HB 23A

1
A bill to be entitled
2An act relating to Citizens Property Insurance
3Corporation; amending s. 627.351, F.S.; deleting criteria
4for determining whether a rate is inadequate; deleting
5legislative intent with regard to rate adequacy in the
6residual market; providing an effective date.
7
8Be It Enacted by the Legislature of the State of Florida:
9
10     Section 1.  Paragraph (m) of subsection (6) of section
11627.351, Florida Statutes, is amended to read:
12     627.351  Insurance risk apportionment plans.--
13     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
14     (m)1.a.  Rates for coverage provided by the corporation
15shall be actuarially sound and not competitive with approved
16rates charged in the admitted voluntary market, so that the
17corporation functions as a residual market mechanism to provide
18insurance only when the insurance cannot be procured in the
19voluntary market. Rates shall include an appropriate catastrophe
20loading factor that reflects the actual catastrophic exposure of
21the corporation. For policies in the personal lines account and
22the commercial lines account issued or renewed on or after March
231, 2007, a rate is deemed inadequate if the rate, including
24investment income, is not sufficient to provide for the
25procurement of coverage under the Florida Hurricane Catastrophe
26Fund and private reinsurance costs, whether or not reinsurance
27is procured, and to pay all claims and expenses reasonably
28expected to result from a 100-year probable maximum loss event
29without resort to any regular or emergency assessments, long-
30term debt, state revenues, or other funding sources. For
31policies in the high-risk account issued or renewed on or after
32March 1, 2007, a rate is deemed inadequate if the rate,
33including investment income, is not sufficient to provide for
34the procurement of coverage under the Florida Hurricane
35Catastrophe Fund and private reinsurance costs, whether or not
36reinsurance is procured, and to pay all claims and expenses
37reasonably expected to result from a 70-year probable maximum
38loss event with resort to any regular or emergency assessments,
39long-term debt, state revenues, or other funding sources. For
40policies in the high-risk account issued or renewed in 2008 and
412009, the rate must be based upon an 85-year and 100-year
42probable maximum loss event, respectively.
43     b.  It is the intent of the Legislature to reaffirm the
44requirement of rate adequacy in the residual market. Recognizing
45that rates may comply with the intent expressed in sub-
46subparagraph a. and yet be inadequate and recognizing the public
47need to limit subsidies within the residual market, it is the
48further intent of the Legislature to establish statutory
49standards for rate adequacy. Such standards are intended to
50supplement the standard specified in s. 627.062(2)(e)3.,
51providing that rates are inadequate if they are clearly
52insufficient to sustain projected losses and expenses in the
53class of business to which they apply.
54     2.  For each county, the average rates of the corporation
55for each line of business for personal lines residential
56policies excluding rates for wind-only policies shall be no
57lower than the average rates charged by the insurer that had the
58highest average rate in that county among the 20 insurers with
59the greatest total direct written premium in the state for that
60line of business in the preceding year, except that with respect
61to mobile home coverages, the average rates of the corporation
62shall be no lower than the average rates charged by the insurer
63that had the highest average rate in that county among the 5
64insurers with the greatest total written premium for mobile home
65owner's policies in the state in the preceding year.
66     3.  Rates for personal lines residential wind-only policies
67must be actuarially sound and not competitive with approved
68rates charged by authorized insurers. If the filing under this
69subparagraph is made at least 90 days before the proposed
70effective date and the filing is not implemented during the
71office's review of the filing and any proceeding and judicial
72review, such filing shall be considered a "file and use" filing.
73In such case, the office shall finalize its review by issuance
74of a notice of intent to approve or a notice of intent to
75disapprove within 90 days after receipt of the filing. The
76notice of intent to approve and the notice of intent to
77disapprove constitute agency action for purposes of the
78Administrative Procedure Act. Requests for supporting
79information, requests for mathematical or mechanical
80corrections, or notification to the insurer by the office of its
81preliminary findings shall not toll the 90-day period during any
82such proceedings and subsequent judicial review. The rate shall
83be deemed approved if the office does not issue a notice of
84intent to approve or a notice of intent to disapprove within 90
85days after receipt of the filing. Corporation rate manuals shall
86include a rate surcharge for seasonal occupancy. To ensure that
87personal lines residential wind-only rates are not competitive
88with approved rates charged by authorized insurers, the
89corporation, in conjunction with the office, shall develop a
90wind-only ratemaking methodology, which methodology shall be
91contained in each rate filing made by the corporation with the
92office. If the office determines that the wind-only rates or
93rating factors filed by the corporation fail to comply with the
94wind-only ratemaking methodology provided for in this
95subsection, it shall so notify the corporation and require the
96corporation to amend its rates or rating factors to come into
97compliance within 90 days of notice from the office.
98     4.  The requirements of this paragraph that rates not be
99competitive with approved rates charged by authorized insurers
100do not apply in a county or area for which the office determines
101that no authorized insurer is offering coverage. The corporation
102shall amend its rates or rating factors for the affected county
103or area in conjunction with its next rate filing after such
104determination is made.
105     5.  For the purposes of establishing a pilot program to
106evaluate issues relating to the availability and affordability
107of insurance in an area where historically there has been little
108market competition, the provisions of subparagraph 2. do not
109apply to coverage provided by the corporation in Monroe County
110if the office determines that a reasonable degree of competition
111does not exist for personal lines residential policies. The
112provisions of subparagraph 3. do not apply to coverage provided
113by the corporation in Monroe County if the office determines
114that a reasonable degree of competition does not exist for
115personal lines residential policies in the area of that county
116which is eligible for wind-only coverage. In this county, the
117rates for personal lines residential coverage shall be
118actuarially sound and not excessive, inadequate, or unfairly
119discriminatory and are subject to the other provisions of the
120paragraph and s. 627.062. The commission shall adopt rules
121establishing the criteria for determining whether a reasonable
122degree of competition exists for personal lines residential
123policies in Monroe County. By March 1, 2006, the office shall
124submit a report to the Legislature providing an evaluation of
125the implementation of the pilot program affecting Monroe County.
126     6.  Rates for commercial lines coverage shall not be
127subject to the requirements of subparagraph 2., but shall be
128subject to all other requirements of this paragraph and s.
129627.062.
130     7.  Nothing in this paragraph shall require or allow the
131corporation to adopt a rate that is inadequate under s. 627.062.
132     8.  The corporation shall certify to the office at least
133twice annually that its personal lines rates comply with the
134requirements of subparagraphs 1., 2., and 3. If any adjustment
135in the rates or rating factors of the corporation is necessary
136to ensure such compliance, the corporation shall make and
137implement such adjustments and file its revised rates and rating
138factors with the office. If the office thereafter determines
139that the revised rates and rating factors fail to comply with
140the provisions of subparagraphs 1., 2., and 3., it shall notify
141the corporation and require the corporation to amend its rates
142or rating factors in conjunction with its next rate filing. The
143office must notify the corporation by electronic means of any
144rate filing it approves for any insurer among the insurers
145referred to in subparagraph 2.
146     9.  In addition to the rates otherwise determined pursuant
147to this paragraph, the corporation shall impose and collect an
148amount equal to the premium tax provided for in s. 624.509 to
149augment the financial resources of the corporation.
150     10.  The corporation shall develop a notice to
151policyholders or applicants that the rates of Citizens Property
152Insurance Corporation are intended to be higher than the rates
153of any admitted carrier and providing other information the
154corporation deems necessary to assist consumers in finding other
155voluntary admitted insurers willing to insure their property.
156     11.  After the public hurricane loss-projection model under
157s. 627.06281 has been found to be accurate and reliable by the
158Florida Commission on Hurricane Loss Projection Methodology,
159that model shall serve as the minimum benchmark for determining
160the windstorm portion of the corporation's rates. This
161subparagraph does not require or allow the corporation to adopt
162rates lower than the rates otherwise required or allowed by this
163paragraph.
164     Section 2.  This act shall take effect upon becoming a law.


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