1 | A bill to be entitled |
2 | An act relating to Citizens Property Insurance |
3 | Corporation; amending s. 627.351, F.S.; deleting criteria |
4 | for determining whether a rate is inadequate; deleting |
5 | legislative intent with regard to rate adequacy in the |
6 | residual market; providing an effective date. |
7 |
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8 | Be It Enacted by the Legislature of the State of Florida: |
9 |
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10 | Section 1. Paragraph (m) of subsection (6) of section |
11 | 627.351, 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 |
15 | shall be actuarially sound and not competitive with approved |
16 | rates charged in the admitted voluntary market, so that the |
17 | corporation functions as a residual market mechanism to provide |
18 | insurance only when the insurance cannot be procured in the |
19 | voluntary market. Rates shall include an appropriate catastrophe |
20 | loading factor that reflects the actual catastrophic exposure of |
21 | the corporation. For policies in the personal lines account and |
22 | the commercial lines account issued or renewed on or after March |
23 | 1, 2007, a rate is deemed inadequate if the rate, including |
24 | investment income, is not sufficient to provide for the |
25 | procurement of coverage under the Florida Hurricane Catastrophe |
26 | Fund and private reinsurance costs, whether or not reinsurance |
27 | is procured, and to pay all claims and expenses reasonably |
28 | expected to result from a 100-year probable maximum loss event |
29 | without resort to any regular or emergency assessments, long- |
30 | term debt, state revenues, or other funding sources. For |
31 | policies in the high-risk account issued or renewed on or after |
32 | March 1, 2007, a rate is deemed inadequate if the rate, |
33 | including investment income, is not sufficient to provide for |
34 | the procurement of coverage under the Florida Hurricane |
35 | Catastrophe Fund and private reinsurance costs, whether or not |
36 | reinsurance is procured, and to pay all claims and expenses |
37 | reasonably expected to result from a 70-year probable maximum |
38 | loss event with resort to any regular or emergency assessments, |
39 | long-term debt, state revenues, or other funding sources. For |
40 | policies in the high-risk account issued or renewed in 2008 and |
41 | 2009, the rate must be based upon an 85-year and 100-year |
42 | probable maximum loss event, respectively. |
43 | b. It is the intent of the Legislature to reaffirm the |
44 | requirement of rate adequacy in the residual market. Recognizing |
45 | that rates may comply with the intent expressed in sub- |
46 | subparagraph a. and yet be inadequate and recognizing the public |
47 | need to limit subsidies within the residual market, it is the |
48 | further intent of the Legislature to establish statutory |
49 | standards for rate adequacy. Such standards are intended to |
50 | supplement the standard specified in s. 627.062(2)(e)3., |
51 | providing that rates are inadequate if they are clearly |
52 | insufficient to sustain projected losses and expenses in the |
53 | class of business to which they apply. |
54 | 2. For each county, the average rates of the corporation |
55 | for each line of business for personal lines residential |
56 | policies excluding rates for wind-only policies shall be no |
57 | lower than the average rates charged by the insurer that had the |
58 | highest average rate in that county among the 20 insurers with |
59 | the greatest total direct written premium in the state for that |
60 | line of business in the preceding year, except that with respect |
61 | to mobile home coverages, the average rates of the corporation |
62 | shall be no lower than the average rates charged by the insurer |
63 | that had the highest average rate in that county among the 5 |
64 | insurers with the greatest total written premium for mobile home |
65 | owner's policies in the state in the preceding year. |
66 | 3. Rates for personal lines residential wind-only policies |
67 | must be actuarially sound and not competitive with approved |
68 | rates charged by authorized insurers. If the filing under this |
69 | subparagraph is made at least 90 days before the proposed |
70 | effective date and the filing is not implemented during the |
71 | office's review of the filing and any proceeding and judicial |
72 | review, such filing shall be considered a "file and use" filing. |
73 | In such case, the office shall finalize its review by issuance |
74 | of a notice of intent to approve or a notice of intent to |
75 | disapprove within 90 days after receipt of the filing. The |
76 | notice of intent to approve and the notice of intent to |
77 | disapprove constitute agency action for purposes of the |
78 | Administrative Procedure Act. Requests for supporting |
79 | information, requests for mathematical or mechanical |
80 | corrections, or notification to the insurer by the office of its |
81 | preliminary findings shall not toll the 90-day period during any |
82 | such proceedings and subsequent judicial review. The rate shall |
83 | be deemed approved if the office does not issue a notice of |
84 | intent to approve or a notice of intent to disapprove within 90 |
85 | days after receipt of the filing. Corporation rate manuals shall |
86 | include a rate surcharge for seasonal occupancy. To ensure that |
87 | personal lines residential wind-only rates are not competitive |
88 | with approved rates charged by authorized insurers, the |
89 | corporation, in conjunction with the office, shall develop a |
90 | wind-only ratemaking methodology, which methodology shall be |
91 | contained in each rate filing made by the corporation with the |
92 | office. If the office determines that the wind-only rates or |
93 | rating factors filed by the corporation fail to comply with the |
94 | wind-only ratemaking methodology provided for in this |
95 | subsection, it shall so notify the corporation and require the |
96 | corporation to amend its rates or rating factors to come into |
97 | compliance within 90 days of notice from the office. |
98 | 4. The requirements of this paragraph that rates not be |
99 | competitive with approved rates charged by authorized insurers |
100 | do not apply in a county or area for which the office determines |
101 | that no authorized insurer is offering coverage. The corporation |
102 | shall amend its rates or rating factors for the affected county |
103 | or area in conjunction with its next rate filing after such |
104 | determination is made. |
105 | 5. For the purposes of establishing a pilot program to |
106 | evaluate issues relating to the availability and affordability |
107 | of insurance in an area where historically there has been little |
108 | market competition, the provisions of subparagraph 2. do not |
109 | apply to coverage provided by the corporation in Monroe County |
110 | if the office determines that a reasonable degree of competition |
111 | does not exist for personal lines residential policies. The |
112 | provisions of subparagraph 3. do not apply to coverage provided |
113 | by the corporation in Monroe County if the office determines |
114 | that a reasonable degree of competition does not exist for |
115 | personal lines residential policies in the area of that county |
116 | which is eligible for wind-only coverage. In this county, the |
117 | rates for personal lines residential coverage shall be |
118 | actuarially sound and not excessive, inadequate, or unfairly |
119 | discriminatory and are subject to the other provisions of the |
120 | paragraph and s. 627.062. The commission shall adopt rules |
121 | establishing the criteria for determining whether a reasonable |
122 | degree of competition exists for personal lines residential |
123 | policies in Monroe County. By March 1, 2006, the office shall |
124 | submit a report to the Legislature providing an evaluation of |
125 | the implementation of the pilot program affecting Monroe County. |
126 | 6. Rates for commercial lines coverage shall not be |
127 | subject to the requirements of subparagraph 2., but shall be |
128 | subject to all other requirements of this paragraph and s. |
129 | 627.062. |
130 | 7. Nothing in this paragraph shall require or allow the |
131 | corporation to adopt a rate that is inadequate under s. 627.062. |
132 | 8. The corporation shall certify to the office at least |
133 | twice annually that its personal lines rates comply with the |
134 | requirements of subparagraphs 1., 2., and 3. If any adjustment |
135 | in the rates or rating factors of the corporation is necessary |
136 | to ensure such compliance, the corporation shall make and |
137 | implement such adjustments and file its revised rates and rating |
138 | factors with the office. If the office thereafter determines |
139 | that the revised rates and rating factors fail to comply with |
140 | the provisions of subparagraphs 1., 2., and 3., it shall notify |
141 | the corporation and require the corporation to amend its rates |
142 | or rating factors in conjunction with its next rate filing. The |
143 | office must notify the corporation by electronic means of any |
144 | rate filing it approves for any insurer among the insurers |
145 | referred to in subparagraph 2. |
146 | 9. In addition to the rates otherwise determined pursuant |
147 | to this paragraph, the corporation shall impose and collect an |
148 | amount equal to the premium tax provided for in s. 624.509 to |
149 | augment the financial resources of the corporation. |
150 | 10. The corporation shall develop a notice to |
151 | policyholders or applicants that the rates of Citizens Property |
152 | Insurance Corporation are intended to be higher than the rates |
153 | of any admitted carrier and providing other information the |
154 | corporation deems necessary to assist consumers in finding other |
155 | voluntary admitted insurers willing to insure their property. |
156 | 11. After the public hurricane loss-projection model under |
157 | s. 627.06281 has been found to be accurate and reliable by the |
158 | Florida Commission on Hurricane Loss Projection Methodology, |
159 | that model shall serve as the minimum benchmark for determining |
160 | the windstorm portion of the corporation's rates. This |
161 | subparagraph does not require or allow the corporation to adopt |
162 | rates lower than the rates otherwise required or allowed by this |
163 | paragraph. |
164 | Section 2. This act shall take effect upon becoming a law. |