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A bill to be entitled

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An act relating to commercial property insurance; amending

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s. 627.041, F.S.; defining the terms "assessable

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commercial property insurance" and "nonassessable

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commercial property insurance"; amending s. 627.062, F.S.;

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providing rate standards regarding nonassessable

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commercial property insurance; providing that

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nonassessable commercial property insurance is not subject

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to a determination that the rate is excessive or unfairly

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discriminatory; providing an exception; amending s.

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627.351, F.S.; excluding nonassessable commercial property

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insurance from the definition of "subject lines of

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business"; providing that insurers issuing nonassessable

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commercial property insurance policies are not assessable

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for the portion of the assessment from which the

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nonassessable commercial property insurance policy is

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exempt; creating s. 627.7031, F.S.; authorizing insurers

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offering assessable commercial property insurance policies

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to offer nonassessable commercial property insurance

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policies; authorizing an owner of a commercial property to

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purchase a nonassessable commercial property insurance

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policy if such a policy is offered by the insurer;

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requiring that an application for a nonassessable

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commercial property policy contain a specified disclaimer;

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requiring that the declarations page of a nonassessable

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commercial property policy contain a specified disclaimer;

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providing an effective date.

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Be It Enacted by the Legislature of the State of Florida:

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     Section 1.  Subsections (10) and (11) are added to section

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627.041, Florida Statutes, to read:

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     627.041  Definitions.--As used in this part:

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     (10) "Assessable commercial property insurance" means

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insurance on commercial property of every kind, as well as every

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interest therein, whether such property is on land, water, or in

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the air, against loss or damage from any and all hazard or cause,

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and against loss consequential upon such loss or damage, other

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than noncontractual legal liability for any such loss or damage

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that is subject to the rate standards set forth in s. 627.062 and

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deficit assessments by Citizens Property Insurance Corporation.

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Assessable commercial property insurance may contain a provision

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for accidental death or injury as part of a multiple peril

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policy.

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     (11) "Nonassessable commercial property insurance" means

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insurance on commercial property of every kind, as well as every

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interest therein, whether such property is on land, water, or in

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the air, against loss or damage from any and all hazard or cause,

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and against loss consequential upon such loss or damage, other

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than noncontractual legal liability for any such loss or damage

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that is not subject to the rate standards set forth in s.

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627.062, except as provided in s. 627.062(2)(k), or deficit

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assessments by Citizens Property Insurance Corporation.

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Nonassessable commercial property insurance may contain a

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provision for accidental death or injury as part of a multiple

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peril policy.

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     Section 2.  Paragraph (k) is added to subsection (2) of

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section 627.062, Florida Statutes, to read:

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     627.062  Rate standards.--

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     (2)  As to all such classes of insurance:

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     (k)1. Notwithstanding any other provisions of this section,

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nonassessable commercial property insurance is not subject to a

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determination that the rate is excessive or unfairly

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discriminatory, except as provided in subparagraph 3.

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2. This paragraph does not apply to filings for commercial

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lines residential insurance or assessable commercial property

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insurance.

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     3. This paragraph does not affect the power of the office

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to disapprove rates as inadequate or to disapprove a rate filing

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for the use of a rating factor that is unlawful under Florida

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law.

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The provisions of this subsection shall not apply to workers'

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compensation and employer's liability insurance and to motor

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vehicle insurance.

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     Section 3.  Paragraph (b) of subsection (6) of section

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627.351, Florida Statutes, is amended to read:

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     627.351  Insurance risk apportionment plans.--

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     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--

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     (b)1.  All insurers authorized to write one or more subject

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lines of business in this state are subject to assessment by the

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corporation and, for the purposes of this subsection, are

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referred to collectively as "assessable insurers." Insurers

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writing one or more subject lines of business in this state

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pursuant to part VIII of chapter 626 are not assessable insurers,

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but insureds who procure one or more subject lines of business in

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this state pursuant to part VIII of chapter 626 are subject to

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assessment by the corporation and are referred to collectively as

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"assessable insureds." An authorized insurer's assessment

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liability shall begin on the first day of the calendar year

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following the year in which the insurer was issued a certificate

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of authority to transact insurance for subject lines of business

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in this state and shall terminate 1 year after the end of the

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first calendar year during which the insurer no longer holds a

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certificate of authority to transact insurance for subject lines

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of business in this state.

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     2.a.  All revenues, assets, liabilities, losses, and

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expenses of the corporation shall be divided into three separate

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accounts as follows:

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     (I)  A personal lines account for personal residential

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policies issued by the corporation or issued by the Residential

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Property and Casualty Joint Underwriting Association and renewed

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by the corporation that provide comprehensive, multiperil

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coverage on risks that are not located in areas eligible for

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coverage in the Florida Windstorm Underwriting Association as

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those areas were defined on January 1, 2002, and for such

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policies that do not provide coverage for the peril of wind on

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risks that are located in such areas;

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     (II)  A commercial lines account for commercial residential

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and commercial nonresidential policies issued by the corporation

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or issued by the Residential Property and Casualty Joint

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Underwriting Association and renewed by the corporation that

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provide coverage for basic property perils on risks that are not

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located in areas eligible for coverage in the Florida Windstorm

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Underwriting Association as those areas were defined on January

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1, 2002, and for such policies that do not provide coverage for

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the peril of wind on risks that are located in such areas; and

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     (III)  A high-risk account for personal residential policies

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and commercial residential and commercial nonresidential property

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policies issued by the corporation or transferred to the

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corporation that provide coverage for the peril of wind on risks

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that are located in areas eligible for coverage in the Florida

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Windstorm Underwriting Association as those areas were defined on

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January 1, 2002. Subject to the approval of a business plan by

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the Financial Services Commission and Legislative Budget

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Commission as provided in this sub-sub-subparagraph, but no

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earlier than March 31, 2007, the corporation may offer policies

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that provide multiperil coverage and the corporation shall

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continue to offer policies that provide coverage only for the

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peril of wind for risks located in areas eligible for coverage in

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the high-risk account. In issuing multiperil coverage, the

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corporation may use its approved policy forms and rates for the

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personal lines account. An applicant or insured who is eligible

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to purchase a multiperil policy from the corporation may purchase

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a multiperil policy from an authorized insurer without prejudice

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to the applicant's or insured's eligibility to prospectively

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purchase a policy that provides coverage only for the peril of

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wind from the corporation. An applicant or insured who is

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eligible for a corporation policy that provides coverage only for

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the peril of wind may elect to purchase or retain such policy and

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also purchase or retain coverage excluding wind from an

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authorized insurer without prejudice to the applicant's or

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insured's eligibility to prospectively purchase a policy that

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provides multiperil coverage from the corporation. It is the goal

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of the Legislature that there would be an overall average savings

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of 10 percent or more for a policyholder who currently has a

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wind-only policy with the corporation, and an ex-wind policy with

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a voluntary insurer or the corporation, and who then obtains a

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multiperil policy from the corporation. It is the intent of the

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Legislature that the offer of multiperil coverage in the high-

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risk account be made and implemented in a manner that does not

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adversely affect the tax-exempt status of the corporation or

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creditworthiness of or security for currently outstanding

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financing obligations or credit facilities of the high-risk

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account, the personal lines account, or the commercial lines

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account. By March 1, 2007, the corporation shall prepare and

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submit for approval by the Financial Services Commission and

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Legislative Budget Commission a report detailing the

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corporation's business plan for issuing multiperil coverage in

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the high-risk account. The business plan shall be approved or

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disapproved within 30 days after receipt, as submitted or

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modified and resubmitted by the corporation. The business plan

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must include: the impact of such multiperil coverage on the

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corporation's financial resources, the impact of such multiperil

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coverage on the corporation's tax-exempt status, the manner in

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which the corporation plans to implement the processing of

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applications and policy forms for new and existing policyholders,

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the impact of such multiperil coverage on the corporation's

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ability to deliver customer service at the high level required by

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this subsection, the ability of the corporation to process

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claims, the ability of the corporation to quote and issue

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policies, the impact of such multiperil coverage on the

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corporation's agents, the impact of such multiperil coverage on

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the corporation's existing policyholders, and the impact of such

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multiperil coverage on rates and premium. The high-risk account

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must also include quota share primary insurance under

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subparagraph (c)2. The area eligible for coverage under the high-

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risk account also includes the area within Port Canaveral, which

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is bordered on the south by the City of Cape Canaveral, bordered

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on the west by the Banana River, and bordered on the north by

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Federal Government property.

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     b.  The three separate accounts must be maintained as long

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as financing obligations entered into by the Florida Windstorm

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Underwriting Association or Residential Property and Casualty

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Joint Underwriting Association are outstanding, in accordance

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with the terms of the corresponding financing documents. When the

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financing obligations are no longer outstanding, in accordance

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with the terms of the corresponding financing documents, the

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corporation may use a single account for all revenues, assets,

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liabilities, losses, and expenses of the corporation. Consistent

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with the requirement of this subparagraph and prudent investment

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policies that minimize the cost of carrying debt, the board shall

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exercise its best efforts to retire existing debt or to obtain

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approval of necessary parties to amend the terms of existing

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debt, so as to structure the most efficient plan to consolidate

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the three separate accounts into a single account. By February 1,

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2007, the board shall submit a report to the Financial Services

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Commission, the President of the Senate, and the Speaker of the

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House of Representatives which includes an analysis of

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consolidating the accounts, the actions the board has taken to

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minimize the cost of carrying debt, and its recommendations for

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executing the most efficient plan.

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     c.  Creditors of the Residential Property and Casualty Joint

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Underwriting Association and of the accounts specified in sub-

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sub-subparagraphs a.(I) and (II) may have a claim against, and

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recourse to, the accounts referred to in sub-sub-subparagraphs

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a.(I) and (II) and shall have no claim against, or recourse to,

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the account referred to in sub-sub-subparagraph a.(III).

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Creditors of the Florida Windstorm Underwriting Association shall

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have a claim against, and recourse to, the account referred to in

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sub-sub-subparagraph a.(III) and shall have no claim against, or

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recourse to, the accounts referred to in sub-sub-subparagraphs

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a.(I) and (II).

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     d.  Revenues, assets, liabilities, losses, and expenses not

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attributable to particular accounts shall be prorated among the

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accounts.

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     e.  The Legislature finds that the revenues of the

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corporation are revenues that are necessary to meet the

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requirements set forth in documents authorizing the issuance of

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bonds under this subsection.

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     f.  No part of the income of the corporation may inure to

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the benefit of any private person.

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     3.  With respect to a deficit in an account:

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     a.  When the deficit incurred in a particular calendar year

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is not greater than 10 percent of the aggregate statewide direct

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written premium for the subject lines of business for the prior

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calendar year, the entire deficit shall be recovered through

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regular assessments of assessable insurers under paragraph (p)

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and assessable insureds.

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     b.  When the deficit incurred in a particular calendar year

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exceeds 10 percent of the aggregate statewide direct written

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premium for the subject lines of business for the prior calendar

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year, the corporation shall levy regular assessments on

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assessable insurers under paragraph (p) and on assessable

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insureds in an amount equal to the greater of 10 percent of the

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deficit or 10 percent of the aggregate statewide direct written

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premium for the subject lines of business for the prior calendar

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year. Any remaining deficit shall be recovered through emergency

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assessments under sub-subparagraph d.

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     c.  Each assessable insurer's share of the amount being

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assessed under sub-subparagraph a. or sub-subparagraph b. shall

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be in the proportion that the assessable insurer's direct written

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premium for the subject lines of business for the year preceding

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the assessment bears to the aggregate statewide direct written

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premium for the subject lines of business for that year. The

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assessment percentage applicable to each assessable insured is

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the ratio of the amount being assessed under sub-subparagraph a.

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or sub-subparagraph b. to the aggregate statewide direct written

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premium for the subject lines of business for the prior year.

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Assessments levied by the corporation on assessable insurers

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under sub-subparagraphs a. and b. shall be paid as required by

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the corporation's plan of operation and paragraph (p).

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Notwithstanding any other provision of this subsection, the

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aggregate amount of a regular assessment for a deficit incurred

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in a particular calendar year shall be reduced by the estimated

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amount to be received by the corporation from the Citizens

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policyholder surcharge under subparagraph (c)10. and the amount

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collected or estimated to be collected from the assessment on

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Citizens policyholders pursuant to sub-subparagraph i.

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Assessments levied by the corporation on assessable insureds

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under sub-subparagraphs a. and b. shall be collected by the

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surplus lines agent at the time the surplus lines agent collects

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the surplus lines tax required by s. 626.932 and shall be paid to

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the Florida Surplus Lines Service Office at the time the surplus

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lines agent pays the surplus lines tax to the Florida Surplus

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Lines Service Office. Upon receipt of regular assessments from

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surplus lines agents, the Florida Surplus Lines Service Office

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shall transfer the assessments directly to the corporation as

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determined by the corporation.

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     d.  Upon a determination by the board of governors that a

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deficit in an account exceeds the amount that will be recovered

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through regular assessments under sub-subparagraph a. or sub-

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subparagraph b., the board shall levy, after verification by the

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office, emergency assessments, for as many years as necessary to

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cover the deficits, to be collected by assessable insurers and

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the corporation and collected from assessable insureds upon

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issuance or renewal of policies for subject lines of business,

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excluding National Flood Insurance policies. The amount of the

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emergency assessment collected in a particular year shall be a

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uniform percentage of that year's direct written premium for

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subject lines of business and all accounts of the corporation,

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excluding National Flood Insurance Program policy premiums, as

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annually determined by the board and verified by the office. The

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office shall verify the arithmetic calculations involved in the

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board's determination within 30 days after receipt of the

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information on which the determination was based. Notwithstanding

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any other provision of law, the corporation and each assessable

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insurer that writes subject lines of business shall collect

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emergency assessments from its policyholders without such

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obligation being affected by any credit, limitation, exemption,

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or deferment. Emergency assessments levied by the corporation on

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assessable insureds shall be collected by the surplus lines agent

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at the time the surplus lines agent collects the surplus lines

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tax required by s. 626.932 and shall be paid to the Florida

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Surplus Lines Service Office at the time the surplus lines agent

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pays the surplus lines tax to the Florida Surplus Lines Service

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Office. The emergency assessments so collected shall be

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transferred directly to the corporation on a periodic basis as

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determined by the corporation and shall be held by the

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corporation solely in the applicable account. The aggregate

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amount of emergency assessments levied for an account under this

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sub-subparagraph in any calendar year may not exceed the greater

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of 10 percent of the amount needed to cover the original deficit,

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plus interest, fees, commissions, required reserves, and other

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costs associated with financing of the original deficit, or 10

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percent of the aggregate statewide direct written premium for

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subject lines of business and for all accounts of the corporation

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for the prior year, plus interest, fees, commissions, required

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reserves, and other costs associated with financing the original

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deficit.

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     e.  The corporation may pledge the proceeds of assessments,

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projected recoveries from the Florida Hurricane Catastrophe Fund,

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other insurance and reinsurance recoverables, policyholder

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surcharges and other surcharges, and other funds available to the

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corporation as the source of revenue for and to secure bonds

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issued under paragraph (p), bonds or other indebtedness issued

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under subparagraph (c)3., or lines of credit or other financing

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mechanisms issued or created under this subsection, or to retire

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any other debt incurred as a result of deficits or events giving

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rise to deficits, or in any other way that the board determines

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will efficiently recover such deficits. The purpose of the lines

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of credit or other financing mechanisms is to provide additional

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resources to assist the corporation in covering claims and

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expenses attributable to a catastrophe. As used in this

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subsection, the term "assessments" includes regular assessments

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under sub-subparagraph a., sub-subparagraph b., or subparagraph

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(p)1. and emergency assessments under sub-subparagraph d.

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Emergency assessments collected under sub-subparagraph d. are not

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part of an insurer's rates, are not premium, and are not subject

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to premium tax, fees, or commissions; however, failure to pay the

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emergency assessment shall be treated as failure to pay premium.

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The emergency assessments under sub-subparagraph d. shall

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continue as long as any bonds issued or other indebtedness

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incurred with respect to a deficit for which the assessment was

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imposed remain outstanding, unless adequate provision has been

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made for the payment of such bonds or other indebtedness pursuant

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to the documents governing such bonds or other indebtedness.

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     f.  As used in this subsection for purposes of any deficit

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incurred on or after January 25, 2007, the term "subject lines of

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business" means insurance written by assessable insurers or

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procured by assessable insureds for all property and casualty

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lines of business in this state, but not including workers'

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compensation, or medical malpractice, or nonassessable commercial

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property insurance as defined in s. 627.041(11). As used in the

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sub-subparagraph, the term "property and casualty lines of

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business" includes all lines of business identified on Form 2,

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Exhibit of Premiums and Losses, in the annual statement required

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of authorized insurers by s. 624.424 and any rule adopted under

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this section, except for those lines identified as accident and

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health insurance and except for policies written under the

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National Flood Insurance Program or the Federal Crop Insurance

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Program. For purposes of this sub-subparagraph, the term

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"workers' compensation" includes both workers' compensation

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insurance and excess workers' compensation insurance. Insurers

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issuing nonassessable commercial property insurance policies are

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not assessable for the portion of the assessment from which the

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nonassessable commercial property insurance policy is exempt.

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     g.  The Florida Surplus Lines Service Office shall determine

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annually the aggregate statewide written premium in subject lines

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of business procured by assessable insureds and shall report that

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information to the corporation in a form and at a time the

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corporation specifies to ensure that the corporation can meet the

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requirements of this subsection and the corporation's financing

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obligations.

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     h.  The Florida Surplus Lines Service Office shall verify

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the proper application by surplus lines agents of assessment

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percentages for regular assessments and emergency assessments

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levied under this subparagraph on assessable insureds and shall

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assist the corporation in ensuring the accurate, timely

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collection and payment of assessments by surplus lines agents as

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required by the corporation.

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     i.  If a deficit is incurred in any account in 2008 or

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thereafter, the board of governors shall levy an immediate

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assessment against the premium of each nonhomestead property

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policyholder in all accounts of the corporation, as a uniform

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percentage of the premium of the policy of up to 10 percent of

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such premium, which funds shall be used to offset the deficit. If

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this assessment is insufficient to eliminate the deficit, the

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board of governors shall levy an additional assessment against

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all policyholders of the corporation, which shall be collected at

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the time of issuance or renewal of a policy, as a uniform

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percentage of the premium for the policy of up to 10 percent of

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such premium, which funds shall be used to further offset the

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deficit.

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     j.  The board of governors shall maintain separate

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accounting records that consolidate data for nonhomestead

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properties, including, but not limited to, number of policies,

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insured values, premiums written, and losses. The board of

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governors shall annually report to the office and the Legislature

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a summary of such data.

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     Section 4.  Section 627.7031, Florida Statutes, is created

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to read:

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     627.7031 Commercial property insurance.--

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     (1) Insurers offering assessable commercial property

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insurance policies as defined in s. 627.041(10) may offer

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nonassessable commercial property insurance policies as defined

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in s. 627.041(11).

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     (2) An owner of commercial property may purchase a

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nonassessable commercial property insurance policy if such a

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policy is offered by the insurer.

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     (3) The application for a nonassessable commercial property

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insurance policy shall contain the following disclaimer printed

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in at least 12-point boldfaced type:

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THIS APPLICATION IS FOR A COMMERCIAL PROPERTY POLICY THAT IS

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SUBJECT TO LIMITED RATE REGULATION REQUIREMENTS OF FLORIDA LAW

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AND IS NOT SUBJECT TO DEFICIT ASSESSMENTS BY CITIZENS PROPERTY

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INSURANCE CORPORATION. A COMMERCIAL PROPERTY POLICY THAT IS

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SUBJECT TO RATE REGULATION REQUIREMENTS AND DEFICIT ASSESSMENT BY

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CITIZENS PROPERTY INSURANCE CORPORATION IS AVAILABLE. PLEASE

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DISCUSS YOUR POLICY OPTIONS WITH YOUR INSURANCE AGENT.

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     (4) The declarations page of a nonassessable commercial

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property insurance policy shall contain the following disclaimer

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printed in at least 12-point boldfaced type:

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THIS COMMERCIAL PROPERTY POLICY IS SUBJECT TO LIMITED RATE

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REGULATION REQUIREMENTS OF FLORIDA LAW AND IS NOT SUBJECT TO

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DEFICIT ASSESSMENTS BY CITIZENS PROPERTY INSURANCE CORPORATION. A

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COMMERCIAL PROPERTY POLICY THAT IS SUBJECT TO RATE REGULATION

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REQUIREMENTS AND DEFICIT ASSESSMENT BY CITIZENS PROPERTY

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INSURANCE CORPORATION IS AVAILABLE. PLEASE DISCUSS YOUR POLICY

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OPTIONS WITH YOUR INSURANCE AGENT.

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     Section 5.  This act shall take effect July 1, 2008.