
14 limited to, those individuals authorized to sign checks and
15 the president, secretary, and treasurer of the association.
16 The association shall bear the cost of bonding.
17 Section 38. Task Force on Citizens Property Insurance
18 Claims Handling and Resolution.--
19 (1) TASK FORCE CREATED.--There is created the Task
20 Force on Citizens Property Insurance Claims Handling and
21 Resolution.
22 (2) ADMINISTRATION.--The task force shall be
23 administratively housed within the Office of the Chief
24 Financial Officer but shall operate independently of any state
25 officer or agency. The Office of the Chief Financial Officer
26 shall provide such administrative support as the task force
27 deems necessary to accomplish its mission and shall provide
28 necessary funding for the task force within its existing
29 resources. The Executive Office of the Governor, the
30 Department of Financial Services, and the Office of Insurance
31 Regulation shall provide substantive staff support for the
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1 task force.
2 (3) MEMBERSHIP.--The members of the task force shall
3 be appointed as follows:
4 (a) The Governor shall appoint one member who is a
5 representative of insurance consumers.
6 (b) The Chief Financial Officer shall appoint one
7 member who has expertise in claims handling.
8 (c) The President of the Senate shall appoint one
9 member.
10 (d) The Speaker of the House of Representatives shall
11 appoint one member.
12 (e) The Commissioner of Insurance Regulation, or his
13 or her designee, shall serve as an ex officio voting member of
14 the task force.
15 (f) The Insurance Consumer Advocate, or his or her
16 designee, shall serve as an ex officio voting member of the
17 task force.
18 (g) The Executive Director of Citizens Property
19 Insurance Corporation, or his or her designee, shall serve as
20 an ex officio voting member of the task force.
21
22 Members of the task force shall serve without compensation but
23 are entitled to receive reimbursement for per diem and travel
24 expenses as provided in s. 112.061, Florida Statutes.
25 (4) PURPOSE AND INTENT.--The Legislature recognizes
26 that policyholders and applicants of Citizens Property
27 Insurance Corporation should receive the highest possible
28 level of service and treatment. This level should never be
29 less than the private market. The Legislature further
30 recognizes that Citizens Property Insurance Corporation's
31 service standards should be no less than those applied to
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1 insurers in the voluntary market with respect to
2 responsiveness, timeliness, customer courtesy, and overall
3 dealings with policyholders and applicants. The purpose of the
4 task force is to make recommendations to the legislative and
5 executive branches of this state's government relating to the
6 handling, service, and resolution of claims by Citizens
7 Property Insurance Corporation that are sufficient to ensure
8 that all Citizens' policyholders and applicants in this state
9 are able to obtain appropriate handling, service, and
10 resolution of claims, as further described in this section.
11 (5) SPECIFIC ISSUES.--The task force shall conduct
12 such research and hearings as it deems necessary to achieve
13 the purposes specified in subsection (4) and shall develop
14 information on relevant issues, including, but not limited to,
15 the following:
16 (a) How Citizens Property Insurance Corporation can
17 improve its customer service.
18 (b) How Citizens Property Insurance Corporation can
19 improve its adjuster response time after a hurricane.
20 (c) How Citizens Property Insurance Corporation can
21 efficiently use its available adjusting sources for claims.
22 (d) How Citizens Property Insurance Corporation can
23 improve the time it takes to conduct damage assessments.
24 (e) How Citizens Property Insurance Corporation can
25 dispose of and settle claims remaining from the 2004 and 2005
26 hurricane seasons and can improve the time it takes to dispose
27 of and settle claims remaining from the 2004 and 2005
28 hurricane seasons.
29 (f) How Citizens Property Insurance Corporation can
30 improve the time it takes to dispose of and settle claims.
31 (g) Whether Citizens Property Insurance Corporation
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1 has hired an adequate level of permanent claims and adjusting
2 staff in addition to outsourcing its claims-adjusting
3 functions to independent adjusting firms.
4 (6) REPORTS AND RECOMMENDATIONS.--By July 1, 2007, the
5 task force shall provide a report containing recommendations
6 regarding the process Citizens Property Insurance Corporation
7 should use to dispose of the claims remaining open from the
8 2004 and 2005 hurricane seasons. By July 1, 2008, the task
9 force shall provide a report containing findings relating to
10 the issues identified in subsection (5) and recommendations
11 consistent with the purposes of this section and also
12 consistent with such findings. The report shall include
13 recommendations regarding the process Citizens Property
14 Insurance Corporation should use to dispose of claims. The
15 task force shall submit the reports to the Governor, the Chief
16 Financial Officer, the President of the Senate, and the
17 Speaker of the House of Representatives. The task force may
18 also submit such interim reports as it deems appropriate.
19 (7) ADDITIONAL ACTIVITIES.--The task force shall
20 monitor the implementation of the provisions of chapter
21 2006-12, Laws of Florida, relating to the creation of the
22 Office of Internal Auditor in Citizens Property Insurance
23 Corporation and shall make such additional recommendations as
24 it deems appropriate for further legislative action during the
25 2006-2008 legislative biennium.
26 (8) EXPIRATION.--The task force shall expire at the
27 end of the 2006-2008 legislative biennium.
28 Section 39. Windstorm Mitigation Study Committee.--
29 (1)(a) The Windstorm Mitigation Study Committee is
30 created and shall be composed of eight members as follows:
31 1. Two members shall be appointed by the Governor,
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1 with one designated by the Governor to serve as chair.
2 2. Two members shall be appointed by the Chief
3 Financial Officer.
4 3. Two members shall be appointed by the President of
5 the Senate.
6 4. Two members shall be appointed by the Speaker of
7 the House of Representatives.
8 (b) Each member must be knowledgeable of issues
9 concerning the mitigation of the effects of windstorms on
10 structures in this state and at least one member must
11 represent primarily the interests of homeowners.
12 (2)(a) The members of the committee shall serve
13 without compensation, but are entitled to reimbursement for
14 all necessary expenses incurred in performing their duties,
15 including travel expenses, in accordance with s. 112.061,
16 Florida Statutes. Reimbursements for travel shall be paid by
17 the appointing entity.
18 (b) The committee shall meet as necessary, at the call
19 of the chair, and at the time and place designated by the
20 chair. The committee may conduct its meetings through
21 teleconferences or other similar means. The first meeting of
22 the committee shall occur no later than February 9, 2007.
23 (3) The Department of Financial Services, the Office
24 of Insurance Regulation, the Citizens Property Insurance
25 Corporation, and other agencies of this state shall supply any
26 information, assistance, and facilities that are considered
27 necessary by the committee to carry out its duties under this
28 section. The department shall provide staff assistance as
29 necessary in order to carry out the required clerical and
30 administrative functions of the committee.
31 (4) The committee shall analyze those solutions and
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1 programs that address the state's acute need to mitigate the
2 effects of windstorms on structures, especially residential
3 property that is located in areas at greatest risk of
4 windstorm damage, including programs or proposals that provide
5 for:
6 (a) The availability of home inspections for windstorm
7 resistance.
8 (b) Grants to assist homeowners, and possibly other
9 groups of property owners, to harden their property against
10 windstorm damage.
11 (c) The full actuarial value to be reflected in
12 premium credits for windstorm mitigation.
13 (d) The most effective way to inform policyholders of
14 the availability of and means by which to obtain premium
15 credits for windstorm mitigation.
16 (e) Coordination among federal, local, and private
17 initiatives.
18 (f) Streamlining or strengthening applicable state,
19 regional, and local regulations.
20 (g) The stimulation of public and private efforts to
21 mitigate against windstorm injury and damage.
22 (h) The discovery and assessment of funding sources
23 for windstorm mitigation.
24 (i) Tax incentives for windstorm mitigation.
25 (j) Consumer information concerning the benefits of
26 windstorm mitigation, including personal safety as well as
27 property security.
28 (k) Research on windstorm mitigation.
29
30 The committee may develop any other solutions and programs
31 that it considers appropriate.
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1 (5) In performing its analysis, the committee shall
2 consider both the safety of the residents of this state and
3 the protection of real property, especially residential. In
4 addition, the committee shall consider both short-term and
5 long-term solutions and programs.
6 (6) The committee shall review, evaluate, and make
7 recommendations regarding existing and proposed programs and
8 initiatives for mitigating windstorm damage.
9 (7) The committee shall provide recommendations,
10 including proposed legislation, to the Governor, the President
11 of the Senate, the Speaker of the House of Representatives,
12 the Chief Financial Officer, and the Commissioner of Insurance
13 Regulation by March 6, 2007.
14 (8) The committee shall expire on May 15, 2007.
15 Section 40. The Financial Services Commission shall
16 adopt a uniform home grading scale to grade the ability of a
17 home to withstand the wind load from a sustained severe
18 tropical storm or hurricane. The commission shall coordinate
19 with the Office of Insurance Regulation, the Department of
20 Financial Services, and the Department of Community Affairs in
21 developing the grading scale, which must be based upon and
22 consistent with the rating system required by chapter 2006-12,
23 Laws of Florida. The commission shall adopt the uniform
24 grading scale by rule no later than June 30, 2007.
25 Section 41. Florida Disaster Recovery Program.--
26 (1) The Department of Community Affairs shall
27 implement the 2006 Disaster Recovery Program from funds
28 provided through the Emergency Supplemental Appropriations Act
29 for Defense, the Global War on Terror, and Hurricane Recovery,
30 2006, for the purpose of assisting local governments in
31 satisfying disaster-recovery needs in the areas of low-income
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1 housing and infrastructure, with a primary focus on the
2 hardening of single-family and multifamily housing units, not
3 only to ensure that affordable housing can withstand the
4 effects of hurricane-force winds, but also to mitigate the
5 increasing costs of insurance, which may ultimately render
6 existing affordable homes unaffordable or uninsurable. This
7 section does not create an entitlement for local governments
8 or property owners or obligate the state in any way to fund
9 disaster-recovery needs.
10 (2) Entitlement and nonentitlement counties identified
11 under the Federal Disaster Declaration (FEMA-1609-DR),
12 federally recognized Indian tribes, and nonprofit
13 organizations are eligible to apply for funding.
14 (3) Up to 78 percent of these funds may be used to
15 complement the grants awarded by the Department of Financial
16 Services under s. 215.5586, Florida Statutes, and fund other
17 eligible disaster-related activities supporting housing
18 rehabilitation, hardening, mitigation, and infrastructure
19 improvements at the request of the local governments in order
20 to assist the State of Florida in better serving low-income
21 homeowners in single-family housing units, including, but not
22 limited to, condominiums. Up to 20 percent of the funds may be
23 used to provide inspections and mitigation improvements to
24 multifamily units receiving rental assistance under projects
25 of the United States Department of Housing and Urban
26 Development or the Rural Development Division of the United
27 States Department of Agriculture.
28 (4) For the 2006-2007 fiscal year, the sum of
29 $100,066,518 is appropriated in a Grant in Aid - Fixed Capital
30 Outlay appropriation category from the Florida Small Cities
31 Community Development Block Grant Program Fund to the
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1 Department of Community Affairs for the purpose of
2 implementing the provisions of this section. These funds shall
3 be used in a manner consistent with Federal Register, Vol. 71,
4 No. 209, Docket No. FR-5089-N-01, and the State of Florida
5 Action Plan for Disaster Recovery as approved by the United
6 States Department of Housing and Urban Development.
7 Section 42. Effective January 1, 2008, no insurer
8 writing private passenger automobile insurance in this state
9 may continue to write such insurance if the insurer writes
10 homeowners' insurance in another state but not in this state
11 unless the insurer writing private passenger automobile
12 insurance in this state is affiliated with an insurer writing
13 homeowners' insurance in this state.
14 Section 43. It is the intent of the Legislature to
15 create during the 2007 Legislative Session a grant program to
16 assist persons whose income does not exceed that of
17 "low-income persons" as defined in s. 420.602(8), Florida
18 Statutes, for the purpose of purchasing property insurance to
19 protect their homestead property.
20 Section 44. Effective July 1, 2007, subsection (6) of
21 section 627.0629, Florida Statutes, is repealed.
22 Section 45. For the 2006-2007 fiscal year, there is
23 appropriated $2 million from the Department of Financial
24 Services' Insurance Regulatory Trust Fund to the Department of
25 Financial Services for the purposes of implementing section 40
26 of this act.
27 Section 46. Effective February 1, 2007, the sum of
28 $105,000 is appropriated from the Insurance Regulatory Trust
29 Fund and 193,000 in associated rate is provided to the Office
30 of Insurance Regulation for the purpose of granting
31 competitive pay adjustments for actuaries employed within the
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1 office. Adjustments shall be provided at the discretion of the
2 Commissioner of Insurance Regulation.
3 Section 47. If any provision of this act or its
4 application to any person or circumstance is held invalid, the
5 invalidity does not affect other provisions or applications of
6 the act which can be given effect without the invalid
7 provision or application, and to this end the provisions of
8 this act are severable.
9 Section 48. Except as otherwise expressly provided in
10 this act, this act shall take effect upon becoming a law.
11
12
13 ================ T I T L E A M E N D M E N T ===============
14 And the title is amended as follows:
15 Delete everything before the enacting clause
16
17 and insert:
18 A bill to be entitled
19 An act relating to hurricane preparedness and
20 insurance; amending s. 163.01, F.S., relating
21 to the Florida Interlocal Cooperation Act;
22 redefining the term "public agency" to include
23 certain legal or administrative entities;
24 authorizing such entities to finance the
25 provision of property coverage contracts for or
26 from local government property insurance pools
27 or property coverage contracts; providing a
28 definition; authorizing certain hospitals to
29 jointly issue bonds to finance windstorm
30 coverages and claims; granting authority to
31 individual hospitals and teaching hospitals to
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1 jointly issue bond anticipation notes;
2 authorizing validation of bonds issued to
3 certain hospital entities; specifying that a
4 hospital's immunity caps are not waived through
5 issuance of bonds to pay windstorm coverage or
6 claims; amending s. 215.555, F.S., relating to
7 the Florida Hurricane Catastrophe Fund;
8 revising certain provisions of the
9 reimbursement contracts for insurers; deleting
10 a rapid cash buildup requirement from a
11 reimbursement premium formula factor; expanding
12 the State Board of Administration's reinsurance
13 procurement powers and duties for certain
14 purposes; providing for temporary emergency
15 options for additional coverage and for
16 temporary increase in coverage limit options;
17 providing legislative findings and intent;
18 providing for application of certain
19 provisions; providing additional definitions;
20 providing for a reimbursement contract addendum
21 for certain insurers; providing requirements
22 and procedures under the addendum; providing
23 for certain reimbursement premiums for such
24 insurers; providing for calculation of such
25 premiums; providing for effect on claims-paying
26 capacity of fund; requiring insurers electing
27 optional coverages offered by the Florida
28 Hurricane Catastrophe Fund to make rate filings
29 that reflect savings or reduction in loss
30 exposure; requiring that the Office of
31 Insurance Regulation specify, by order, the
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 dates on which such filings must be made;
2 requiring certain insurers to make additional
3 rate filings; specifying rate filing
4 requirements; amending s. 215.5586, F.S.;
5 revising criteria for wind certification and
6 hurricane mitigation inspectors; requiring a
7 level 2 background check for wind certification
8 and hurricane mitigation inspectors;
9 authorizing the Department of Financial
10 Services to conduct criminal records checks of
11 inspectors; requiring payment of fingerprint
12 processing fees; revising certain financial
13 wind certification and mitigation grant
14 criteria and use provisions; providing
15 additional uses for grant funding for certain
16 homeowners; authorizing the department to
17 contract with not-for-profit corporations to
18 conduct the Florida Comprehensive Hurricane
19 Damage Mitigation Program and enhance awareness
20 of the benefits of mitigation; requiring the
21 department to develop and maintain a list of
22 wind certification and hurricane mitigation
23 inspectors; amending s. 215.5595, F.S.;
24 including manufactured housing insurers in the
25 Insurance Capital Build-Up Incentive Program;
26 providing manufactured housing insurer program
27 contribution requirements; providing surplus
28 requirements; prioritizing funding for
29 manufactured housing insurers; providing
30 premium to surplus ratio requirements for
31 certain manufactured housing insurers; creating
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Bill No. CS/HB 1-A (c1)
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1 s. 395.106, F.S.; authorizing certain hospitals
2 and hospital systems to pool and spread
3 windstorm property exposure risk among members;
4 providing criteria for participation; providing
5 definitions; subjecting alliances not in
6 compliance with risk-pooling requirements to
7 the Insurance Code; excluding an alliance
8 meeting provision requirements from
9 participation in or coverage by an insurance
10 guaranty association established by ch. 631,
11 F.S.; amending s. 553.73, F.S.; prohibiting the
12 Florida Building Commission from modifying
13 certain foundation codes relating to wind
14 resistance or the prevention of water intrusion
15 unless the modification enhances such
16 provisions; amending s. 553.775, F.S., relating
17 to interpretations of the Florida Building
18 Code; conforming a cross-reference; requiring
19 jurisdictions having authority to enforce the
20 Florida Building Code to require
21 wind-borne-debris protection according to
22 specified requirements; requiring that the
23 Florida Building Commission amend the Florida
24 Building Code to reflect the requirements of
25 the act and eliminate certain less stringent
26 requirements; providing an exception; requiring
27 the commission to develop voluntary guidelines
28 for increasing the hurricane resistance of
29 buildings; requiring that the guidelines be
30 included in the commission's report to the 2008
31 Legislature; amending s. 624.407, F.S.,
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 relating to capitalization requirements for
2 insurers writing property insurance; specifying
3 certain minimum surplus amounts; prohibiting
4 insurers writing private passenger automobile
5 insurance from writing such insurance under
6 certain circumstances; amending s. 624.462,
7 F.S.; revising requirements for the
8 establishment of a commercial self-insurance
9 fund by a not-for-profit group; amending s.
10 624.4622, F.S.; authorizing local government
11 self-insurance funds to insure or self-insure
12 real or personal property against loss or
13 damage; creating s. 624.4625, F.S.; authorizing
14 two or more corporations not for profit to form
15 a self-insurance fund for certain purposes;
16 providing specific requirements; providing a
17 definition; providing limitations; providing
18 for application of certain provisions to
19 certain premiums, contributions, and
20 assessments; providing for payment of insurance
21 premium tax at a reduced rate by corporation
22 not-for-profit self-insurance funds; subjecting
23 a corporation not for profit self-insurance
24 fund to certain group self-insurance fund
25 provisions under certain circumstances;
26 amending s. 624.610, F.S.; prescribing
27 responsibilities of the Commissioner of
28 Insurance Regulation relating to allowing
29 credit for reinsurance; amending s. 626.2815,
30 F.S.; requiring continuing education for
31 certain agents and customer representatives on
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 the subject of premium discounts for hurricane
2 mitigation options; amending s. 627.0613, F.S.;
3 providing additional duties of the consumer
4 advocate; amending s. 627.062, F.S.; requiring
5 that an insurer make a "file and use" filing
6 under certain circumstances; deleting
7 provisions exempting certain rate filings from
8 review by the Office of Insurance Regulation;
9 requiring certain rate filings to account for
10 certain mitigation measures; requiring the
11 chief executive officer, chief financial
12 officer, or chief actuary of a property insurer
13 to certify the information contained in a rate
14 filing; providing penalties for knowingly
15 making a false certification; authorizing the
16 Financial Services Commission to adopt rules;
17 amending s. 627.0629, F.S.; providing
18 legislative intent relating to savings to
19 customers for windstorm mitigation efforts;
20 providing for reductions in deductibles for
21 mitigation measures; creating s. 627.0655,
22 F.S.; authorizing insurers to provide certain
23 premium discounts under certain circumstances;
24 amending s. 627.351, F.S., relating to the
25 Citizens Property Insurance Corporation;
26 deleting provisions that deny certain
27 nonhomestead property eligibility for coverage
28 by the corporation; including commercial
29 nonresidential policies into an account of the
30 corporation; authorizing the corporation to
31 issue multiperil coverage and continue to offer
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 wind-only coverage in the high-risk account
2 after a specified date; deleting provisions
3 authorizing the Office of Insurance Regulation
4 to remove territory from the area eligible for
5 wind-only and quota share coverage; requiring
6 the board of governors of the corporation to
7 levy an assessment against nonhomestead
8 property policyholders if certain deficits
9 occur after a specified date; restricting the
10 eligibility of a risk for a policy issued by
11 the corporation under certain circumstances;
12 authorizing the plan of operation to establish
13 limits of coverage and to require commercial
14 property to meet specified hurricane-mitigation
15 features; requiring that the corporation
16 annually file recommended rates; requiring that
17 the office issue a final order establishing the
18 rates within a specified period; prohibiting
19 the corporation from pursuing administrative or
20 judicial review of such order; deleting
21 provisions specifying circumstances under which
22 a rate is deemed inadequate; deleting
23 legislative intent concerning rate adequacy in
24 the residual market; deleting provisions
25 providing requirements for personal lines
26 residential policies and residential wind-only
27 policies; deleting an exemption provided for
28 coverage provided by the corporation in Monroe
29 County under certain circumstances; deleting a
30 requirement that the corporation certify to the
31 office that its rates comply with certain
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 requirements; deleting a requirement for a
2 notice to policyholders and applicants;
3 rescinding certain rate filings by the
4 corporation which took effect January 1, 2007;
5 reinstating certain rates in effect on December
6 31, 2006; clarifying the effect of a policy
7 that is taken out, assumed, or removed from the
8 corporation; providing legislative intent that
9 commercial nonresidential property insurance be
10 made available from Citizens Property Insurance
11 Corporation; requiring that Citizens Property
12 Insurance Corporation adopt a plan providing
13 for the transition of such coverage from the
14 Property and Casualty Joint Underwriting
15 Association to Citizens; providing requirements
16 for the plan; amending s. 627.3515, F.S.;
17 requiring Citizens Property Insurance
18 Corporation to develop a business plan, which
19 must be approved by the commission; providing
20 that an insurer is not liable and there is no
21 cause of action against an insurer acting
22 within the scope of its authority; amending s.
23 627.4035, F.S.; requiring insurers to provide
24 certain premium payment plan options to
25 policyholders; requiring prior approval of such
26 plans by the office; amending s. 627.4133,
27 F.S.; increasing a period of notice for
28 nonrenewals, cancellations, and terminations;
29 requiring residential property insurers to
30 return excess profits to policyholders except
31 as directed by the Office of Insurance
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 Regulation; providing a formula for determining
2 excess profits; transferring, renumbering, and
3 amending s. 627.4261, F.S.; requiring insurers
4 to pay or deny certain claims within a time
5 certain; providing an exception; providing
6 penalties; amending s. 627.701, F.S.; requiring
7 insurers to provide insureds options for
8 certain deductibles, credits, or rate
9 differentials; creating s. 627.7018, F.S.;
10 providing a prohibition and requirements for
11 insurers in denying coverage; amending s.
12 627.706, F.S., relating to sinkhole insurance;
13 defining the term "catastrophic ground cover
14 collapse"; requiring property insurers to
15 provide coverage for catastrophic ground cover
16 collapse; allowing property insurers to charge
17 an appropriate additional premium for coverage
18 for sinkhole loss; specifying the date on which
19 coverage for catastrophic ground cover collapse
20 may take effect; requiring insurers offering
21 policies that exclude coverage for sinkhole
22 losses to provide notice to policyholders;
23 amending s. 627.711, F.S.; requiring certain
24 notices to specify combinations of discounts,
25 credits, rate differentials, and reductions in
26 deductibles; requiring the Financial Services
27 Commission to develop uniform mitigation
28 verification inspection forms; providing duties
29 of the commission; creating s. 627.712, F.S.;
30 requiring insurers issuing residential property
31 insurance to provide hurricane or windstorm
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Florida Senate - 2007 CONFERENCE COMMITTEE AMENDMENT
Bill No. CS/HB 1-A (c1)
Barcode 574486
1 coverage; authorizing a policyholder to make a
2 written rejection of such coverage by signing a
3 statement acknowledging the lack of insurance
4 or providing a statement from the
5 mortgageholder or lienholder; requiring
6 insurers issuing residential property insurance
7 to make available an exclusion of coverage for
8 contents; providing for the policyholder to
9 make a written rejection of such coverage;
10 requiring that the insurer keep documentation
11 of such statements; requiring the Financial
12 Services Commission to adopt rules; creating s.
13 627.713, F.S.; authorizing the office to
14 require property insurers to report data
15 regarding hurricane claims and underwriting
16 costs; amending s. 627.7277, F.S.; requiring
17 certain information to be included in notices
18 of renewal premium; providing for rules;
19 amending s. 631.57, F.S.; revising criteria and
20 requirements for levy of emergency assessments
21 by the Florida Insurance Guaranty Association;
22 revising characterizations of emergency
23 assessments; providing legislative intent;
24 amending s. 718.111, F.S.; providing for
25 windstorm insurance for condominium
26 associations; creating the Task Force on
27 Citizens Property Insurance Claims Handling and
28 Resolution; providing for administration of the
29 task force; providing for membership; providing
30 for reimbursement of expenses but no
31 compensation; providing purpose and intent;
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 requiring the task force to address certain
2 issues; requiring reports and recommendations;
3 providing additional responsibilities of the
4 task force; providing for expiration of the
5 task force; creating the Windstorm Mitigation
6 Study Committee for the purpose of analyzing
7 solutions and programs that could address the
8 state's need to mitigate the effects of
9 windstorms on structures; providing for
10 membership and qualifications; providing that
11 the members are entitled to reimbursement for
12 expenses incurred in connection with their
13 duties; providing for reimbursement of travel
14 expenses; requiring the Department of Financial
15 Services, the Office of Insurance Regulation,
16 the Citizens Property Insurance Corporation,
17 and other state agencies to supply information,
18 assistance, and facilities to the committee;
19 requiring the department to provide staff
20 assistance; specifying duties of the committee;
21 requiring the committee to report to the
22 Governor, the Legislature, the Chief Financial
23 Officer, and the Commissioner of Insurance
24 Regulation by a specified date; providing for
25 expiration of the committee; requiring the
26 Financial Services Commission to adopt a
27 uniform home grading scale for certain
28 purposes; providing criteria; requiring the
29 Department of Community Affairs to implement
30 the 2006 Disaster Recovery Program for the
31 purpose of assisting local governments in
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Florida Senate - 2007 CONFERENCE COMMITTEE AMENDMENT
Bill No. CS/HB 1-A (c1)
Barcode 574486
1 hardening low-income housing against the
2 effects of hurricanes; specifying that the act
3 does not create an entitlement or obligate the
4 state; providing for program administration;
5 specifying the entities that are eligible to
6 apply for funding; providing for the use of
7 funds under the program; prohibiting insurers
8 writing private passenger automobile insurance
9 from writing such insurance under certain
10 circumstances; expressing the intent of the
11 Legislature to create a grant program to assist
12 low-income persons in purchasing property
13 insurance; repealing s. 627.0629(6), F.S.,
14 relating to certain limitations on writing
15 residential property insurance; providing
16 appropriations; providing for severability;
17 providing effective dates.
18
19 WHEREAS, homeowners in the State of Florida are
20 struggling under increased insurance costs and increased
21 housing prices as a result of damage caused by hurricanes and
22 tropical storms, and
23 WHEREAS, this increase in the cost of property
24 insurance for the state's residents demands immediate
25 attention, and
26 WHEREAS, the affordability of property insurance
27 creates financial burdens for Florida's residents and
28 financial crises for some property owners, and
29 WHEREAS, in addition to affordability, the availability
30 and stability of property insurance rates are critical issues
31 to the residents of this state, and
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 WHEREAS, because there is no single, quick, or easy
2 solution to the current crisis, a comprehensive and creative
3 approach is required, and
4 WHEREAS, property insurance is so interwoven with other
5 forms of insurance, through business, regulation, advocacy,
6 purchasing, and other interactions, that the viability of the
7 insurance market in Florida is at risk, and
8 WHEREAS, expanding coverage offered by the Florida
9 Hurricane Catastrophe Fund can help to address this crisis,
10 and
11 WHEREAS, taking steps to control or reduce the premiums
12 charged by Citizens Property Insurance Corporation can help to
13 address this crisis, and
14 WHEREAS, strengthening the Florida Building Code and
15 providing for voluntary guidelines in addition to the
16 requirements of the code can help to address this crisis, and
17 WHEREAS, sinkhole coverage is a critical part of the
18 crisis in certain areas of the state and must be addressed as
19 part of any comprehensive solution, and
20 WHEREAS, requiring property insurers to offer
21 additional deductibles and exclusions that apply at the option
22 of the property owner can help to address this crisis, and
23 WHEREAS, authorizing various groups of public and
24 private entities to enter into forms of self-insurance or
25 guaranty groups can help to address this crisis, and
26 WHEREAS, strengthening the processes for establishing
27 property insurance rates can help to address this crisis, and
28 WHEREAS, the role of consumer advocacy is a critical
29 part of addressing this crisis and consumer advocacy for
30 property insurance is a critical, if not the predominant, part
31 of consumer advocacy regarding insurance, and
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Bill No. CS/HB 1-A (c1)
Barcode 574486
1 WHEREAS, promoting, through financial and regulatory
2 methods, the ability of property insurers and reinsurers to do
3 business in Florida can help to address this crisis, and
4 WHEREAS, promoting, through financial and regulatory
5 incentives for property owners, the strengthening of property
6 to withstand the effects of windstorm damage can help to
7 address this crisis, NOW, THEREFORE,
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