Florida Senate - 2008 COMMITTEE AMENDMENT

Bill No. CS for SB's 2860 & 1196

924300

CHAMBER ACTION

Senate

Comm: RCS

4/8/2008

House

The Committee on General Government Appropriations (Alexander)

recommended the following amendment:

Senate Amendment (with title amendment)

Delete everything after the enacting clause

and insert:

Section 1. Section 215.5595, Florida Statutes, is amended

to read:

215.5595 Insurance Capital Build-Up Incentive Program.--

(1) Upon entering the 2008 2006 hurricane season, the

Legislature finds that:

(a) The losses in Florida from eight hurricanes in 2004 and

2005 have seriously strained the resources of both the voluntary

insurance market and the public sector mechanisms of Citizens

Property Insurance Corporation and the Florida Hurricane

Catastrophe Fund.

(b) Private reinsurance is much less available and at a

significantly greater cost to residential property insurers as

compared to 1 year ago, particularly for amounts below the

insurer's retention or retained losses that must be paid before

reimbursement is provided by the Florida Hurricane Catastrophe

Fund.

the insolvency of certain insurers may be imminent.

(d) Hurricane forecast experts predict that the 2006

hurricane season will be an active hurricane season and that the

Atlantic and Gulf Coast regions face an active hurricane cycle of

10 to 20 years or longer.

(b)(e) Citizens Property Insurance Corporation has over 1.2

million policies in force, has the largest market share of any

insurer writing residential property insurer in the state, and

faces the threat of a catastrophic loss that The number of

cancellations or nonrenewals of residential property insurance

policies is expected to increase and the number of new

residential policies written in the voluntary market are likely

to decrease, causing increased policy growth and exposure to the

state insurer of last resort, Citizens Property Insurance

Corporation, and threatening to increase the deficit of the

corporation, currently estimated to be over $1.7 billion. This

deficit must be funded by assessments against insurers and

policyholders, unless otherwise funded by the state.

(c)(f) Policyholders are subject to high increased premiums

and assessments that are increasingly making such coverage

unaffordable and that may force policyholders to sell their homes

and even leave the state.

(d)(g) The increased risk to the public sector and private

sector continues to pose poses a serious threat to the economy of

this state, particularly the building and financing of

residential structures, and existing mortgages may be placed in

default.

(h) The losses from 2004 and 2005, combined with the

expectation that the increase in hurricane activity will continue

for the foreseeable future, have caused both insurers and

reinsurers to limit the capital they are willing to commit to

covering the hurricane risk in Florida; attracting new capital to

the Florida market is a critical priority; and providing a low-

cost source of capital would enable insurers to write additional

residential property insurance coverage and act to mitigate

premium increases.

(e)(i) Appropriating state funds to be exchanged for used

as surplus notes issued by for residential property insurers,

under conditions requiring the insurer to contribute additional

private sector capital and to write a minimum level of premiums

for residential hurricane coverage, is a valid and important

public purpose.

(f) Extending the Insurance Capital Build-up Incentive

Program will provide an incentive for investors to commit

additional capital to Florida's residential insurance market.

(2) The purpose of this section is to provide funds in

exchange for surplus notes to be issued by to new or existing

authorized residential property insurers under the Insurance

Capital Build-Up Incentive Program administered by the State

Board of Administration, under the following conditions:

(a) The amount of state funds provided in exchange for a

the surplus note to for any insurer or insurer group, other than

an insurer writing only manufactured housing policies, may not

exceed $25 million or 20 percent of the total amount of funds

appropriated for available under the program, whichever is

greater. The amount of the surplus note for any insurer or

insurer group writing residential property insurance covering

only manufactured housing may not exceed $7 million.

(b) The insurer must contribute an amount of new capital to

its surplus which is at least equal to the amount of the surplus

note and must apply to the board by October 1, 2008 July 1, 2006.

If an insurer applies after July 1, 2006, but before June 1,

2007, the amount of the surplus note is limited to one-half of

the new capital that the insurer contributes to its surplus,

except that an insurer writing only manufactured housing policies

is eligible to receive a surplus note of up to $7 million. For

purposes of this section, new capital must be in the form of cash

or cash equivalents as specified in s. 625.012(1).

note must total at least $50 million, except for insurers writing

residential property insurance covering only manufactured

housing. The insurer's surplus, new capital, and the surplus note

must total at least $14 million for insurers writing only

residential property insurance covering manufactured housing

policies as provided in paragraph (a).

(d) The insurer must commit to increase its writings of

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residential property insurance, including the peril of wind, and

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to meet meeting a minimum writing ratio of net written premium to

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surplus of at least 1:1 for the first year after receiving the

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state funds, 1.5:1 for the second year, and 2:1 for the remaining

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term of the surplus note. Alternatively, the insurer must meet a

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minimum writing ratio of gross written premium to surplus of at

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least 3:1 for the first year after receiving the state funds,

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4.5:1 for the second year, and 6:1 for the remaining term of the

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surplus note. The writing ratios, which shall be determined by

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the Office of Insurance Regulation and certified quarterly to the

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board. For this purpose, the term "premium" "net written premium"

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means net written premium for residential property insurance in

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Florida, including the peril of wind, and "surplus" refers to the

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amount of the state funds provided to the insurer in exchange for

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the surplus note plus the amount of new capital contributed by

115

the insurer in order to obtain the state funds the entire surplus

116

of the insurer. The insurer must also commit to writing at least

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15 percent of its net or gross written premium for new policies,

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not including renewal premiums, for policies taken out of

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Citizens Property Insurance Corporation, during each of the first

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3 years after receiving the state funds in exchange for the

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surplus note, which shall be determined by the Office of

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Insurance Regulation and certified annually to the board. The

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removal of such policies must result in a reduction in the

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probable maximum loss in the account from which the policies are

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removed. The insurer must also commit to maintaining a level of

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surplus and reinsurance sufficient to cover in excess of its 1-

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in-100 year probable maximum loss, as determined by a hurricane

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loss model accepted by the Florida Commission on Hurricane Loss

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Projection Methodology, which shall be determined by the Office

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of Insurance Regulation and certified annually the board. If the

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board determines that the insurer has failed to meet any of the

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requirements of this paragraph required ratio is not maintained

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during the term of the surplus note, the board may increase the

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interest rate, accelerate the repayment of interest and

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principal, or shorten the term of the surplus note, subject to

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approval by the Commissioner of Insurance of payments by the

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insurer of principal and interest as provided in paragraph (f).

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(e) If the requirements of this section are met, the board

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may approve an application by an insurer for funds in exchange

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for issuance of a surplus note, unless the board determines that

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the financial condition of the insurer and its business plan for

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writing residential property insurance in Florida places an

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unreasonably high level of financial risk to the state of

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nonpayment in full of the interest and principal. The board shall

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consult with the Office of Insurance Regulation and may contract

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with independent financial and insurance consultants in making

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this determination.

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(f) The surplus note must be repayable to the state with a

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term of 20 years. The surplus note shall accrue interest on the

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unpaid principal balance at a rate equivalent to the 10-year U.S.

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Treasury Bond rate, require the payment only of interest during

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the first 3 years, and include such other terms as approved by

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the board. The board may charge late fees up to 5 percent for

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late payments or other late remittances. Payment of principal, or

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interest, or late fees by the insurer on the surplus note must be

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approved by the Commissioner of Insurance, who shall approve such

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payment unless the commissioner determines that such payment will

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substantially impair the financial condition of the insurer. If

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such a determination is made, the commissioner shall approve such

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payment that will not substantially impair the financial

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condition of the insurer.

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(g) The total amount of funds available for the program is

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limited to the amount appropriated by the Legislature for this

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purpose. If the amount of surplus notes requested by insurers

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exceeds the amount of funds available, the board may prioritize

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insurers that are eligible and approved, with priority for

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funding given to insurers writing only manufactured housing

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policies, regardless of the date of application, based on the

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financial strength of the insurer, the viability of its proposed

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business plan for writing additional residential property

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insurance in the state, and the effect on competition in the

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residential property insurance market. Between insurers writing

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residential property insurance covering manufactured housing,

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priority shall be given to the insurer writing the highest

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percentage of its policies covering manufactured housing.

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(h) The board may allocate portions of the funds available

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for the program and establish dates for insurers to apply for

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surplus notes from such allocation which are earlier than the

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dates established in paragraph (b).

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(h)(i) Notwithstanding paragraph (d), a newly formed

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manufactured housing insurer that is eligible for a surplus note

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under this section shall meet the premium to surplus ratio

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provisions of s. 624.4095.

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(i)(j) As used in this section, "an insurer writing only

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manufactured housing policies" includes:

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1. A Florida domiciled insurer that begins writing personal

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lines residential manufactured housing policies in Florida after

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March 1, 2007, and that removes a minimum of 50,000 policies from

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Citizens Property Insurance Corporation without accepting a

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bonus, provided at least 25 percent of its policies cover

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manufactured housing. Such an insurer may count any funds above

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the minimum capital and surplus requirement that were contributed

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into the insurer after March 1, 2007, as new capital under this

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section.

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2. A Florida domiciled insurer that writes at least 40

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percent of its policies covering manufactured housing in Florida.

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(3) As used in this section, the term:

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(a) "Board" means the State Board of Administration.

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(b) "Program" means the Insurance Capital Build-Up

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Incentive Program established by this section.

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(4) The state funds provided to the insurer in exchange for

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the A surplus note provided to an insurer pursuant to this

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section are is considered borrowed surplus an asset of the

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insurer pursuant to s. 628.401 s. 625.012.

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(5) If an insurer that receives funds in exchange for

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issuance of a surplus note pursuant to this section is rendered

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insolvent, the state is a class 3 creditor pursuant to s. 631.271

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for the unpaid principal and interest on the surplus note.

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(6) The board shall adopt rules prescribing the procedures,

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administration, and criteria for approving the applications of

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insurers to receive funds in exchange for issuance of surplus

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notes pursuant to this section, which may be adopted pursuant to

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the procedures for emergency rules of chapter 120. Otherwise,

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actions and determinations by the board pursuant to this section

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are exempt from chapter 120.

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(7) The board shall invest and reinvest the funds

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appropriated for the program in accordance with s. 215.47 and

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consistent with board policy.

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(8) The board shall semiannually submit a report to the

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President of the Senate and the Speaker of the House of

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Representatives on February 1 and August 1 as to the results of

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the program and each insurer's compliance with the terms of its

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surplus note.

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(9) The amendments to this section enacted in 2008 do not

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affect the terms or conditions of the surplus notes that were

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approved prior to January 1, 2008. However, the board may

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renegotiate the terms of any surplus note issued by an insurer

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prior to January 2008 under this program upon the agreement of

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the insurer and the board and consistent with the requirements of

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this section as amended in 2008.

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(10) On January 15, 2009, the State Board of Administration

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shall transfer to Citizens Property Insurance Corporation any

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funds that have not been committed or reserved for insurers

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approved to receive such funds under the program, from the funds

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that were appropriated from Citizens Property Insurance

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Corporation in 2008-2009 for such purposes. Beginning July 1,

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2009, and each quarter thereafter, the State Board of

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Administration shall transfer any interest earned prior to

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issuance of any surplus notes, interest paid, and principal

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repaid to the state for any surplus notes issued by the program

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after December 1, 2008, to the Citizens Property Insurance

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Corporation. Such transfers shall be in the proportion that

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surplus notes were funded from 2008-2009 appropriations from

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Citizens Property Insurance Corporation and shall be made until

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principal or interest is no longer due to the state on surplus

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notes funded from such appropriations. Citizens Property

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Insurance Corporation shall deposit the transferred funds into

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each of its accounts in the proportion that moneys were

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transferred out of those accounts to the General Revenue Fund in

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December 2008.

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Section 2. Section 542.20, Florida Statutes, is amended to

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read:

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542.20 Exemptions.--

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(1) Any activity or conduct exempt under Florida statutory

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or common law or exempt from the provisions of the antitrust laws

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of the United States is exempt from the provisions of this

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chapter, except as provided in subsection (2).

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(2)(a) The business of insurance is subject to the

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provisions of this chapter. As applied to the business of

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insurance, any legal action to seek penalties or damages for

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violations or to otherwise enforce the provisions of this chapter

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shall be brought only by the Attorney General or a state

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attorney, as provided in this chapter, and another party may not

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bring suit against a person engaged in the business of insurance,

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notwithstanding any other provision of this chapter.

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(b) This chapter does not prohibit a rating organization or

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advisory organization from collecting claims, loss, or expense

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data from insurers and filing rates or advisory rates with the

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Office of Insurance Regulation.

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Section 3. Subsection (6) is added to section 624.3161,

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Florida Statutes, to read:

272

624.3161 Market conduct examinations.--

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(6) Based on the findings of a market conduct examination

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that an insurer has exhibited a pattern or practice of willful

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violations of an unfair insurance trade practice related to

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claims-handling which caused harm to policyholders, as prohibited

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by s. 626.9541(1)(i), the office may require an insurer to file

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its claims-handling practices and procedures related to that line

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of insurance with the office for review and inspection, to be

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held by the office for the following 36-month period. Such

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claims-handling practices and procedures are public records and

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are not trade secrets or otherwise exempt from the provisions of

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s. 119.07(1). As used in this section, "claims-handling practices

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and procedures" are any policies, guidelines, rules, protocols,

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standard operating procedures, instructions, or directives that

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govern or guide how and the manner in which an insured's claims

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for benefits under any policy will be processed.

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Section 4. Subsections (2) and (3) of section 624.4211,

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Florida Statutes, are amended, and subsections (5) and (6) are

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added to that section, to read:

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624.4211 Administrative fine in lieu of suspension or

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revocation.--

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(2) With respect to any nonwillful violation, such fine may

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shall not exceed $25,000 $2,500 per violation. In no event shall

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such fine exceed an aggregate amount equal to 1 percent of the

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insurer's surplus, as determined by the most recent financial

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statements filed with the office, of $10,000 for all nonwillful

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violations arising out of the same action. If When an insurer

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discovers a nonwillful violation, the insurer shall correct the

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violation and, if restitution is due, make restitution to all

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affected persons. Such restitution shall include interest at 12

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percent per year from either the date of the violation or the

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date of inception of the affected person's policy, at the

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insurer's option. The restitution may be a credit against future

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premiums due provided that the interest accumulates shall

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accumulate until the premiums are due. If the amount of

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restitution due to any person is $50 or more and the insurer

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wishes to credit it against future premiums, it shall notify such

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person that she or he may receive a check instead of a credit. If

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the credit is on a policy that which is not renewed, the insurer

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shall pay the restitution to the person to whom it is due.

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(3) With respect to any knowing and willful violation of a

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lawful order or rule of the office or commission or a provision

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of this code, the office may impose a fine upon the insurer in an

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amount not to exceed $100,000 $20,000 for each such violation. In

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no event shall such fine exceed an aggregate amount equal to 5

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percent of the insurer's surplus, as determined by the most

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recent financial statements filed with the office, of $100,000

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for all knowing and willful violations arising out of the same

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action. In addition to such fines, the such insurer shall make

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restitution when due in accordance with the provisions of

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subsection (2).

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(5) The office may impose an administrative fine for each

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day the insurer is not in compliance with the Florida Insurance

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Code up to a maximum of $25,000 per violation per day, beginning

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with the 10th day of noncompliance, not to exceed an aggregate

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amount equal to 5 percent of the insurer's surplus, as determined

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by the most recent financial statements filed with the office.

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This aggregate cap includes all fines imposed by the office under

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this section.

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(6) In determining the amount of the fine, the office shall

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consider:

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(a) The degree of consumer harm caused or potentially

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caused by the violation;

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(b) Whether the violation constitutes an immediate danger

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to the public;

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to past violations by the insurer;

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(d) The effect on the solvency of the insurer;

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(e) The premium volume of the insurer; and

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(f) The effect that fining the insurer will have on the

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insurer's compliance with the Florida Insurance Code.

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Section 5. Section 624.4213, Florida Statutes, is created

344

to read:

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624.4213 Trade secret documents.--

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(1) If any person who is required to submit documents or

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other information to the office or department pursuant to the

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Insurance Code or by rule or order of the office, department, or

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commission claims that such submission contains a trade secret,

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such person may file with the office or department a notice of

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trade secret as provided in this section. Failure to do so

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constitutes a waiver of any claim by such person that the

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document or information is a trade secret.

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(a) Each page of such document or specific portion of a

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document claimed to be a trade secret must be clearly marked as

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"trade secret."

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(b) All material marked as a trade secret must be separated

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from all non-trade secret material, such as being submitted in a

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separate envelope clearly marked as "trade secret."

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department, the submitting party must include an affidavit

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certifying under oath to the truth of the following statements

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concerning all documents or information that are claimed to be

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trade secrets:

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1. [I consider/My company considers] this information a

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trade secret that has value and provides an advantage or an

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opportunity to obtain an advantage over those who do not know or

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use it.

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2. [I have/My company has] taken measures to prevent the

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disclosure of the information to anyone other that those who have

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been selected to have access for limited purposes, and [I

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intend/my company intends] to continue to take such measures.

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3. The information is not, and has not been, reasonably

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obtainable without [my/our] consent by other persons by use of

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legitimate means.

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4. The information is not publicly available elsewhere.

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(2) If the office or department receives a public-records

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request for a document or information that is marked and

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certified as a trade secret, the office or department shall

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promptly notify the person that certified the document as a trade

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secret. The notice shall inform such person that he or she or his

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or her company has 30 days following receipt of such notice to

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file an action in circuit court seeking a determination whether

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the document in question contains trade secrets and an order

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barring public disclosure of the document. If that person or

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company files an action within 30 days after receipt of notice of

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the public-records request, the office or department may not

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release the documents pending the outcome of the legal action.

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The failure to file an action within 30 days constitutes a waiver

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of any claim of confidentiality and the office or department

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shall release the document as requested.

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(3) If a court or administrative tribunal finds that any

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document or information certified as a trade secret, submitted to

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the office or department under this section, and subsequently

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requested by a third party is not a trade secret, the company or

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the person certifying such document or information as a trade

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secret is liable for an award of reasonable attorney's fees and

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costs to the third party seeking access to such documents and to

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the office or department.

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(4) The office or department may disclose a trade secret,

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together with the claim that it is a trade secret, to an officer

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or employee of another governmental agency whose use of the trade

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secret is within the scope of his or her employment.

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Section 6. Subsection (2) of section 626.9521, Florida

405

Statutes, is amended to read:

406

626.9521 Unfair methods of competition and unfair or

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deceptive acts or practices prohibited; penalties.--

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(2) Any person who violates any provision of this part

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shall be subject to a fine in an amount not greater than $25,000

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$2,500 for each nonwillful violation and not greater than

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$100,000 $20,000 for each willful violation. Fines under this

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subsection imposed against an insurer may not exceed an aggregate

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amount equal to 1 percent of the insurer's surplus of $10,000 for

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all nonwillful violations arising out of the same action or an

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aggregate amount equal to 5 percent of the insurer's surplus of

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$100,000 for all willful violations arising out of the same

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action, as surplus is determined by the insurer's most recent

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financial statements filed with the office. The fines authorized

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by this subsection may be imposed in addition to any other

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applicable penalty.

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Section 7. Paragraph (i) of subsection (1) of section

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626.9541, Florida Statutes, is amended to read:

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626.9541 Unfair methods of competition and unfair or

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deceptive acts or practices defined.--

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(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE

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ACTS.--The following are defined as unfair methods of competition

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and unfair or deceptive acts or practices:

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(i) Unfair claim settlement practices.--

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1. Attempting to settle claims on the basis of an

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application, when serving as a binder or intended to become a

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part of the policy, or any other material document that is which

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was altered without notice to, or knowledge or consent of, the

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insured;

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2. A material misrepresentation made to an insured or any

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other person having an interest in the proceeds payable under a

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such contract or policy, for the purpose and with the intent of

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effecting settlement of such claims, loss, or damage under such

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contract or policy on less favorable terms than those provided

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in, and contemplated by, the such contract or policy; or

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3. Committing or performing with such frequency as to

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indicate a general business practice any of the following:

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a. Failing to adopt and implement standards for the proper

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investigation of claims.;

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b. Misrepresenting pertinent facts or insurance policy

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provisions relating to coverages at issue.;

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c. Failing to acknowledge and act promptly upon

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communications with respect to claims.;

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d. Denying claims without conducting reasonable

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investigations based upon available information.;

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e. Failing to affirm or deny full or partial coverage of

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claims, and, as to partial coverage, the dollar amount or extent

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of coverage, or failing to provide a written statement that the

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claim is being investigated, upon the written request of the

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insured within 30 days after proof-of-loss statements have been

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completed.;

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f. Failing to promptly provide a reasonable explanation in

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writing to the insured of the basis in the insurance policy, in

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relation to the facts or applicable law, for denial of a claim or

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for the offer of a compromise settlement.;

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g. Failing to promptly notify the insured of any additional

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information necessary for the processing of a claim.; or

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h. Failing to clearly explain the nature of the requested

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information and the reasons why such information is necessary.

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4. Giving consideration to the age, race, income level,

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education, credit score, or any other personal characteristic of

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a policyholder when evaluating, adjusting, settling, or

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attempting to settle a property insurance claim; or

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5. Failing to pay undisputed amounts of partial or full

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benefits owed under first-party property insurance policies

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within 90 days after determining the amounts of partial or full

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benefits and agreeing to coverage.

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Section 8. Paragraphs (a), (b), and (g) of subsection (2),

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and subsections (6) and (9) of section 627.062, Florida Statutes,

474

are amended 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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(a) Insurers or rating organizations shall establish and

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use rates, rating schedules, or rating manuals to allow the

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insurer a reasonable rate of return on such classes of insurance

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written in this state. A copy of rates, rating schedules, rating

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manuals, premium credits or discount schedules, and surcharge

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schedules, and changes thereto, shall be filed with the office

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under one of the following procedures except as provided in

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subparagraph 3.:

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1. If the filing is made at least 90 days before the

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proposed effective date and the filing is not implemented during

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the office's review of the filing and any proceeding and judicial

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review, then such filing shall be considered a "file and use"

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filing. In such case, the office shall finalize its review by

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issuance of a notice of intent to approve or a notice of intent

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to disapprove within 90 days after receipt of the filing. The

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notice of intent to approve and the notice of intent to

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disapprove constitute agency action for purposes of the

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Administrative Procedure Act. Requests for supporting

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information, requests for mathematical or mechanical corrections,

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or notification to the insurer by the office of its preliminary

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findings shall not toll the 90-day period during any such

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proceedings and subsequent judicial review. The rate shall be

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deemed approved if the office does not issue a notice of intent

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to approve or a notice of intent to disapprove within 90 days

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after receipt of the filing.

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2. If the filing is not made in accordance with the

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provisions of subparagraph 1., such filing shall be made as soon

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as practicable, but no later than 30 days after the effective

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date, and shall be considered a "use and file" filing. An insurer

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making a "use and file" filing is potentially subject to an order

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by the office to return to policyholders portions of rates found

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to be excessive, as provided in paragraph (h).

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3. For all property insurance filings made or submitted

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after January 25, 2007, but before December 31, 2008, an insurer

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seeking a rate that is greater than the rate most recently

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approved by the office shall make a "file and use" filing. This

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subparagraph applies to property insurance only. For purposes of

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this subparagraph, motor vehicle collision and comprehensive

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coverages are not considered to be property coverages.

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(b) Upon receiving a rate filing, the office shall review

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the rate filing to determine if a rate is excessive, inadequate,

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or unfairly discriminatory. In making that determination, the

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office shall, in accordance with generally accepted and

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reasonable actuarial techniques, consider the following factors:

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1. Past and prospective loss experience within and without

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this state.

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2. Past and prospective expenses.

524

3. The degree of competition among insurers for the risk

525

insured.

526

4. Investment income reasonably expected by the insurer,

527

consistent with the insurer's investment practices, from

528

investable premiums anticipated in the filing, plus any other

529

expected income from currently invested assets representing the

530

amount expected on unearned premium reserves and loss reserves.

531

The commission may adopt rules using utilizing reasonable

532

techniques of actuarial science and economics to specify the

533

manner in which insurers shall calculate investment income

534

attributable to such classes of insurance written in this state

535

and the manner in which such investment income shall be used to

536

calculate in the calculation of insurance rates. Such manner

537

shall contemplate allowances for an underwriting profit factor

538

and full consideration of investment income which produce a

539

reasonable rate of return; however, investment income from

540

invested surplus may shall not be considered.

541

5. The reasonableness of the judgment reflected in the

542

filing.

543

6. Dividends, savings, or unabsorbed premium deposits

544

allowed or returned to Florida policyholders, members, or

545

subscribers.

546

7. The adequacy of loss reserves.

547

8. The cost of reinsurance. The office shall not disapprove

548

a rate as excessive solely due to the insurer having obtained

549

catastrophic reinsurance to cover the insurer's estimated 250-

550

year probable maximum loss or any lower level of loss.

551

9. Trend factors, including trends in actual losses per

552

insured unit for the insurer making the filing.

553

10. Conflagration and catastrophe hazards, if applicable.

554

11. Projected hurricane losses, if applicable, which must

555

be estimated using a model or method found to be acceptable or

556

reliable by the Florida Commission on Hurricane Loss Projection

557

Methodology, and as further provided in s. 627.0628.

558

12.11. A reasonable margin for underwriting profit and

559

contingencies. For that portion of the rate covering the risk of

560

hurricanes and other catastrophic losses for which the insurer

561

has not purchased reinsurance and has exposed its capital and

562

surplus to such risk, the office must approve a rating factor

563

that provides the insurer a reasonable rate of return that is

564

commensurate with such risk.

565

13.12. The cost of medical services, if applicable.

566

14.13. Other relevant factors which impact upon the

567

frequency or severity of claims or upon expenses.

568

(g) The office may at any time review a rate, rating

569

schedule, rating manual, or rate change; the pertinent records of

570

the insurer; and market conditions. If the office finds on a

571

preliminary basis that a rate may be excessive, inadequate, or

572

unfairly discriminatory, the office shall initiate proceedings to

573

disapprove the rate and shall so notify the insurer. However, the

574

office may not disapprove as excessive any rate for which it has

575

given final approval or which has been deemed approved for a

576

period of 1 year after the effective date of the filing unless

577

the office finds that a material misrepresentation or material

578

error was made by the insurer or was contained in the filing, or

579

unless the insurer has nonrenewed a number or percentage of

580

policies which the office determines may result in the insurer

581

having an excessive rate. Upon being so notified, the insurer or

582

rating organization shall, within 60 days, file with the office

583

all information which, in the belief of the insurer or

584

organization, proves the reasonableness, adequacy, and fairness

585

of the rate or rate change. The office shall issue a notice of

586

intent to approve or a notice of intent to disapprove pursuant to

587

the procedures of paragraph (a) within 90 days after receipt of

588

the insurer's initial response. In such instances and in any

589

administrative proceeding relating to the legality of the rate,

590

the insurer or rating organization shall carry the burden of

591

proof by a preponderance of the evidence to show that the rate is

592

not excessive, inadequate, or unfairly discriminatory. After the

593

office notifies an insurer that a rate may be excessive,

594

inadequate, or unfairly discriminatory, unless the office

595

withdraws the notification, the insurer shall not alter the rate

596

except to conform with the office's notice until the earlier of

597

120 days after the date the notification was provided or 180 days

598

after the date of the implementation of the rate. The office may,

599

subject to chapter 120, disapprove without the 60-day

600

notification any rate increase filed by an insurer within the

601

prohibited time period or during the time that the legality of

602

the increased rate is being contested.

603

604

The provisions of this subsection shall not apply to workers'

605

compensation and employer's liability insurance and to motor

606

vehicle insurance.

607

(6)(a) If, in any administrative hearing under s. 120.57,

608

any additional information related to a rate filing, other than

609

expert opinion, is offered or presented by the insurer to justify

610

the rate, or offered or presented by the office to challenge the

611

rate, which was not received by the other party prior to the date

612

that the office issues a notice of intent to disapprove the

613

filing, the administrative law judge shall grant a continuance of

614

at least 30 days if requested by the party that had not

615

previously received the information. After any action with

616

respect to a rate filing that constitutes agency action for

617

purposes of the Administrative Procedure Act, except for a rate

618

filing for medical malpractice, an insurer may, in lieu of

619

demanding a hearing under s. 120.57, require arbitration of the

620

rate filing. However, the arbitration option provision in this

621

subsection does not apply to a rate filing that is made on or

622

after the effective date of this act until January 1, 2009.

623

Arbitration shall be conducted by a board of arbitrators

624

consisting of an arbitrator selected by the office, an arbitrator

625

selected by the insurer, and an arbitrator selected jointly by

626

the other two arbitrators. Each arbitrator must be certified by

627

the American Arbitration Association. A decision is valid only

628

upon the affirmative vote of at least two of the arbitrators. No

629

arbitrator may be an employee of any insurance regulator or

630

regulatory body or of any insurer, regardless of whether or not

631

the employing insurer does business in this state. The office and

632

the insurer must treat the decision of the arbitrators as the

633

final approval of a rate filing. Costs of arbitration shall be

634

paid by the insurer.

635

(b) Arbitration under this subsection shall be conducted

636

pursuant to the procedures specified in ss. 682.06-682.10. Either

637

party may apply to the circuit court to vacate or modify the

638

decision pursuant to s. 682.13 or s. 682.14. The commission shall

639

adopt rules for arbitration under this subsection, which rules

640

may not be inconsistent with the arbitration rules of the

641

American Arbitration Association as of January 1, 1996.

642

643

waives all rights to challenge the action of the office under the

644

Administrative Procedure Act or any other provision of law;

645

however, such rights are restored to the insurer if the

646

arbitrators fail to render a decision within 90 days after

647

initiation of the arbitration process.

648

(9)(a) Effective March 1, 2007, The chief executive officer

649

or chief financial officer of a property insurer and the chief

650

actuary of a property insurer must certify under oath and subject

651

to the penalty of perjury, on a form approved by the commission,

652

the following information, which must accompany a rate filing:

653

1. The signing officer and actuary have reviewed the rate

654

filing;

655

2. Based on the signing officer's and actuary's knowledge,

656

the rate filing does not contain any untrue statement of a

657

material fact or omit to state a material fact necessary in order

658

to make the statements made, in light of the circumstances under

659

which such statements were made, not misleading;

660

3. Based on the signing officer's and actuary's knowledge,

661

the information and other factors described in paragraph (2)(b),

662

including, but not limited to, investment income, fairly present

663

in all material respects the basis of the rate filing for the

664

periods presented in the filing; and

665

4. Based on the signing officer's and actuary's knowledge,

666

the rate filing reflects all premium savings that are reasonably

667

expected to result from legislative enactments and are in

668

accordance with generally accepted and reasonable actuarial

669

techniques;.

670

5. Based on the signing officer's and actuary's knowledge,

671

the actuary responsible for preparing the rate filing reviewed

672

the rate indications used by the office in approving the

673

insurer's last rate filing, if made available to the insurer for

674

review, and identified factors used in the current rate filing

675

which are inconsistent with the factors used by the office in

676

developing such rate indications; and

677

6. Based on the signing officer's and actuary's knowledge,

678

the number and type of policies that the insurer intends to

679

nonrenew during the year following the proposed effective date of

680

the rate filing, and that the rate filing reflects the reduced

681

risk of loss associated with such nonrenewals.

682

(b) A signing officer or actuary knowingly making a false

683

certification under this subsection commits a violation of s.

684

626.9541(1)(e) and is subject to the penalties under s. 626.9521.

685

686

and actuary shall result in the rate filing being disapproved

687

without prejudice to be refiled.

688

(d) The commission may adopt rules and forms pursuant to

689

ss. 120.536(1) and 120.54 to administer this subsection.

690

Section 9. Subsection (1) of section 627.0613, Florida

691

Statutes, is amended to read:

692

627.0613 Consumer advocate.--The Chief Financial Officer

693

must appoint a consumer advocate who must represent the general

694

public of the state before the department and the office. The

695

consumer advocate must report directly to the Chief Financial

696

Officer, but is not otherwise under the authority of the

697

department or of any employee of the department. The consumer

698

advocate has such powers as are necessary to carry out the duties

699

of the office of consumer advocate, including, but not limited

700

to, the powers to:

701

(1) Recommend to the department or office, by petition, the

702

commencement of any proceeding or action; appear in any

703

proceeding or action before the department or office; or appear

704

in any proceeding before the Division of Administrative Hearings

705

or arbitration panel specified in s. 627.062(6) relating to

706

subject matter under the jurisdiction of the department or

707

office.

708

Section 10. Paragraph (c) of subsection (1) and paragraph

709

710

amended to read:

711

627.0628 Florida Commission on Hurricane Loss Projection

712

Methodology; public records exemption; public meetings

713

exemption.--

714

(1) LEGISLATIVE FINDINGS AND INTENT.--

715

716

Florida Commission on Hurricane Loss Projection Methodology as a

717

panel of experts to provide the most actuarially sophisticated

718

guidelines and standards for projection of hurricane losses

719

possible, given the current state of actuarial science. It is the

720

further intent of the Legislature that such standards and

721

guidelines must be used by the State Board of Administration in

722

developing reimbursement premium rates for the Florida Hurricane

723

Catastrophe Fund, and, subject to paragraph (3)(c), must may be

724

used by insurers in rate filings under s. 627.062 unless the way

725

in which such standards and guidelines were applied by the

726

insurer was erroneous, as shown by a preponderance of the

727

evidence.

728

(3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--

729

730

insurer must may employ and may not modify or adjust actuarial

731

methods, principles, standards, models, or output ranges found by

732

the commission to be accurate or reliable in determining to

733

determine hurricane loss factors used for use in a rate filing

734

and in determining probable maximum loss levels for reinsurance

735

costs included in a rate filing under s. 627.062. Such findings

736

and factors are admissible and relevant in consideration of a

737

rate filing by the office or in any arbitration or administrative

738

or judicial review only if the office and the consumer advocate

739

appointed pursuant to s. 627.0613 have access to all of the

740

assumptions and factors that were used in developing the

741

actuarial methods, principles, standards, models, or output

742

ranges, and are not precluded from disclosing such information in

743

a rate proceeding. In any rate hearing under s. 120.57 or in any

744

arbitration proceeding under s. 627.062(6), the hearing officer,

745

judge, or arbitration panel may determine whether the office and

746

the consumer advocate were provided with access to all of the

747

assumptions and factors that were used in developing the

748

actuarial methods, principles, standards, models, or output

749

ranges and to determine their admissibility.

750

Section 11. Subsection (1) of section 627.0629, Florida

751

Statutes, is amended to read:

752

627.0629 Residential property insurance; rate filings.--

753

(1)(a) It is the intent of the Legislature that insurers

754

must provide savings to consumers who install or implement

755

windstorm damage mitigation techniques, alterations, or solutions

756

to their properties to prevent windstorm losses. A rate filing

757

for residential property insurance must include actuarially

758

reasonable discounts, credits, or other rate differentials, or

759

appropriate reductions in deductibles, for properties on which

760

fixtures or construction techniques demonstrated to reduce the

761

amount of loss in a windstorm have been installed or implemented.

762

The fixtures or construction techniques shall include, but not be

763

limited to, fixtures or construction techniques which enhance

764

roof strength, roof covering performance, roof-to-wall strength,

765

wall-to-floor-to-foundation strength, opening protection, and

766

window, door, and skylight strength. Credits, discounts, or other

767

rate differentials, or appropriate reductions in deductibles, for

768

fixtures and construction techniques which meet the minimum

769

requirements of the Florida Building Code must be included in the

770

rate filing. All insurance companies must make a rate filing

771

which includes the credits, discounts, or other rate

772

differentials or reductions in deductibles by February 28, 2003.

773

By July 1, 2007, the office shall reevaluate the discounts,

774

credits, other rate differentials, and appropriate reductions in

775

deductibles for fixtures and construction techniques that meet

776

the minimum requirements of the Florida Building Code, based upon

777

actual experience or any other loss relativity studies available

778

to the office. The office shall determine the discounts, credits,

779

other rate differentials, and appropriate reductions in

780

deductibles that reflect the full actuarial value of such

781

revaluation, which may be used by insurers in rate filings.

782

(b) By February 1, 2009, the Office of Insurance

783

Regulation, in consultation with the Department of Financial

784

Services and the Department of Community Affairs, shall develop

785

and make publicly available a proposed method for insurers to

786

establish discounts, credits, or other rate differentials for

787

hurricane mitigation measures which directly correlate to the

788

numerical rating assigned to a structure pursuant to the uniform

789

home grading scale adopted by the Financial Services Commission

790

pursuant to s. 215.55865, including any proposed changes to the

791

uniform home grading scale. By October 1, 2009, the commission

792

shall adopt rules requiring insurers to make rate filings for

793

residential property insurance which revise insurers' discounts,

794

credits, or other rate differentials for hurricane mitigation

795

measures so that such rate differentials correlate directly to

796

the uniform home grading scale. The rules may include such

797

changes to the uniform home grading scale as the commission

798

determines are necessary, and may specify the minimum required

799

discounts, credits, or other rate differentials. Such rate

800

differentials must be consistent with generally accepted

801

actuarial principles and wind-loss mitigation studies. The rules

802

shall allow a period of at least 2 years after the effective date

803

of the revised mitigation discounts, credits, or other rate

804

differentials for a property owner to obtain an inspection or

805

otherwise qualify for the revised credit, during which time the

806

insurer shall continue to apply the mitigation credit that was

807

applied immediately prior to the effective date of the revised

808

credit.

809

Section 12. Paragraph (b) of subsection (2) and paragraphs

810

(a), (b), (c), (m), (p), (dd), (ee), and (ff) of subsection (6)

811

of section 627.351, Florida Statutes, are amended to read:

812

627.351 Insurance risk apportionment plans.--

813

(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--

814

(b) The department shall require all insurers holding a

815

certificate of authority to transact property insurance on a

816

direct basis in this state, other than joint underwriting

817

associations and other entities formed pursuant to this section,

818

to provide windstorm coverage to applicants from areas determined

819

to be eligible pursuant to paragraph (c) who in good faith are

820

entitled to, but are unable to procure, such coverage through

821

ordinary means; or it shall adopt a reasonable plan or plans for

822

the equitable apportionment or sharing among such insurers of

823

windstorm coverage, which may include formation of an association

824

for this purpose. As used in this subsection, the term "property

825

insurance" means insurance on real or personal property, as

826

defined in s. 624.604, including insurance for fire, industrial

827

fire, allied lines, farmowners multiperil, homeowners'

828

multiperil, commercial multiperil, and mobile homes, and

829

including liability coverages on all such insurance, but

830

excluding inland marine as defined in s. 624.607(3) and excluding

831

vehicle insurance as defined in s. 624.605(1)(a) other than

832

insurance on mobile homes used as permanent dwellings. The

833

department shall adopt rules that provide a formula for the

834

recovery and repayment of any deferred assessments.

835

1. For the purpose of this section, properties eligible for

836

such windstorm coverage are defined as dwellings, buildings, and

837

other structures, including mobile homes which are used as

838

dwellings and which are tied down in compliance with mobile home

839

tie-down requirements prescribed by the Department of Highway

840

Safety and Motor Vehicles pursuant to s. 320.8325, and the

841

contents of all such properties. An applicant or policyholder is

842

eligible for coverage only if an offer of coverage cannot be

843

obtained by or for the applicant or policyholder from an admitted

844

insurer at approved rates.

845

2.a.(I) All insurers required to be members of such

846

association shall participate in its writings, expenses, and

847

losses. Surplus of the association shall be retained for the

848

payment of claims and shall not be distributed to the member

849

insurers. Such participation by member insurers shall be in the

850

proportion that the net direct premiums of each member insurer

851

written for property insurance in this state during the preceding

852

calendar year bear to the aggregate net direct premiums for

853

property insurance of all member insurers, as reduced by any

854

credits for voluntary writings, in this state during the

855

preceding calendar year. For the purposes of this subsection, the

856

term "net direct premiums" means direct written premiums for

857

property insurance, reduced by premium for liability coverage and

858

for the following if included in allied lines: rain and hail on

859

growing crops; livestock; association direct premiums booked;

860

National Flood Insurance Program direct premiums; and similar

861

deductions specifically authorized by the plan of operation and

862

approved by the department. A member's participation shall begin

863

on the first day of the calendar year following the year in which

864

it is issued a certificate of authority to transact property

865

insurance in the state and shall terminate 1 year after the end

866

of the calendar year during which it no longer holds a

867

certificate of authority to transact property insurance in the

868

state. The commissioner, after review of annual statements, other

869

reports, and any other statistics that the commissioner deems

870

necessary, shall certify to the association the aggregate direct

871

premiums written for property insurance in this state by all

872

member insurers.

873

(II) Effective July 1, 2002, the association shall operate

874

subject to the supervision and approval of a board of governors

875

who are the same individuals that have been appointed by the

876

Treasurer to serve on the board of governors of the Citizens

877

Property Insurance Corporation.

878

(III) The plan of operation shall provide a formula whereby

879

a company voluntarily providing windstorm coverage in affected

880

areas will be relieved wholly or partially from apportionment of

881

a regular assessment pursuant to sub-sub-subparagraph d.(I) or

882

sub-sub-subparagraph d.(II).

883

(IV) A company which is a member of a group of companies

884

under common management may elect to have its credits applied on

885

a group basis, and any company or group may elect to have its

886

credits applied to any other company or group.

887

(V) There shall be no credits or relief from apportionment

888

to a company for emergency assessments collected from its

889

policyholders under sub-sub-subparagraph d.(III).

890

(VI) The plan of operation may also provide for the award

891

of credits, for a period not to exceed 3 years, from a regular

892

assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-

893

subparagraph d.(II) as an incentive for taking policies out of

894

the Residential Property and Casualty Joint Underwriting

895

Association. In order to qualify for the exemption under this

896

sub-sub-subparagraph, the take-out plan must provide that at

897

least 40 percent of the policies removed from the Residential

898

Property and Casualty Joint Underwriting Association cover risks

899

located in Dade, Broward, and Palm Beach Counties or at least 30

900

percent of the policies so removed cover risks located in Dade,

901

Broward, and Palm Beach Counties and an additional 50 percent of

902

the policies so removed cover risks located in other coastal

903

counties, and must also provide that no more than 15 percent of

904

the policies so removed may exclude windstorm coverage. With the

905

approval of the department, the association may waive these

906

geographic criteria for a take-out plan that removes at least the

907

lesser of 100,000 Residential Property and Casualty Joint

908

Underwriting Association policies or 15 percent of the total

909

number of Residential Property and Casualty Joint Underwriting

910

Association policies, provided the governing board of the

911

Residential Property and Casualty Joint Underwriting Association

912

certifies that the take-out plan will materially reduce the

913

Residential Property and Casualty Joint Underwriting

914

Association's 100-year probable maximum loss from hurricanes.

915

With the approval of the department, the board may extend such

916

credits for an additional year if the insurer guarantees an

917

additional year of renewability for all policies removed from the

918

Residential Property and Casualty Joint Underwriting Association,

919

or for 2 additional years if the insurer guarantees 2 additional

920

years of renewability for all policies removed from the

921

Residential Property and Casualty Joint Underwriting Association.

922

b. Assessments to pay deficits in the association under

923

this subparagraph shall be included as an appropriate factor in

924

the making of rates as provided in s. 627.3512.

925

c. The Legislature finds that the potential for unlimited

926

deficit assessments under this subparagraph may induce insurers

927

to attempt to reduce their writings in the voluntary market, and

928

that such actions would worsen the availability problems that the

929

association was created to remedy. It is the intent of the

930

Legislature that insurers remain fully responsible for paying

931

regular assessments and collecting emergency assessments for any

932

deficits of the association; however, it is also the intent of

933

the Legislature to provide a means by which assessment

934

liabilities may be amortized over a period of years.

935

d.(I) When the deficit incurred in a particular calendar

936

year is 10 percent or less of the aggregate statewide direct

937

written premium for property insurance for the prior calendar

938

year for all member insurers, the association shall levy an

939

assessment on member insurers in an amount equal to the deficit.

940

(II) When the deficit incurred in a particular calendar

941

year exceeds 10 percent of the aggregate statewide direct written

942

premium for property insurance for the prior calendar year for

943

all member insurers, the association shall levy an assessment on

944

member insurers in an amount equal to the greater of 10 percent

945

of the deficit or 10 percent of the aggregate statewide direct

946

written premium for property insurance for the prior calendar

947

year for member insurers. Any remaining deficit shall be

948

recovered through emergency assessments under sub-sub-

949

subparagraph (III).

950

(III) Upon a determination by the board of directors that a

951

deficit exceeds the amount that will be recovered through regular

952

assessments on member insurers, pursuant to sub-sub-subparagraph

953

(I) or sub-sub-subparagraph (II), the board shall levy, after

954

verification by the department, emergency assessments to be

955

collected by member insurers and by underwriting associations

956

created pursuant to this section which write property insurance,

957

upon issuance or renewal of property insurance policies other

958

than National Flood Insurance policies in the year or years

959

following levy of the regular assessments. The amount of the

960

emergency assessment collected in a particular year shall be a

961

uniform percentage of that year's direct written premium for

962

property insurance for all member insurers and underwriting

963

associations, excluding National Flood Insurance policy premiums,

964

as annually determined by the board and verified by the

965

department. The department shall verify the arithmetic

966

calculations involved in the board's determination within 30 days

967

after receipt of the information on which the determination was

968

based. Notwithstanding any other provision of law, each member

969

insurer and each underwriting association created pursuant to

970

this section shall collect emergency assessments from its

971

policyholders without such obligation being affected by any

972

credit, limitation, exemption, or deferment. The emergency

973

assessments so collected shall be transferred directly to the

974

association on a periodic basis as determined by the association.

975

The aggregate amount of emergency assessments levied under this

976

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

977

greater of 10 percent of the amount needed to cover the original

978

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

979

other costs associated with financing of the original deficit, or

980

10 percent of the aggregate statewide direct written premium for

981

property insurance written by member insurers and underwriting

982

associations for the prior year, plus interest, fees,

983

commissions, required reserves, and other costs associated with

984

financing the original deficit. The board may pledge the proceeds

985

of the emergency assessments under this sub-sub-subparagraph as

986

the source of revenue for bonds, to retire any other debt

987

incurred as a result of the deficit or events giving rise to the

988

deficit, or in any other way that the board determines will

989

efficiently recover the deficit. The emergency assessments under

990

this sub-sub-subparagraph shall continue as long as any bonds

991

issued or other indebtedness incurred with respect to a deficit

992

for which the assessment was imposed remain outstanding, unless

993

adequate provision has been made for the payment of such bonds or

994

other indebtedness pursuant to the document governing such bonds

995

or other indebtedness. Emergency assessments collected under this

996

sub-sub-subparagraph are not part of an insurer's rates, are not

997

premium, and are not subject to premium tax, fees, or

998

commissions; however, failure to pay the emergency assessment

999

shall be treated as failure to pay premium.

1000

(IV) Each member insurer's share of the total regular

1001

assessments under sub-sub-subparagraph (I) or sub-sub-

1002

subparagraph (II) shall be in the proportion that the insurer's

1003

net direct premium for property insurance in this state, for the

1004

year preceding the assessment bears to the aggregate statewide

1005

net direct premium for property insurance of all member insurers,

1006

as reduced by any credits for voluntary writings for that year.

1007

(V) If regular deficit assessments are made under sub-sub-

1008

subparagraph (I) or sub-sub-subparagraph (II), or by the

1009

Residential Property and Casualty Joint Underwriting Association

1010

under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,

1011

the association shall levy upon the association's policyholders,

1012

as part of its next rate filing, or by a separate rate filing

1013

solely for this purpose, a market equalization surcharge in a

1014

percentage equal to the total amount of such regular assessments

1015

divided by the aggregate statewide direct written premium for

1016

property insurance for member insurers for the prior calendar

1017

year. Market equalization surcharges under this sub-sub-

1018

subparagraph are not considered premium and are not subject to

1019

commissions, fees, or premium taxes; however, failure to pay a

1020

market equalization surcharge shall be treated as failure to pay

1021

premium.

1022

e. The governing body of any unit of local government, any

1023

residents of which are insured under the plan, may issue bonds as

1024

defined in s. 125.013 or s. 166.101 to fund an assistance

1025

program, in conjunction with the association, for the purpose of

1026

defraying deficits of the association. In order to avoid needless

1027

and indiscriminate proliferation, duplication, and fragmentation

1028

of such assistance programs, any unit of local government, any

1029

residents of which are insured by the association, may provide

1030

for the payment of losses, regardless of whether or not the

1031

losses occurred within or outside of the territorial jurisdiction

1032

of the local government. Revenue bonds may not be issued until

1033

validated pursuant to chapter 75, unless a state of emergency is

1034

declared by executive order or proclamation of the Governor

1035

pursuant to s. 252.36 making such findings as are necessary to

1036

determine that it is in the best interests of, and necessary for,

1037

the protection of the public health, safety, and general welfare

1038

of residents of this state and the protection and preservation of

1039

the economic stability of insurers operating in this state, and

1040

declaring it an essential public purpose to permit certain

1041

municipalities or counties to issue bonds as will provide relief

1042

to claimants and policyholders of the association and insurers

1043

responsible for apportionment of plan losses. Any such unit of

1044

local government may enter into such contracts with the

1045

association and with any other entity created pursuant to this

1046

subsection as are necessary to carry out this paragraph. Any

1047

bonds issued under this sub-subparagraph shall be payable from

1048

and secured by moneys received by the association from

1049

assessments under this subparagraph, and assigned and pledged to

1050

or on behalf of the unit of local government for the benefit of

1051

the holders of such bonds. The funds, credit, property, and

1052

taxing power of the state or of the unit of local government

1053

shall not be pledged for the payment of such bonds. If any of the

1054

bonds remain unsold 60 days after issuance, the department shall

1055

require all insurers subject to assessment to purchase the bonds,

1056

which shall be treated as admitted assets; each insurer shall be

1057

required to purchase that percentage of the unsold portion of the

1058

bond issue that equals the insurer's relative share of assessment

1059

liability under this subsection. An insurer shall not be required

1060

to purchase the bonds to the extent that the department

1061

determines that the purchase would endanger or impair the

1062

solvency of the insurer. The authority granted by this sub-

1063

subparagraph is additional to any bonding authority granted by

1064

subparagraph 6.

1065

3. The plan shall also provide that any member with a

1066

surplus as to policyholders of $20 million or less writing 25

1067

percent or more of its total countrywide property insurance

1068

premiums in this state may petition the department, within the

1069

first 90 days of each calendar year, to qualify as a limited

1070

apportionment company. The apportionment of such a member company

1071

in any calendar year for which it is qualified shall not exceed

1072

its gross participation, which shall not be affected by the

1073

formula for voluntary writings. In no event shall a limited

1074

apportionment company be required to participate in any

1075

apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)

1076

or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds

1077

$50 million after payment of available plan funds in any calendar

1078

year. However, a limited apportionment company shall collect from

1079

its policyholders any emergency assessment imposed under sub-sub-

1080

subparagraph 2.d.(III). The plan shall provide that, if the

1081

department determines that any regular assessment will result in

1082

an impairment of the surplus of a limited apportionment company,

1083

the department may direct that all or part of such assessment be

1084

deferred. However, there shall be no limitation or deferment of

1085

an emergency assessment to be collected from policyholders under

1086

sub-sub-subparagraph 2.d.(III).

1087

4. The plan shall provide for the deferment, in whole or in

1088

part, of a regular assessment of a member insurer under sub-sub-

1089

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not

1090

for an emergency assessment collected from policyholders under

1091

sub-sub-subparagraph 2.d.(III), if, in the opinion of the

1092

commissioner, payment of such regular assessment would endanger

1093

or impair the solvency of the member insurer. In the event a

1094

regular assessment against a member insurer is deferred in whole

1095

or in part, the amount by which such assessment is deferred may

1096

be assessed against the other member insurers in a manner

1097

consistent with the basis for assessments set forth in sub-sub-

1098

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).

1099

5.a. The plan of operation may include deductibles and

1100

rules for classification of risks and rate modifications

1101

consistent with the objective of providing and maintaining funds

1102

sufficient to pay catastrophe losses.

1103

b. The association may require arbitration of a rate filing

1104

under s. 627.062(6). It is the intent of the Legislature that the

1105

rates for coverage provided by the association be actuarially

1106

sound and not competitive with approved rates charged in the

1107

admitted voluntary market such that the association functions as

1108

a residual market mechanism to provide insurance only when the

1109

insurance cannot be procured in the voluntary market. The plan of

1110

operation shall provide a mechanism to assure that, beginning no

1111

later than January 1, 1999, the rates charged by the association

1112

for each line of business are reflective of approved rates in the

1113

voluntary market for hurricane coverage for each line of business

1114

in the various areas eligible for association coverage.

1115

c. The association shall provide for windstorm coverage on

1116

residential properties in limits up to $10 million for commercial

1117

lines residential risks and up to $1 million for personal lines

1118

residential risks. If coverage with the association is sought for

1119

a residential risk valued in excess of these limits, coverage

1120

shall be available to the risk up to the replacement cost or

1121

actual cash value of the property, at the option of the insured,

1122

if coverage for the risk cannot be located in the authorized

1123

market. The association must accept a commercial lines

1124

residential risk with limits above $10 million or a personal

1125

lines residential risk with limits above $1 million if coverage

1126

is not available in the authorized market. The association may

1127

write coverage above the limits specified in this subparagraph

1128

with or without facultative or other reinsurance coverage, as the

1129

association determines appropriate.

1130

d. The plan of operation must provide objective criteria

1131

and procedures, approved by the department, to be uniformly

1132

applied for all applicants in determining whether an individual

1133

risk is so hazardous as to be uninsurable. In making this

1134

determination and in establishing the criteria and procedures,

1135

the following shall be considered:

1136

(I) Whether the likelihood of a loss for the individual

1137

risk is substantially higher than for other risks of the same

1138

class; and

1139

(II) Whether the uncertainty associated with the individual

1140

risk is such that an appropriate premium cannot be determined.

1141

1142

The acceptance or rejection of a risk by the association pursuant

1143

to such criteria and procedures must be construed as the private

1144

placement of insurance, and the provisions of chapter 120 do not

1145

apply.

1146

e. If the risk accepts an offer of coverage through the

1147

market assistance program or through a mechanism established by

1148

the association, either before the policy is issued by the

1149

association or during the first 30 days of coverage by the

1150

association, and the producing agent who submitted the

1151

application to the association is not currently appointed by the

1152

insurer, the insurer shall:

1153

(I) Pay to the producing agent of record of the policy, for

1154

the first year, an amount that is the greater of the insurer's

1155

usual and customary commission for the type of policy written or

1156

a fee equal to the usual and customary commission of the

1157

association; or

1158

(II) Offer to allow the producing agent of record of the

1159

policy to continue servicing the policy for a period of not less

1160

than 1 year and offer to pay the agent the greater of the

1161

insurer's or the association's usual and customary commission for

1162

the type of policy written.

1163

1164

If the producing agent is unwilling or unable to accept

1165

appointment, the new insurer shall pay the agent in accordance

1166

with sub-sub-subparagraph (I). Subject to the provisions of s.

1167

627.3517, the policies issued by the association must provide

1168

that if the association obtains an offer from an authorized

1169

insurer to cover the risk at its approved rates under either a

1170

standard policy including wind coverage or, if consistent with

1171

the insurer's underwriting rules as filed with the department, a

1172

basic policy including wind coverage, the risk is no longer

1173

eligible for coverage through the association. Upon termination

1174

of eligibility, the association shall provide written notice to

1175

the policyholder and agent of record stating that the association

1176

policy must be canceled as of 60 days after the date of the

1177

notice because of the offer of coverage from an authorized

1178

insurer. Other provisions of the insurance code relating to

1179

cancellation and notice of cancellation do not apply to actions

1180

under this sub-subparagraph.

1181

f. When the association enters into a contractual agreement

1182

for a take-out plan, the producing agent of record of the

1183

association policy is entitled to retain any unearned commission

1184

on the policy, and the insurer shall:

1185

(I) Pay to the producing agent of record of the association

1186

policy, for the first year, an amount that is the greater of the

1187

insurer's usual and customary commission for the type of policy

1188

written or a fee equal to the usual and customary commission of

1189

the association; or

1190

(II) Offer to allow the producing agent of record of the

1191

association policy to continue servicing the policy for a period

1192

of not less than 1 year and offer to pay the agent the greater of

1193

the insurer's or the association's usual and customary commission

1194

for the type of policy written.

1195

1196

If the producing agent is unwilling or unable to accept

1197

appointment, the new insurer shall pay the agent in accordance

1198

with sub-sub-subparagraph (I).

1199

6.a. The plan of operation may authorize the formation of a

1200

private nonprofit corporation, a private nonprofit unincorporated

1201

association, a partnership, a trust, a limited liability company,

1202

or a nonprofit mutual company which may be empowered, among other

1203

things, to borrow money by issuing bonds or by incurring other

1204

indebtedness and to accumulate reserves or funds to be used for

1205

the payment of insured catastrophe losses. The plan may authorize

1206

all actions necessary to facilitate the issuance of bonds,

1207

including the pledging of assessments or other revenues.

1208

b. Any entity created under this subsection, or any entity

1209

formed for the purposes of this subsection, may sue and be sued,

1210

may borrow money; issue bonds, notes, or debt instruments; pledge

1211

or sell assessments, market equalization surcharges and other

1212

surcharges, rights, premiums, contractual rights, projected

1213

recoveries from the Florida Hurricane Catastrophe Fund, other

1214

reinsurance recoverables, and other assets as security for such

1215

bonds, notes, or debt instruments; enter into any contracts or

1216

agreements necessary or proper to accomplish such borrowings; and

1217

take other actions necessary to carry out the purposes of this

1218

subsection. The association may issue bonds or incur other

1219

indebtedness, or have bonds issued on its behalf by a unit of

1220

local government pursuant to subparagraph (6)(p)2., in the

1221

absence of a hurricane or other weather-related event, upon a

1222

determination by the association subject to approval by the

1223

department that such action would enable it to efficiently meet

1224

the financial obligations of the association and that such

1225

financings are reasonably necessary to effectuate the

1226

requirements of this subsection. Any such entity may accumulate

1227

reserves and retain surpluses as of the end of any association

1228

year to provide for the payment of losses incurred by the

1229

association during that year or any future year. The association

1230

shall incorporate and continue the plan of operation and articles

1231

of agreement in effect on the effective date of chapter 76-96,

1232

Laws of Florida, to the extent that it is not inconsistent with

1233

chapter 76-96, and as subsequently modified consistent with

1234

chapter 76-96. The board of directors and officers currently

1235

serving shall continue to serve until their successors are duly

1236

qualified as provided under the plan. The assets and obligations

1237

of the plan in effect immediately prior to the effective date of

1238

chapter 76-96 shall be construed to be the assets and obligations

1239

of the successor plan created herein.

1240

c. In recognition of s. 10, Art. I of the State

1241

Constitution, prohibiting the impairment of obligations of

1242

contracts, it is the intent of the Legislature that no action be

1243

taken whose purpose is to impair any bond indenture or financing

1244

agreement or any revenue source committed by contract to such

1245

bond or other indebtedness issued or incurred by the association

1246

or any other entity created under this subsection.

1247

7. On such coverage, an agent's remuneration shall be that

1248

amount of money payable to the agent by the terms of his or her

1249

contract with the company with which the business is placed.

1250

However, no commission will be paid on that portion of the

1251

premium which is in excess of the standard premium of that

1252

company.

1253

8. Subject to approval by the department, the association

1254

may establish different eligibility requirements and operational

1255

procedures for any line or type of coverage for any specified

1256

eligible area or portion of an eligible area if the board

1257

determines that such changes to the eligibility requirements and

1258

operational procedures are justified due to the voluntary market

1259

being sufficiently stable and competitive in such area or for

1260

such line or type of coverage and that consumers who, in good

1261

faith, are unable to obtain insurance through the voluntary

1262

market through ordinary methods would continue to have access to

1263

coverage from the association. When coverage is sought in

1264

connection with a real property transfer, such requirements and

1265

procedures shall not provide for an effective date of coverage

1266

later than the date of the closing of the transfer as established

1267

by the transferor, the transferee, and, if applicable, the

1268

lender.

1269

9. Notwithstanding any other provision of law:

1270

a. The pledge or sale of, the lien upon, and the security

1271

interest in any rights, revenues, or other assets of the

1272

association created or purported to be created pursuant to any

1273

financing documents to secure any bonds or other indebtedness of

1274

the association shall be and remain valid and enforceable,

1275

notwithstanding the commencement of and during the continuation

1276

of, and after, any rehabilitation, insolvency, liquidation,

1277

bankruptcy, receivership, conservatorship, reorganization, or

1278

similar proceeding against the association under the laws of this

1279

state or any other applicable laws.

1280

b. No such proceeding shall relieve the association of its

1281

obligation, or otherwise affect its ability to perform its

1282

obligation, to continue to collect, or levy and collect,

1283

assessments, market equalization or other surcharges, projected

1284

recoveries from the Florida Hurricane Catastrophe Fund,

1285

reinsurance recoverables, or any other rights, revenues, or other

1286

assets of the association pledged.

1287

c. Each such pledge or sale of, lien upon, and security

1288

interest in, including the priority of such pledge, lien, or

1289

security interest, any such assessments, emergency assessments,

1290

market equalization or renewal surcharges, projected recoveries

1291

from the Florida Hurricane Catastrophe Fund, reinsurance

1292

recoverables, or other rights, revenues, or other assets which

1293

are collected, or levied and collected, after the commencement of

1294

and during the pendency of or after any such proceeding shall

1295

continue unaffected by such proceeding.

1296

d. As used in this subsection, the term "financing

1297

documents" means any agreement, instrument, or other document now

1298

existing or hereafter created evidencing any bonds or other

1299

indebtedness of the association or pursuant to which any such

1300

bonds or other indebtedness has been or may be issued and

1301

pursuant to which any rights, revenues, or other assets of the

1302

association are pledged or sold to secure the repayment of such

1303

bonds or indebtedness, together with the payment of interest on

1304

such bonds or such indebtedness, or the payment of any other

1305

obligation of the association related to such bonds or

1306

indebtedness.

1307

e. Any such pledge or sale of assessments, revenues,

1308

contract rights or other rights or assets of the association

1309

shall constitute a lien and security interest, or sale, as the

1310

case may be, that is immediately effective and attaches to such

1311

assessments, revenues, contract, or other rights or assets,

1312

whether or not imposed or collected at the time the pledge or

1313

sale is made. Any such pledge or sale is effective, valid,

1314

binding, and enforceable against the association or other entity

1315

making such pledge or sale, and valid and binding against and

1316

superior to any competing claims or obligations owed to any other

1317

person or entity, including policyholders in this state,

1318

asserting rights in any such assessments, revenues, contract, or

1319

other rights or assets to the extent set forth in and in

1320

accordance with the terms of the pledge or sale contained in the

1321

applicable financing documents, whether or not any such person or

1322

entity has notice of such pledge or sale and without the need for

1323

any physical delivery, recordation, filing, or other action.

1324

f. There shall be no liability on the part of, and no cause

1325

of action of any nature shall arise against, any member insurer

1326

or its agents or employees, agents or employees of the

1327

association, members of the board of directors of the

1328

association, or the department or its representatives, for any

1329

action taken by them in the performance of their duties or

1330

responsibilities under this subsection. Such immunity does not

1331

apply to actions for breach of any contract or agreement

1332

pertaining to insurance, or any willful tort.

1333

(6) CITIZENS PROPERTY INSURANCE CORPORATION.--

1334

(a)1. It is the public purpose of this subsection to ensure

1335

the existence of an orderly market for property insurance for

1336

Floridians and Florida businesses. The Legislature finds that

1337

private insurers are unwilling or unable to provide affordable

1338

property insurance coverage in this state to the extent sought

1339

and needed. The absence of affordable property insurance

1340

threatens the public health, safety, and welfare and likewise

1341

threatens the economic health of the state. The state therefore

1342

has a compelling public interest and a public purpose to assist

1343

in assuring that property in the state is insured and that it is

1344

insured at affordable rates so as to facilitate the remediation,

1345

reconstruction, and replacement of damaged or destroyed property

1346

in order to reduce or avoid the negative effects otherwise

1347

resulting to the public health, safety, and welfare, to the

1348

economy of the state, and to the revenues of the state and local

1349

governments which are needed to provide for the public welfare.

1350

It is necessary, therefore, to provide affordable property

1351

insurance to applicants who are in good faith entitled to procure

1352

insurance through the voluntary market but are unable to do so.

1353

The Legislature intends by this subsection that affordable

1354

property insurance be provided and that it continue to be

1355

provided, as long as necessary, through Citizens Property

1356

Insurance Corporation, a government entity that is an integral

1357

part of the state, and that is not a private insurance company.

1358

To that end, Citizens Property Insurance Corporation shall strive

1359

to increase the availability of affordable property insurance in

1360

this state, while achieving efficiencies and economies, and while

1361

providing service to policyholders, applicants, and agents which

1362

is no less than the quality generally provided in the voluntary

1363

market, for the achievement of the foregoing public purposes.

1364

Because it is essential for this government entity to have the

1365

maximum financial resources to pay claims following a

1366

catastrophic hurricane, it is the intent of the Legislature that

1367

Citizens Property Insurance Corporation continue to be an

1368

integral part of the state and that the income of the corporation

1369

be exempt from federal income taxation and that interest on the

1370

debt obligations issued by the corporation be exempt from federal

1371

income taxation.

1372

2. The Residential Property and Casualty Joint Underwriting

1373

Association originally created by this statute shall be known, as

1374

of July 1, 2002, as the Citizens Property Insurance Corporation.

1375

The corporation shall provide insurance for residential and

1376

commercial property, for applicants who are in good faith

1377

entitled, but are unable, to procure insurance through the

1378

voluntary market. The corporation shall operate pursuant to a

1379

plan of operation approved by order of the Financial Services

1380

Commission. The plan is subject to continuous review by the

1381

commission. The commission may, by order, withdraw approval of

1382

all or part of a plan if the commission determines that

1383

conditions have changed since approval was granted and that the

1384

purposes of the plan require changes in the plan. The corporation

1385

shall continue to operate pursuant to the plan of operation

1386

approved by the Office of Insurance Regulation until October 1,

1387

2006. For the purposes of this subsection, residential coverage

1388

includes both personal lines residential coverage, which consists

1389

of the type of coverage provided by homeowner's, mobile home

1390

owner's, dwelling, tenant's, condominium unit owner's, and

1391

similar policies, and commercial lines residential coverage,

1392

which consists of the type of coverage provided by condominium

1393

association, apartment building, and similar policies.

1394

3. For the purposes of this subsection, the term "homestead

1395

property" means:

1396

a. Property that has been granted a homestead exemption

1397

under chapter 196;

1398

b. Property for which the owner has a current, written

1399

lease with a renter for a term of at least 7 months and for which

1400

the dwelling is insured by the corporation for $200,000 or less;

1401

c. An owner-occupied mobile home or manufactured home, as

1402

defined in s. 320.01, which is permanently affixed to real

1403

property, is owned by a Florida resident, and has been granted a

1404

homestead exemption under chapter 196 or, if the owner does not

1405

own the real property, the owner certifies that the mobile home

1406

or manufactured home is his or her principal place of residence;

1407

d. Tenant's coverage;

1408

e. Commercial lines residential property; or

1409

f. Any county, district, or municipal hospital; a hospital

1410

licensed by any not-for-profit corporation qualified under s.

1411

501(c)(3) of the United States Internal Revenue Code; or a

1412

continuing care retirement community that is certified under

1413

chapter 651 and that receives an exemption from ad valorem taxes

1414

under chapter 196.

1415

4. For the purposes of this subsection, the term

1416

"nonhomestead property" means property that is not homestead

1417

property.

1418

5. Effective January 1, 2009, a personal lines residential

1419

structure that has a dwelling replacement cost of $1 million or

1420

more, or a single condominium unit that has a combined dwelling

1421

and content replacement cost of $1 million or more is not

1422

eligible for coverage by the corporation. Such dwellings insured

1423

by the corporation on December 31, 2008, may continue to be

1424

covered by the corporation until the end of the policy term.

1425

However, such dwellings that are insured by the corporation and

1426

become ineligible for coverage due to the provisions of this

1427

subparagraph may reapply and obtain coverage in the high-risk

1428

account and be considered "nonhomestead property" if the property

1429

owner provides the corporation with a sworn affidavit from one or

1430

more insurance agents, on a form provided by the corporation,

1431

stating that the agents have made their best efforts to obtain

1432

coverage and that the property has been rejected for coverage by

1433

at least one authorized insurer and at least three surplus lines

1434

insurers. If such conditions are met, the dwelling may be insured

1435

by the corporation for up to 3 years, after which time the

1436

dwelling is ineligible for coverage. The office shall approve the

1437

method used by the corporation for valuing the dwelling

1438

replacement cost for the purposes of this subparagraph. If a

1439

policyholder is insured by the corporation prior to being

1440

determined to be ineligible pursuant to this subparagraph and

1441

such policyholder files a lawsuit challenging the determination,

1442

the policyholder may remain insured by the corporation until the

1443

conclusion of the litigation.

1444

3.6. For properties constructed on or after January 1,

1445

2009, the corporation may not insure any property located within

1446

2,500 feet landward of the coastal construction control line

1447

created pursuant to s. 161.053 unless the property meets the

1448

requirements of the code-plus building standards developed by the

1449

Florida Building Commission.

1450

4.7. It is the intent of the Legislature that

1451

policyholders, applicants, and agents of the corporation receive

1452

service and treatment of the highest possible level but never

1453

less than that generally provided in the voluntary market. It

1454

also is intended that the corporation be held to service

1455

standards no less than those applied to insurers in the voluntary

1456

market by the office with respect to responsiveness, timeliness,

1457

customer courtesy, and overall dealings with policyholders,

1458

applicants, or agents of the corporation.

1459

5.8. Effective January 1, 2009, a personal lines

1460

residential structure that is located in the "wind-borne debris

1461

region," as defined in s. 1609.2, International Building Code

1462

(2006), and that has an insured value on the structure of

1463

$750,000 or more is not eligible for coverage by the corporation

1464

unless the structure has opening protections as required under

1465

the Florida Building Code for a newly constructed residential

1466

structure in that area. A residential structure shall be deemed

1467

to comply with the requirements of this subparagraph if it has

1468

shutters or opening protections on all openings and if such

1469

opening protections complied with the Florida Building Code at

1470

the time they were installed. Effective January 1, 2011, the

1471

requirements of this subparagraph apply to a personal lines

1472

residential structure that is located in the wind-borne debris

1473

region and that has an insured value on the structure of $500,000

1474

or more.

1475

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

1476

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

1477

corporation and, for the purposes of this subsection, are

1478

referred to collectively as "assessable insurers." Insurers

1479

writing one or more subject lines of business in this state

1480

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

1481

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

1482

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

1483

assessment by the corporation and are referred to collectively as

1484

"assessable insureds." An authorized insurer's assessment

1485

liability shall begin on the first day of the calendar year

1486

following the year in which the insurer was issued a certificate

1487

of authority to transact insurance for subject lines of business

1488

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

1489

first calendar year during which the insurer no longer holds a

1490

certificate of authority to transact insurance for subject lines

1491

of business in this state.

1492

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

1493

expenses of the corporation shall be divided into three separate

1494

accounts as follows:

1495

(I) A personal lines account for personal residential

1496

policies issued by the corporation or issued by the Residential

1497

Property and Casualty Joint Underwriting Association and renewed

1498

by the corporation that provide comprehensive, multiperil

1499

coverage on risks that are not located in areas eligible for

1500

coverage in the Florida Windstorm Underwriting Association as

1501

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

1502

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

1503

risks that are located in such areas;

1504

(II) A commercial lines account for commercial residential

1505

and commercial nonresidential policies issued by the corporation

1506

or issued by the Residential Property and Casualty Joint

1507

Underwriting Association and renewed by the corporation that

1508

provide coverage for basic property perils on risks that are not

1509

located in areas eligible for coverage in the Florida Windstorm

1510

Underwriting Association as those areas were defined on January

1511

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

1512

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

1513

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

1514

and commercial residential and commercial nonresidential property

1515

policies issued by the corporation or transferred to the

1516

corporation that provide coverage for the peril of wind on risks

1517

that are located in areas eligible for coverage in the Florida

1518

Windstorm Underwriting Association as those areas were defined on

1519

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

1520

the Financial Services Commission and Legislative Budget

1521

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

1522

earlier than March 31, 2007, The corporation shall may offer

1523

policies that provide multiperil coverage and the corporation

1524

shall continue to offer policies that provide coverage only for

1525

the peril of wind for risks located in areas eligible for

1526

coverage in the high-risk account. Beginning July 1, 2008, the

1527

corporation may not issue new policies that provide coverage only

1528

for the peril of wind, but may continue to renew such policies

1529

that were in force on that date. In issuing multiperil coverage,

1530

the corporation may use its approved policy forms and rates for

1531

the personal lines account. An applicant or insured who is

1532

eligible to purchase a multiperil policy from the corporation may

1533

purchase a multiperil policy from an authorized insurer without

1534

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

1535

prospectively purchase a policy that provides coverage only for

1536

the peril of wind from the corporation prior to July 1, 2008. An

1537

applicant or insured who is eligible for a corporation policy

1538

that provides coverage only for the peril of wind may elect to

1539

purchase or retain such policy and also purchase or retain

1540

coverage excluding wind from an authorized insurer without

1541

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

1542

prospectively purchase a policy that provides multiperil coverage

1543

from the corporation. It is the goal of the Legislature that

1544

there would be an overall average savings of 10 percent or more

1545

for a policyholder who currently has a wind-only policy with the

1546

corporation, and an ex-wind policy with a voluntary insurer or

1547

the corporation, and who then obtains a multiperil policy from

1548

the corporation. It is the intent of the Legislature that the

1549

offer of multiperil coverage in the high-risk account be made and

1550

implemented in a manner that does not adversely affect the tax-

1551

exempt status of the corporation or creditworthiness of or

1552

security for currently outstanding financing obligations or

1553

credit facilities of the high-risk account, the personal lines

1554

account, or the commercial lines account. By March 1, 2007, the

1555

corporation shall prepare and submit for approval by the

1556

Financial Services Commission and Legislative Budget Commission a

1557

report detailing the corporation's business plan for issuing

1558

multiperil coverage in the high-risk account. The business plan

1559

shall be approved or disapproved within 30 days after receipt, as

1560

submitted or modified and resubmitted by the corporation. The

1561

business plan must include: the impact of such multiperil

1562

coverage on the corporation's financial resources, the impact of

1563

such multiperil coverage on the corporation's tax-exempt status,

1564

the manner in which the corporation plans to implement the

1565

processing of applications and policy forms for new and existing

1566

policyholders, the impact of such multiperil coverage on the

1567

corporation's ability to deliver customer service at the high

1568

level required by this subsection, the ability of the corporation

1569

to process claims, the ability of the corporation to quote and

1570

issue policies, the impact of such multiperil coverage on the

1571

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

1572

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

1573

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

1574

must also include quota share primary insurance under

1575

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

1576

risk account also includes the area within Port Canaveral, which

1577

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

1578

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

1579

Federal Government property.

1580

b. The three separate accounts must be maintained as long

1581

as financing obligations entered into by the Florida Windstorm

1582

Underwriting Association or Residential Property and Casualty

1583

Joint Underwriting Association are outstanding, in accordance

1584

with the terms of the corresponding financing documents. When the

1585

financing obligations are no longer outstanding, in accordance

1586

with the terms of the corresponding financing documents, the

1587

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

1588

liabilities, losses, and expenses of the corporation. Consistent

1589

with the requirement of this subparagraph and prudent investment

1590

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

1591

exercise its best efforts to retire existing debt or to obtain

1592

approval of necessary parties to amend the terms of existing

1593

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

1594

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

1595

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

1596

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

1597

House of Representatives which includes an analysis of

1598

consolidating the accounts, the actions the board has taken to

1599

minimize the cost of carrying debt, and its recommendations for

1600

executing the most efficient plan.

1601

c. Creditors of the Residential Property and Casualty Joint

1602

Underwriting Association and of the accounts specified in sub-

1603

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

1604

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

1605

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

1606

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

1607

Creditors of the Florida Windstorm Underwriting Association shall

1608

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

1609

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

1610

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

1611

a.(I) and (II).

1612

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

1613

attributable to particular accounts shall be prorated among the

1614

accounts.

1615

e. The Legislature finds that the revenues of the

1616

corporation are revenues that are necessary to meet the

1617

requirements set forth in documents authorizing the issuance of

1618

bonds under this subsection.

1619

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

1620

the benefit of any private person.

1621

3. With respect to a deficit in an account:

1622

a. When the deficit incurred in a particular calendar year

1623

is not greater than 8 10 percent of the aggregate statewide

1624

direct written premium for the subject lines of business for the

1625

prior calendar year, the entire deficit shall be recovered

1626

through regular assessments of assessable insurers under

1627

paragraph (p) and assessable insureds.

1628

b. When the deficit incurred in a particular calendar year

1629

exceeds 8 10 percent of the aggregate statewide direct written

1630

premium for the subject lines of business for the prior calendar

1631

year, the corporation shall levy regular assessments on

1632

assessable insurers under paragraph (p) and on assessable

1633

insureds in an amount equal to the greater of 8 10 percent of the

1634

deficit or 8 10 percent of the aggregate statewide direct written

1635

premium for the subject lines of business for the prior calendar

1636

year. Any remaining deficit shall be recovered through emergency

1637

assessments under sub-subparagraph d.

1638

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

1639

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

1640

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

1641

premium for the subject lines of business for the year preceding

1642

the assessment bears to the aggregate statewide direct written

1643

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

1644

assessment percentage applicable to each assessable insured is

1645

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

1646

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

1647

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

1648

Assessments levied by the corporation on assessable insurers

1649

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

1650

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

1651

notwithstanding any other provision of this subsection, the

1652

aggregate amount of a regular assessment for a deficit incurred

1653

in a particular calendar year shall be reduced by the estimated

1654

amount to be received by the corporation from the Citizens

1655

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

1656

collected or estimated to be collected from the assessment on

1657

Citizens policyholders pursuant to sub-subparagraph i.

1658

Assessments levied by the corporation on assessable insureds

1659

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

1660

surplus lines agent at the time the surplus lines agent collects

1661

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

1662

the Florida Surplus Lines Service Office at the time the surplus

1663

lines agent pays the surplus lines tax to the Florida Surplus

1664

Lines Service Office. Upon receipt of regular assessments from

1665

surplus lines agents, the Florida Surplus Lines Service Office

1666

shall transfer the assessments directly to the corporation as

1667

determined by the corporation.

1668

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

1669

deficit in an account exceeds the amount that will be recovered

1670

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

1671

subparagraph b., plus the amount that is expected to be recovered

1672

through surcharges under sub-subparagraph i., as to the remaining

1673

projected deficit the board shall levy, after verification by the

1674

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

1675

cover the deficits, to be collected by assessable insurers and

1676

the corporation and collected from assessable insureds upon

1677

issuance or renewal of policies for subject lines of business,

1678

excluding National Flood Insurance policies. The amount of the

1679

emergency assessment collected in a particular year shall be a

1680

uniform percentage of that year's direct written premium for

1681

subject lines of business and all accounts of the corporation,

1682

excluding National Flood Insurance Program policy premiums, as

1683

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

1684

office shall verify the arithmetic calculations involved in the

1685

board's determination within 30 days after receipt of the

1686

information on which the determination was based. Notwithstanding

1687

any other provision of law, the corporation and each assessable

1688

insurer that writes subject lines of business shall collect

1689

emergency assessments from its policyholders without such

1690

obligation being affected by any credit, limitation, exemption,

1691

or deferment. Emergency assessments levied by the corporation on

1692

assessable insureds shall be collected by the surplus lines agent

1693

at the time the surplus lines agent collects the surplus lines

1694

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

1695

Surplus Lines Service Office at the time the surplus lines agent

1696

pays the surplus lines tax to the Florida Surplus Lines Service

1697

Office. The emergency assessments so collected shall be

1698

transferred directly to the corporation on a periodic basis as

1699

determined by the corporation and shall be held by the

1700

corporation solely in the applicable account. The aggregate

1701

amount of emergency assessments levied for an account under this

1702

sub-subparagraph in any calendar year may, at the discretion of

1703

the board of governors, be less than but may not exceed the

1704

greater of 10 percent of the amount needed to cover the original

1705

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

1706

other costs associated with financing of the original deficit, or

1707

10 percent of the aggregate statewide direct written premium for

1708

subject lines of business and for all accounts of the corporation

1709

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

1710

reserves, and other costs associated with financing the original

1711

deficit.

1712

e. The corporation may pledge the proceeds of assessments,

1713

projected recoveries from the Florida Hurricane Catastrophe Fund,

1714

other insurance and reinsurance recoverables, policyholder

1715

surcharges and other surcharges, and other funds available to the

1716

corporation as the source of revenue for and to secure bonds

1717

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

1718

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

1719

mechanisms issued or created under this subsection, or to retire

1720

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

1721

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

1722

will efficiently recover such deficits. The purpose of the lines

1723

of credit or other financing mechanisms is to provide additional

1724

resources to assist the corporation in covering claims and

1725

expenses attributable to a catastrophe. As used in this

1726

subsection, the term "assessments" includes regular assessments

1727

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

1728

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

1729

Emergency assessments collected under sub-subparagraph d. are not

1730

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

1731

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

1732

emergency assessment shall be treated as failure to pay premium.

1733

The emergency assessments under sub-subparagraph d. shall

1734

continue as long as any bonds issued or other indebtedness

1735

incurred with respect to a deficit for which the assessment was

1736

imposed remain outstanding, unless adequate provision has been

1737

made for the payment of such bonds or other indebtedness pursuant

1738

to the documents governing such bonds or other indebtedness.

1739

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

1740

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

1741

business" means insurance written by assessable insurers or

1742

procured by assessable insureds for all property and casualty

1743

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

1744

compensation or medical malpractice. As used in the sub-

1745

subparagraph, the term "property and casualty lines of business"

1746

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

1747

Premiums and Losses, in the annual statement required of

1748

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

1749

section, except for those lines identified as accident and health

1750

insurance and except for policies written under the National

1751

Flood Insurance Program or the Federal Crop Insurance Program.

1752

For purposes of this sub-subparagraph, the term "workers'

1753

compensation" includes both workers' compensation insurance and

1754

excess workers' compensation insurance.

1755

g. The Florida Surplus Lines Service Office shall determine

1756

annually the aggregate statewide written premium in subject lines

1757

of business procured by assessable insureds and shall report that

1758

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

1759

corporation specifies to ensure that the corporation can meet the

1760

requirements of this subsection and the corporation's financing

1761

obligations.

1762

h. The Florida Surplus Lines Service Office shall verify

1763

the proper application by surplus lines agents of assessment

1764

percentages for regular assessments and emergency assessments

1765

levied under this subparagraph on assessable insureds and shall

1766

assist the corporation in ensuring the accurate, timely

1767

collection and payment of assessments by surplus lines agents as

1768

required by the corporation.

1769

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

1770

thereafter, the board of governors shall levy a Citizens

1771

policyholder surcharge an immediate assessment against the

1772

premium of each nonhomestead property policyholder in all

1773

accounts of the corporation, as a uniform percentage of the

1774

premium of the policy of up to 10 percent of such premium, which

1775

funds shall be used to offset the deficit. If this assessment is

1776

insufficient to eliminate the deficit, the board of governors

1777

shall levy an additional assessment against all policyholders of

1778

the corporation for a 12-month period, which shall be collected

1779

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

1780

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

1781

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

1782

deficit and reduce the amount of the regular assessment as

1783

provided in sub-subparagraphs a. and b. Citizens policyholder

1784

surcharges under this sub-subparagraph are not considered premium

1785

and are not subject to commissions, fees, or premium taxes.

1786

However, failure to pay such surcharges shall be treated as

1787

failure to pay premium.

1788

j. If the amount of any assessments or surcharges collected

1789

from corporation policyholders, assessable insurers or their

1790

policyholders, or assessable insureds exceeds the amount of the

1791

deficits, such excess amounts shall be remitted to and retained

1792

by the corporation in a reserve to be used by the corporation, as

1793

determined by the board of governors and approved by the office,

1794

to pay claims or reduce any past, present, or future plan-year

1795

deficits or to reduce outstanding debt. The board of governors

1796

shall maintain separate accounting records that consolidate data

1797

for nonhomestead properties, including, but not limited to,

1798

number of policies, insured values, premiums written, and losses.

1799

The board of governors shall annually report to the office and

1800

the Legislature a summary of such data.

1801

1802

1. Must provide for adoption of residential property and

1803

casualty insurance policy forms and commercial residential and

1804

nonresidential property insurance forms, which forms must be

1805

approved by the office prior to use. The corporation shall adopt

1806

the following policy forms:

1807

a. Standard personal lines policy forms that are

1808

comprehensive multiperil policies providing full coverage of a

1809

residential property equivalent to the coverage provided in the

1810

private insurance market under an HO-3, HO-4, or HO-6 policy.

1811

b. Basic personal lines policy forms that are policies

1812

similar to an HO-8 policy or a dwelling fire policy that provide

1813

coverage meeting the requirements of the secondary mortgage

1814

market, but which coverage is more limited than the coverage

1815

under a standard policy.

1816

c. Commercial lines residential and nonresidential policy

1817

forms that are generally similar to the basic perils of full

1818

coverage obtainable for commercial residential structures and

1819

commercial nonresidential structures in the admitted voluntary

1820

market.

1821

d. Personal lines and commercial lines residential property

1822

insurance forms that cover the peril of wind only. The forms are

1823

applicable only to residential properties located in areas

1824

eligible for coverage under the high-risk account referred to in

1825

sub-subparagraph (b)2.a.

1826

e. Commercial lines nonresidential property insurance forms

1827

that cover the peril of wind only. The forms are applicable only

1828

to nonresidential properties located in areas eligible for

1829

coverage under the high-risk account referred to in sub-

1830

subparagraph (b)2.a.

1831

f. The corporation may adopt variations of the policy forms

1832

listed in sub-subparagraphs a.-e. that contain more restrictive

1833

coverage.

1834

2.a. Must provide that the corporation adopt a program in

1835

which the corporation and authorized insurers enter into quota

1836

share primary insurance agreements for hurricane coverage, as

1837

defined in s. 627.4025(2)(a), for eligible risks, and adopt

1838

property insurance forms for eligible risks which cover the peril

1839

of wind only. As used in this subsection, the term:

1840

(I) "Quota share primary insurance" means an arrangement in

1841

which the primary hurricane coverage of an eligible risk is

1842

provided in specified percentages by the corporation and an

1843

authorized insurer. The corporation and authorized insurer are

1844

each solely responsible for a specified percentage of hurricane

1845

coverage of an eligible risk as set forth in a quota share

1846

primary insurance agreement between the corporation and an

1847

authorized insurer and the insurance contract. The responsibility

1848

of the corporation or authorized insurer to pay its specified

1849

percentage of hurricane losses of an eligible risk, as set forth

1850

in the quota share primary insurance agreement, may not be

1851

altered by the inability of the other party to the agreement to

1852

pay its specified percentage of hurricane losses. Eligible risks

1853

that are provided hurricane coverage through a quota share

1854

primary insurance arrangement must be provided policy forms that

1855

set forth the obligations of the corporation and authorized

1856

insurer under the arrangement, clearly specify the percentages of

1857

quota share primary insurance provided by the corporation and

1858

authorized insurer, and conspicuously and clearly state that

1859

neither the authorized insurer nor the corporation may be held

1860

responsible beyond its specified percentage of coverage of

1861

hurricane losses.

1862

(II) "Eligible risks" means personal lines residential and

1863

commercial lines residential risks that meet the underwriting

1864

criteria of the corporation and are located in areas that were

1865

eligible for coverage by the Florida Windstorm Underwriting

1866

Association on January 1, 2002.

1867

b. The corporation may enter into quota share primary

1868

insurance agreements with authorized insurers at corporation

1869

coverage levels of 90 percent and 50 percent.

1870

c. If the corporation determines that additional coverage

1871

levels are necessary to maximize participation in quota share

1872

primary insurance agreements by authorized insurers, the

1873

corporation may establish additional coverage levels. However,

1874

the corporation's quota share primary insurance coverage level

1875

may not exceed 90 percent.

1876

d. Any quota share primary insurance agreement entered into

1877

between an authorized insurer and the corporation must provide

1878

for a uniform specified percentage of coverage of hurricane

1879

losses, by county or territory as set forth by the corporation

1880

board, for all eligible risks of the authorized insurer covered

1881

under the quota share primary insurance agreement.

1882

e. Any quota share primary insurance agreement entered into

1883

between an authorized insurer and the corporation is subject to

1884

review and approval by the office. However, such agreement shall

1885

be authorized only as to insurance contracts entered into between

1886

an authorized insurer and an insured who is already insured by

1887

the corporation for wind coverage.

1888

f. For all eligible risks covered under quota share primary

1889

insurance agreements, the exposure and coverage levels for both

1890

the corporation and authorized insurers shall be reported by the

1891

corporation to the Florida Hurricane Catastrophe Fund. For all

1892

policies of eligible risks covered under quota share primary

1893

insurance agreements, the corporation and the authorized insurer

1894

shall maintain complete and accurate records for the purpose of

1895

exposure and loss reimbursement audits as required by Florida

1896

Hurricane Catastrophe Fund rules. The corporation and the

1897

authorized insurer shall each maintain duplicate copies of policy

1898

declaration pages and supporting claims documents.

1899

g. The corporation board shall establish in its plan of

1900

operation standards for quota share agreements which ensure that

1901

there is no discriminatory application among insurers as to the

1902

terms of quota share agreements, pricing of quota share

1903

agreements, incentive provisions if any, and consideration paid

1904

for servicing policies or adjusting claims.

1905

h. The quota share primary insurance agreement between the

1906

corporation and an authorized insurer must set forth the specific

1907

terms under which coverage is provided, including, but not

1908

limited to, the sale and servicing of policies issued under the

1909

agreement by the insurance agent of the authorized insurer

1910

producing the business, the reporting of information concerning

1911

eligible risks, the payment of premium to the corporation, and

1912

arrangements for the adjustment and payment of hurricane claims

1913

incurred on eligible risks by the claims adjuster and personnel

1914

of the authorized insurer. Entering into a quota sharing

1915

insurance agreement between the corporation and an authorized

1916

insurer shall be voluntary and at the discretion of the

1917

authorized insurer.

1918

3. May provide that the corporation may employ or otherwise

1919

contract with individuals or other entities to provide

1920

administrative or professional services that may be appropriate

1921

to effectuate the plan. The corporation shall have the power to

1922

borrow funds, by issuing bonds or by incurring other

1923

indebtedness, and shall have other powers reasonably necessary to

1924

effectuate the requirements of this subsection, including,

1925

without limitation, the power to issue bonds and incur other

1926

indebtedness in order to refinance outstanding bonds or other

1927

indebtedness. The corporation may, but is not required to, seek

1928

judicial validation of its bonds or other indebtedness under

1929

chapter 75. The corporation may issue bonds or incur other

1930

indebtedness, or have bonds issued on its behalf by a unit of

1931

local government pursuant to subparagraph (p)2., in the absence

1932

of a hurricane or other weather-related event, upon a

1933

determination by the corporation, subject to approval by the

1934

office, that such action would enable it to efficiently meet the

1935

financial obligations of the corporation and that such financings

1936

are reasonably necessary to effectuate the requirements of this

1937

subsection. The corporation is authorized to take all actions

1938

needed to facilitate tax-free status for any such bonds or

1939

indebtedness, including formation of trusts or other affiliated

1940

entities. The corporation shall have the authority to pledge

1941

assessments, projected recoveries from the Florida Hurricane

1942

Catastrophe Fund, other reinsurance recoverables, market

1943

equalization and other surcharges, and other funds available to

1944

the corporation as security for bonds or other indebtedness. In

1945

recognition of s. 10, Art. I of the State Constitution,

1946

prohibiting the impairment of obligations of contracts, it is the

1947

intent of the Legislature that no action be taken whose purpose

1948

is to impair any bond indenture or financing agreement or any

1949

revenue source committed by contract to such bond or other

1950

indebtedness.

1951

4.a. Must require that the corporation operate subject to

1952

the supervision and approval of a board of governors consisting

1953

of eight individuals who are residents of this state, from

1954

different geographical areas of this state. The Governor, the

1955

Chief Financial Officer, the President of the Senate, and the

1956

Speaker of the House of Representatives shall each appoint two

1957

members of the board. At least one of the two members appointed

1958

by each appointing officer must have demonstrated expertise in

1959

insurance. The Chief Financial Officer shall designate one of the

1960

appointees as chair. All board members serve at the pleasure of

1961

the appointing officer. All members of the board of governors are

1962

subject to removal at will by the officers who appointed them.

1963

All board members, including the chair, must be appointed to

1964

serve for 3-year terms beginning annually on a date designated by

1965

the plan. Any board vacancy shall be filled for the unexpired

1966

term by the appointing officer. The Chief Financial Officer shall

1967

appoint a technical advisory group to provide information and

1968

advice to the board of governors in connection with the board's

1969

duties under this subsection. The executive director and senior

1970

managers of the corporation shall be engaged by the board and

1971

serve at the pleasure of the board. Any executive director

1972

appointed on or after July 1, 2006, is subject to confirmation by

1973

the Senate. The executive director is responsible for employing

1974

other staff as the corporation may require, subject to review and

1975

concurrence by the board.

1976

b. The board shall create a Market Accountability Advisory

1977

Committee to assist the corporation in developing awareness of

1978

its rates and its customer and agent service levels in

1979

relationship to the voluntary market insurers writing similar

1980

coverage. The members of the advisory committee shall consist of

1981

the following 11 persons, one of whom must be elected chair by

1982

the members of the committee: four representatives, one appointed

1983

by the Florida Association of Insurance Agents, one by the

1984

Florida Association of Insurance and Financial Advisors, one by

1985

the Professional Insurance Agents of Florida, and one by the

1986

Latin American Association of Insurance Agencies; three

1987

representatives appointed by the insurers with the three highest

1988

voluntary market share of residential property insurance business

1989

in the state; one representative from the Office of Insurance

1990

Regulation; one consumer appointed by the board who is insured by

1991

the corporation at the time of appointment to the committee; one

1992

representative appointed by the Florida Association of Realtors;

1993

and one representative appointed by the Florida Bankers

1994

Association. All members must serve for 3-year terms and may

1995

serve for consecutive terms. The committee shall report to the

1996

corporation at each board meeting on insurance market issues

1997

which may include rates and rate competition with the voluntary

1998

market; service, including policy issuance, claims processing,

1999

and general responsiveness to policyholders, applicants, and

2000

agents; and matters relating to depopulation.

2001

5. Must provide a procedure for determining the eligibility

2002

of a risk for coverage, as follows:

2003

a. Subject to the provisions of s. 627.3517, with respect

2004

to personal lines residential risks, if the risk is offered

2005

coverage from an authorized insurer at the insurer's approved

2006

rate under either a standard policy including wind coverage or,

2007

if consistent with the insurer's underwriting rules as filed with

2008

the office, a basic policy including wind coverage, for a new

2009

application to the corporation for coverage, the risk is not

2010

eligible for any policy issued by the corporation unless the

2011

premium for coverage from the authorized insurer is more than 15

2012

percent greater than the premium for comparable coverage from the

2013

corporation. If the risk is not able to obtain any such offer,

2014

the risk is eligible for either a standard policy including wind

2015

coverage or a basic policy including wind coverage issued by the

2016

corporation; however, if the risk could not be insured under a

2017

standard policy including wind coverage regardless of market

2018

conditions, the risk shall be eligible for a basic policy

2019

including wind coverage unless rejected under subparagraph 9.

2020

However, with regard to a policyholder of the corporation or a

2021

policyholder removed from the corporation through an assumption

2022

agreement until the end of the assumption period, the

2023

policyholder remains eligible for coverage from the corporation

2024

regardless of any offer of coverage from an authorized insurer or

2025

surplus lines insurer. The corporation shall determine the type

2026

of policy to be provided on the basis of objective standards

2027

specified in the underwriting manual and based on generally

2028

accepted underwriting practices.

2029

(I) If the risk accepts an offer of coverage through the

2030

market assistance plan or an offer of coverage through a

2031

mechanism established by the corporation before a policy is

2032

issued to the risk by the corporation or during the first 30 days

2033

of coverage by the corporation, and the producing agent who

2034

submitted the application to the plan or to the corporation is

2035

not currently appointed by the insurer, the insurer shall:

2036

(A) Pay to the producing agent of record of the policy, for

2037

the first year, an amount that is the greater of the insurer's

2038

usual and customary commission for the type of policy written or

2039

a fee equal to the usual and customary commission of the

2040

corporation; or

2041

(B) Offer to allow the producing agent of record of the

2042

policy to continue servicing the policy for a period of not less

2043

than 1 year and offer to pay the agent the greater of the

2044

insurer's or the corporation's usual and customary commission for

2045

the type of policy written.

2046

2047

If the producing agent is unwilling or unable to accept

2048

appointment, the new insurer shall pay the agent in accordance

2049

with sub-sub-sub-subparagraph (A).

2050

(II) When the corporation enters into a contractual

2051

agreement for a take-out plan, the producing agent of record of

2052

the corporation policy is entitled to retain any unearned

2053

commission on the policy, and the insurer shall:

2054

(A) Pay to the producing agent of record of the corporation

2055

policy, for the first year, an amount that is the greater of the

2056

insurer's usual and customary commission for the type of policy

2057

written or a fee equal to the usual and customary commission of

2058

the corporation; or

2059

(B) Offer to allow the producing agent of record of the

2060

corporation policy to continue servicing the policy for a period

2061

of not less than 1 year and offer to pay the agent the greater of

2062

the insurer's or the corporation's usual and customary commission

2063

for the type of policy written.

2064

2065

If the producing agent is unwilling or unable to accept

2066

appointment, the new insurer shall pay the agent in accordance

2067

with sub-sub-sub-subparagraph (A).

2068

b. With respect to commercial lines residential risks, for

2069

a new application to the corporation for coverage, if the risk is

2070

offered coverage under a policy including wind coverage from an

2071

authorized insurer at its approved rate, the risk is not eligible

2072

for any policy issued by the corporation unless the premium for

2073

coverage from the authorized insurer is more than 15 percent

2074

greater than the premium for comparable coverage from the

2075

corporation. If the risk is not able to obtain any such offer,

2076

the risk is eligible for a policy including wind coverage issued

2077

by the corporation. However, with regard to a policyholder of the

2078

corporation or a policyholder removed from the corporation

2079

through an assumption agreement until the end of the assumption

2080

period, the policyholder remains eligible for coverage from the

2081

corporation regardless of any offer of coverage from an

2082

authorized insurer or surplus lines insurer.

2083

(I) If the risk accepts an offer of coverage through the

2084

market assistance plan or an offer of coverage through a

2085

mechanism established by the corporation before a policy is

2086

issued to the risk by the corporation or during the first 30 days

2087

of coverage by the corporation, and the producing agent who

2088

submitted the application to the plan or the corporation is not

2089

currently appointed by the insurer, the insurer shall:

2090

(A) Pay to the producing agent of record of the policy, for

2091

the first year, an amount that is the greater of the insurer's

2092

usual and customary commission for the type of policy written or

2093

a fee equal to the usual and customary commission of the

2094

corporation; or

2095

(B) Offer to allow the producing agent of record of the

2096

policy to continue servicing the policy for a period of not less

2097

than 1 year and offer to pay the agent the greater of the

2098

insurer's or the corporation's usual and customary commission for

2099

the type of policy written.

2100

2101

If the producing agent is unwilling or unable to accept

2102

appointment, the new insurer shall pay the agent in accordance

2103

with sub-sub-sub-subparagraph (A).

2104

(II) When the corporation enters into a contractual

2105

agreement for a take-out plan, the producing agent of record of

2106

the corporation policy is entitled to retain any unearned

2107

commission on the policy, and the insurer shall:

2108

(A) Pay to the producing agent of record of the corporation

2109

policy, for the first year, an amount that is the greater of the

2110

insurer's usual and customary commission for the type of policy

2111

written or a fee equal to the usual and customary commission of

2112

the corporation; or

2113

(B) Offer to allow the producing agent of record of the

2114

corporation policy to continue servicing the policy for a period

2115

of not less than 1 year and offer to pay the agent the greater of

2116

the insurer's or the corporation's usual and customary commission

2117

for the type of policy written.

2118

2119

If the producing agent is unwilling or unable to accept

2120

appointment, the new insurer shall pay the agent in accordance

2121

with sub-sub-sub-subparagraph (A).

2122

c. For purposes of determining comparable coverage under

2123

sub-subparagraphs a. and b., the comparison shall be based on

2124

those forms and coverages that are reasonably comparable. The

2125

corporation may rely on a determination of comparable coverage

2126

and premium made by the producing agent who submits the

2127

application to the corporation, made in the agent's capacity as

2128

the corporation's agent. A comparison may be made solely of the

2129

premium with respect to the main building or structure only on

2130

the following basis: the same coverage A or other building

2131

limits; the same percentage hurricane deductible that applies on

2132

an annual basis or that applies to each hurricane for commercial

2133

residential property; the same percentage of ordinance and law

2134

coverage, if the same limit is offered by both the corporation

2135

and the authorized insurer; the same mitigation credits, to the

2136

extent the same types of credits are offered both by the

2137

corporation and the authorized insurer; the same method for loss

2138

payment, such as replacement cost or actual cash value, if the

2139

same method is offered both by the corporation and the authorized

2140

insurer in accordance with underwriting rules; and any other form

2141

or coverage that is reasonably comparable as determined by the

2142

board. If an application is submitted to the corporation for

2143

wind-only coverage in the high-risk account, the premium for the

2144

corporation's wind-only policy plus the premium for the ex-wind

2145

policy that is offered by an authorized insurer to the applicant

2146

shall be compared to the premium for multiperil coverage offered

2147

by an authorized insurer, subject to the standards for comparison

2148

specified in this subparagraph. If the corporation or the

2149

applicant requests from the authorized insurer a breakdown of the

2150

premium of the offer by types of coverage so that a comparison

2151

may be made by the corporation or its agent and the authorized

2152

insurer refuses or is unable to provide such information, the

2153

corporation may treat the offer as not being an offer of coverage

2154

from an authorized insurer at the insurer's approved rate.

2155

6. Must include rules for classifications of risks and

2156

rates therefor.

2157

7. Must provide that if premium and investment income for

2158

an account attributable to a particular calendar year are in

2159

excess of projected losses and expenses for the account

2160

attributable to that year, such excess shall be held in surplus

2161

in the account. Such surplus shall be available to defray

2162

deficits in that account as to future years and shall be used for

2163

that purpose prior to assessing assessable insurers and

2164

assessable insureds as to any calendar year.

2165

8. Must provide objective criteria and procedures to be

2166

uniformly applied for all applicants in determining whether an

2167

individual risk is so hazardous as to be uninsurable. In making

2168

this determination and in establishing the criteria and

2169

procedures, the following shall be considered:

2170

a. Whether the likelihood of a loss for the individual risk

2171

is substantially higher than for other risks of the same class;

2172

and

2173

b. Whether the uncertainty associated with the individual

2174

risk is such that an appropriate premium cannot be determined.

2175

2176

The acceptance or rejection of a risk by the corporation shall be

2177

construed as the private placement of insurance, and the

2178

provisions of chapter 120 shall not apply.

2179

9. Must provide that the corporation shall make its best

2180

efforts to procure catastrophe reinsurance at reasonable rates,

2181

to cover its projected 100-year probable maximum loss as

2182

determined by the board of governors.

2183

10. Must provide that in the event of regular deficit

2184

assessments under sub-subparagraph (b)3.a. or sub-subparagraph

2185

(b)3.b., in the personal lines account, the commercial lines

2186

residential account, or the high-risk account, the corporation

2187

shall levy upon corporation policyholders in its next rate

2188

filing, or by a separate rate filing solely for this purpose, a

2189

Citizens policyholder surcharge arising from a regular assessment

2190

in such account in a percentage equal to the total amount of such

2191

regular assessments divided by the aggregate statewide direct

2192

written premium for subject lines of business for the prior

2193

calendar year. For purposes of calculating the Citizens

2194

policyholder surcharge to be levied under this subparagraph, the

2195

total amount of the regular assessment to which this surcharge is

2196

related shall be determined as set forth in subparagraph (b)3.,

2197

without deducting the estimated Citizens policyholder surcharge.

2198

Citizens policyholder surcharges under this subparagraph are not

2199

considered premium and are not subject to commissions, fees, or

2200

premium taxes; however, failure to pay a market equalization

2201

surcharge shall be treated as failure to pay premium.

2202

10.11. The policies issued by the corporation must provide

2203

that, if the corporation or the market assistance plan obtains an

2204

offer from an authorized insurer to cover the risk at its

2205

approved rates, the risk is no longer eligible for renewal

2206

through the corporation, except as otherwise provided in this

2207

subsection.

2208

11.12. Corporation policies and applications must include a

2209

notice that the corporation policy could, under this section, be

2210

replaced with a policy issued by an authorized insurer that does

2211

not provide coverage identical to the coverage provided by the

2212

corporation. The notice shall also specify that acceptance of

2213

corporation coverage creates a conclusive presumption that the

2214

applicant or policyholder is aware of this potential.

2215

12.13. May establish, subject to approval by the office,

2216

different eligibility requirements and operational procedures for

2217

any line or type of coverage for any specified county or area if

2218

the board determines that such changes to the eligibility

2219

requirements and operational procedures are justified due to the

2220

voluntary market being sufficiently stable and competitive in

2221

such area or for such line or type of coverage and that consumers

2222

who, in good faith, are unable to obtain insurance through the

2223

voluntary market through ordinary methods would continue to have

2224

access to coverage from the corporation. When coverage is sought

2225

in connection with a real property transfer, such requirements

2226

and procedures shall not provide for an effective date of

2227

coverage later than the date of the closing of the transfer as

2228

established by the transferor, the transferee, and, if

2229

applicable, the lender.

2230

13.14. Must provide that, with respect to the high-risk

2231

account, any assessable insurer with a surplus as to

2232

policyholders of $25 million or less writing 25 percent or more

2233

of its total countrywide property insurance premiums in this

2234

state may petition the office, within the first 90 days of each

2235

calendar year, to qualify as a limited apportionment company. A

2236

regular assessment levied by the corporation on a limited

2237

apportionment company for a deficit incurred by the corporation

2238

for the high-risk account in 2006 or thereafter may be paid to

2239

the corporation on a monthly basis as the assessments are

2240

collected by the limited apportionment company from its insureds

2241

pursuant to s. 627.3512, but the regular assessment must be paid

2242

in full within 12 months after being levied by the corporation. A

2243

limited apportionment company shall collect from its

2244

policyholders any emergency assessment imposed under sub-

2245

subparagraph (b)3.d. The plan shall provide that, if the office

2246

determines that any regular assessment will result in an

2247

impairment of the surplus of a limited apportionment company, the

2248

office may direct that all or part of such assessment be deferred

2249

as provided in subparagraph (p)4. However, there shall be no

2250

limitation or deferment of an emergency assessment to be

2251

collected from policyholders under sub-subparagraph (b)3.d.

2252

14.15. Must provide that the corporation appoint as its

2253

licensed agents only those agents who also hold an appointment as

2254

defined in s. 626.015(3) with an insurer who at the time of the

2255

agent's initial appointment by the corporation is authorized to

2256

write and is actually writing personal lines residential property

2257

coverage, commercial residential property coverage, or commercial

2258

nonresidential property coverage within the state.

2259

15.16. Must provide, by July 1, 2007, a premium payment

2260

plan option to its policyholders which allows at a minimum for

2261

quarterly and semiannual payment of premiums. A monthly payment

2262

plan may, but is not required to, be offered.

2263

16.17. Must limit coverage on mobile homes or manufactured

2264

homes built prior to 1994 to actual cash value of the dwelling

2265

rather than replacement costs of the dwelling.

2266

17.18. May provide such limits of coverage as the board

2267

determines, consistent with the requirements of this subsection.

2268

18.19. May require commercial property to meet specified

2269

hurricane mitigation construction features as a condition of

2270

eligibility for coverage.

2271

(m)1. Rates for coverage provided by the corporation shall

2272

be actuarially sound and subject to the requirements of s.

2273

627.062, except as otherwise provided in this paragraph. The

2274

corporation shall file its recommended rates with the office at

2275

least annually. The corporation shall provide any additional

2276

information regarding the rates which the office requires. The

2277

office shall consider the recommendations of the board and issue

2278

a final order establishing the rates for the corporation within

2279

45 days after the recommended rates are filed. The corporation

2280

may not pursue an administrative challenge or judicial review of

2281

the final order of the office.

2282

2. In addition to the rates otherwise determined pursuant

2283

to this paragraph, the corporation shall impose and collect an

2284

amount equal to the premium tax provided for in s. 624.509 to

2285

augment the financial resources of the corporation.

2286

3. After the public hurricane loss-projection model under

2287

s. 627.06281 has been found to be accurate and reliable by the

2288

Florida Commission on Hurricane Loss Projection Methodology, that

2289

model shall serve as the minimum benchmark for determining the

2290

windstorm portion of the corporation's rates. This subparagraph

2291

does not require or allow the corporation to adopt rates lower

2292

than the rates otherwise required or allowed by this paragraph.

2293

4. The rate filings for the corporation which were approved

2294

by the office and which took effect January 1, 2007, are

2295

rescinded, except for those rates that were lowered. As soon as

2296

possible, the corporation shall begin using the lower rates that

2297

were in effect on December 31, 2006, and shall provide refunds to

2298

policyholders who have paid higher rates as a result of that rate

2299

filing. The rates in effect on December 31, 2006, shall remain in

2300

effect for the 2007 and 2008 calendar years except for any rate

2301

change that results in a lower rate. The next rate change that

2302

may increase rates shall take effect January 1, 2009, pursuant to

2303

a new rate filing recommended by the corporation and established

2304

by the office, subject to the requirements of this paragraph.

2305

5.a. Beginning on January 15, 2009, and each year

2306

thereafter, the corporation must make a recommended actuarially

2307

sound rate filing for each personal and commercial line of

2308

business it writes, to be effective no earlier than July 1, 2009.

2309

b. For the 36-month period beginning with the effective

2310

date for each of the rate filings made by the corporation on

2311

January 15, 2009, the rates established by the office for the

2312

corporation for its personal residential multiperil policies, its

2313

commercial residential multiperil policies, and its commercial

2314

nonresidential multiperil policies may not result in an overall

2315

average statewide premium increase of more than 5 percent or an

2316

increase for any single policyholder of more than 5 percent,

2317

during the first 12-month period, and may not result in an

2318

overall average statewide premium increase of more than 10

2319

percent, or an increase for any single policyholder of more than

2320

10 percent, during each of the two subsequent 12-month periods,

2321

excluding coverage changes and surcharges.

2322

c. For the 36-month period beginning with the effective

2323

date for the rate filings made by the corporation on January 15,

2324

2009, the rates established by the office for the corporation for

2325

its personal residential wind-only policies, its commercial

2326

residential wind-only policies, and its commercial nonresidential

2327

wind-only policies may not result in an overall average statewide

2328

premium increase of more than 10 percent, or an increase for any

2329

single policyholder of more than 10 percent, during the first 12-

2330

month period, and may not result in an overall average statewide

2331

premium increase of more than 10 percent, or an increase for any

2332

single policyholder of more than 10 percent, during each of the

2333

two subsequent 12-month periods, excluding coverage changes and

2334

surcharges.

2335

(p)1. The corporation shall certify to the office its needs

2336

for annual assessments as to a particular calendar year, and for

2337

any interim assessments that it deems to be necessary to sustain

2338

operations as to a particular year pending the receipt of annual

2339

assessments. Upon verification, the office shall approve such

2340

certification, and the corporation shall levy such annual or

2341

interim assessments. Such assessments shall be prorated as

2342

provided in paragraph (b). The corporation shall take all

2343

reasonable and prudent steps necessary to collect the amount of

2344

assessment due from each assessable insurer, including, if

2345

prudent, filing suit to collect such assessment. If the

2346

corporation is unable to collect an assessment from any

2347

assessable insurer, the uncollected assessments shall be levied

2348

as an additional assessment against the assessable insurers and

2349

any assessable insurer required to pay an additional assessment

2350

as a result of such failure to pay shall have a cause of action

2351

against such nonpaying assessable insurer. Assessments shall be

2352

included as an appropriate factor in the making of rates. The

2353

failure of a surplus lines agent to collect and remit any regular

2354

or emergency assessment levied by the corporation is considered

2355

to be a violation of s. 626.936 and subjects the surplus lines

2356

agent to the penalties provided in that section.

2357

2. The governing body of any unit of local government, any

2358

residents of which are insured by the corporation, may issue

2359

bonds as defined in s. 125.013 or s. 166.101 from time to time to

2360

fund an assistance program, in conjunction with the corporation,

2361

for the purpose of defraying deficits of the corporation. In

2362

order to avoid needless and indiscriminate proliferation,

2363

duplication, and fragmentation of such assistance programs, any

2364

unit of local government, any residents of which are insured by

2365

the corporation, may provide for the payment of losses,

2366

regardless of whether or not the losses occurred within or

2367

outside of the territorial jurisdiction of the local government.

2368

Revenue bonds under this subparagraph may not be issued until

2369

validated pursuant to chapter 75, unless a state of emergency is

2370

declared by executive order or proclamation of the Governor

2371

pursuant to s. 252.36 making such findings as are necessary to

2372

determine that it is in the best interests of, and necessary for,

2373

the protection of the public health, safety, and general welfare

2374

of residents of this state and declaring it an essential public

2375

purpose to permit certain municipalities or counties to issue

2376

such bonds as will permit relief to claimants and policyholders

2377

of the corporation. Any such unit of local government may enter

2378

into such contracts with the corporation and with any other

2379

entity created pursuant to this subsection as are necessary to

2380

carry out this paragraph. Any bonds issued under this

2381

subparagraph shall be payable from and secured by moneys received

2382

by the corporation from emergency assessments under sub-

2383

subparagraph (b)3.d., and assigned and pledged to or on behalf of

2384

the unit of local government for the benefit of the holders of

2385

such bonds. The funds, credit, property, and taxing power of the

2386

state or of the unit of local government shall not be pledged for

2387

the payment of such bonds. If any of the bonds remain unsold 60

2388

days after issuance, the office shall require all insurers

2389

subject to assessment to purchase the bonds, which shall be

2390

treated as admitted assets; each insurer shall be required to

2391

purchase that percentage of the unsold portion of the bond issue

2392

that equals the insurer's relative share of assessment liability

2393

under this subsection. An insurer shall not be required to

2394

purchase the bonds to the extent that the office determines that

2395

the purchase would endanger or impair the solvency of the

2396

insurer.

2397

3.a. The corporation shall adopt one or more programs

2398

subject to approval by the office for the reduction of both new

2399

and renewal writings in the corporation. Beginning January 1,

2400

2008, any program the corporation adopts for the payment of

2401

bonuses to an insurer for each risk the insurer removes from the

2402

corporation shall comply with s. 627.3511(2) and may not exceed

2403

the amount referenced in s. 627.3511(2) for each risk removed.

2404

The corporation may consider any prudent and not unfairly

2405

discriminatory approach to reducing corporation writings, and may

2406

adopt a credit against assessment liability or other liability

2407

that provides an incentive for insurers to take risks out of the

2408

corporation and to keep risks out of the corporation by

2409

maintaining or increasing voluntary writings in counties or areas

2410

in which corporation risks are highly concentrated and a program

2411

to provide a formula under which an insurer voluntarily taking

2412

risks out of the corporation by maintaining or increasing

2413

voluntary writings will be relieved wholly or partially from

2414

assessments under sub-subparagraphs (b)3.a. and b. However, any

2415

"take-out bonus" or payment to an insurer must be conditioned on

2416

the property being insured for at least 5 years by the insurer,

2417

unless canceled or nonrenewed by the policyholder. If the policy

2418

is canceled or nonrenewed by the policyholder before the end of

2419

the 5-year period, the amount of the take-out bonus must be

2420

prorated for the time period the policy was insured. When the

2421

corporation enters into a contractual agreement for a take-out

2422

plan, the producing agent of record of the corporation policy is

2423

entitled to retain any unearned commission on such policy, and

2424

the insurer shall either:

2425

(I) Pay to the producing agent of record of the policy, for

2426

the first year, an amount which is the greater of the insurer's

2427

usual and customary commission for the type of policy written or

2428

a policy fee equal to the usual and customary commission of the

2429

corporation; or

2430

(II) Offer to allow the producing agent of record of the

2431

policy to continue servicing the policy for a period of not less

2432

than 1 year and offer to pay the agent the insurer's usual and

2433

customary commission for the type of policy written. If the

2434

producing agent is unwilling or unable to accept appointment by

2435

the new insurer, the new insurer shall pay the agent in

2436

accordance with sub-sub-subparagraph (I).

2437

b. Any credit or exemption from regular assessments adopted

2438

under this subparagraph shall last no longer than the 3 years

2439

following the cancellation or expiration of the policy by the

2440

corporation. With the approval of the office, the board may

2441

extend such credits for an additional year if the insurer

2442

guarantees an additional year of renewability for all policies

2443

removed from the corporation, or for 2 additional years if the

2444

insurer guarantees 2 additional years of renewability for all

2445

policies so removed.

2446

c. There shall be no credit, limitation, exemption, or

2447

deferment from emergency assessments to be collected from

2448

policyholders pursuant to sub-subparagraph (b)3.d.

2449

d. Subject to the execution of the confidentiality

2450

agreement required by paragraph (w), the corporation shall make

2451

its database of policies available to prospective take-out

2452

insurers considering underwriting a risk insured by the

2453

corporation, without categorically eliminating policies from

2454

eligibility for removal. The corporation may not instruct or

2455

encourage prospective take-out insurers to avoid the selection of

2456

policies for which the agent has disapproved policy removals. The

2457

corporation must require agents to accept or decline appointment

2458

for any policy selected and, in the case of a declination, must

2459

notify the policyholder that an insurer, identified by name,

2460

selected his or her policy for a take-out offer, but that the

2461

policyholder's agent refused to be appointed by the insurer. The

2462

notice must also provide the policyholder with the take-out

2463

insurer's contact information so that the policyholder may

2464

contact the company directly and make his or her own

2465

determination of whether to seek coverage from the take-out

2466

insurer.

2467

4. The plan shall provide for the deferment, in whole or in

2468

part, of the assessment of an assessable insurer, other than an

2469

emergency assessment collected from policyholders pursuant to

2470

sub-subparagraph (b)3.d., if the office finds that payment of the

2471

assessment would endanger or impair the solvency of the insurer.

2472

In the event an assessment against an assessable insurer is

2473

deferred in whole or in part, the amount by which such assessment

2474

is deferred may be assessed against the other assessable insurers

2475

in a manner consistent with the basis for assessments set forth

2476

in paragraph (b).

2477

5. Effective July 1, 2007, in order to evaluate the costs

2478

and benefits of approved take-out plans, if the corporation pays

2479

a bonus or other payment to an insurer for an approved take-out

2480

plan, it shall maintain a record of the address or such other

2481

identifying information on the property or risk removed in order

2482

to track if and when the property or risk is later insured by the

2483

corporation.

2484

6. Any policy taken out, assumed, or removed from the

2485

corporation is, as of the effective date of the take-out,

2486

assumption, or removal, direct insurance issued by the insurer

2487

and not by the corporation, even if the corporation continues to

2488

service the policies. This subparagraph applies to policies of

2489

the corporation and not policies taken out, assumed, or removed

2490

from any other entity.

2491

(dd)1. For policies subject to nonrenewal as a result of

2492

the risk being no longer eligible for coverage due to being

2493

valued at $1 million or more, the corporation shall, directly or

2494

through the market assistance plan, make information from

2495

confidential underwriting and claims files of policyholders

2496

available only to licensed general lines agents who register with

2497

the corporation to receive such information according to the

2498

following procedures:

2499

2. By August 1, 2006, the corporation shall provide such

2500

policyholders who are not eligible for renewal the opportunity to

2501

request in writing, within 30 days after the notification is

2502

sent, that information from their confidential underwriting and

2503

claims files not be released to licensed general lines agents

2504

registered pursuant to this paragraph.

2505

3. By August 1, 2006, the corporation shall make available

2506

to licensed general lines agents the registration procedures to

2507

be used to obtain confidential information from underwriting and

2508

claims files for such policies not eligible for renewal. As a

2509

condition of registration, the corporation shall require the

2510

licensed general lines agent to attest that the agent has the

2511

experience and relationships with authorized or surplus lines

2512

carriers to attempt to offer replacement coverage for such

2513

policies.

2514

4. By September 1, 2006, the corporation shall make

2515

available through a secured website to licensed general lines

2516

agents registered pursuant to this paragraph application, rating,

2517

loss history, mitigation, and policy type information relating to

2518

such policies not eligible for renewal and for which the

2519

policyholder has not requested the corporation withhold such

2520

information. The registered licensed general lines agent may use

2521

such information to contact and assist the policyholder in

2522

securing replacement policies, and the agent may disclose to the

2523

policyholder that such information was obtained from the

2524

corporation.

2525

(dd)(ee) The assets of the corporation may be invested and

2526

managed by the State Board of Administration.

2527

(ee)(ff) The office may establish a pilot program to offer

2528

optional sinkhole coverage in one or more counties or other

2529

territories of the corporation for the purpose of implementing s.

2530

627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.

2531

Under the pilot program, the corporation is not required to issue

2532

a notice of nonrenewal to exclude sinkhole coverage upon the

2533

renewal of existing policies, but may exclude such coverage using

2534

a notice of coverage change.

2535

Section 13. Paragraph (b) of subsection (2) of section

2536

627.4133, Florida Statutes, is amended to read:

2537

(2) With respect to any personal lines or commercial

2538

residential property insurance policy, including, but not limited

2539

to, any homeowner's, mobile home owner's, farmowner's,

2540

condominium association, condominium unit owner's, apartment

2541

building, or other policy covering a residential structure or its

2542

contents:

2543

(b) The insurer shall give the named insured written notice

2544

of nonrenewal, cancellation, or termination at least 180 100 days

2545

prior to the effective date of the nonrenewal, cancellation, or

2546

termination. However, the insurer shall give at least 100 days'

2547

written notice, or written notice by June 1, whichever is

2548

earlier, for any nonrenewal, cancellation, or termination that

2549

would be effective between June 1 and November 30. The notice

2550

must include the reason or reasons for the nonrenewal,

2551

cancellation, or termination, except that:

2552

1. When cancellation is for nonpayment of premium, at least

2553

10 days' written notice of cancellation accompanied by the reason

2554

therefor shall be given. As used in this subparagraph, the term

2555

"nonpayment of premium" means failure of the named insured to

2556

discharge when due any of her or his obligations in connection

2557

with the payment of premiums on a policy or any installment of

2558

such premium, whether the premium is payable directly to the

2559

insurer or its agent or indirectly under any premium finance plan

2560

or extension of credit, or failure to maintain membership in an

2561

organization if such membership is a condition precedent to

2562

insurance coverage. "Nonpayment of premium" also means the

2563

failure of a financial institution to honor an insurance

2564

applicant's check after delivery to a licensed agent for payment

2565

of a premium, even if the agent has previously delivered or

2566

transferred the premium to the insurer. If a dishonored check

2567

represents the initial premium payment, the contract and all

2568

contractual obligations shall be void ab initio unless the

2569

nonpayment is cured within the earlier of 5 days after actual

2570

notice by certified mail is received by the applicant or 15 days

2571

after notice is sent to the applicant by certified mail or

2572

registered mail, and if the contract is void, any premium

2573

received by the insurer from a third party shall be refunded to

2574

that party in full.

2575

2. When such cancellation or termination occurs during the

2576

first 90 days during which the insurance is in force and the

2577

insurance is canceled or terminated for reasons other than

2578

nonpayment of premium, at least 20 days' written notice of

2579

cancellation or termination accompanied by the reason therefor

2580

shall be given except where there has been a material

2581

misstatement or misrepresentation or failure to comply with the

2582

underwriting requirements established by the insurer.

2583

3. The requirement for providing written notice of

2584

nonrenewal by June 1 of any nonrenewal that would be effective

2585

between June 1 and November 30 does not apply to the following

2586

situations, but the insurer remains subject to the requirement to

2587

provide such notice at least 100 days prior to the effective date

2588

of nonrenewal:

2589

a. A policy that is nonrenewed due to a revision in the

2590

coverage for sinkhole losses and catastrophic ground cover

2591

collapse pursuant to s. 627.730, as amended by s. 30, chapter

2592

2007-1, Laws of Florida.

2593

b. A policy that is nonrenewed by Citizens Property

2594

Insurance Corporation, pursuant to s. 627.351(6), for a policy

2595

that has been assumed by an authorized insurer offering

2596

replacement or renewal coverage to the policyholder.

2597

2598

After the policy has been in effect for 90 days, the policy shall

2599

not be canceled by the insurer except when there has been a

2600

material misstatement, a nonpayment of premium, a failure to

2601

comply with underwriting requirements established by the insurer

2602

within 90 days of the date of effectuation of coverage, or a

2603

substantial change in the risk covered by the policy or when the

2604

cancellation is for all insureds under such policies for a given

2605

class of insureds. This paragraph does not apply to individually

2606

rated risks having a policy term of less than 90 days.

2607

Section 14. Effective January 1, 2011, section 689.262,

2608

Florida Statutes, is created to read:

2609

689.262 Sale of residential property; disclosure of

2610

windstorm mitigation rating.--A purchaser of residential property

2611

must be informed of the windstorm mitigation rating of the

2612

structure, based on the uniform home grading scale adopted

2613

pursuant to s. 215.55865. The rating must be included in the

2614

contract for sale or as a separate document attached to the

2615

contract for sale. The Financial Services Commission may adopt

2616

rules, consistent with other state laws, to administer this

2617

section, including the form of the disclosure and the

2618

requirements for the windstorm mitigation inspection or report

2619

that is required for purposes of determining the rating.

2620

Section 15. Effective October 1, 2008, subsection (1) of

2621

section 817.2341, Florida Statutes, is amended to read:

2622

817.2341 False or misleading statements or supporting

2623

documents; penalty.--

2624

(1) Any person who willfully files with the department or

2625

office, or who willfully signs for filing with the department or

2626

office, a materially false or materially misleading financial

2627

statement or document in support of such statement required by

2628

law or rule, or a materially false or materially misleading rate

2629

filing, with intent to deceive and with knowledge that the

2630

statement or document is materially false or materially

2631

misleading, commits a felony of the third degree, punishable as

2632

provided in s. 775.082, s. 775.083, or s. 775.084.

2633

Section 16. (1) By December 15, 2008, Citizens Property

2634

Insurance Corporation shall transfer $250 million to the General

2635

Revenue Fund by transferring an amount from the Personal Lines

2636

Account and the Commercial Lines Account, as defined in s.

2637

627.351(6), Florida Statutes, in proportion to the surplus of

2638

each account, if the combined losses in the Personal Lines

2639

Account and the Commercial Lines Account from one or more named

2640

hurricanes in 2008 do not exceed $750 million. The board of

2641

governors of Citizens Property Insurance Corporation must make a

2642

reasonable estimate of such losses on or after December 1, 2008,

2643

and no later than December 14, 2008, using generally accepted

2644

actuarial and accounting practices, recognizing that audited

2645

financial statements will not yet be available and that all

2646

losses will have not been reported or developed.

2647

(2) If Citizens Property Insurance Corporation transfers

2648

$250 million to General Revenue as provided in subsection (1),

2649

effective December 15, 2008, and for the 2008-2009 fiscal year,

2650

the sum of $250 million is appropriated from the General Revenue

2651

Fund on a nonrecurring basis to the State Board of Administration

2652

for purposes of the Insurance Capital Build-Up Incentive Program

2653

established pursuant to s. 215.5595, Florida Statutes, as amended

2654

by this act. Costs and fees incurred by the board in

2655

administering this program, including fees for investment

2656

services, shall be paid from funds appropriated by the

2657

Legislature for this program, but are limited to 1 percent of the

2658

amount appropriated. Notwithstanding the provisions of s.

2659

216.301, Florida Statutes, to the contrary, the unexpended

2660

balance of this appropriation shall not revert to the General

2661

Revenue Fund until June 30, 2009.

2662

Section 17. Except as otherwise expressly provided in this

2663

act, this act shall take effect upon becoming a law.

2664

2665

================ T I T L E A M E N D M E N T ================

2666

And the title is amended as follows:

2667

Delete everything before the enacting clause

2668

and insert:

2669

A bill to be entitled

2670

An act relating to insurance; amending s. 215.5595, F.S.;

2671

revising legislative findings with respect to the

2672

Insurance Capital Build-Up Incentive Program and the

2673

appropriation of state funds for surplus notes issued by

2674

residential property insurers; revising the conditions and

2675

requirements for providing funds to insurers under the

2676

program; requiring a commitment by the insurer to meet

2677

minimum premium-to-surplus writing ratios for residential

2678

property insurance, for taking policies out of Citizens

2679

Property Insurance Corporation, and for maintaining

2680

certain surplus and reinsurance; establishing deadlines

2681

for insurers to apply for funds; authorizing the State

2682

Board of Administration to charge a late fee for payment

2683

of remittances; requiring the board to submit semiannual

2684

reports to the Legislature regarding the program;

2685

providing that amendments made by the act do not affect

2686

the terms of surplus notes approved prior to a specified

2687

date, but authorizing the board and an insurer to

2688

renegotiate such terms consistent with such amendments;

2689

requiring the board to transfer to Citizens Property

2690

Insurance Corporation any funds that have not been

2691

reserved for insurers approved to receive such funds under

2692

the program, from the funds that were appropriated from

2693

Citizens; requiring the board to transfer to Citizens

2694

interest and principal payments to Citizens Property

2695

Insurance Corporation for surplus note funded from

2696

appropriations from Citizens; requiring Citizens to

2697

deposit such funds into accounts from which appropriations

2698

were made; amending s. 542.20, F.S.; subjecting the

2699

business of insurance to the Florida Antitrust Act;

2700

limiting enforcement to actions by the Attorney General or

2701

a state attorney; providing exceptions; amending s.

2702

624.3161, F.S.; authorizing the Office of Insurance

2703

Regulation to require an insurer to file its claims

2704

handling practices and procedures as a public record based

2705

on findings of a market conduct examination; amending s.

2706

624.4211, F.S.; increasing the maximum amounts of

2707

administrative fines that may be imposed upon an insurer

2708

by the Office of Insurance Regulation for nonwillful and

2709

willful violations of an order or rule of the office or

2710

any provision of the Florida Insurance Code; authorizing

2711

the office to impose a fine for each day of noncompliance

2712

up to a maximum amount; providing factors to consider when

2713

determining the amount of the fine; creating s. 624.4213,

2714

F.S.; specifying requirements for submission of a document

2715

or information to the Office of Insurance Regulation or

2716

the Department of Financial Services in order for a person

2717

to claim that the document is a trade secret; requiring

2718

each page or portion to be labeled as a trade secret and

2719

be separated from non-trade secret material; requiring the

2720

submitting party to include an affidavit certifying

2721

certain information about the documents claimed to be

2722

trade secrets; requiring the office or department to

2723

notify persons who submit trade secret documents of any

2724

public-records request and the opportunity to file a court

2725

action to bar disclosure; specifying conditions for the

2726

office to retain or release such documents; requiring an

2727

award of attorney's fees against a person who certified a

2728

document as trade secret if a court or administrative

2729

tribunal finds that the document is not a trade secret;

2730

amending s. 626.9521, F.S.; increasing the maximum fines

2731

that may be imposed by the office or department for

2732

nonwillful and willful violations of state law regarding

2733

unfair methods of competition and unfair or deceptive acts

2734

or practices related to insurance; amending s. 626.9541,

2735

F.S.; prohibiting an insurer from considering certain

2736

factors when evaluating or adjusting a property insurance

2737

claim; prohibiting an insurer from failing to pay

2738

undisputed amounts of benefits owed under a property

2739

insurance policy within a certain period; amending s.

2740

627.062, F.S.; requiring that an insurer seeking a rate

2741

for property insurance that is greater than the rate most

2742

recently approved by the Office of Insurance Regulation

2743

make a "file and use" filing for all such rate filings

2744

made after a specified date; revising the factors the

2745

office must consider in reviewing a rate filing;

2746

prohibiting the Office of Insurance Regulation from

2747

disapproving as excessive a rate solely because the

2748

insurer obtained reinsurance covering a specified probably

2749

maximum loss; allowing the office to disapprove a rate as

2750

excessive within 1 year after the rate has been approved

2751

under certain conditions related to nonrenewal of policies

2752

by the insurer; requiring an administrative law judge in a

2753

hearing on an insurance rate to grant a continuance if

2754

requested by a party due to receiving additional

2755

information that was not previously available; deleting

2756

provisions relating to the submission of a disputed rate

2757

filing, other than a rate filing for medical malpractice

2758

insurance, to an arbitration panel in lieu of an

2759

administrative hearing if the rate is filed before a

2760

specified date; requiring certain officers and the chief

2761

actuary of a property insurer to certify certain

2762

information as part of a rate filing, subject to the

2763

penalty of perjury; amending s. 627.0613, F.S.; deleting

2764

cross-references to conform to changes made by the act;

2765

amending s. 627.0628, F.S.; requiring that with respect to

2766

rate filings, insurers must use actuarial methods or

2767

models found to be accurate or reliable by the Florida

2768

Commission on Hurricane Loss Projection Methodology;

2769

deleting the requirement for the Office of Insurance

2770

Regulation and the Consumer Advocate to have access to all

2771

assumptions of a hurricane loss model in order for a model

2772

that has been found to be accurate and reliable by the

2773

Florida Commission on Hurricane Loss Projection

2774

Methodology to be admissible in a rate proceeding;

2775

deleting cross-references to conform to changes made by

2776

the act; amending s. 627.0629, F.S.; requiring that the

2777

Office of Insurance Regulation develop and make publicly

2778

available before a specified deadline a proposed method

2779

for insurers to establish windstorm mitigation premium

2780

discounts that correlate to the uniform home rating scale;

2781

requiring that the Financial Services Commission adopt

2782

rules before a specified deadline; requiring insurers to

2783

make rate filings pursuant to such method; authorizing the

2784

commission to make changes by rule to the uniform home

2785

grading scale and specify by rule the minimum required

2786

discounts, credits, or other rate differentials; requiring

2787

that such rate differentials be consistent with generally

2788

accepted actuarial principles and wind loss mitigation

2789

studies; amending s. 627.351, F.S., relating to Citizens

2790

Property Insurance Corporation; deleting a provision to

2791

conform to changes made in the act; deleting provisions

2792

defining the terms "homestead property" and "nonhomestead

2793

property"; deleting a provision providing for the

2794

classification of certain dwellings as "nonhomestead

2795

property"; deleting provisions making dwellings and

2796

condominium units that have a replacement cost above a

2797

specified value ineligible for coverage after a specified

2798

date; requiring certain structures to have opening

2799

protections as a condition of eligibility for coverage

2800

after a specified date; requiring that the corporation

2801

cease issuance of new wind-only coverage beginning on a

2802

specified date; deleting outdated provisions requiring the

2803

corporation to submit a report for approval of offering

2804

multiperil coverage; revising threshold amounts of

2805

deficits incurred in a calendar year on which the decision

2806

to levy assessments and the types of such assessments are

2807

based; revising the formula used to calculate shares of

2808

assessments owed by certain assessable insureds; requiring

2809

that the board of governors make certain determinations

2810

before levying emergency assessments; providing the board

2811

of governors with discretion to set the amount of an

2812

emergency assessment within specified limits; requiring

2813

the board of governors to levy a Citizens policyholder

2814

surcharge under certain conditions; deleting a provision

2815

requiring the levy of an immediate assessment against

2816

certain policyholders under such conditions; requiring

2817

that funds collected from the levy of such surcharges be

2818

used for certain purposes; providing that such surcharges

2819

are not considered premium and are not subject to

2820

commissions, fees, or premium taxes; requiring that the

2821

failure to pay such surcharges be treated as failure to

2822

pay premium; requiring that the amount of any assessment

2823

or surcharge which exceeds the amount of deficits be

2824

remitted to and used by the corporation for specified

2825

purposes; deleting provisions requiring that the plan of

2826

operation of the corporation provide for the levy of a

2827

Citizens policyholder surcharge if regular deficit

2828

assessments are levied as a result of deficits in certain

2829

accounts; deleting provisions related to the calculation,

2830

classification, and nonpayment of such surcharge;

2831

requiring that the corporation make an annual filing for

2832

each personal or commercial line of business it writes,

2833

beginning on a specified date; limiting the overall

2834

average statewide premium increase and the increase for an

2835

individual policyholder to a specified amount for rates

2836

established for certain policies during a specified

2837

period; deleting a provision requiring an insurer to

2838

purchase bonds that remain unsold; requiring the

2839

corporation to make its database of policies available to

2840

prospective take-out insurers under certain conditions;

2841

requiring the corporation to require agents to accept or

2842

decline appointment for any policy selected; requiring the

2843

corporation to notify the policyholder of certain

2844

information if an insurer selected his or her policy for a

2845

take-out offer but the policyholder's agent refused to be

2846

appointed; deleting provisions requiring the corporation

2847

to make certain confidential underwriting and claims files

2848

available to agents to conform to changes made by the act

2849

relating to ineligibility of certain dwellings; amending

2850

s. 627.4133, F.S.; increasing the required time period for

2851

an insurer to notify a policyholder of cancellation or

2852

nonrenewal of a personal lines or commercial residential

2853

property insurance policy; making conforming changes;

2854

creating s. 689.262, F.S.; requiring a purchaser of

2855

residential property to be presented with the windstorm

2856

mitigation rating of the structure; authorizing the

2857

Financial Services Commission to adopt rules; amending s.

2858

817.2341, F.S.; providing for criminal penalties to be

2859

imposed under certain conditions against any person who

2860

willfully files a materially false or misleading rate

2861

filing; requiring Citizens Property Insurance Corporation

2862

to transfer funds to the General Revenue Fund Revenue Fund

2863

if the losses due to a hurricane do not exceed a specified

2864

amount; requiring the board of governors of Citizens

2865

Property Insurance Corporation to make a reasonable

2866

estimate of such losses by a certain date; making

2867

nonrecurring appropriations for purposes of the Insurance

2868

Capital Build-Up Incentive Program established pursuant to

2869

s. 215.5595, F.S., as amended by the act; authorizing

2870

costs and fees to be paid from funds appropriated, subject

2871

to specified limitations; providing effective dates.

4/7/2008 5:45:00 PM 601-06879-08

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