Florida Senate - 2008 CS for SB's 2860 & 1196
By the Committee on Banking and Insurance; and Senators Atwater, Geller, Fasano, Garcia and Jones
597-05738B-08 20082860c1
1
A bill to be entitled
2
An act relating to insurance; amending s. 215.5595, F.S.;
3
revising legislative findings with respect to the
4
Insurance Capital Build-Up Incentive Program and the
5
appropriation of state funds for surplus notes issued by
6
residential property insurers; revising the conditions and
7
requirements for providing funds to insurers under the
8
program; requiring a commitment by the insurer to meet
9
minimum premium-to-surplus writing ratios for residential
10
property insurance and for taking policies out of Citizens
11
Property Insurance Corporation; allowing the State Board
12
of Administration to charge a late fee for payment of
13
remittances; providing that amendments made by the act do
14
not affect the terms of surplus notes approved prior to a
15
specified date, but authorizing the board and an insurer
16
to renegotiate such terms consistent with such amendments;
17
amending s. 542.20, F.S.; subjecting the business of
18
insurance to the Florida Antitrust Act; providing
19
exceptions; amending s. 624.3161, F.S.; authorizing the
20
Office of Insurance Regulation to require an insurer to
21
file its claims handling practices and procedures as a
22
public record based on findings of a market conduct
23
examination; amending s. 624.418, F.S.; authorizing the
24
Office of Insurance Regulation to immediately suspend the
25
certificate of authority of an insurer that fails to
26
provide information subpoenaed by the office; amending s.
27
624.4211, F.S.; increasing the maximum amounts of
28
administrative fines that may be imposed upon an insurer
29
by the Office of Insurance Regulation for nonwillful and
30
willful violations of an order or rule of the office or
31
any provision of the Florida Insurance Code; authorizing
32
the office to impose a fine for each day of noncompliance
33
up to a maximum amount; providing factors to consider when
34
determining the amount of the fine; creating s. 624.4213,
35
F.S.; specifying requirements for submission of a document
36
or information to the Office of Insurance Regulation or
37
the Department of Financial Services in order for a person
38
to claim that the document is a trade secret; requiring
39
each page or portion to be labeled as a trade secret and
40
be separated from non-trade secret material; requiring the
41
submitting party to include an affidavit certifying
42
certain information about the documents claimed to be
43
trade secrets; requiring an award of attorney's fees
44
against a person who certified a document as trade secret
45
if a court or administrative tribunal finds that the
46
document is not a trade secret; providing for
47
administrative penalties under certain conditions;
48
creating s. 624.4305, F.S.; requiring an insurer planning
49
to nonrenew more than a specified number of residential
50
property insurance polices to notify the Office of
51
Insurance Regulation and obtain approval; specifying
52
procedures; prohibiting the office from approving the plan
53
unless it determines that the insurer has met certain
54
conditions; amending s. 626.9521, F.S.; increasing the
55
maximum fines that may be imposed by the office for
56
nonwillful and willful violations of state law regarding
57
unfair methods of competition and unfair or deceptive acts
58
or practices related to insurance; amending s. 626.9541,
59
F.S.; prohibiting an insurer from failing to promptly
60
provide to the insured estimates of damage and a good
61
faith explanation of the insurer's evaluation; prohibiting
62
an insurer from considering certain factors when
63
evaluating or adjusting a property insurance claim;
64
prohibiting an insurer from failing to pay undisputed
65
amounts of benefits owed under a property insurance policy
66
within a certain period; amending s. 627.062, F.S.;
67
requiring that an insurer seeking a rate for property
68
insurance that is greater than the rate most recently
69
approved by the Office of Insurance Regulation make a
70
"file and use" filing for all such rate filings made after
71
a specified date; revising the factors the office must
72
consider in reviewing a rate filing; providing that the
73
cost of reinsurance shall be presumed excessive under
74
certain conditions and, for reinsurance purchased from
75
affiliated reinsurers, may not include broker fees;
76
providing that projected hurricane losses are to be
77
considered as provided in s. 627.0628, F.S., relating to
78
hurricane loss models or methods found to be accurate or
79
reliable by the Florida Commission on Hurricane Loss
80
Projection Methodology; allowing the office to disapprove
81
a rate as excessive within 1 year after the rate has been
82
approved under certain conditions related to nonrenewal of
83
policies by the insurer; requiring certain officers and
84
the chief actuary of a property insurer to certify certain
85
information as part of a rate filing, subject to the
86
penalty of perjury; requiring that a rate filing contain
87
all information that supports the filing; providing that
88
after the office issues a notice of intent to disapprove
89
the filing, no additional information is admissible in any
90
subsequent administrative or judicial proceeding;
91
repealing s. 627.062(6), F.S., relating to the submission
92
of a disputed rate filing, other than a rate filing for
93
medical malpractice insurance, to an arbitration panel in
94
lieu of an administrative hearing if the rate is filed
95
before a specified date; amending s. 627.0613, F.S.;
96
deleting cross-references to conform to changes made by
97
the act; amending s. 627.0628, F.S.; requiring that with
98
respect to rate filings, insurers must use actuarial
99
methods or models found to be accurate or reliable by the
100
Florida Commission on Hurricane Loss Projection
101
Methodology; deleting cross-references to conform to
102
changes made by the act; amending s. 627.0629, F.S.;
103
requiring that the Office of Insurance Regulation develop
104
and make publicly available before a specified deadline a
105
proposed method for insurers to establish windstorm
106
mitigation premium discounts that correlate to the uniform
107
home rating scale; requiring that the Financial Services
108
Commission adopt rules before a specified deadline;
109
requiring insurers to make rate filings pursuant to such
110
method; authorizing the commission to make changes by rule
111
to the uniform home grading scale and specify by rule the
112
minimum required discounts, credits, or other rate
113
differentials; requiring that such rate differentials be
114
consistent with generally accepted actuarial principles
115
and wind loss mitigation studies; amending s. 627.351,
116
F.S., relating to Citizens Property Insurance Corporation;
117
deleting a provision to conform to changes made in the
118
act; deleting provisions defining the terms "homestead
119
property" and "nonhomestead property"; deleting a
120
provision providing for the classification of certain
121
dwellings as "nonhomestead property"; deleting provisions
122
making dwellings and condominium units that have a
123
replacement cost above a specified value ineligible for
124
coverage after a specified date; requiring certain
125
structures to have opening protections as a condition of
126
eligibility for coverage after a specified date; requiring
127
that the corporation cease issuance of new wind-only
128
coverage beginning on a specified date; deleting outdated
129
provisions requiring the corporation to submit a report
130
for approval of offering multiperil coverage; revising
131
threshold amounts of deficits incurred in a calendar year
132
on which the decision to levy assessments and the types of
133
such assessments are based; revising the formula used to
134
calculate shares of assessments owed by certain assessable
135
insureds; requiring that the board of governors make
136
certain determinations before levying emergency
137
assessments; providing the board of governors with
138
discretion to set the amount of an emergency assessment
139
within specified limits; requiring the board of governors
140
to levy a Citizens policyholder surcharge under certain
141
conditions; deleting a provision requiring the levy of an
142
immediate assessment against certain policyholders under
143
such conditions; requiring that funds collected from the
144
levy of such surcharges be used for certain purposes;
145
providing that such surcharges are not considered premium
146
and are not subject to commissions, fees, or premium
147
taxes; requiring that the failure to pay such surcharges
148
be treated as failure to pay premium; requiring that the
149
amount of any assessment or surcharge which exceeds the
150
amount of deficits be remitted to and used by the
151
corporation for specified purposes; deleting provisions
152
requiring that the plan of operation of the corporation
153
provide for the levy of a Citizens policyholder surcharge
154
if regular deficit assessments are levied as a result of
155
deficits in certain accounts; deleting provisions related
156
to the calculation, classification, and nonpayment of such
157
surcharge; providing legislative findings; requiring that
158
the corporation make an annual filing for each personal or
159
commercial line of business it writes, beginning on a
160
specified date; limiting the overall average statewide
161
premium increase and the increase for an individual
162
policyholder to a specified amount for rates established
163
for certain policies during a specified period; deleting a
164
provision requiring an insurer to purchase bonds that
165
remain unsold; requiring the corporation to make its
166
database of policies available to prospective take-out
167
insurers under certain conditions; requiring the
168
corporation to require agents to accept or decline
169
appointment for any policy selected; requiring the
170
corporation to notify the policyholder of certain
171
information if an insurer selected his or her policy for a
172
take-out offer but the policyholder's agent refused to be
173
appointed; deleting provisions requiring the corporation
174
to make certain confidential underwriting and claims files
175
available to agents to conform to changes made by the act
176
relating to ineligibility of certain dwellings; creating
177
s. 627.714, F.S.; requiring that personal lines
178
residential policies be guaranteed renewable for a
179
specified period if the dwelling meets certain wind-borne-
180
debris protection requirements; providing for
181
applicability; creating s. 689.262, F.S.; requiring a
182
purchaser of residential property to be presented with the
183
windstorm mitigation rating of the structure; authorizing
184
the Financial Services Commission to adopt rules; amending
185
s. 817.2341, F.S.; providing criminal penalties for any
186
person who willfully files a materially false or
187
misleading rate filing, under certain conditions, and for
188
any person who attempts to corruptly influence or obstruct
189
the lawful regulation of the business of insurance;
190
providing effective dates.
191
192
Be It Enacted by the Legislature of the State of Florida:
193
194
Section 1. Section 215.5595, Florida Statutes, is amended
195
to read:
196
215.5595 Insurance Capital Build-Up Incentive Program.--
197
(1) Upon entering the 2008 2006 hurricane season, the
198
Legislature finds that:
199
(a) The losses in Florida from eight hurricanes in 2004 and
200
2005 have seriously strained the resources of both the voluntary
201
insurance market and the public sector mechanisms of Citizens
202
Property Insurance Corporation and the Florida Hurricane
203
Catastrophe Fund.
204
(b) Private reinsurance is much less available and at a
205
significantly greater cost to residential property insurers as
206
compared to 1 year ago, particularly for amounts below the
207
insurer's retention or retained losses that must be paid before
208
reimbursement is provided by the Florida Hurricane Catastrophe
209
Fund.
210
(c) The Office of Insurance Regulation has reported that
211
the insolvency of certain insurers may be imminent.
212
(d) Hurricane forecast experts predict that the 2006
213
hurricane season will be an active hurricane season and that the
214
Atlantic and Gulf Coast regions face an active hurricane cycle of
215
10 to 20 years or longer.
216
(b)(e) Citizens Property Insurance Corporation has over 1.2
217
million policies in force and has the largest market share of any
218
insurer writing residential property insurer in the state, and
219
faces the threat of a catastrophic loss that The number of
220
cancellations or nonrenewals of residential property insurance
221
policies is expected to increase and the number of new
222
residential policies written in the voluntary market are likely
223
to decrease, causing increased policy growth and exposure to the
224
state insurer of last resort, Citizens Property Insurance
225
Corporation, and threatening to increase the deficit of the
226
corporation, currently estimated to be over $1.7 billion. This
227
deficit must be funded by assessments against insurers and
228
policyholders, unless otherwise funded by the state.
229
(c)(f) Policyholders are subject to high increased premiums
230
and assessments that are increasingly making such coverage
231
unaffordable and that may force policyholders to sell their homes
232
and even leave the state.
233
(d)(g) The increased risk to the public sector and private
234
sector continues to pose poses a serious threat to the economy of
235
this state, particularly the building and financing of
236
residential structures, and existing mortgages may be placed in
237
default.
238
(h) The losses from 2004 and 2005, combined with the
239
expectation that the increase in hurricane activity will continue
240
for the foreseeable future, have caused both insurers and
241
reinsurers to limit the capital they are willing to commit to
242
covering the hurricane risk in Florida; attracting new capital to
243
the Florida market is a critical priority; and providing a low-
244
cost source of capital would enable insurers to write additional
245
residential property insurance coverage and act to mitigate
246
premium increases.
247
(e)(i) Appropriating state funds to be exchanged for used
248
as surplus notes issued by for residential property insurers,
249
under conditions requiring the insurer to contribute additional
250
private sector capital and to write a minimum level of premiums
251
for residential hurricane coverage, is a valid and important
252
public purpose.
253
(f) Extending the Insurance Capital Build-up Incentive
254
Program will provide an incentive for investors to commit
255
additional capital to Florida's residential insurance market.
256
(2) The purpose of this section is to provide funds in
257
exchange for surplus notes to be issued by to new or existing
258
authorized residential property insurers under the Insurance
259
Capital Build-Up Incentive Program administered by the State
260
Board of Administration, under the following conditions:
261
(a) The amount of state funds provided in exchange for a
262
the surplus note to for any insurer or insurer group, other than
263
an insurer writing only manufactured housing policies, may not
264
exceed $25 million or 20 percent of the total amount of funds
265
appropriated for available under the program, whichever is
266
greater. The amount of the surplus note for any insurer or
267
insurer group writing residential property insurance covering
268
only manufactured housing may not exceed $7 million.
269
(b) The insurer must contribute an amount of new capital to
270
its surplus which is at least equal to the amount of the surplus
271
note and must apply to the board by July 1, 2006. If an insurer
272
applies after July 1, 2006, but before June 1, 2007, the amount
273
of the surplus note is limited to one-half of the new capital
274
that the insurer contributes to its surplus, except that an
275
insurer writing only manufactured housing policies is eligible to
276
receive a surplus note of up to $7 million. For purposes of this
277
section, new capital must be in the form of cash or cash
278
equivalents as specified in s. 625.012(1).
279
(c) The insurer's surplus, new capital, and the surplus
280
note must total at least $50 million, except for insurers writing
281
residential property insurance covering only manufactured
282
housing. The insurer's surplus, new capital, and the surplus note
283
must total at least $14 million for insurers writing only
284
residential property insurance covering manufactured housing
285
policies as provided in paragraph (a).
286
(d) The insurer must commit to increase its writings of
287
residential property insurance, including the peril of wind, and
288
to meet meeting a minimum writing ratio of net written premium to
289
surplus of at least 1:1 for the first year after receiving the
290
state funds, 1.5:1 for the second year, and 2:1 for the remaining
291
term of the surplus note. Alternatively, the insurer must meet a
292
minimum writing ratio of gross written premium to surplus of at
293
least 3:1 for the first year after receiving the state funds,
294
4.5:1 for the second year, and 6:1 for the remaining term of the
295
surplus note. The writing ratios, which shall be determined by
296
the Office of Insurance Regulation and certified quarterly to the
297
board. For this purpose, the term "premium" "net written premium"
298
means net written premium for residential property insurance in
299
Florida, including the peril of wind, and "surplus" refers to the
300
entire surplus of the insurer. The insurer must also commit to
301
writing at least one-third of its net or gross written premium
302
for new policies, not including renewal premiums, for policies
303
taken out of Citizens Property Insurance Corporation, during each
304
of the first 3 years after receiving the state funds in exchange
305
for the surplus note, which shall be determined by the Office of
306
Insurance Regulation and certified annually to the board. The
307
office may determine that an insurer meets the requirement for
308
taking policies out of Citizens, by written notice to the board,
309
upon a finding that the insurer made offers of coverage to
310
policyholders of Citizens which would have resulted in meeting
311
this requirement had the policyholders accepted the offer. If the
312
required ratio or the required writings for policies taken out of
313
Citizens is not maintained during the term of the surplus note,
314
the board may increase the interest rate, accelerate the
315
repayment of interest and principal, or shorten the term of the
316
surplus note, subject to approval by the Commissioner of
317
Insurance of payments by the insurer of principal and interest as
318
provided in paragraph (f).
319
(e) If the requirements of this section are met, the board
320
may approve an application by an insurer for funds in exchange
321
for issuance of a surplus note, unless the board determines that
322
the financial condition of the insurer and its business plan for
323
writing residential property insurance in Florida places an
324
unreasonably high level of financial risk to the state of
325
nonpayment in full of the interest and principal. The board shall
326
consult with the Office of Insurance Regulation and may contract
327
with independent financial and insurance consultants in making
328
this determination.
329
(f) The surplus note must be repayable to the state with a
330
term of 20 years. The surplus note shall accrue interest on the
331
unpaid principal balance at a rate equivalent to the 10-year U.S.
332
Treasury Bond rate, require the payment only of interest during
333
the first 3 years, and include such other terms as approved by
334
the board. The board may charge late fees up to 5 percent for
335
late payments or other late remittances. Payment of principal, or
336
interest, or late fees by the insurer on the surplus note must be
337
approved by the Commissioner of Insurance, who shall approve such
338
payment unless the commissioner determines that such payment will
339
substantially impair the financial condition of the insurer. If
340
such a determination is made, the commissioner shall approve such
341
payment that will not substantially impair the financial
342
condition of the insurer.
343
(g) The total amount of funds available for the program is
344
limited to the amount appropriated by the Legislature for this
345
purpose. If the amount of surplus notes requested by insurers
346
exceeds the amount of funds available, the board may prioritize
347
insurers that are eligible and approved, with priority for
348
funding given to insurers writing only manufactured housing
349
policies, regardless of the date of application, based on the
350
financial strength of the insurer, the viability of its proposed
351
business plan for writing additional residential property
352
insurance in the state, and the effect on competition in the
353
residential property insurance market. Between insurers writing
354
residential property insurance covering manufactured housing,
355
priority shall be given to the insurer writing the highest
356
percentage of its policies covering manufactured housing.
357
(h) The board may allocate portions of the funds available
358
for the program and establish dates for insurers to apply for
359
surplus notes from such allocation which are earlier than the
360
dates established in paragraph (b).
361
(h)(i) Notwithstanding paragraph (d), a newly formed
362
manufactured housing insurer that is eligible for a surplus note
363
under this section shall meet the premium to surplus ratio
364
provisions of s. 624.4095.
365
(i)(j) As used in this section, "an insurer writing only
366
manufactured housing policies" includes:
367
1. A Florida domiciled insurer that begins writing personal
368
lines residential manufactured housing policies in Florida after
369
March 1, 2007, and that removes a minimum of 50,000 policies from
370
Citizens Property Insurance Corporation without accepting a
371
bonus, provided at least 25 percent of its policies cover
372
manufactured housing. Such an insurer may count any funds above
373
the minimum capital and surplus requirement that were contributed
374
into the insurer after March 1, 2007, as new capital under this
375
section.
376
2. A Florida domiciled insurer that writes at least 40
377
percent of its policies covering manufactured housing in Florida.
378
(3) As used in this section, the term:
379
(a) "Board" means the State Board of Administration.
380
(b) "Program" means the Insurance Capital Build-Up
381
Incentive Program established by this section.
382
(4) The state funds provided to the insurer in exchange for
383
the A surplus note provided to an insurer pursuant to this
384
section are is considered borrowed surplus an asset of the
386
(5) If an insurer that receives funds in exchange for
387
issuance of a surplus note pursuant to this section is rendered
388
insolvent, the state is a class 3 creditor pursuant to s. 631.271
389
for the unpaid principal and interest on the surplus note.
390
(6) The board shall adopt rules prescribing the procedures,
391
administration, and criteria for approving the applications of
392
insurers to receive funds in exchange for issuance of surplus
393
notes pursuant to this section, which may be adopted pursuant to
394
the procedures for emergency rules of chapter 120. Otherwise,
395
actions and determinations by the board pursuant to this section
396
are exempt from chapter 120.
397
(7) The board shall invest and reinvest the funds
398
appropriated for the program in accordance with s. 215.47 and
399
consistent with board policy.
400
(8) The amendments to this section enacted in 2008 do not
401
affect the terms or conditions of the surplus notes that were
402
approved prior to January 1, 2008. However, the board may
403
renegotiate the terms of any surplus note issued by an insurer
404
prior to January 2008 under this program, upon the agreement of
405
the insurer and the board, consistent with the requirements of
406
this section as amended in 2008.
407
Section 2. Section 542.20, Florida Statutes, is amended to
408
read:
409
542.20 Exemptions.--
410
(1) Any activity or conduct exempt under Florida statutory
411
or common law or exempt from the provisions of the antitrust laws
412
of the United States is exempt from the provisions of this
413
chapter, except as provided in subsection (2).
414
(2) The business of insurance is subject to the provisions
415
of this chapter. This chapter does not prohibit a rating
416
organization or advisory organization from collecting claims,
417
loss, or expense data from insurers and filing rates or advisory
418
rates with the Office of Insurance Regulation.
419
Section 3. Subsection (6) is added to section 624.3161,
420
Florida Statutes, to read:
421
624.3161 Market conduct examinations.--
422
(6) Based on the findings of a market conduct examination
423
that an insurer has violated an unfair insurance trade practice
424
related to claims-handling as prohibited by s. 626.9541(1)(i),
425
the office may require an insurer to file its claims-handling
426
practices and procedures related to that line of insurance with
427
the office for review and inspection, to be held by the office
428
for the following 36-month period. Such claims-handling practices
429
and procedures are public records and are not trade secrets or
430
otherwise exempt from the provisions of s. 119.07(1). As used in
431
this section, "claims-handling practices and procedures" are any
432
policies, guidelines, rules, protocols, standard operating
433
procedures, instructions, or directives that govern or guide how
434
and the manner in which an insured's claims for benefits under
435
any policy will be processed.
436
Section 4. Subsection (4) is added to section 624.418,
437
Florida Statutes, to read:
438
624.418 Suspension, revocation of certificate of authority
439
for violations and special grounds.--
440
(4) The failure of an insurer to provide documents or
441
information subpoenaed by the office constitutes an immediate and
442
serious danger to the public health, safety, and welfare; and the
443
office may, at its discretion, without prior notice or the
444
opportunity for a hearing immediately suspend the insurer's
445
certificate of authority.
446
Section 5. Subsections (2) and (3) of section 624.4211,
447
Florida Statutes, are amended, and subsections (5) and (6) are
448
added to that section, to read:
449
624.4211 Administrative fine in lieu of suspension or
450
revocation.--
451
(2) With respect to any nonwillful violation, such fine may
452
shall not exceed $25,000 $2,500 per violation. In no event shall
453
such fine exceed an aggregate amount of $10,000 for all
454
nonwillful violations arising out of the same action. If When an
455
insurer discovers a nonwillful violation, the insurer shall
456
correct the violation and, if restitution is due, make
457
restitution to all affected persons. Such restitution shall
458
include interest at 12 percent per year from either the date of
459
the violation or the date of inception of the affected person's
460
policy, at the insurer's option. The restitution may be a credit
461
against future premiums due provided that the interest
462
accumulates shall accumulate until the premiums are due. If the
463
amount of restitution due to any person is $50 or more and the
464
insurer wishes to credit it against future premiums, it shall
465
notify such person that she or he may receive a check instead of
466
a credit. If the credit is on a policy that which is not renewed,
467
the insurer shall pay the restitution to the person to whom it is
468
due.
469
(3) With respect to any knowing and willful violation of a
470
lawful order or rule of the office or commission or a provision
471
of this code, the office may impose a fine upon the insurer in an
472
amount not to exceed $100,000 $20,000 for each such violation. In
473
no event shall such fine exceed an aggregate amount of $100,000
474
for all knowing and willful violations arising out of the same
475
action. In addition to such fines, the such insurer shall make
476
restitution when due in accordance with the provisions of
477
subsection (2).
478
(5) The office may impose an administrative fine for each
479
day the insurer is not in compliance with the Florida Insurance
480
Code up to a maximum of $25,000 per violation per day.
481
(6) In determining the amount of the fine, the office shall
482
consider:
483
(a) The degree of consumer harm caused or potentially
484
caused by the violation;
485
(b) Whether the violation constitutes an immediate danger
486
to the public;
487
(c) Whether the violation is a repeat violation or similar
488
to past violations by the insurer;
489
(d) The effect on the solvency of the insurer;
490
(e) The premium volume of the insurer; and
491
(f) The effect that fining the insurer will have on the
492
insurer's compliance with the Florida Insurance Code.
493
Section 6. Section 624.4213, Florida Statutes, is created to
494
read:
495
624.4213 Trade secret documents.--
496
(1) If any person who is required to submit documents or
497
other information to the office or department pursuant to the
498
Insurance Code or by rule or order of the office, department, or
499
commission claims that such submission contains a trade secret,
500
such person may file with the office or department a notice of
501
trade secret as provided in this section. Failure to do so
502
constitutes a waiver of any claim by such person that the
503
document or information is a trade secret.
504
(a) Each page of such document or specific portion of a
505
document claimed to be a trade secret must be clearly marked as
506
"trade secret."
507
(b) All material marked as a trade secret must be separated
508
from all non-trade secret material, such as being submitted in a
509
separate envelope clearly marked as "trade secret."
510
(c) In submitting a notice of trade secret to the office or
511
department, the submitting party must include an affidavit
512
certifying under oath to the truth of the following statements
513
concerning all documents or information that are claimed to be
514
trade secrets:
515
1. [I consider/My company considers] this information a
516
trade secret that has value and provides an advantage or an
517
opportunity to obtain an advantage over those who do not know or
518
use it.
519
2. [I have/My company has] taken measures to prevent the
520
disclosure of the information to anyone other that those who have
521
been selected to have access for limited purposes, and [I
522
intend/my company intends] to continue to take such measures.
523
3. The information is not, and has not been, reasonably
524
obtainable without [my/our] consent by other persons by use of
525
legitimate means.
526
4. The information is not publicly available elsewhere.
527
(2) If a court or administrative tribunal finds that any
528
document or information certified as a trade secret, submitted to
529
the office or department under this section, and subsequently
530
requested by a third party is not a trade secret, the company or
531
the person certifying such document or information as a trade
532
secret is liable for an award of reasonable attorney's fees and
533
costs to the third party seeking access to such documents. In
534
addition, it is a violation of the Florida Insurance Code if the
535
office or department finds that the person submitting the
536
document or information knew, or should have known, that the
537
document or information is not a trade secret.
538
(3) The office or department may disclose a trade secret,
539
together with the claim that it is a trade secret, to an officer
540
or employee of another governmental agency whose use of the trade
541
secret is within the scope of his or her employment.
542
Section 7. Section 624.4305, Florida Statutes, is created to
543
read:
544
624.4305 Nonrenewal of residential property insurance
545
policies.--
546
(1) Any insurer planning to nonrenew more than 10,000
547
residential property insurance policies in this state within a
548
12-month period shall give 90 days' notice in writing to the
549
office prior to the issuance of any notices of nonrenewal. The
550
notice must set forth the insurer's reasons for such action, the
551
effective dates of nonrenewal, and any arrangements that have
552
been made for other insurers to offer coverage to affected
553
policyholders.
554
(2) The insurer may not issue a notice of nonrenewal to
555
such policyholders unless the office approves or fails to
556
disapprove the nonrenewal plan within 90 days after receiving the
557
notice from the insurer. The office may not approve the plan
558
unless it finds that the insurer has staggered the nonrenewals
559
over a reasonable period relative to the number of nonrenewals,
560
or has made arrangements for offers of replacement coverage, such
561
that the actions are not hazardous to policyholders or the
562
public.
563
Section 8. Subsection (2) of section 626.9521, Florida
564
Statutes, is amended to read:
565
626.9521 Unfair methods of competition and unfair or
566
deceptive acts or practices prohibited; penalties.--
567
(2) Any person who violates any provision of this part
568
shall be subject to a fine in an amount not greater than $25,000
569
$2,500 for each nonwillful violation and not greater than
570
$100,000 $20,000 for each willful violation. Fines under this
571
subsection may not exceed an aggregate amount of $10,000 for all
572
nonwillful violations arising out of the same action or an
573
aggregate amount of $100,000 for all willful violations arising
574
out of the same action. The fines authorized by this subsection
575
may be imposed in addition to any other applicable penalty.
576
Section 9. Paragraph (i) of subsection (1) of section
577
626.9541, Florida Statutes, is amended to read:
578
626.9541 Unfair methods of competition and unfair or
579
deceptive acts or practices defined.--
580
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
581
ACTS.--The following are defined as unfair methods of competition
582
and unfair or deceptive acts or practices:
583
(i) Unfair claim settlement practices.--
584
1. Attempting to settle claims on the basis of an
585
application, when serving as a binder or intended to become a
586
part of the policy, or any other material document that is which
587
was altered without notice to, or knowledge or consent of, the
588
insured;
589
2. A material misrepresentation made to an insured or any
590
other person having an interest in the proceeds payable under a
591
such contract or policy, for the purpose and with the intent of
592
effecting settlement of such claims, loss, or damage under such
593
contract or policy on less favorable terms than those provided
594
in, and contemplated by, the such contract or policy; or
595
3. Committing or performing with such frequency as to
596
indicate a general business practice any of the following:
597
a. Failing to adopt and implement standards for the proper
598
investigation of claims.;
599
b. Misrepresenting pertinent facts or insurance policy
600
provisions relating to coverages at issue.;
601
c. Failing to acknowledge and act promptly upon
602
communications with respect to claims.;
603
d. Denying claims without conducting reasonable
604
investigations based upon available information.;
605
e. Failing to affirm or deny full or partial coverage of
606
claims, and, as to partial coverage, the dollar amount or extent
607
of coverage, or failing to provide a written statement that the
608
claim is being investigated, upon the written request of the
609
insured within 30 days after proof-of-loss statements have been
610
completed.;
611
f. Failing to promptly provide a reasonable explanation in
612
writing to the insured of the basis in the insurance policy, in
613
relation to the facts or applicable law, for denial of a claim or
614
for the offer of a compromise settlement.;
615
g. Failing to promptly notify the insured of any additional
616
information necessary for the processing of a claim.; or
617
h. Failing to clearly explain the nature of the requested
618
information and the reasons why such information is necessary.
619
i. Failing to promptly provide to the insured estimates of
620
damage and a good faith explanation in writing of the insurer's
621
evaluation of benefits and the basis for the evaluation.
622
4. Giving consideration to the age, race, income level,
623
education, credit score, or any other personal characteristic of
624
a policyholder when evaluating, adjusting, settling, or
625
attempting to settle a property insurance claim; or
626
5. Failing to pay undisputed amounts of partial or full
627
benefits owed under first-party property insurance policies
628
within 30 days after determining the amounts of partial or full
629
benefits and agreeing to coverage. This subparagraph controls to
630
the extent of any conflict with any other provision of law.
631
Section 10. Paragraphs (a), (b), and (g) of subsection (2)
632
and subsection (9) of section 627.062, Florida Statutes, are
633
amended to read:
634
627.062 Rate standards.--
635
(2) As to all such classes of insurance:
636
(a) Insurers or rating organizations shall establish and
637
use rates, rating schedules, or rating manuals to allow the
638
insurer a reasonable rate of return on such classes of insurance
639
written in this state. A copy of rates, rating schedules, rating
640
manuals, premium credits or discount schedules, and surcharge
641
schedules, and changes thereto, shall be filed with the office
642
under one of the following procedures except as provided in
643
subparagraph 3.:
644
1. If the filing is made at least 90 days before the
645
proposed effective date and the filing is not implemented during
646
the office's review of the filing and any proceeding and judicial
647
review, then such filing shall be considered a "file and use"
648
filing. In such case, the office shall finalize its review by
649
issuance of a notice of intent to approve or a notice of intent
650
to disapprove within 90 days after receipt of the filing. The
651
notice of intent to approve and the notice of intent to
652
disapprove constitute agency action for purposes of the
653
Administrative Procedure Act. Requests for supporting
654
information, requests for mathematical or mechanical corrections,
655
or notification to the insurer by the office of its preliminary
656
findings shall not toll the 90-day period during any such
657
proceedings and subsequent judicial review. The rate shall be
658
deemed approved if the office does not issue a notice of intent
659
to approve or a notice of intent to disapprove within 90 days
660
after receipt of the filing.
661
2. If the filing is not made in accordance with the
662
provisions of subparagraph 1., such filing shall be made as soon
663
as practicable, but no later than 30 days after the effective
664
date, and shall be considered a "use and file" filing. An insurer
665
making a "use and file" filing is potentially subject to an order
666
by the office to return to policyholders portions of rates found
667
to be excessive, as provided in paragraph (h).
668
3. For all property insurance filings made or submitted
669
after January 25, 2007, but before December 31, 2008, an insurer
670
seeking a rate that is greater than the rate most recently
671
approved by the office shall make a "file and use" filing. This
672
subparagraph applies to property insurance only. For purposes of
673
this subparagraph, motor vehicle collision and comprehensive
674
coverages are not considered to be property coverages.
675
(b) Upon receiving a rate filing, the office shall review
676
the rate filing to determine if a rate is excessive, inadequate,
677
or unfairly discriminatory. In making that determination, the
678
office shall, in accordance with generally accepted and
679
reasonable actuarial techniques, consider the following factors:
680
1. Past and prospective loss experience within and without
681
this state.
682
2. Past and prospective expenses.
683
3. The degree of competition among insurers for the risk
684
insured.
685
4. Investment income reasonably expected by the insurer,
686
consistent with the insurer's investment practices, from
687
investable premiums anticipated in the filing, plus any other
688
expected income from currently invested assets representing the
689
amount expected on unearned premium reserves and loss reserves.
690
The commission may adopt rules using utilizing reasonable
691
techniques of actuarial science and economics to specify the
692
manner in which insurers shall calculate investment income
693
attributable to such classes of insurance written in this state
694
and the manner in which such investment income shall be used to
695
calculate in the calculation of insurance rates. Such manner
696
shall contemplate allowances for an underwriting profit factor
697
and full consideration of investment income which produce a
698
reasonable rate of return; however, investment income from
699
invested surplus may shall not be considered.
700
5. The reasonableness of the judgment reflected in the
701
filing.
702
6. Dividends, savings, or unabsorbed premium deposits
703
allowed or returned to Florida policyholders, members, or
704
subscribers.
705
7. The adequacy of loss reserves.
706
8. The cost of reinsurance, subject to the following
707
conditions:.
708
a. The cost of reinsurance shall be presumed to be
709
excessive if the annual expected recoveries are less than 40
710
percent of the annual reinsurance premium for reinsurance
711
purchased from affiliated reinsurers, or less than 20 percent of
712
the annual reinsurance premium for reinsurance purchased from
713
unaffiliated reinsurers after excluding the Florida Hurricane
714
Catastrophe Fund. The insurer may rebut this presumption by
715
providing documentation to the office demonstrating that the
716
annual expected recovery must deviate from such requirements in
717
order to ensure the financial soundness of the insurer.
718
b. For reinsurance purchased from affiliated reinsurers,
719
the costs may not include any broker fees.
720
c. The cost of catastrophe reinsurance shall be presumed to
721
be excessive to the extent that the amount of reinsurance
722
coverage was based on estimates of probable maximum loss which
723
are in excess of estimates using a hurricane loss model or method
724
found to be acceptable or reliable by the Florida Commission on
725
Hurricane Loss Projection Methodology, as provided in s.
726
727
9. Trend factors, including trends in actual losses per
728
insured unit for the insurer making the filing.
729
10. Conflagration and catastrophe hazards, if applicable.
730
11. Projected hurricane losses, if applicable, which must
731
be estimated using a model or method found to be acceptable or
732
reliable by the Florida Commission on Hurricane Loss Projection
733
Methodology, and as further provided in s. 627.0628.
734
12.11. A reasonable margin for underwriting profit and
735
contingencies. For that portion of the rate covering the risk of
736
hurricanes and other catastrophic losses for which the insurer
737
has not purchased reinsurance and has exposed its capital and
738
surplus to such risk, the office must approve a rating factor
739
that provides the insurer a reasonable rate of return that is
740
commensurate with such risk.
741
13.12. The cost of medical services, if applicable.
742
14.13. Other relevant factors which impact upon the
743
frequency or severity of claims or upon expenses.
744
(g) The office may at any time review a rate, rating
745
schedule, rating manual, or rate change; the pertinent records of
746
the insurer; and market conditions. If the office finds on a
747
preliminary basis that a rate may be excessive, inadequate, or
748
unfairly discriminatory, the office shall initiate proceedings to
749
disapprove the rate and shall so notify the insurer. However, the
750
office may not disapprove as excessive any rate for which it has
751
given final approval or which has been deemed approved for a
752
period of 1 year after the effective date of the filing unless
753
the office finds that a material misrepresentation or material
754
error was made by the insurer or was contained in the filing, or
755
unless the insurer has nonrenewed a number or percentage of
756
policies which the office determines may result in the insurer
757
having an excessive rate. Upon being so notified, the insurer or
758
rating organization shall, within 60 days, file with the office
759
all information which, in the belief of the insurer or
760
organization, proves the reasonableness, adequacy, and fairness
761
of the rate or rate change. The office shall issue a notice of
762
intent to approve or a notice of intent to disapprove pursuant to
763
the procedures of paragraph (a) within 90 days after receipt of
764
the insurer's initial response. In such instances and in any
765
administrative proceeding relating to the legality of the rate,
766
the insurer or rating organization shall carry the burden of
767
proof by a preponderance of the evidence to show that the rate is
768
not excessive, inadequate, or unfairly discriminatory. After the
769
office notifies an insurer that a rate may be excessive,
770
inadequate, or unfairly discriminatory, unless the office
771
withdraws the notification, the insurer shall not alter the rate
772
except to conform with the office's notice until the earlier of
773
120 days after the date the notification was provided or 180 days
774
after the date of the implementation of the rate. The office may,
775
subject to chapter 120, disapprove without the 60-day
776
notification any rate increase filed by an insurer within the
777
prohibited time period or during the time that the legality of
778
the increased rate is being contested.
779
780
The provisions of this subsection shall not apply to workers'
781
compensation and employer's liability insurance and to motor
782
vehicle insurance.
783
(9)(a) Effective March 1, 2007, The chief executive officer
784
or chief financial officer of a property insurer and the chief
785
actuary of a property insurer must certify under oath and subject
786
to the penalty of perjury, on a form approved by the commission,
787
the following information, which must accompany a rate filing:
788
1. The signing officer and actuary have reviewed the rate
789
filing;
790
2. Based on the signing officer's and actuary's knowledge,
791
the rate filing does not contain any untrue statement of a
792
material fact or omit to state a material fact necessary in order
793
to make the statements made, in light of the circumstances under
794
which such statements were made, not misleading;
795
3. Based on the signing officer's and actuary's knowledge,
796
the information and other factors described in paragraph (2)(b),
797
including, but not limited to, investment income, fairly present
798
in all material respects the basis of the rate filing for the
799
periods presented in the filing; and
800
4. Based on the signing officer's and actuary's knowledge,
801
the rate filing reflects all premium savings that are reasonably
802
expected to result from legislative enactments and are in
803
accordance with generally accepted and reasonable actuarial
804
techniques;.
805
5. Based on the signing officer's and actuary's knowledge,
806
the actuary responsible for preparing the rate filing reviewed
807
the rate indications used by the office in approving the
808
insurer's last rate filing, if made available to the insurer for
809
review, and identified factors used in the current rate filing
810
which are inconsistent with the factors used by the office in
811
developing such rate indications; and
812
6. Based on the signing officer's and actuary's knowledge,
813
the number and type of policies that the insurer intends to
814
nonrenew during the year following the proposed effective date of
815
the rate filing, and that the rate filing reflects the reduced
816
risk of loss associated with such nonrenewals.
817
(b) A signing officer or actuary knowingly making a false
818
certification under this subsection commits a violation of s.
820
(c) Failure to provide such certification by the officer
821
and actuary shall result in the rate filing being disapproved
822
without prejudice to be refiled.
823
(d) A properly certified rate filing must contain all
824
information that the insurer intends to support the rate filing,
825
unless the office requests additional information to support the
826
filing. If the office issues a notice of intent to disapprove the
827
filing, additional information related to the rate filing is not
828
admissible to justify the rate in any subsequent administrative
829
or legal proceeding, other than expert opinion.
830
(e)(d) The commission may adopt rules and forms pursuant to
832
Section 11. Subsection (6) of section 627.062, Florida
833
Statutes, is repealed.
834
Section 12. Subsection (1) of section 627.0613, Florida
835
Statutes, is amended to read:
836
627.0613 Consumer advocate.--The Chief Financial Officer
837
must appoint a consumer advocate who must represent the general
838
public of the state before the department and the office. The
839
consumer advocate must report directly to the Chief Financial
840
Officer, but is not otherwise under the authority of the
841
department or of any employee of the department. The consumer
842
advocate has such powers as are necessary to carry out the duties
843
of the office of consumer advocate, including, but not limited
844
to, the powers to:
845
(1) Recommend to the department or office, by petition, the
846
commencement of any proceeding or action; appear in any
847
proceeding or action before the department or office; or appear
848
in any proceeding before the Division of Administrative Hearings
849
or arbitration panel specified in s. 627.062(6) relating to
850
subject matter under the jurisdiction of the department or
851
office.
852
Section 13. Paragraph (c) of subsection (1) and paragraph
853
(c) of subsection (3) of section 627.0628, Florida Statutes, are
854
amended to read:
855
627.0628 Florida Commission on Hurricane Loss Projection
856
Methodology; public records exemption; public meetings
857
exemption.--
858
(1) LEGISLATIVE FINDINGS AND INTENT.--
859
(c) It is the intent of the Legislature to create the
860
Florida Commission on Hurricane Loss Projection Methodology as a
861
panel of experts to provide the most actuarially sophisticated
862
guidelines and standards for projection of hurricane losses
863
possible, given the current state of actuarial science. It is the
864
further intent of the Legislature that such standards and
865
guidelines must be used by the State Board of Administration in
866
developing reimbursement premium rates for the Florida Hurricane
867
Catastrophe Fund, and, subject to paragraph (3)(c), must may be
868
used by insurers in rate filings under s. 627.062 unless the way
869
in which such standards and guidelines were applied by the
870
insurer was erroneous, as shown by a preponderance of the
871
evidence.
872
(3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
873
(c) With respect to a rate filing under s. 627.062, an
874
insurer must may employ and may not modify or adjust actuarial
875
methods, principles, standards, models, or output ranges found by
876
the commission to be accurate or reliable in determining to
877
determine hurricane loss factors used for use in a rate filing
878
and in determining probable maximum loss levels for reinsurance
879
costs included in a rate filing under s. 627.062. However, such
880
findings and factors are admissible and relevant in consideration
881
of a rate filing by the office or in any arbitration or
882
administrative or judicial review only if the office and the
883
consumer advocate appointed pursuant to s. 627.0613 have access
884
to all of the assumptions and factors that were used in
885
developing the actuarial methods, principles, standards, models,
886
or output ranges, and are not precluded from disclosing such
887
information in a rate proceeding. In any rate hearing under s.
889
hearing officer or, judge, or arbitration panel may determine
890
whether the office and the consumer advocate were provided with
891
access to all of the assumptions and factors that were used in
892
developing the actuarial methods, principles, standards, models,
893
or output ranges and may to determine their admissibility.
894
Section 14. Subsection (1) of section 627.0629, Florida
895
Statutes, is amended to read:
896
627.0629 Residential property insurance; rate filings.--
897
(1)(a) It is the intent of the Legislature that insurers
898
must provide savings to consumers who install or implement
899
windstorm damage mitigation techniques, alterations, or solutions
900
to their properties to prevent windstorm losses. A rate filing
901
for residential property insurance must include actuarially
902
reasonable discounts, credits, or other rate differentials, or
903
appropriate reductions in deductibles, for properties on which
904
fixtures or construction techniques demonstrated to reduce the
905
amount of loss in a windstorm have been installed or implemented.
906
The fixtures or construction techniques shall include, but not be
907
limited to, fixtures or construction techniques which enhance
908
roof strength, roof covering performance, roof-to-wall strength,
909
wall-to-floor-to-foundation strength, opening protection, and
910
window, door, and skylight strength. Credits, discounts, or other
911
rate differentials, or appropriate reductions in deductibles, for
912
fixtures and construction techniques which meet the minimum
913
requirements of the Florida Building Code must be included in the
914
rate filing. All insurance companies must make a rate filing
915
which includes the credits, discounts, or other rate
916
differentials or reductions in deductibles by February 28, 2003.
917
By July 1, 2007, the office shall reevaluate the discounts,
918
credits, other rate differentials, and appropriate reductions in
919
deductibles for fixtures and construction techniques that meet
920
the minimum requirements of the Florida Building Code, based upon
921
actual experience or any other loss relativity studies available
922
to the office. The office shall determine the discounts, credits,
923
other rate differentials, and appropriate reductions in
924
deductibles that reflect the full actuarial value of such
925
revaluation, which may be used by insurers in rate filings.
926
(b) By February 1, 2009, the Office of Insurance
927
Regulation, in consultation with the Department of Financial
928
Services and the Department of Community Affairs, shall develop
929
and make publicly available a proposed method for insurers to
930
establish discounts, credits, or other rate differentials for
931
hurricane mitigation measures which directly correlate to the
932
numerical rating assigned to a structure pursuant to the uniform
933
home grading scale adopted by the Financial Services Commission
934
pursuant to s. 215.55865, including any proposed changes to the
935
uniform home grading scale. By October 1, 2009, the commission
936
shall adopt rules requiring insurers to make rate filings for
937
residential property insurance which revise insurers' discounts,
938
credits, or other rate differentials for hurricane mitigation
939
measures so that such rate differentials correlate directly to
940
the uniform home grading scale. The rules may include such
941
changes to the uniform home grading scale as the commission
942
determines are necessary, and may specify the minimum required
943
discounts, credits, or other rate differentials. Such rate
944
differentials must be consistent with generally accepted
945
actuarial principles and wind-loss mitigation studies. The rules
946
shall allow a period of at least 2 years after the effective date
947
of the revised mitigation discounts, credits, or other rate
948
differentials for a property owner to obtain an inspection or
949
otherwise qualify for the revised credit, during which time the
950
insurer shall continue to apply the mitigation credit that was
951
applied immediately prior to the effective date of the revised
952
credit.
953
Section 15. Paragraph (b) of subsection (2) and subsection
954
(6) of section 627.351, Florida Statutes, are amended to read:
955
627.351 Insurance risk apportionment plans.--
956
(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
957
(b) The department shall require all insurers holding a
958
certificate of authority to transact property insurance on a
959
direct basis in this state, other than joint underwriting
960
associations and other entities formed pursuant to this section,
961
to provide windstorm coverage to applicants from areas determined
962
to be eligible pursuant to paragraph (c) who in good faith are
963
entitled to, but are unable to procure, such coverage through
964
ordinary means; or it shall adopt a reasonable plan or plans for
965
the equitable apportionment or sharing among such insurers of
966
windstorm coverage, which may include formation of an association
967
for this purpose. As used in this subsection, the term "property
968
insurance" means insurance on real or personal property, as
969
defined in s. 624.604, including insurance for fire, industrial
970
fire, allied lines, farmowners multiperil, homeowners'
971
multiperil, commercial multiperil, and mobile homes, and
972
including liability coverages on all such insurance, but
973
excluding inland marine as defined in s. 624.607(3) and excluding
974
vehicle insurance as defined in s. 624.605(1)(a) other than
975
insurance on mobile homes used as permanent dwellings. The
976
department shall adopt rules that provide a formula for the
977
recovery and repayment of any deferred assessments.
978
1. For the purpose of this section, properties eligible for
979
such windstorm coverage are defined as dwellings, buildings, and
980
other structures, including mobile homes which are used as
981
dwellings and which are tied down in compliance with mobile home
982
tie-down requirements prescribed by the Department of Highway
983
Safety and Motor Vehicles pursuant to s. 320.8325, and the
984
contents of all such properties. An applicant or policyholder is
985
eligible for coverage only if an offer of coverage cannot be
986
obtained by or for the applicant or policyholder from an admitted
987
insurer at approved rates.
988
2.a.(I) All insurers required to be members of such
989
association shall participate in its writings, expenses, and
990
losses. Surplus of the association shall be retained for the
991
payment of claims and shall not be distributed to the member
992
insurers. Such participation by member insurers shall be in the
993
proportion that the net direct premiums of each member insurer
994
written for property insurance in this state during the preceding
995
calendar year bear to the aggregate net direct premiums for
996
property insurance of all member insurers, as reduced by any
997
credits for voluntary writings, in this state during the
998
preceding calendar year. For the purposes of this subsection, the
999
term "net direct premiums" means direct written premiums for
1000
property insurance, reduced by premium for liability coverage and
1001
for the following if included in allied lines: rain and hail on
1002
growing crops; livestock; association direct premiums booked;
1003
National Flood Insurance Program direct premiums; and similar
1004
deductions specifically authorized by the plan of operation and
1005
approved by the department. A member's participation shall begin
1006
on the first day of the calendar year following the year in which
1007
it is issued a certificate of authority to transact property
1008
insurance in the state and shall terminate 1 year after the end
1009
of the calendar year during which it no longer holds a
1010
certificate of authority to transact property insurance in the
1011
state. The commissioner, after review of annual statements, other
1012
reports, and any other statistics that the commissioner deems
1013
necessary, shall certify to the association the aggregate direct
1014
premiums written for property insurance in this state by all
1015
member insurers.
1016
(II) Effective July 1, 2002, the association shall operate
1017
subject to the supervision and approval of a board of governors
1018
who are the same individuals that have been appointed by the
1019
Treasurer to serve on the board of governors of the Citizens
1020
Property Insurance Corporation.
1021
(III) The plan of operation shall provide a formula whereby
1022
a company voluntarily providing windstorm coverage in affected
1023
areas will be relieved wholly or partially from apportionment of
1024
a regular assessment pursuant to sub-sub-subparagraph d.(I) or
1025
sub-sub-subparagraph d.(II).
1026
(IV) A company which is a member of a group of companies
1027
under common management may elect to have its credits applied on
1028
a group basis, and any company or group may elect to have its
1029
credits applied to any other company or group.
1030
(V) There shall be no credits or relief from apportionment
1031
to a company for emergency assessments collected from its
1032
policyholders under sub-sub-subparagraph d.(III).
1033
(VI) The plan of operation may also provide for the award
1034
of credits, for a period not to exceed 3 years, from a regular
1035
assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
1036
subparagraph d.(II) as an incentive for taking policies out of
1037
the Residential Property and Casualty Joint Underwriting
1038
Association. In order to qualify for the exemption under this
1039
sub-sub-subparagraph, the take-out plan must provide that at
1040
least 40 percent of the policies removed from the Residential
1041
Property and Casualty Joint Underwriting Association cover risks
1042
located in Dade, Broward, and Palm Beach Counties or at least 30
1043
percent of the policies so removed cover risks located in Dade,
1044
Broward, and Palm Beach Counties and an additional 50 percent of
1045
the policies so removed cover risks located in other coastal
1046
counties, and must also provide that no more than 15 percent of
1047
the policies so removed may exclude windstorm coverage. With the
1048
approval of the department, the association may waive these
1049
geographic criteria for a take-out plan that removes at least the
1050
lesser of 100,000 Residential Property and Casualty Joint
1051
Underwriting Association policies or 15 percent of the total
1052
number of Residential Property and Casualty Joint Underwriting
1053
Association policies, provided the governing board of the
1054
Residential Property and Casualty Joint Underwriting Association
1055
certifies that the take-out plan will materially reduce the
1056
Residential Property and Casualty Joint Underwriting
1057
Association's 100-year probable maximum loss from hurricanes.
1058
With the approval of the department, the board may extend such
1059
credits for an additional year if the insurer guarantees an
1060
additional year of renewability for all policies removed from the
1061
Residential Property and Casualty Joint Underwriting Association,
1062
or for 2 additional years if the insurer guarantees 2 additional
1063
years of renewability for all policies removed from the
1064
Residential Property and Casualty Joint Underwriting Association.
1065
b. Assessments to pay deficits in the association under
1066
this subparagraph shall be included as an appropriate factor in
1067
the making of rates as provided in s. 627.3512.
1068
c. The Legislature finds that the potential for unlimited
1069
deficit assessments under this subparagraph may induce insurers
1070
to attempt to reduce their writings in the voluntary market, and
1071
that such actions would worsen the availability problems that the
1072
association was created to remedy. It is the intent of the
1073
Legislature that insurers remain fully responsible for paying
1074
regular assessments and collecting emergency assessments for any
1075
deficits of the association; however, it is also the intent of
1076
the Legislature to provide a means by which assessment
1077
liabilities may be amortized over a period of years.
1078
d.(I) When the deficit incurred in a particular calendar
1079
year is 10 percent or less of the aggregate statewide direct
1080
written premium for property insurance for the prior calendar
1081
year for all member insurers, the association shall levy an
1082
assessment on member insurers in an amount equal to the deficit.
1083
(II) When the deficit incurred in a particular calendar
1084
year exceeds 10 percent of the aggregate statewide direct written
1085
premium for property insurance for the prior calendar year for
1086
all member insurers, the association shall levy an assessment on
1087
member insurers in an amount equal to the greater of 10 percent
1088
of the deficit or 10 percent of the aggregate statewide direct
1089
written premium for property insurance for the prior calendar
1090
year for member insurers. Any remaining deficit shall be
1091
recovered through emergency assessments under sub-sub-
1092
subparagraph (III).
1093
(III) Upon a determination by the board of directors that a
1094
deficit exceeds the amount that will be recovered through regular
1095
assessments on member insurers, pursuant to sub-sub-subparagraph
1096
(I) or sub-sub-subparagraph (II), the board shall levy, after
1097
verification by the department, emergency assessments to be
1098
collected by member insurers and by underwriting associations
1099
created pursuant to this section which write property insurance,
1100
upon issuance or renewal of property insurance policies other
1101
than National Flood Insurance policies in the year or years
1102
following levy of the regular assessments. The amount of the
1103
emergency assessment collected in a particular year shall be a
1104
uniform percentage of that year's direct written premium for
1105
property insurance for all member insurers and underwriting
1106
associations, excluding National Flood Insurance policy premiums,
1107
as annually determined by the board and verified by the
1108
department. The department shall verify the arithmetic
1109
calculations involved in the board's determination within 30 days
1110
after receipt of the information on which the determination was
1111
based. Notwithstanding any other provision of law, each member
1112
insurer and each underwriting association created pursuant to
1113
this section shall collect emergency assessments from its
1114
policyholders without such obligation being affected by any
1115
credit, limitation, exemption, or deferment. The emergency
1116
assessments so collected shall be transferred directly to the
1117
association on a periodic basis as determined by the association.
1118
The aggregate amount of emergency assessments levied under this
1119
sub-sub-subparagraph in any calendar year may not exceed the
1120
greater of 10 percent of the amount needed to cover the original
1121
deficit, plus interest, fees, commissions, required reserves, and
1122
other costs associated with financing of the original deficit, or
1123
10 percent of the aggregate statewide direct written premium for
1124
property insurance written by member insurers and underwriting
1125
associations for the prior year, plus interest, fees,
1126
commissions, required reserves, and other costs associated with
1127
financing the original deficit. The board may pledge the proceeds
1128
of the emergency assessments under this sub-sub-subparagraph as
1129
the source of revenue for bonds, to retire any other debt
1130
incurred as a result of the deficit or events giving rise to the
1131
deficit, or in any other way that the board determines will
1132
efficiently recover the deficit. The emergency assessments under
1133
this sub-sub-subparagraph shall continue as long as any bonds
1134
issued or other indebtedness incurred with respect to a deficit
1135
for which the assessment was imposed remain outstanding, unless
1136
adequate provision has been made for the payment of such bonds or
1137
other indebtedness pursuant to the document governing such bonds
1138
or other indebtedness. Emergency assessments collected under this
1139
sub-sub-subparagraph are not part of an insurer's rates, are not
1140
premium, and are not subject to premium tax, fees, or
1141
commissions; however, failure to pay the emergency assessment
1142
shall be treated as failure to pay premium.
1143
(IV) Each member insurer's share of the total regular
1144
assessments under sub-sub-subparagraph (I) or sub-sub-
1145
subparagraph (II) shall be in the proportion that the insurer's
1146
net direct premium for property insurance in this state, for the
1147
year preceding the assessment bears to the aggregate statewide
1148
net direct premium for property insurance of all member insurers,
1149
as reduced by any credits for voluntary writings for that year.
1150
(V) If regular deficit assessments are made under sub-sub-
1151
subparagraph (I) or sub-sub-subparagraph (II), or by the
1152
Residential Property and Casualty Joint Underwriting Association
1153
under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,
1154
the association shall levy upon the association's policyholders,
1155
as part of its next rate filing, or by a separate rate filing
1156
solely for this purpose, a market equalization surcharge in a
1157
percentage equal to the total amount of such regular assessments
1158
divided by the aggregate statewide direct written premium for
1159
property insurance for member insurers for the prior calendar
1160
year. Market equalization surcharges under this sub-sub-
1161
subparagraph are not considered premium and are not subject to
1162
commissions, fees, or premium taxes; however, failure to pay a
1163
market equalization surcharge shall be treated as failure to pay
1164
premium.
1165
e. The governing body of any unit of local government, any
1166
residents of which are insured under the plan, may issue bonds as
1168
program, in conjunction with the association, for the purpose of
1169
defraying deficits of the association. In order to avoid needless
1170
and indiscriminate proliferation, duplication, and fragmentation
1171
of such assistance programs, any unit of local government, any
1172
residents of which are insured by the association, may provide
1173
for the payment of losses, regardless of whether or not the
1174
losses occurred within or outside of the territorial jurisdiction
1175
of the local government. Revenue bonds may not be issued until
1176
validated pursuant to chapter 75, unless a state of emergency is
1177
declared by executive order or proclamation of the Governor
1178
pursuant to s. 252.36 making such findings as are necessary to
1179
determine that it is in the best interests of, and necessary for,
1180
the protection of the public health, safety, and general welfare
1181
of residents of this state and the protection and preservation of
1182
the economic stability of insurers operating in this state, and
1183
declaring it an essential public purpose to permit certain
1184
municipalities or counties to issue bonds as will provide relief
1185
to claimants and policyholders of the association and insurers
1186
responsible for apportionment of plan losses. Any such unit of
1187
local government may enter into such contracts with the
1188
association and with any other entity created pursuant to this
1189
subsection as are necessary to carry out this paragraph. Any
1190
bonds issued under this sub-subparagraph shall be payable from
1191
and secured by moneys received by the association from
1192
assessments under this subparagraph, and assigned and pledged to
1193
or on behalf of the unit of local government for the benefit of
1194
the holders of such bonds. The funds, credit, property, and
1195
taxing power of the state or of the unit of local government
1196
shall not be pledged for the payment of such bonds. If any of the
1197
bonds remain unsold 60 days after issuance, the department shall
1198
require all insurers subject to assessment to purchase the bonds,
1199
which shall be treated as admitted assets; each insurer shall be
1200
required to purchase that percentage of the unsold portion of the
1201
bond issue that equals the insurer's relative share of assessment
1202
liability under this subsection. An insurer shall not be required
1203
to purchase the bonds to the extent that the department
1204
determines that the purchase would endanger or impair the
1205
solvency of the insurer. The authority granted by this sub-
1206
subparagraph is additional to any bonding authority granted by
1207
subparagraph 6.
1208
3. The plan shall also provide that any member with a
1209
surplus as to policyholders of $20 million or less writing 25
1210
percent or more of its total countrywide property insurance
1211
premiums in this state may petition the department, within the
1212
first 90 days of each calendar year, to qualify as a limited
1213
apportionment company. The apportionment of such a member company
1214
in any calendar year for which it is qualified shall not exceed
1215
its gross participation, which shall not be affected by the
1216
formula for voluntary writings. In no event shall a limited
1217
apportionment company be required to participate in any
1218
apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
1219
or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
1220
$50 million after payment of available plan funds in any calendar
1221
year. However, a limited apportionment company shall collect from
1222
its policyholders any emergency assessment imposed under sub-sub-
1223
subparagraph 2.d.(III). The plan shall provide that, if the
1224
department determines that any regular assessment will result in
1225
an impairment of the surplus of a limited apportionment company,
1226
the department may direct that all or part of such assessment be
1227
deferred. However, there shall be no limitation or deferment of
1228
an emergency assessment to be collected from policyholders under
1229
sub-sub-subparagraph 2.d.(III).
1230
4. The plan shall provide for the deferment, in whole or in
1231
part, of a regular assessment of a member insurer under sub-sub-
1232
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not
1233
for an emergency assessment collected from policyholders under
1234
sub-sub-subparagraph 2.d.(III), if, in the opinion of the
1235
commissioner, payment of such regular assessment would endanger
1236
or impair the solvency of the member insurer. In the event a
1237
regular assessment against a member insurer is deferred in whole
1238
or in part, the amount by which such assessment is deferred may
1239
be assessed against the other member insurers in a manner
1240
consistent with the basis for assessments set forth in sub-sub-
1241
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
1242
5.a. The plan of operation may include deductibles and
1243
rules for classification of risks and rate modifications
1244
consistent with the objective of providing and maintaining funds
1245
sufficient to pay catastrophe losses.
1246
b. The association may require arbitration of a rate filing
1247
under s. 627.062(6). It is the intent of the Legislature that the
1248
rates for coverage provided by the association be actuarially
1249
sound and not competitive with approved rates charged in the
1250
admitted voluntary market such that the association functions as
1251
a residual market mechanism to provide insurance only when the
1252
insurance cannot be procured in the voluntary market. The plan of
1253
operation shall provide a mechanism to assure that, beginning no
1254
later than January 1, 1999, the rates charged by the association
1255
for each line of business are reflective of approved rates in the
1256
voluntary market for hurricane coverage for each line of business
1257
in the various areas eligible for association coverage.
1258
c. The association shall provide for windstorm coverage on
1259
residential properties in limits up to $10 million for commercial
1260
lines residential risks and up to $1 million for personal lines
1261
residential risks. If coverage with the association is sought for
1262
a residential risk valued in excess of these limits, coverage
1263
shall be available to the risk up to the replacement cost or
1264
actual cash value of the property, at the option of the insured,
1265
if coverage for the risk cannot be located in the authorized
1266
market. The association must accept a commercial lines
1267
residential risk with limits above $10 million or a personal
1268
lines residential risk with limits above $1 million if coverage
1269
is not available in the authorized market. The association may
1270
write coverage above the limits specified in this subparagraph
1271
with or without facultative or other reinsurance coverage, as the
1272
association determines appropriate.
1273
d. The plan of operation must provide objective criteria
1274
and procedures, approved by the department, to be uniformly
1275
applied for all applicants in determining whether an individual
1276
risk is so hazardous as to be uninsurable. In making this
1277
determination and in establishing the criteria and procedures,
1278
the following shall be considered:
1279
(I) Whether the likelihood of a loss for the individual
1280
risk is substantially higher than for other risks of the same
1281
class; and
1282
(II) Whether the uncertainty associated with the individual
1283
risk is such that an appropriate premium cannot be determined.
1284
1285
The acceptance or rejection of a risk by the association pursuant
1286
to such criteria and procedures must be construed as the private
1287
placement of insurance, and the provisions of chapter 120 do not
1288
apply.
1289
e. If the risk accepts an offer of coverage through the
1290
market assistance program or through a mechanism established by
1291
the association, either before the policy is issued by the
1292
association or during the first 30 days of coverage by the
1293
association, and the producing agent who submitted the
1294
application to the association is not currently appointed by the
1295
insurer, the insurer shall:
1296
(I) Pay to the producing agent of record of the policy, for
1297
the first year, an amount that is the greater of the insurer's
1298
usual and customary commission for the type of policy written or
1299
a fee equal to the usual and customary commission of the
1300
association; or
1301
(II) Offer to allow the producing agent of record of the
1302
policy to continue servicing the policy for a period of not less
1303
than 1 year and offer to pay the agent the greater of the
1304
insurer's or the association's usual and customary commission for
1305
the type of policy written.
1306
1307
If the producing agent is unwilling or unable to accept
1308
appointment, the new insurer shall pay the agent in accordance
1309
with sub-sub-subparagraph (I). Subject to the provisions of s.
1310
627.3517, the policies issued by the association must provide
1311
that if the association obtains an offer from an authorized
1312
insurer to cover the risk at its approved rates under either a
1313
standard policy including wind coverage or, if consistent with
1314
the insurer's underwriting rules as filed with the department, a
1315
basic policy including wind coverage, the risk is no longer
1316
eligible for coverage through the association. Upon termination
1317
of eligibility, the association shall provide written notice to
1318
the policyholder and agent of record stating that the association
1319
policy must be canceled as of 60 days after the date of the
1320
notice because of the offer of coverage from an authorized
1321
insurer. Other provisions of the insurance code relating to
1322
cancellation and notice of cancellation do not apply to actions
1323
under this sub-subparagraph.
1324
f. When the association enters into a contractual agreement
1325
for a take-out plan, the producing agent of record of the
1326
association policy is entitled to retain any unearned commission
1327
on the policy, and the insurer shall:
1328
(I) Pay to the producing agent of record of the association
1329
policy, for the first year, an amount that is the greater of the
1330
insurer's usual and customary commission for the type of policy
1331
written or a fee equal to the usual and customary commission of
1332
the association; or
1333
(II) Offer to allow the producing agent of record of the
1334
association policy to continue servicing the policy for a period
1335
of not less than 1 year and offer to pay the agent the greater of
1336
the insurer's or the association's usual and customary commission
1337
for the type of policy written.
1338
1339
If the producing agent is unwilling or unable to accept
1340
appointment, the new insurer shall pay the agent in accordance
1341
with sub-sub-subparagraph (I).
1342
6.a. The plan of operation may authorize the formation of a
1343
private nonprofit corporation, a private nonprofit unincorporated
1344
association, a partnership, a trust, a limited liability company,
1345
or a nonprofit mutual company which may be empowered, among other
1346
things, to borrow money by issuing bonds or by incurring other
1347
indebtedness and to accumulate reserves or funds to be used for
1348
the payment of insured catastrophe losses. The plan may authorize
1349
all actions necessary to facilitate the issuance of bonds,
1350
including the pledging of assessments or other revenues.
1351
b. Any entity created under this subsection, or any entity
1352
formed for the purposes of this subsection, may sue and be sued,
1353
may borrow money; issue bonds, notes, or debt instruments; pledge
1354
or sell assessments, market equalization surcharges and other
1355
surcharges, rights, premiums, contractual rights, projected
1356
recoveries from the Florida Hurricane Catastrophe Fund, other
1357
reinsurance recoverables, and other assets as security for such
1358
bonds, notes, or debt instruments; enter into any contracts or
1359
agreements necessary or proper to accomplish such borrowings; and
1360
take other actions necessary to carry out the purposes of this
1361
subsection. The association may issue bonds or incur other
1362
indebtedness, or have bonds issued on its behalf by a unit of
1363
local government pursuant to subparagraph (6)(p)2., in the
1364
absence of a hurricane or other weather-related event, upon a
1365
determination by the association subject to approval by the
1366
department that such action would enable it to efficiently meet
1367
the financial obligations of the association and that such
1368
financings are reasonably necessary to effectuate the
1369
requirements of this subsection. Any such entity may accumulate
1370
reserves and retain surpluses as of the end of any association
1371
year to provide for the payment of losses incurred by the
1372
association during that year or any future year. The association
1373
shall incorporate and continue the plan of operation and articles
1374
of agreement in effect on the effective date of chapter 76-96,
1375
Laws of Florida, to the extent that it is not inconsistent with
1376
chapter 76-96, and as subsequently modified consistent with
1377
chapter 76-96. The board of directors and officers currently
1378
serving shall continue to serve until their successors are duly
1379
qualified as provided under the plan. The assets and obligations
1380
of the plan in effect immediately prior to the effective date of
1381
chapter 76-96 shall be construed to be the assets and obligations
1382
of the successor plan created herein.
1383
c. In recognition of s. 10, Art. I of the State
1384
Constitution, prohibiting the impairment of obligations of
1385
contracts, it is the intent of the Legislature that no action be
1386
taken whose purpose is to impair any bond indenture or financing
1387
agreement or any revenue source committed by contract to such
1388
bond or other indebtedness issued or incurred by the association
1389
or any other entity created under this subsection.
1390
7. On such coverage, an agent's remuneration shall be that
1391
amount of money payable to the agent by the terms of his or her
1392
contract with the company with which the business is placed.
1393
However, no commission will be paid on that portion of the
1394
premium which is in excess of the standard premium of that
1395
company.
1396
8. Subject to approval by the department, the association
1397
may establish different eligibility requirements and operational
1398
procedures for any line or type of coverage for any specified
1399
eligible area or portion of an eligible area if the board
1400
determines that such changes to the eligibility requirements and
1401
operational procedures are justified due to the voluntary market
1402
being sufficiently stable and competitive in such area or for
1403
such line or type of coverage and that consumers who, in good
1404
faith, are unable to obtain insurance through the voluntary
1405
market through ordinary methods would continue to have access to
1406
coverage from the association. When coverage is sought in
1407
connection with a real property transfer, such requirements and
1408
procedures shall not provide for an effective date of coverage
1409
later than the date of the closing of the transfer as established
1410
by the transferor, the transferee, and, if applicable, the
1411
lender.
1412
9. Notwithstanding any other provision of law:
1413
a. The pledge or sale of, the lien upon, and the security
1414
interest in any rights, revenues, or other assets of the
1415
association created or purported to be created pursuant to any
1416
financing documents to secure any bonds or other indebtedness of
1417
the association shall be and remain valid and enforceable,
1418
notwithstanding the commencement of and during the continuation
1419
of, and after, any rehabilitation, insolvency, liquidation,
1420
bankruptcy, receivership, conservatorship, reorganization, or
1421
similar proceeding against the association under the laws of this
1422
state or any other applicable laws.
1423
b. No such proceeding shall relieve the association of its
1424
obligation, or otherwise affect its ability to perform its
1425
obligation, to continue to collect, or levy and collect,
1426
assessments, market equalization or other surcharges, projected
1427
recoveries from the Florida Hurricane Catastrophe Fund,
1428
reinsurance recoverables, or any other rights, revenues, or other
1429
assets of the association pledged.
1430
c. Each such pledge or sale of, lien upon, and security
1431
interest in, including the priority of such pledge, lien, or
1432
security interest, any such assessments, emergency assessments,
1433
market equalization or renewal surcharges, projected recoveries
1434
from the Florida Hurricane Catastrophe Fund, reinsurance
1435
recoverables, or other rights, revenues, or other assets which
1436
are collected, or levied and collected, after the commencement of
1437
and during the pendency of or after any such proceeding shall
1438
continue unaffected by such proceeding.
1439
d. As used in this subsection, the term "financing
1440
documents" means any agreement, instrument, or other document now
1441
existing or hereafter created evidencing any bonds or other
1442
indebtedness of the association or pursuant to which any such
1443
bonds or other indebtedness has been or may be issued and
1444
pursuant to which any rights, revenues, or other assets of the
1445
association are pledged or sold to secure the repayment of such
1446
bonds or indebtedness, together with the payment of interest on
1447
such bonds or such indebtedness, or the payment of any other
1448
obligation of the association related to such bonds or
1449
indebtedness.
1450
e. Any such pledge or sale of assessments, revenues,
1451
contract rights or other rights or assets of the association
1452
shall constitute a lien and security interest, or sale, as the
1453
case may be, that is immediately effective and attaches to such
1454
assessments, revenues, contract, or other rights or assets,
1455
whether or not imposed or collected at the time the pledge or
1456
sale is made. Any such pledge or sale is effective, valid,
1457
binding, and enforceable against the association or other entity
1458
making such pledge or sale, and valid and binding against and
1459
superior to any competing claims or obligations owed to any other
1460
person or entity, including policyholders in this state,
1461
asserting rights in any such assessments, revenues, contract, or
1462
other rights or assets to the extent set forth in and in
1463
accordance with the terms of the pledge or sale contained in the
1464
applicable financing documents, whether or not any such person or
1465
entity has notice of such pledge or sale and without the need for
1466
any physical delivery, recordation, filing, or other action.
1467
f. There shall be no liability on the part of, and no cause
1468
of action of any nature shall arise against, any member insurer
1469
or its agents or employees, agents or employees of the
1470
association, members of the board of directors of the
1471
association, or the department or its representatives, for any
1472
action taken by them in the performance of their duties or
1473
responsibilities under this subsection. Such immunity does not
1474
apply to actions for breach of any contract or agreement
1475
pertaining to insurance, or any willful tort.
1476
(6) CITIZENS PROPERTY INSURANCE CORPORATION.--
1477
(a)1. It is the public purpose of this subsection to ensure
1478
the existence of an orderly market for property insurance for
1479
Floridians and Florida businesses. The Legislature finds that
1480
private insurers are unwilling or unable to provide affordable
1481
property insurance coverage in this state to the extent sought
1482
and needed. The absence of affordable property insurance
1483
threatens the public health, safety, and welfare and likewise
1484
threatens the economic health of the state. The state therefore
1485
has a compelling public interest and a public purpose to assist
1486
in assuring that property in the state is insured and that it is
1487
insured at affordable rates so as to facilitate the remediation,
1488
reconstruction, and replacement of damaged or destroyed property
1489
in order to reduce or avoid the negative effects otherwise
1490
resulting to the public health, safety, and welfare, to the
1491
economy of the state, and to the revenues of the state and local
1492
governments which are needed to provide for the public welfare.
1493
It is necessary, therefore, to provide affordable property
1494
insurance to applicants who are in good faith entitled to procure
1495
insurance through the voluntary market but are unable to do so.
1496
The Legislature intends by this subsection that affordable
1497
property insurance be provided and that it continue to be
1498
provided, as long as necessary, through Citizens Property
1499
Insurance Corporation, a government entity that is an integral
1500
part of the state, and that is not a private insurance company.
1501
To that end, Citizens Property Insurance Corporation shall strive
1502
to increase the availability of affordable property insurance in
1503
this state, while achieving efficiencies and economies, and while
1504
providing service to policyholders, applicants, and agents which
1505
is no less than the quality generally provided in the voluntary
1506
market, for the achievement of the foregoing public purposes.
1507
Because it is essential for this government entity to have the
1508
maximum financial resources to pay claims following a
1509
catastrophic hurricane, it is the intent of the Legislature that
1510
Citizens Property Insurance Corporation continue to be an
1511
integral part of the state and that the income of the corporation
1512
be exempt from federal income taxation and that interest on the
1513
debt obligations issued by the corporation be exempt from federal
1514
income taxation.
1515
2. The Residential Property and Casualty Joint Underwriting
1516
Association originally created by this statute shall be known, as
1517
of July 1, 2002, as the Citizens Property Insurance Corporation.
1518
The corporation shall provide insurance for residential and
1519
commercial property, for applicants who are in good faith
1520
entitled, but are unable, to procure insurance through the
1521
voluntary market. The corporation shall operate pursuant to a
1522
plan of operation approved by order of the Financial Services
1523
Commission. The plan is subject to continuous review by the
1524
commission. The commission may, by order, withdraw approval of
1525
all or part of a plan if the commission determines that
1526
conditions have changed since approval was granted and that the
1527
purposes of the plan require changes in the plan. The corporation
1528
shall continue to operate pursuant to the plan of operation
1529
approved by the Office of Insurance Regulation until October 1,
1530
2006. For the purposes of this subsection, residential coverage
1531
includes both personal lines residential coverage, which consists
1532
of the type of coverage provided by homeowner's, mobile home
1533
owner's, dwelling, tenant's, condominium unit owner's, and
1534
similar policies, and commercial lines residential coverage,
1535
which consists of the type of coverage provided by condominium
1536
association, apartment building, and similar policies.
1537
3. For the purposes of this subsection, the term "homestead
1538
property" means:
1539
a. Property that has been granted a homestead exemption
1540
under chapter 196;
1541
b. Property for which the owner has a current, written
1542
lease with a renter for a term of at least 7 months and for which
1543
the dwelling is insured by the corporation for $200,000 or less;
1544
c. An owner-occupied mobile home or manufactured home, as
1545
defined in s. 320.01, which is permanently affixed to real
1546
property, is owned by a Florida resident, and has been granted a
1547
homestead exemption under chapter 196 or, if the owner does not
1548
own the real property, the owner certifies that the mobile home
1549
or manufactured home is his or her principal place of residence;
1550
d. Tenant's coverage;
1551
e. Commercial lines residential property; or
1552
f. Any county, district, or municipal hospital; a hospital
1553
licensed by any not-for-profit corporation qualified under s.
1554
501(c)(3) of the United States Internal Revenue Code; or a
1555
continuing care retirement community that is certified under
1556
chapter 651 and that receives an exemption from ad valorem taxes
1557
under chapter 196.
1558
4. For the purposes of this subsection, the term
1559
"nonhomestead property" means property that is not homestead
1560
property.
1561
5. Effective January 1, 2009, a personal lines residential
1562
structure that has a dwelling replacement cost of $1 million or
1563
more, or a single condominium unit that has a combined dwelling
1564
and content replacement cost of $1 million or more is not
1565
eligible for coverage by the corporation. Such dwellings insured
1566
by the corporation on December 31, 2008, may continue to be
1567
covered by the corporation until the end of the policy term.
1568
However, such dwellings that are insured by the corporation and
1569
become ineligible for coverage due to the provisions of this
1570
subparagraph may reapply and obtain coverage in the high-risk
1571
account and be considered "nonhomestead property" if the property
1572
owner provides the corporation with a sworn affidavit from one or
1573
more insurance agents, on a form provided by the corporation,
1574
stating that the agents have made their best efforts to obtain
1575
coverage and that the property has been rejected for coverage by
1576
at least one authorized insurer and at least three surplus lines
1577
insurers. If such conditions are met, the dwelling may be insured
1578
by the corporation for up to 3 years, after which time the
1579
dwelling is ineligible for coverage. The office shall approve the
1580
method used by the corporation for valuing the dwelling
1581
replacement cost for the purposes of this subparagraph. If a
1582
policyholder is insured by the corporation prior to being
1583
determined to be ineligible pursuant to this subparagraph and
1584
such policyholder files a lawsuit challenging the determination,
1585
the policyholder may remain insured by the corporation until the
1586
conclusion of the litigation.
1587
3.6. For properties constructed on or after January 1,
1588
2009, the corporation may not insure any property located within
1589
2,500 feet landward of the coastal construction control line
1590
created pursuant to s. 161.053 unless the property meets the
1591
requirements of the code-plus building standards developed by the
1592
Florida Building Commission.
1593
4.7. It is the intent of the Legislature that
1594
policyholders, applicants, and agents of the corporation receive
1595
service and treatment of the highest possible level but never
1596
less than that generally provided in the voluntary market. It
1597
also is intended that the corporation be held to service
1598
standards no less than those applied to insurers in the voluntary
1599
market by the office with respect to responsiveness, timeliness,
1600
customer courtesy, and overall dealings with policyholders,
1601
applicants, or agents of the corporation.
1602
5.8. Effective January 1, 2009, a personal lines
1603
residential structure that is located in the "wind-borne debris
1604
region," as defined in s. 1609.2, International Building Code
1605
(2006), and that has an insured value on the structure of
1606
$750,000 or more is not eligible for coverage by the corporation
1607
unless the structure has opening protections as required under
1608
the Florida Building Code for a newly constructed residential
1609
structure in that area. A residential structure shall be deemed
1610
to comply with the requirements of this subparagraph if it has
1611
shutters or opening protections on all openings and if such
1612
opening protections complied with the Florida Building Code at
1613
the time they were installed. Effective January 1, 2011, the
1614
requirements of this subparagraph apply to a personal lines
1615
residential structure that is located in the wind-borne debris
1616
region and that has an insured value on the structure of $500,000
1617
or more.
1618
(b)1. All insurers authorized to write one or more subject
1619
lines of business in this state are subject to assessment by the
1620
corporation and, for the purposes of this subsection, are
1621
referred to collectively as "assessable insurers." Insurers
1622
writing one or more subject lines of business in this state
1623
pursuant to part VIII of chapter 626 are not assessable insurers,
1624
but insureds who procure one or more subject lines of business in
1625
this state pursuant to part VIII of chapter 626 are subject to
1626
assessment by the corporation and are referred to collectively as
1627
"assessable insureds." An authorized insurer's assessment
1628
liability shall begin on the first day of the calendar year
1629
following the year in which the insurer was issued a certificate
1630
of authority to transact insurance for subject lines of business
1631
in this state and shall terminate 1 year after the end of the
1632
first calendar year during which the insurer no longer holds a
1633
certificate of authority to transact insurance for subject lines
1634
of business in this state.
1635
2.a. All revenues, assets, liabilities, losses, and
1636
expenses of the corporation shall be divided into three separate
1637
accounts as follows:
1638
(I) A personal lines account for personal residential
1639
policies issued by the corporation or issued by the Residential
1640
Property and Casualty Joint Underwriting Association and renewed
1641
by the corporation that provide comprehensive, multiperil
1642
coverage on risks that are not located in areas eligible for
1643
coverage in the Florida Windstorm Underwriting Association as
1644
those areas were defined on January 1, 2002, and for such
1645
policies that do not provide coverage for the peril of wind on
1646
risks that are located in such areas;
1647
(II) A commercial lines account for commercial residential
1648
and commercial nonresidential policies issued by the corporation
1649
or issued by the Residential Property and Casualty Joint
1650
Underwriting Association and renewed by the corporation that
1651
provide coverage for basic property perils on risks that are not
1652
located in areas eligible for coverage in the Florida Windstorm
1653
Underwriting Association as those areas were defined on January
1654
1, 2002, and for such policies that do not provide coverage for
1655
the peril of wind on risks that are located in such areas; and
1656
(III) A high-risk account for personal residential policies
1657
and commercial residential and commercial nonresidential property
1658
policies issued by the corporation or transferred to the
1659
corporation that provide coverage for the peril of wind on risks
1660
that are located in areas eligible for coverage in the Florida
1661
Windstorm Underwriting Association as those areas were defined on
1662
January 1, 2002. Subject to the approval of a business plan by
1663
the Financial Services Commission and Legislative Budget
1664
Commission as provided in this sub-sub-subparagraph, but no
1665
earlier than March 31, 2007, The corporation shall may offer
1666
policies that provide multiperil coverage and the corporation
1667
shall continue to offer policies that provide coverage only for
1668
the peril of wind for risks located in areas eligible for
1669
coverage in the high-risk account. Beginning July 1, 2008, the
1670
corporation may not issue new policies that provide coverage only
1671
for the peril of wind, but may continue to renew such policies
1672
that were in force on that date. In issuing multiperil coverage,
1673
the corporation may use its approved policy forms and rates for
1674
the personal lines account. An applicant or insured who is
1675
eligible to purchase a multiperil policy from the corporation may
1676
purchase a multiperil policy from an authorized insurer without
1677
prejudice to the applicant's or insured's eligibility to
1678
prospectively purchase a policy that provides coverage only for
1679
the peril of wind from the corporation prior to July 1, 2008. An
1680
applicant or insured who is eligible for a corporation policy
1681
that provides coverage only for the peril of wind may elect to
1682
purchase or retain such policy and also purchase or retain
1683
coverage excluding wind from an authorized insurer without
1684
prejudice to the applicant's or insured's eligibility to
1685
prospectively purchase a policy that provides multiperil coverage
1686
from the corporation. It is the goal of the Legislature that
1687
there would be an overall average savings of 10 percent or more
1688
for a policyholder who currently has a wind-only policy with the
1689
corporation, and an ex-wind policy with a voluntary insurer or
1690
the corporation, and who then obtains a multiperil policy from
1691
the corporation. It is the intent of the Legislature that the
1692
offer of multiperil coverage in the high-risk account be made and
1693
implemented in a manner that does not adversely affect the tax-
1694
exempt status of the corporation or creditworthiness of or
1695
security for currently outstanding financing obligations or
1696
credit facilities of the high-risk account, the personal lines
1697
account, or the commercial lines account. By March 1, 2007, the
1698
corporation shall prepare and submit for approval by the
1699
Financial Services Commission and Legislative Budget Commission a
1700
report detailing the corporation's business plan for issuing
1701
multiperil coverage in the high-risk account. The business plan
1702
shall be approved or disapproved within 30 days after receipt, as
1703
submitted or modified and resubmitted by the corporation. The
1704
business plan must include: the impact of such multiperil
1705
coverage on the corporation's financial resources, the impact of
1706
such multiperil coverage on the corporation's tax-exempt status,
1707
the manner in which the corporation plans to implement the
1708
processing of applications and policy forms for new and existing
1709
policyholders, the impact of such multiperil coverage on the
1710
corporation's ability to deliver customer service at the high
1711
level required by this subsection, the ability of the corporation
1712
to process claims, the ability of the corporation to quote and
1713
issue policies, the impact of such multiperil coverage on the
1714
corporation's agents, the impact of such multiperil coverage on
1715
the corporation's existing policyholders, and the impact of such
1716
multiperil coverage on rates and premium. The high-risk account
1717
must also include quota share primary insurance under
1718
subparagraph (c)2. The area eligible for coverage under the high-
1719
risk account also includes the area within Port Canaveral, which
1720
is bordered on the south by the City of Cape Canaveral, bordered
1721
on the west by the Banana River, and bordered on the north by
1722
Federal Government property.
1723
b. The three separate accounts must be maintained as long
1724
as financing obligations entered into by the Florida Windstorm
1725
Underwriting Association or Residential Property and Casualty
1726
Joint Underwriting Association are outstanding, in accordance
1727
with the terms of the corresponding financing documents. When the
1728
financing obligations are no longer outstanding, in accordance
1729
with the terms of the corresponding financing documents, the
1730
corporation may use a single account for all revenues, assets,
1731
liabilities, losses, and expenses of the corporation. Consistent
1732
with the requirement of this subparagraph and prudent investment
1733
policies that minimize the cost of carrying debt, the board shall
1734
exercise its best efforts to retire existing debt or to obtain
1735
approval of necessary parties to amend the terms of existing
1736
debt, so as to structure the most efficient plan to consolidate
1737
the three separate accounts into a single account. By February 1,
1738
2007, the board shall submit a report to the Financial Services
1739
Commission, the President of the Senate, and the Speaker of the
1740
House of Representatives which includes an analysis of
1741
consolidating the accounts, the actions the board has taken to
1742
minimize the cost of carrying debt, and its recommendations for
1743
executing the most efficient plan.
1744
c. Creditors of the Residential Property and Casualty Joint
1745
Underwriting Association and of the accounts specified in sub-
1746
sub-subparagraphs a.(I) and (II) may have a claim against, and
1747
recourse to, the accounts referred to in sub-sub-subparagraphs
1748
a.(I) and (II) and shall have no claim against, or recourse to,
1749
the account referred to in sub-sub-subparagraph a.(III).
1750
Creditors of the Florida Windstorm Underwriting Association shall
1751
have a claim against, and recourse to, the account referred to in
1752
sub-sub-subparagraph a.(III) and shall have no claim against, or
1753
recourse to, the accounts referred to in sub-sub-subparagraphs
1754
a.(I) and (II).
1755
d. Revenues, assets, liabilities, losses, and expenses not
1756
attributable to particular accounts shall be prorated among the
1757
accounts.
1758
e. The Legislature finds that the revenues of the
1759
corporation are revenues that are necessary to meet the
1760
requirements set forth in documents authorizing the issuance of
1761
bonds under this subsection.
1762
f. No part of the income of the corporation may inure to
1763
the benefit of any private person.
1764
3. With respect to a deficit in an account:
1765
a. When the deficit incurred in a particular calendar year
1766
is not greater than 8 10 percent of the aggregate statewide
1767
direct written premium for the subject lines of business for the
1768
prior calendar year, the entire deficit shall be recovered
1769
through regular assessments of assessable insurers under
1770
paragraph (p) and assessable insureds.
1771
b. When the deficit incurred in a particular calendar year
1772
exceeds 8 10 percent of the aggregate statewide direct written
1773
premium for the subject lines of business for the prior calendar
1774
year, the corporation shall levy regular assessments on
1775
assessable insurers under paragraph (p) and on assessable
1776
insureds in an amount equal to the greater of 8 10 percent of the
1777
deficit or 8 10 percent of the aggregate statewide direct written
1778
premium for the subject lines of business for the prior calendar
1779
year. Any remaining deficit shall be recovered through emergency
1780
assessments under sub-subparagraph d.
1781
c. Each assessable insurer's share of the amount being
1782
assessed under sub-subparagraph a. or sub-subparagraph b. shall
1783
be in the proportion that the assessable insurer's direct written
1784
premium for the subject lines of business for the year preceding
1785
the assessment bears to the aggregate statewide direct written
1786
premium for the subject lines of business for that year. The
1787
assessment percentage applicable to each assessable insured is
1788
the ratio of the amount being assessed under sub-subparagraph a.
1789
or sub-subparagraph b. to the aggregate statewide direct written
1790
premium for the subject lines of business for the prior year.
1791
Assessments levied by the corporation on assessable insurers
1792
under sub-subparagraphs a. and b. shall be paid as required by
1793
the corporation's plan of operation and paragraph (p).
1794
notwithstanding any other provision of this subsection, the
1795
aggregate amount of a regular assessment for a deficit incurred
1796
in a particular calendar year shall be reduced by the estimated
1797
amount to be received by the corporation from the Citizens
1798
policyholder surcharge under subparagraph (c)10. and the amount
1799
collected or estimated to be collected from the assessment on
1800
Citizens policyholders pursuant to sub-subparagraph i.
1801
Assessments levied by the corporation on assessable insureds
1802
under sub-subparagraphs a. and b. shall be collected by the
1803
surplus lines agent at the time the surplus lines agent collects
1804
the surplus lines tax required by s. 626.932 and shall be paid to
1805
the Florida Surplus Lines Service Office at the time the surplus
1806
lines agent pays the surplus lines tax to the Florida Surplus
1807
Lines Service Office. Upon receipt of regular assessments from
1808
surplus lines agents, the Florida Surplus Lines Service Office
1809
shall transfer the assessments directly to the corporation as
1810
determined by the corporation.
1811
d. Upon a determination by the board of governors that a
1812
deficit in an account exceeds the amount that will be recovered
1813
through regular assessments under sub-subparagraph a. or sub-
1814
subparagraph b., plus the amount that is expected to be recovered
1815
through surcharges under sub-subparagraph i., as to the remaining
1816
projected deficit the board shall levy, after verification by the
1817
office, emergency assessments, for as many years as necessary to
1818
cover the deficits, to be collected by assessable insurers and
1819
the corporation and collected from assessable insureds upon
1820
issuance or renewal of policies for subject lines of business,
1821
excluding National Flood Insurance policies. The amount of the
1822
emergency assessment collected in a particular year shall be a
1823
uniform percentage of that year's direct written premium for
1824
subject lines of business and all accounts of the corporation,
1825
excluding National Flood Insurance Program policy premiums, as
1826
annually determined by the board and verified by the office. The
1827
office shall verify the arithmetic calculations involved in the
1828
board's determination within 30 days after receipt of the
1829
information on which the determination was based. Notwithstanding
1830
any other provision of law, the corporation and each assessable
1831
insurer that writes subject lines of business shall collect
1832
emergency assessments from its policyholders without such
1833
obligation being affected by any credit, limitation, exemption,
1834
or deferment. Emergency assessments levied by the corporation on
1835
assessable insureds shall be collected by the surplus lines agent
1836
at the time the surplus lines agent collects the surplus lines
1837
tax required by s. 626.932 and shall be paid to the Florida
1838
Surplus Lines Service Office at the time the surplus lines agent
1839
pays the surplus lines tax to the Florida Surplus Lines Service
1840
Office. The emergency assessments so collected shall be
1841
transferred directly to the corporation on a periodic basis as
1842
determined by the corporation and shall be held by the
1843
corporation solely in the applicable account. The aggregate
1844
amount of emergency assessments levied for an account under this
1845
sub-subparagraph in any calendar year may, at the discretion of
1846
the board of governors, be less than but may not exceed the
1847
greater of 10 percent of the amount needed to cover the original
1848
deficit, plus interest, fees, commissions, required reserves, and
1849
other costs associated with financing of the original deficit, or
1850
10 percent of the aggregate statewide direct written premium for
1851
subject lines of business and for all accounts of the corporation
1852
for the prior year, plus interest, fees, commissions, required
1853
reserves, and other costs associated with financing the original
1854
deficit.
1855
e. The corporation may pledge the proceeds of assessments,
1856
projected recoveries from the Florida Hurricane Catastrophe Fund,
1857
other insurance and reinsurance recoverables, policyholder
1858
surcharges and other surcharges, and other funds available to the
1859
corporation as the source of revenue for and to secure bonds
1860
issued under paragraph (p), bonds or other indebtedness issued
1861
under subparagraph (c)3., or lines of credit or other financing
1862
mechanisms issued or created under this subsection, or to retire
1863
any other debt incurred as a result of deficits or events giving
1864
rise to deficits, or in any other way that the board determines
1865
will efficiently recover such deficits. The purpose of the lines
1866
of credit or other financing mechanisms is to provide additional
1867
resources to assist the corporation in covering claims and
1868
expenses attributable to a catastrophe. As used in this
1869
subsection, the term "assessments" includes regular assessments
1870
under sub-subparagraph a., sub-subparagraph b., or subparagraph
1871
(p)1. and emergency assessments under sub-subparagraph d.
1872
Emergency assessments collected under sub-subparagraph d. are not
1873
part of an insurer's rates, are not premium, and are not subject
1874
to premium tax, fees, or commissions; however, failure to pay the
1875
emergency assessment shall be treated as failure to pay premium.
1876
The emergency assessments under sub-subparagraph d. shall
1877
continue as long as any bonds issued or other indebtedness
1878
incurred with respect to a deficit for which the assessment was
1879
imposed remain outstanding, unless adequate provision has been
1880
made for the payment of such bonds or other indebtedness pursuant
1881
to the documents governing such bonds or other indebtedness.
1882
f. As used in this subsection for purposes of any deficit
1883
incurred on or after January 25, 2007, the term "subject lines of
1884
business" means insurance written by assessable insurers or
1885
procured by assessable insureds for all property and casualty
1886
lines of business in this state, but not including workers'
1887
compensation or medical malpractice. As used in the sub-
1888
subparagraph, the term "property and casualty lines of business"
1889
includes all lines of business identified on Form 2, Exhibit of
1890
Premiums and Losses, in the annual statement required of
1891
authorized insurers by s. 624.424 and any rule adopted under this
1892
section, except for those lines identified as accident and health
1893
insurance and except for policies written under the National
1894
Flood Insurance Program or the Federal Crop Insurance Program.
1895
For purposes of this sub-subparagraph, the term "workers'
1896
compensation" includes both workers' compensation insurance and
1897
excess workers' compensation insurance.
1898
g. The Florida Surplus Lines Service Office shall determine
1899
annually the aggregate statewide written premium in subject lines
1900
of business procured by assessable insureds and shall report that
1901
information to the corporation in a form and at a time the
1902
corporation specifies to ensure that the corporation can meet the
1903
requirements of this subsection and the corporation's financing
1904
obligations.
1905
h. The Florida Surplus Lines Service Office shall verify
1906
the proper application by surplus lines agents of assessment
1907
percentages for regular assessments and emergency assessments
1908
levied under this subparagraph on assessable insureds and shall
1909
assist the corporation in ensuring the accurate, timely
1910
collection and payment of assessments by surplus lines agents as
1911
required by the corporation.
1912
i. If a deficit is incurred in any account in 2008 or
1913
thereafter, the board of governors shall levy a Citizens
1914
policyholder surcharge an immediate assessment against the
1915
premium of each nonhomestead property policyholder in all
1916
accounts of the corporation, as a uniform percentage of the
1917
premium of the policy of up to 10 percent of such premium, which
1918
funds shall be used to offset the deficit. If this assessment is
1919
insufficient to eliminate the deficit, the board of governors
1920
shall levy an additional assessment against all policyholders of
1921
the corporation for a 12-month period, which shall be collected
1922
at the time of issuance or renewal of a policy, as a uniform
1923
percentage of the premium for the policy of up to 10 percent of
1924
such premium, which funds shall be used to further offset the
1925
deficit and reduce the amount of the regular assessment as
1926
provided in sub-subparagraphs a. and b. Citizens policyholder
1927
surcharges under this sub-subparagraph are not considered premium
1928
and are not subject to commissions, fees, or premium taxes.
1929
However, failure to pay such surcharges shall be treated as
1930
failure to pay premium.
1931
j. If the amount of any assessments or surcharges collected
1932
from corporation policyholders, assessable insurers or their
1933
policyholders, or assessable insureds exceeds the amount of the
1934
deficits, such excess amounts shall be remitted to and retained
1935
by the corporation in a reserve to be used by the corporation, as
1936
determined by the board of governors and approved by the office,
1937
to pay claims or reduce any past, present, or future plan-year
1938
deficits or to reduce outstanding debt. The board of governors
1939
shall maintain separate accounting records that consolidate data
1940
for nonhomestead properties, including, but not limited to,
1941
number of policies, insured values, premiums written, and losses.
1942
The board of governors shall annually report to the office and
1943
the Legislature a summary of such data.
1944
(c) The plan of operation of the corporation:
1945
1. Must provide for adoption of residential property and
1946
casualty insurance policy forms and commercial residential and
1947
nonresidential property insurance forms, which forms must be
1948
approved by the office prior to use. The corporation shall adopt
1949
the following policy forms:
1950
a. Standard personal lines policy forms that are
1951
comprehensive multiperil policies providing full coverage of a
1952
residential property equivalent to the coverage provided in the
1953
private insurance market under an HO-3, HO-4, or HO-6 policy.
1954
b. Basic personal lines policy forms that are policies
1955
similar to an HO-8 policy or a dwelling fire policy that provide
1956
coverage meeting the requirements of the secondary mortgage
1957
market, but which coverage is more limited than the coverage
1958
under a standard policy.
1959
c. Commercial lines residential and nonresidential policy
1960
forms that are generally similar to the basic perils of full
1961
coverage obtainable for commercial residential structures and
1962
commercial nonresidential structures in the admitted voluntary
1963
market.
1964
d. Personal lines and commercial lines residential property
1965
insurance forms that cover the peril of wind only. The forms are
1966
applicable only to residential properties located in areas
1967
eligible for coverage under the high-risk account referred to in
1968
sub-subparagraph (b)2.a.
1969
e. Commercial lines nonresidential property insurance forms
1970
that cover the peril of wind only. The forms are applicable only
1971
to nonresidential properties located in areas eligible for
1972
coverage under the high-risk account referred to in sub-
1973
subparagraph (b)2.a.
1974
f. The corporation may adopt variations of the policy forms
1975
listed in sub-subparagraphs a.-e. that contain more restrictive
1976
coverage.
1977
2.a. Must provide that the corporation adopt a program in
1978
which the corporation and authorized insurers enter into quota
1979
share primary insurance agreements for hurricane coverage, as
1980
defined in s. 627.4025(2)(a), for eligible risks, and adopt
1981
property insurance forms for eligible risks which cover the peril
1982
of wind only. As used in this subsection, the term:
1983
(I) "Quota share primary insurance" means an arrangement in
1984
which the primary hurricane coverage of an eligible risk is
1985
provided in specified percentages by the corporation and an
1986
authorized insurer. The corporation and authorized insurer are
1987
each solely responsible for a specified percentage of hurricane
1988
coverage of an eligible risk as set forth in a quota share
1989
primary insurance agreement between the corporation and an
1990
authorized insurer and the insurance contract. The responsibility
1991
of the corporation or authorized insurer to pay its specified
1992
percentage of hurricane losses of an eligible risk, as set forth
1993
in the quota share primary insurance agreement, may not be
1994
altered by the inability of the other party to the agreement to
1995
pay its specified percentage of hurricane losses. Eligible risks
1996
that are provided hurricane coverage through a quota share
1997
primary insurance arrangement must be provided policy forms that
1998
set forth the obligations of the corporation and authorized
1999
insurer under the arrangement, clearly specify the percentages of
2000
quota share primary insurance provided by the corporation and
2001
authorized insurer, and conspicuously and clearly state that
2002
neither the authorized insurer nor the corporation may be held
2003
responsible beyond its specified percentage of coverage of
2004
hurricane losses.
2005
(II) "Eligible risks" means personal lines residential and
2006
commercial lines residential risks that meet the underwriting
2007
criteria of the corporation and are located in areas that were
2008
eligible for coverage by the Florida Windstorm Underwriting
2009
Association on January 1, 2002.
2010
b. The corporation may enter into quota share primary
2011
insurance agreements with authorized insurers at corporation
2012
coverage levels of 90 percent and 50 percent.
2013
c. If the corporation determines that additional coverage
2014
levels are necessary to maximize participation in quota share
2015
primary insurance agreements by authorized insurers, the
2016
corporation may establish additional coverage levels. However,
2017
the corporation's quota share primary insurance coverage level
2018
may not exceed 90 percent.
2019
d. Any quota share primary insurance agreement entered into
2020
between an authorized insurer and the corporation must provide
2021
for a uniform specified percentage of coverage of hurricane
2022
losses, by county or territory as set forth by the corporation
2023
board, for all eligible risks of the authorized insurer covered
2024
under the quota share primary insurance agreement.
2025
e. Any quota share primary insurance agreement entered into
2026
between an authorized insurer and the corporation is subject to
2027
review and approval by the office. However, such agreement shall
2028
be authorized only as to insurance contracts entered into between
2029
an authorized insurer and an insured who is already insured by
2030
the corporation for wind coverage.
2031
f. For all eligible risks covered under quota share primary
2032
insurance agreements, the exposure and coverage levels for both
2033
the corporation and authorized insurers shall be reported by the
2034
corporation to the Florida Hurricane Catastrophe Fund. For all
2035
policies of eligible risks covered under quota share primary
2036
insurance agreements, the corporation and the authorized insurer
2037
shall maintain complete and accurate records for the purpose of
2038
exposure and loss reimbursement audits as required by Florida
2039
Hurricane Catastrophe Fund rules. The corporation and the
2040
authorized insurer shall each maintain duplicate copies of policy
2041
declaration pages and supporting claims documents.
2042
g. The corporation board shall establish in its plan of
2043
operation standards for quota share agreements which ensure that
2044
there is no discriminatory application among insurers as to the
2045
terms of quota share agreements, pricing of quota share
2046
agreements, incentive provisions if any, and consideration paid
2047
for servicing policies or adjusting claims.
2048
h. The quota share primary insurance agreement between the
2049
corporation and an authorized insurer must set forth the specific
2050
terms under which coverage is provided, including, but not
2051
limited to, the sale and servicing of policies issued under the
2052
agreement by the insurance agent of the authorized insurer
2053
producing the business, the reporting of information concerning
2054
eligible risks, the payment of premium to the corporation, and
2055
arrangements for the adjustment and payment of hurricane claims
2056
incurred on eligible risks by the claims adjuster and personnel
2057
of the authorized insurer. Entering into a quota sharing
2058
insurance agreement between the corporation and an authorized
2059
insurer shall be voluntary and at the discretion of the
2060
authorized insurer.
2061
3. May provide that the corporation may employ or otherwise
2062
contract with individuals or other entities to provide
2063
administrative or professional services that may be appropriate
2064
to effectuate the plan. The corporation shall have the power to
2065
borrow funds, by issuing bonds or by incurring other
2066
indebtedness, and shall have other powers reasonably necessary to
2067
effectuate the requirements of this subsection, including,
2068
without limitation, the power to issue bonds and incur other
2069
indebtedness in order to refinance outstanding bonds or other
2070
indebtedness. The corporation may, but is not required to, seek
2071
judicial validation of its bonds or other indebtedness under
2072
chapter 75. The corporation may issue bonds or incur other
2073
indebtedness, or have bonds issued on its behalf by a unit of
2074
local government pursuant to subparagraph (p)2., in the absence
2075
of a hurricane or other weather-related event, upon a
2076
determination by the corporation, subject to approval by the
2077
office, that such action would enable it to efficiently meet the
2078
financial obligations of the corporation and that such financings
2079
are reasonably necessary to effectuate the requirements of this
2080
subsection. The corporation is authorized to take all actions
2081
needed to facilitate tax-free status for any such bonds or
2082
indebtedness, including formation of trusts or other affiliated
2083
entities. The corporation shall have the authority to pledge
2084
assessments, projected recoveries from the Florida Hurricane
2085
Catastrophe Fund, other reinsurance recoverables, market
2086
equalization and other surcharges, and other funds available to
2087
the corporation as security for bonds or other indebtedness. In
2088
recognition of s. 10, Art. I of the State Constitution,
2089
prohibiting the impairment of obligations of contracts, it is the
2090
intent of the Legislature that no action be taken whose purpose
2091
is to impair any bond indenture or financing agreement or any
2092
revenue source committed by contract to such bond or other
2093
indebtedness.
2094
4.a. Must require that the corporation operate subject to
2095
the supervision and approval of a board of governors consisting
2096
of eight individuals who are residents of this state, from
2097
different geographical areas of this state. The Governor, the
2098
Chief Financial Officer, the President of the Senate, and the
2099
Speaker of the House of Representatives shall each appoint two
2100
members of the board. At least one of the two members appointed
2101
by each appointing officer must have demonstrated expertise in
2102
insurance. The Chief Financial Officer shall designate one of the
2103
appointees as chair. All board members serve at the pleasure of
2104
the appointing officer. All members of the board of governors are
2105
subject to removal at will by the officers who appointed them.
2106
All board members, including the chair, must be appointed to
2107
serve for 3-year terms beginning annually on a date designated by
2108
the plan. Any board vacancy shall be filled for the unexpired
2109
term by the appointing officer. The Chief Financial Officer shall
2110
appoint a technical advisory group to provide information and
2111
advice to the board of governors in connection with the board's
2112
duties under this subsection. The executive director and senior
2113
managers of the corporation shall be engaged by the board and
2114
serve at the pleasure of the board. Any executive director
2115
appointed on or after July 1, 2006, is subject to confirmation by
2116
the Senate. The executive director is responsible for employing
2117
other staff as the corporation may require, subject to review and
2118
concurrence by the board.
2119
b. The board shall create a Market Accountability Advisory
2120
Committee to assist the corporation in developing awareness of
2121
its rates and its customer and agent service levels in
2122
relationship to the voluntary market insurers writing similar
2123
coverage. The members of the advisory committee shall consist of
2124
the following 11 persons, one of whom must be elected chair by
2125
the members of the committee: four representatives, one appointed
2126
by the Florida Association of Insurance Agents, one by the
2127
Florida Association of Insurance and Financial Advisors, one by
2128
the Professional Insurance Agents of Florida, and one by the
2129
Latin American Association of Insurance Agencies; three
2130
representatives appointed by the insurers with the three highest
2131
voluntary market share of residential property insurance business
2132
in the state; one representative from the Office of Insurance
2133
Regulation; one consumer appointed by the board who is insured by
2134
the corporation at the time of appointment to the committee; one
2135
representative appointed by the Florida Association of Realtors;
2136
and one representative appointed by the Florida Bankers
2137
Association. All members must serve for 3-year terms and may
2138
serve for consecutive terms. The committee shall report to the
2139
corporation at each board meeting on insurance market issues
2140
which may include rates and rate competition with the voluntary
2141
market; service, including policy issuance, claims processing,
2142
and general responsiveness to policyholders, applicants, and
2143
agents; and matters relating to depopulation.
2144
5. Must provide a procedure for determining the eligibility
2145
of a risk for coverage, as follows:
2146
a. Subject to the provisions of s. 627.3517, with respect
2147
to personal lines residential risks, if the risk is offered
2148
coverage from an authorized insurer at the insurer's approved
2149
rate under either a standard policy including wind coverage or,
2150
if consistent with the insurer's underwriting rules as filed with
2151
the office, a basic policy including wind coverage, for a new
2152
application to the corporation for coverage, the risk is not
2153
eligible for any policy issued by the corporation unless the
2154
premium for coverage from the authorized insurer is more than 15
2155
percent greater than the premium for comparable coverage from the
2156
corporation. If the risk is not able to obtain any such offer,
2157
the risk is eligible for either a standard policy including wind
2158
coverage or a basic policy including wind coverage issued by the
2159
corporation; however, if the risk could not be insured under a
2160
standard policy including wind coverage regardless of market
2161
conditions, the risk shall be eligible for a basic policy
2162
including wind coverage unless rejected under subparagraph 9.
2163
However, with regard to a policyholder of the corporation or a
2164
policyholder removed from the corporation through an assumption
2165
agreement until the end of the assumption period, the
2166
policyholder remains eligible for coverage from the corporation
2167
regardless of any offer of coverage from an authorized insurer or
2168
surplus lines insurer. The corporation shall determine the type
2169
of policy to be provided on the basis of objective standards
2170
specified in the underwriting manual and based on generally
2171
accepted underwriting practices.
2172
(I) If the risk accepts an offer of coverage through the
2173
market assistance plan or an offer of coverage through a
2174
mechanism established by the corporation before a policy is
2175
issued to the risk by the corporation or during the first 30 days
2176
of coverage by the corporation, and the producing agent who
2177
submitted the application to the plan or to the corporation is
2178
not currently appointed by the insurer, the insurer shall:
2179
(A) Pay to the producing agent of record of the policy, for
2180
the first year, an amount that is the greater of the insurer's
2181
usual and customary commission for the type of policy written or
2182
a fee equal to the usual and customary commission of the
2183
corporation; or
2184
(B) Offer to allow the producing agent of record of the
2185
policy to continue servicing the policy for a period of not less
2186
than 1 year and offer to pay the agent the greater of the
2187
insurer's or the corporation's usual and customary commission for
2188
the type of policy written.
2189
2190
If the producing agent is unwilling or unable to accept
2191
appointment, the new insurer shall pay the agent in accordance
2192
with sub-sub-sub-subparagraph (A).
2193
(II) When the corporation enters into a contractual
2194
agreement for a take-out plan, the producing agent of record of
2195
the corporation policy is entitled to retain any unearned
2196
commission on the policy, and the insurer shall:
2197
(A) Pay to the producing agent of record of the corporation
2198
policy, for the first year, an amount that is the greater of the
2199
insurer's usual and customary commission for the type of policy
2200
written or a fee equal to the usual and customary commission of
2201
the corporation; or
2202
(B) Offer to allow the producing agent of record of the
2203
corporation policy to continue servicing the policy for a period
2204
of not less than 1 year and offer to pay the agent the greater of
2205
the insurer's or the corporation's usual and customary commission
2206
for the type of policy written.
2207
2208
If the producing agent is unwilling or unable to accept
2209
appointment, the new insurer shall pay the agent in accordance
2210
with sub-sub-sub-subparagraph (A).
2211
b. With respect to commercial lines residential risks, for
2212
a new application to the corporation for coverage, if the risk is
2213
offered coverage under a policy including wind coverage from an
2214
authorized insurer at its approved rate, the risk is not eligible
2215
for any policy issued by the corporation unless the premium for
2216
coverage from the authorized insurer is more than 15 percent
2217
greater than the premium for comparable coverage from the
2218
corporation. If the risk is not able to obtain any such offer,
2219
the risk is eligible for a policy including wind coverage issued
2220
by the corporation. However, with regard to a policyholder of the
2221
corporation or a policyholder removed from the corporation
2222
through an assumption agreement until the end of the assumption
2223
period, the policyholder remains eligible for coverage from the
2224
corporation regardless of any offer of coverage from an
2225
authorized insurer or surplus lines insurer.
2226
(I) If the risk accepts an offer of coverage through the
2227
market assistance plan or an offer of coverage through a
2228
mechanism established by the corporation before a policy is
2229
issued to the risk by the corporation or during the first 30 days
2230
of coverage by the corporation, and the producing agent who
2231
submitted the application to the plan or the corporation is not
2232
currently appointed by the insurer, the insurer shall:
2233
(A) Pay to the producing agent of record of the policy, for
2234
the first year, an amount that is the greater of the insurer's
2235
usual and customary commission for the type of policy written or
2236
a fee equal to the usual and customary commission of the
2237
corporation; or
2238
(B) Offer to allow the producing agent of record of the
2239
policy to continue servicing the policy for a period of not less
2240
than 1 year and offer to pay the agent the greater of the
2241
insurer's or the corporation's usual and customary commission for
2242
the type of policy written.
2243
2244
If the producing agent is unwilling or unable to accept
2245
appointment, the new insurer shall pay the agent in accordance
2246
with sub-sub-sub-subparagraph (A).
2247
(II) When the corporation enters into a contractual
2248
agreement for a take-out plan, the producing agent of record of
2249
the corporation policy is entitled to retain any unearned
2250
commission on the policy, and the insurer shall:
2251
(A) Pay to the producing agent of record of the corporation
2252
policy, for the first year, an amount that is the greater of the
2253
insurer's usual and customary commission for the type of policy
2254
written or a fee equal to the usual and customary commission of
2255
the corporation; or
2256
(B) Offer to allow the producing agent of record of the
2257
corporation policy to continue servicing the policy for a period
2258
of not less than 1 year and offer to pay the agent the greater of
2259
the insurer's or the corporation's usual and customary commission
2260
for the type of policy written.
2261
2262
If the producing agent is unwilling or unable to accept
2263
appointment, the new insurer shall pay the agent in accordance
2264
with sub-sub-sub-subparagraph (A).
2265
c. For purposes of determining comparable coverage under
2266
sub-subparagraphs a. and b., the comparison shall be based on
2267
those forms and coverages that are reasonably comparable. The
2268
corporation may rely on a determination of comparable coverage
2269
and premium made by the producing agent who submits the
2270
application to the corporation, made in the agent's capacity as
2271
the corporation's agent. A comparison may be made solely of the
2272
premium with respect to the main building or structure only on
2273
the following basis: the same coverage A or other building
2274
limits; the same percentage hurricane deductible that applies on
2275
an annual basis or that applies to each hurricane for commercial
2276
residential property; the same percentage of ordinance and law
2277
coverage, if the same limit is offered by both the corporation
2278
and the authorized insurer; the same mitigation credits, to the
2279
extent the same types of credits are offered both by the
2280
corporation and the authorized insurer; the same method for loss
2281
payment, such as replacement cost or actual cash value, if the
2282
same method is offered both by the corporation and the authorized
2283
insurer in accordance with underwriting rules; and any other form
2284
or coverage that is reasonably comparable as determined by the
2285
board. If an application is submitted to the corporation for
2286
wind-only coverage in the high-risk account, the premium for the
2287
corporation's wind-only policy plus the premium for the ex-wind
2288
policy that is offered by an authorized insurer to the applicant
2289
shall be compared to the premium for multiperil coverage offered
2290
by an authorized insurer, subject to the standards for comparison
2291
specified in this subparagraph. If the corporation or the
2292
applicant requests from the authorized insurer a breakdown of the
2293
premium of the offer by types of coverage so that a comparison
2294
may be made by the corporation or its agent and the authorized
2295
insurer refuses or is unable to provide such information, the
2296
corporation may treat the offer as not being an offer of coverage
2297
from an authorized insurer at the insurer's approved rate.
2298
6. Must include rules for classifications of risks and
2299
rates therefor.
2300
7. Must provide that if premium and investment income for
2301
an account attributable to a particular calendar year are in
2302
excess of projected losses and expenses for the account
2303
attributable to that year, such excess shall be held in surplus
2304
in the account. Such surplus shall be available to defray
2305
deficits in that account as to future years and shall be used for
2306
that purpose prior to assessing assessable insurers and
2307
assessable insureds as to any calendar year.
2308
8. Must provide objective criteria and procedures to be
2309
uniformly applied for all applicants in determining whether an
2310
individual risk is so hazardous as to be uninsurable. In making
2311
this determination and in establishing the criteria and
2312
procedures, the following shall be considered:
2313
a. Whether the likelihood of a loss for the individual risk
2314
is substantially higher than for other risks of the same class;
2315
and
2316
b. Whether the uncertainty associated with the individual
2317
risk is such that an appropriate premium cannot be determined.
2318
2319
The acceptance or rejection of a risk by the corporation shall be
2320
construed as the private placement of insurance, and the
2321
provisions of chapter 120 shall not apply.
2322
9. Must provide that the corporation shall make its best
2323
efforts to procure catastrophe reinsurance at reasonable rates,
2324
to cover its projected 100-year probable maximum loss as
2325
determined by the board of governors.
2326
10. Must provide that in the event of regular deficit
2327
assessments under sub-subparagraph (b)3.a. or sub-subparagraph
2328
(b)3.b., in the personal lines account, the commercial lines
2329
residential account, or the high-risk account, the corporation
2330
shall levy upon corporation policyholders in its next rate
2331
filing, or by a separate rate filing solely for this purpose, a
2332
Citizens policyholder surcharge arising from a regular assessment
2333
in such account in a percentage equal to the total amount of such
2334
regular assessments divided by the aggregate statewide direct
2335
written premium for subject lines of business for the prior
2336
calendar year. For purposes of calculating the Citizens
2337
policyholder surcharge to be levied under this subparagraph, the
2338
total amount of the regular assessment to which this surcharge is
2339
related shall be determined as set forth in subparagraph (b)3.,
2340
without deducting the estimated Citizens policyholder surcharge.
2341
Citizens policyholder surcharges under this subparagraph are not
2342
considered premium and are not subject to commissions, fees, or
2343
premium taxes; however, failure to pay a market equalization
2344
surcharge shall be treated as failure to pay premium.
2345
10.11. The policies issued by the corporation must provide
2346
that, if the corporation or the market assistance plan obtains an
2347
offer from an authorized insurer to cover the risk at its
2348
approved rates, the risk is no longer eligible for renewal
2349
through the corporation, except as otherwise provided in this
2350
subsection.
2351
11.12. Corporation policies and applications must include a
2352
notice that the corporation policy could, under this section, be
2353
replaced with a policy issued by an authorized insurer that does
2354
not provide coverage identical to the coverage provided by the
2355
corporation. The notice shall also specify that acceptance of
2356
corporation coverage creates a conclusive presumption that the
2357
applicant or policyholder is aware of this potential.
2358
12.13. May establish, subject to approval by the office,
2359
different eligibility requirements and operational procedures for
2360
any line or type of coverage for any specified county or area if
2361
the board determines that such changes to the eligibility
2362
requirements and operational procedures are justified due to the
2363
voluntary market being sufficiently stable and competitive in
2364
such area or for such line or type of coverage and that consumers
2365
who, in good faith, are unable to obtain insurance through the
2366
voluntary market through ordinary methods would continue to have
2367
access to coverage from the corporation. When coverage is sought
2368
in connection with a real property transfer, such requirements
2369
and procedures shall not provide for an effective date of
2370
coverage later than the date of the closing of the transfer as
2371
established by the transferor, the transferee, and, if
2372
applicable, the lender.
2373
13.14. Must provide that, with respect to the high-risk
2374
account, any assessable insurer with a surplus as to
2375
policyholders of $25 million or less writing 25 percent or more
2376
of its total countrywide property insurance premiums in this
2377
state may petition the office, within the first 90 days of each
2378
calendar year, to qualify as a limited apportionment company. A
2379
regular assessment levied by the corporation on a limited
2380
apportionment company for a deficit incurred by the corporation
2381
for the high-risk account in 2006 or thereafter may be paid to
2382
the corporation on a monthly basis as the assessments are
2383
collected by the limited apportionment company from its insureds
2384
pursuant to s. 627.3512, but the regular assessment must be paid
2385
in full within 12 months after being levied by the corporation. A
2386
limited apportionment company shall collect from its
2387
policyholders any emergency assessment imposed under sub-
2388
subparagraph (b)3.d. The plan shall provide that, if the office
2389
determines that any regular assessment will result in an
2390
impairment of the surplus of a limited apportionment company, the
2391
office may direct that all or part of such assessment be deferred
2392
as provided in subparagraph (p)4. However, there shall be no
2393
limitation or deferment of an emergency assessment to be
2394
collected from policyholders under sub-subparagraph (b)3.d.
2395
14.15. Must provide that the corporation appoint as its
2396
licensed agents only those agents who also hold an appointment as
2397
defined in s. 626.015(3) with an insurer who at the time of the
2398
agent's initial appointment by the corporation is authorized to
2399
write and is actually writing personal lines residential property
2400
coverage, commercial residential property coverage, or commercial
2401
nonresidential property coverage within the state.
2402
15.16. Must provide, by July 1, 2007, a premium payment
2403
plan option to its policyholders which allows at a minimum for
2404
quarterly and semiannual payment of premiums. A monthly payment
2405
plan may, but is not required to, be offered.
2406
16.17. Must limit coverage on mobile homes or manufactured
2407
homes built prior to 1994 to actual cash value of the dwelling
2408
rather than replacement costs of the dwelling.
2409
17.18. May provide such limits of coverage as the board
2410
determines, consistent with the requirements of this subsection.
2411
18.19. May require commercial property to meet specified
2412
hurricane mitigation construction features as a condition of
2413
eligibility for coverage.
2414
(d)1. All prospective employees for senior management
2415
positions, as defined by the plan of operation, are subject to
2416
background checks as a prerequisite for employment. The office
2417
shall conduct background checks on such prospective employees
2419
2. On or before July 1 of each year, employees of the
2420
corporation are required to sign and submit a statement attesting
2421
that they do not have a conflict of interest, as defined in part
2422
III of chapter 112. As a condition of employment, all prospective
2423
employees are required to sign and submit to the corporation a
2424
conflict-of-interest statement.
2425
3. Senior managers and members of the board of governors
2426
are subject to the provisions of part III of chapter 112,
2427
including, but not limited to, the code of ethics and public
2428
disclosure and reporting of financial interests, pursuant to s.
2429
112.3145. Senior managers and board members are also required to
2430
file such disclosures with the Commission on Ethics and the
2431
Office of Insurance Regulation. The executive director of the
2432
corporation or his or her designee shall notify each newly
2433
appointed and existing appointed member of the board of governors
2434
and senior managers of their duty to comply with the reporting
2435
requirements of part III of chapter 112. At least quarterly, the
2436
executive director or his or her designee shall submit to the
2437
Commission on Ethics a list of names of the senior managers and
2438
members of the board of governors who are subject to the public
2439
disclosure requirements under s. 112.3145.
2441
provision of law, an employee or board member may not knowingly
2442
accept, directly or indirectly, any gift or expenditure from a
2443
person or entity, or an employee or representative of such person
2444
or entity, that has a contractual relationship with the
2445
corporation or who is under consideration for a contract. An
2446
employee or board member who fails to comply with subparagraph 3.
2447
or this subparagraph is subject to penalties provided under ss.
2449
5. Any senior manager of the corporation who is employed on
2450
or after January 1, 2007, regardless of the date of hire, who
2451
subsequently retires or terminates employment is prohibited from
2452
representing another person or entity before the corporation for
2453
2 years after retirement or termination of employment from the
2454
corporation.
2455
6. Any senior manager of the corporation who is employed on
2456
or after January 1, 2007, regardless of the date of hire, who
2457
subsequently retires or terminates employment is prohibited from
2458
having any employment or contractual relationship for 2 years
2459
with an insurer that has entered into a take-out bonus agreement
2460
with the corporation.
2461
(e) Purchases that equal or exceed $2,500, but are less
2462
than $25,000, shall be made by receipt of written quotes, written
2463
record of telephone quotes, or informal bids, whenever practical.
2464
The procurement of goods or services valued at or over $25,000
2465
shall be subject to competitive solicitation, except in
2466
situations where the goods or services are provided by a sole
2467
source or are deemed an emergency purchase; the services are
2468
exempted from competitive solicitation requirements under s.
2469
287.057(5)(f); or the procurement of services is subject to s.
2470
627.3513. Justification for the sole-sourcing or emergency
2471
procurement must be documented. Contracts for goods or services
2472
valued at or over $100,000 are subject to approval by the board.
2473
(f) The board shall determine whether it is more cost-
2474
effective and in the best interests of the corporation to use
2475
legal services provided by in-house attorneys employed by the
2476
corporation rather than contracting with outside counsel. In
2477
making such determination, the board shall document its findings
2478
and shall consider: the expertise needed; whether time
2479
commitments exceed in-house staff resources; whether local
2480
representation is needed; the travel, lodging and other costs
2481
associated with in-house representation; and such other factors
2482
that the board determines are relevant.
2483
(g) The corporation may not retain a lobbyist to represent
2484
it before the legislative branch or executive branch. However,
2485
full-time employees of the corporation may register as lobbyists
2486
and represent the corporation before the legislative branch or
2487
executive branch.
2488
(h)1. The Office of the Internal Auditor is established
2489
within the corporation to provide a central point for
2490
coordination of and responsibility for activities that promote
2491
accountability, integrity, and efficiency to the policyholders
2492
and to the taxpayers of this state. The internal auditor shall be
2493
appointed by the board of governors, shall report to and be under
2494
the general supervision of the board of governors, and is not
2495
subject to supervision by any employee of the corporation.
2496
Administrative staff and support shall be provided by the
2497
corporation. The internal auditor shall be appointed without
2498
regard to political affiliation. It is the duty and
2499
responsibility of the internal auditor to:
2500
a. Provide direction for, supervise, conduct, and
2501
coordinate audits, investigations, and management reviews
2502
relating to the programs and operations of the corporation.
2503
b. Conduct, supervise, or coordinate other activities
2504
carried out or financed by the corporation for the purpose of
2505
promoting efficiency in the administration of, or preventing and
2506
detecting fraud, abuse, and mismanagement in, its programs and
2507
operations.
2508
c. Submit final audit reports, reviews, or investigative
2509
reports to the board of governors, the executive director, the
2510
members of the Financial Services Commission, and the President
2511
of the Senate and the Speaker of the House of Representatives.
2512
d. Keep the board of governors informed concerning fraud,
2513
abuses, and internal control deficiencies relating to programs
2514
and operations administered or financed by the corporation,
2515
recommend corrective action, and report on the progress made in
2516
implementing corrective action.
2517
e. Report expeditiously to the Department of Law
2518
Enforcement or other law enforcement agencies, as appropriate,
2519
whenever the internal auditor has reasonable grounds to believe
2520
there has been a violation of criminal law.
2521
2. On or before February 15, the internal auditor shall
2522
prepare an annual report evaluating the effectiveness of the
2523
internal controls of the corporation and providing
2524
recommendations for corrective action, if necessary, and
2525
summarizing the audits, reviews, and investigations conducted by
2526
the office during the preceding fiscal year. The final report
2527
shall be furnished to the board of governors and the executive
2528
director, the President of the Senate, the Speaker of the House
2529
of Representatives, and the Financial Services Commission.
2530
(i) All records of the corporation, except as otherwise
2531
provided by law, are subject to the record retention requirements
2532
of s. 119.021.
2533
(j)1. The corporation shall establish and maintain a unit
2534
or division to investigate possible fraudulent claims by insureds
2535
or by persons making claims for services or repairs against
2536
policies held by insureds; or it may contract with others to
2537
investigate possible fraudulent claims for services or repairs
2538
against policies held by the corporation pursuant to s. 626.9891.
2539
The corporation must comply with reporting requirements of s.
2540
626.9891. An employee of the corporation shall notify the
2541
corporation's Office of the Internal Auditor and the Division of
2542
Insurance Fraud within 48 hours after having information that
2543
would lead a reasonable person to suspect that fraud may have
2544
been committed by any employee of the corporation.
2545
2. The corporation shall establish a unit or division
2546
responsible for receiving and responding to consumer complaints,
2547
which unit or division is the sole responsibility of a senior
2548
manager of the corporation.
2549
(k) The office shall conduct a comprehensive market conduct
2550
examination of the corporation every 2 years to determine
2551
compliance with its plan of operation and internal operations
2552
procedures. The first market conduct examination report shall be
2553
submitted to the President of the Senate and the Speaker of the
2554
House of Representatives no later than February 1, 2009.
2555
Subsequent reports shall be submitted on or before February 1
2556
every 2 years thereafter.
2557
(l) The Auditor General shall conduct an operational audit
2558
of the corporation every 3 years to evaluate management's
2559
performance in administering laws, policies, and procedures
2560
governing the operations of the corporation in an efficient and
2561
effective manner. The scope of the review shall include, but is
2562
not limited to, evaluating claims handling, customer service,
2563
take-out programs and bonuses, financing arrangements,
2564
procurement of goods and services, internal controls, and the
2565
internal audit function. The initial audit must be completed by
2566
February 1, 2009.
2567
(m)1. Rates for coverage provided by the corporation shall
2568
be actuarially sound and subject to the requirements of s.
2569
627.062, except as otherwise provided in this paragraph. The
2570
corporation shall file its recommended rates with the office at
2571
least annually. The corporation shall provide any additional
2572
information regarding the rates which the office requires. The
2573
office shall consider the recommendations of the board and issue
2574
a final order establishing the rates for the corporation within
2575
45 days after the recommended rates are filed. The corporation
2576
may not pursue an administrative challenge or judicial review of
2577
the final order of the office.
2578
2. In addition to the rates otherwise determined pursuant
2579
to this paragraph, the corporation shall impose and collect an
2580
amount equal to the premium tax provided for in s. 624.509 to
2581
augment the financial resources of the corporation.
2582
3. After the public hurricane loss-projection model under
2583
s. 627.06281 has been found to be accurate and reliable by the
2584
Florida Commission on Hurricane Loss Projection Methodology, that
2585
model shall serve as the minimum benchmark for determining the
2586
windstorm portion of the corporation's rates. This subparagraph
2587
does not require or allow the corporation to adopt rates lower
2588
than the rates otherwise required or allowed by this paragraph.
2589
4. The rate filings for the corporation which were approved
2590
by the office and which took effect January 1, 2007, are
2591
rescinded, except for those rates that were lowered. As soon as
2592
possible, the corporation shall begin using the lower rates that
2593
were in effect on December 31, 2006, and shall provide refunds to
2594
policyholders who have paid higher rates as a result of that rate
2595
filing. The rates in effect on December 31, 2006, shall remain in
2596
effect for the 2007, and 2008, and 2009 calendar years except for
2597
any rate change that results in a lower rate. The next rate
2598
change that may increase rates shall take effect no earlier than
2599
January 1, 2010 January 1, 2009, pursuant to a new rate filing
2600
recommended by the corporation and established by the office,
2601
subject to the requirements of this paragraph.
2602
5. The Legislature finds that it is in the public interest
2603
to ensure that increased rates for coverage by the corporation be
2604
implemented incrementally in order to provide rate stability and
2605
predictability to its policyholders.
2606
a. Beginning on or after January 1, 2010, the corporation
2607
must make an annual filing for each personal and commercial line
2608
of business it writes.
2609
b. For the years 2010 through 2012, rates established by
2610
the office for the corporation for its personal residential
2611
multiperil policies, its commercial residential multiperil
2612
policies, and its commercial nonresidential multiperil policies
2613
may not result in any year in an overall average statewide
2614
premium increase of more than 10 percent or an increase for any
2615
single policyholder of more than 10 percent, excluding coverage
2616
changes and surcharges.
2617
c. For the years 2010 through 2012, rates established by
2618
the office for the corporation for its personal residential wind-
2619
only policies, its commercial residential wind-only policies, and
2620
its commercial nonresidential wind-only policies may not result
2621
in any year in an overall average statewide premium increase of
2622
more than 15 percent or an increase for any single policyholder
2623
of more than 15 percent, excluding coverage changes and
2624
surcharges.
2625
(n) If coverage in an account is deactivated pursuant to
2626
paragraph (o), coverage through the corporation shall be
2627
reactivated by order of the office only under one of the
2628
following circumstances:
2629
1. If the market assistance plan receives a minimum of 100
2630
applications for coverage within a 3-month period, or 200
2631
applications for coverage within a 1-year period or less for
2632
residential coverage, unless the market assistance plan provides
2633
a quotation from admitted carriers at their filed rates for at
2634
least 90 percent of such applicants. Any market assistance plan
2635
application that is rejected because an individual risk is so
2636
hazardous as to be uninsurable using the criteria specified in
2637
subparagraph (c)9. shall not be included in the minimum
2638
percentage calculation provided herein. In the event that there
2639
is a legal or administrative challenge to a determination by the
2640
office that the conditions of this subparagraph have been met for
2641
eligibility for coverage in the corporation, any eligible risk
2642
may obtain coverage during the pendency of such challenge.
2643
2. In response to a state of emergency declared by the
2644
Governor under s. 252.36, the office may activate coverage by
2645
order for the period of the emergency upon a finding by the
2646
office that the emergency significantly affects the availability
2647
of residential property insurance.
2648
(o)1. The corporation shall file with the office quarterly
2649
statements of financial condition, an annual statement of
2650
financial condition, and audited financial statements in the
2651
manner prescribed by law. In addition, the corporation shall
2652
report to the office monthly on the types, premium, exposure, and
2653
distribution by county of its policies in force, and shall submit
2654
other reports as the office requires to carry out its oversight
2655
of the corporation.
2656
2. The activities of the corporation shall be reviewed at
2657
least annually by the office to determine whether coverage shall
2658
be deactivated in an account on the basis that the conditions
2659
giving rise to its activation no longer exist.
2660
(p)1. The corporation shall certify to the office its needs
2661
for annual assessments as to a particular calendar year, and for
2662
any interim assessments that it deems to be necessary to sustain
2663
operations as to a particular year pending the receipt of annual
2664
assessments. Upon verification, the office shall approve such
2665
certification, and the corporation shall levy such annual or
2666
interim assessments. Such assessments shall be prorated as
2667
provided in paragraph (b). The corporation shall take all
2668
reasonable and prudent steps necessary to collect the amount of
2669
assessment due from each assessable insurer, including, if
2670
prudent, filing suit to collect such assessment. If the
2671
corporation is unable to collect an assessment from any
2672
assessable insurer, the uncollected assessments shall be levied
2673
as an additional assessment against the assessable insurers and
2674
any assessable insurer required to pay an additional assessment
2675
as a result of such failure to pay shall have a cause of action
2676
against such nonpaying assessable insurer. Assessments shall be
2677
included as an appropriate factor in the making of rates. The
2678
failure of a surplus lines agent to collect and remit any regular
2679
or emergency assessment levied by the corporation is considered
2680
to be a violation of s. 626.936 and subjects the surplus lines
2681
agent to the penalties provided in that section.
2682
2. The governing body of any unit of local government, any
2683
residents of which are insured by the corporation, may issue
2685
fund an assistance program, in conjunction with the corporation,
2686
for the purpose of defraying deficits of the corporation. In
2687
order to avoid needless and indiscriminate proliferation,
2688
duplication, and fragmentation of such assistance programs, any
2689
unit of local government, any residents of which are insured by
2690
the corporation, may provide for the payment of losses,
2691
regardless of whether or not the losses occurred within or
2692
outside of the territorial jurisdiction of the local government.
2693
Revenue bonds under this subparagraph may not be issued until
2694
validated pursuant to chapter 75, unless a state of emergency is
2695
declared by executive order or proclamation of the Governor
2696
pursuant to s. 252.36 making such findings as are necessary to
2697
determine that it is in the best interests of, and necessary for,
2698
the protection of the public health, safety, and general welfare
2699
of residents of this state and declaring it an essential public
2700
purpose to permit certain municipalities or counties to issue
2701
such bonds as will permit relief to claimants and policyholders
2702
of the corporation. Any such unit of local government may enter
2703
into such contracts with the corporation and with any other
2704
entity created pursuant to this subsection as are necessary to
2705
carry out this paragraph. Any bonds issued under this
2706
subparagraph shall be payable from and secured by moneys received
2707
by the corporation from emergency assessments under sub-
2708
subparagraph (b)3.d., and assigned and pledged to or on behalf of
2709
the unit of local government for the benefit of the holders of
2710
such bonds. The funds, credit, property, and taxing power of the
2711
state or of the unit of local government shall not be pledged for
2712
the payment of such bonds. If any of the bonds remain unsold 60
2713
days after issuance, the office shall require all insurers
2714
subject to assessment to purchase the bonds, which shall be
2715
treated as admitted assets; each insurer shall be required to
2716
purchase that percentage of the unsold portion of the bond issue
2717
that equals the insurer's relative share of assessment liability
2718
under this subsection. An insurer shall not be required to
2719
purchase the bonds to the extent that the office determines that
2720
the purchase would endanger or impair the solvency of the
2721
insurer.
2722
3.a. The corporation shall adopt one or more programs
2723
subject to approval by the office for the reduction of both new
2724
and renewal writings in the corporation. Beginning January 1,
2725
2008, any program the corporation adopts for the payment of
2726
bonuses to an insurer for each risk the insurer removes from the
2727
corporation shall comply with s. 627.3511(2) and may not exceed
2728
the amount referenced in s. 627.3511(2) for each risk removed.
2729
The corporation may consider any prudent and not unfairly
2730
discriminatory approach to reducing corporation writings, and may
2731
adopt a credit against assessment liability or other liability
2732
that provides an incentive for insurers to take risks out of the
2733
corporation and to keep risks out of the corporation by
2734
maintaining or increasing voluntary writings in counties or areas
2735
in which corporation risks are highly concentrated and a program
2736
to provide a formula under which an insurer voluntarily taking
2737
risks out of the corporation by maintaining or increasing
2738
voluntary writings will be relieved wholly or partially from
2739
assessments under sub-subparagraphs (b)3.a. and b. However, any
2740
"take-out bonus" or payment to an insurer must be conditioned on
2741
the property being insured for at least 5 years by the insurer,
2742
unless canceled or nonrenewed by the policyholder. If the policy
2743
is canceled or nonrenewed by the policyholder before the end of
2744
the 5-year period, the amount of the take-out bonus must be
2745
prorated for the time period the policy was insured. When the
2746
corporation enters into a contractual agreement for a take-out
2747
plan, the producing agent of record of the corporation policy is
2748
entitled to retain any unearned commission on such policy, and
2749
the insurer shall either:
2750
(I) Pay to the producing agent of record of the policy, for
2751
the first year, an amount which is the greater of the insurer's
2752
usual and customary commission for the type of policy written or
2753
a policy fee equal to the usual and customary commission of the
2754
corporation; or
2755
(II) Offer to allow the producing agent of record of the
2756
policy to continue servicing the policy for a period of not less
2757
than 1 year and offer to pay the agent the insurer's usual and
2758
customary commission for the type of policy written. If the
2759
producing agent is unwilling or unable to accept appointment by
2760
the new insurer, the new insurer shall pay the agent in
2761
accordance with sub-sub-subparagraph (I).
2762
b. Any credit or exemption from regular assessments adopted
2763
under this subparagraph shall last no longer than the 3 years
2764
following the cancellation or expiration of the policy by the
2765
corporation. With the approval of the office, the board may
2766
extend such credits for an additional year if the insurer
2767
guarantees an additional year of renewability for all policies
2768
removed from the corporation, or for 2 additional years if the
2769
insurer guarantees 2 additional years of renewability for all
2770
policies so removed.
2771
c. There shall be no credit, limitation, exemption, or
2772
deferment from emergency assessments to be collected from
2773
policyholders pursuant to sub-subparagraph (b)3.d.
2774
d. Subject to the execution of the confidentiality
2775
agreement required by paragraph (w), the corporation shall make
2776
its database of policies available to prospective take-out
2777
insurers considering underwriting a risk insured by the
2778
corporation, without categorically eliminating policies from
2779
eligibility for removal. The corporation may not instruct or
2780
encourage prospective take-out insurers to avoid the selection of
2781
policies for which the agent has disapproved policy removals. The
2782
corporation must require agents to accept or decline appointment
2783
for any policy selected and, in the case of a declination, must
2784
notify the policyholder that an insurer, identified by name,
2785
selected his or her policy for a take-out offer, but that the
2786
policyholder's agent refused to be appointed by the insurer. The
2787
notice must also provide the policyholder with the take-out
2788
insurer's contact information so that the policyholder may
2789
contact the company directly and make his or her own
2790
determination of whether to seek coverage from the take-out
2791
insurer.
2792
4. The plan shall provide for the deferment, in whole or in
2793
part, of the assessment of an assessable insurer, other than an
2794
emergency assessment collected from policyholders pursuant to
2795
sub-subparagraph (b)3.d., if the office finds that payment of the
2796
assessment would endanger or impair the solvency of the insurer.
2797
In the event an assessment against an assessable insurer is
2798
deferred in whole or in part, the amount by which such assessment
2799
is deferred may be assessed against the other assessable insurers
2800
in a manner consistent with the basis for assessments set forth
2801
in paragraph (b).
2802
5. Effective July 1, 2007, in order to evaluate the costs
2803
and benefits of approved take-out plans, if the corporation pays
2804
a bonus or other payment to an insurer for an approved take-out
2805
plan, it shall maintain a record of the address or such other
2806
identifying information on the property or risk removed in order
2807
to track if and when the property or risk is later insured by the
2808
corporation.
2809
6. Any policy taken out, assumed, or removed from the
2810
corporation is, as of the effective date of the take-out,
2811
assumption, or removal, direct insurance issued by the insurer
2812
and not by the corporation, even if the corporation continues to
2813
service the policies. This subparagraph applies to policies of
2814
the corporation and not policies taken out, assumed, or removed
2815
from any other entity.
2816
(q) Nothing in this subsection shall be construed to
2817
preclude the issuance of residential property insurance coverage
2818
pursuant to part VIII of chapter 626.
2819
(r)1. There shall be no liability on the part of, and no
2820
cause of action of any nature shall arise against, any assessable
2821
insurer or its agents or employees, the corporation or its agents
2822
or employees, members of the board of governors or their
2823
respective designees at a board meeting, corporation committee
2824
members, or the office or its representatives, for any action
2825
taken by them in the performance of their duties or
2826
responsibilities under this subsection. Such immunity does not
2827
apply to:
2828
a. Any of the foregoing persons or entities for any willful
2829
tort;
2830
b. The corporation or its producing agents for breach of
2831
any contract or agreement pertaining to insurance coverage;
2832
c. The corporation with respect to issuance or payment of
2833
debt;
2834
d. Any assessable insurer with respect to any action to
2835
enforce an assessable insurer's obligations to the corporation
2836
under this subsection; or
2837
e. The corporation in any pending or future action for
2838
breach of contract or for benefits under a policy issued by the
2839
corporation; in any such action, the corporation shall be liable
2840
to the policyholders and beneficiaries for attorney's fees under
2841
s. 627.428.
2842
2. The corporation shall manage its claim employees,
2843
independent adjusters, and others who handle claims to ensure
2844
they carry out the corporation's duty to its policyholders to
2845
handle claims carefully, timely, diligently, and in good faith,
2846
balanced against the corporation's duty to the state to manage
2847
its assets responsibly to minimize its assessment potential.
2848
(s) For the purposes of s. 199.183(1), the corporation
2849
shall be considered a political subdivision of the state and
2850
shall be exempt from the corporate income tax. The premiums,
2851
assessments, investment income, and other revenue of the
2852
corporation are funds received for providing property insurance
2853
coverage as required by this subsection, paying claims for
2854
Florida citizens insured by the corporation, securing and
2855
repaying debt obligations issued by the corporation, and
2856
conducting all other activities of the corporation, and shall not
2857
be considered taxes, fees, licenses, or charges for services
2858
imposed by the Legislature on individuals, businesses, or
2859
agencies outside state government. Bonds and other debt
2860
obligations issued by or on behalf of the corporation are not to
2861
be considered "state bonds" within the meaning of s. 215.58(8).
2862
The corporation is not subject to the procurement provisions of
2863
chapter 287, and policies and decisions of the corporation
2864
relating to incurring debt, levying of assessments and the sale,
2865
issuance, continuation, terms and claims under corporation
2866
policies, and all services relating thereto, are not subject to
2867
the provisions of chapter 120. The corporation is not required to
2868
obtain or to hold a certificate of authority issued by the
2869
office, nor is it required to participate as a member insurer of
2870
the Florida Insurance Guaranty Association. However, the
2871
corporation is required to pay, in the same manner as an
2872
authorized insurer, assessments levied by the Florida Insurance
2873
Guaranty Association. It is the intent of the Legislature that
2874
the tax exemptions provided in this paragraph will augment the
2875
financial resources of the corporation to better enable the
2876
corporation to fulfill its public purposes. Any debt obligations
2877
issued by the corporation, their transfer, and the income
2878
therefrom, including any profit made on the sale thereof, shall
2879
at all times be free from taxation of every kind by the state and
2880
any political subdivision or local unit or other instrumentality
2881
thereof; however, this exemption does not apply to any tax
2882
imposed by chapter 220 on interest, income, or profits on debt
2883
obligations owned by corporations other than the corporation.
2884
(t) Upon a determination by the office that the conditions
2885
giving rise to the establishment and activation of the
2886
corporation no longer exist, the corporation is dissolved. Upon
2887
dissolution, the assets of the corporation shall be applied first
2888
to pay all debts, liabilities, and obligations of the
2889
corporation, including the establishment of reasonable reserves
2890
for any contingent liabilities or obligations, and all remaining
2891
assets of the corporation shall become property of the state and
2892
shall be deposited in the Florida Hurricane Catastrophe Fund.
2893
However, no dissolution shall take effect as long as the
2894
corporation has bonds or other financial obligations outstanding
2895
unless adequate provision has been made for the payment of the
2896
bonds or other financial obligations pursuant to the documents
2897
authorizing the issuance of the bonds or other financial
2898
obligations.
2899
(u)1. Effective July 1, 2002, policies of the Residential
2900
Property and Casualty Joint Underwriting Association shall become
2901
policies of the corporation. All obligations, rights, assets and
2902
liabilities of the Residential Property and Casualty Joint
2903
Underwriting Association, including bonds, note and debt
2904
obligations, and the financing documents pertaining to them
2905
become those of the corporation as of July 1, 2002. The
2906
corporation is not required to issue endorsements or certificates
2907
of assumption to insureds during the remaining term of in-force
2908
transferred policies.
2909
2. Effective July 1, 2002, policies of the Florida
2910
Windstorm Underwriting Association are transferred to the
2911
corporation and shall become policies of the corporation. All
2912
obligations, rights, assets, and liabilities of the Florida
2913
Windstorm Underwriting Association, including bonds, note and
2914
debt obligations, and the financing documents pertaining to them
2915
are transferred to and assumed by the corporation on July 1,
2916
2002. The corporation is not required to issue endorsements or
2917
certificates of assumption to insureds during the remaining term
2918
of in-force transferred policies.
2919
3. The Florida Windstorm Underwriting Association and the
2920
Residential Property and Casualty Joint Underwriting Association
2921
shall take all actions as may be proper to further evidence the
2922
transfers and shall provide the documents and instruments of
2923
further assurance as may reasonably be requested by the
2924
corporation for that purpose. The corporation shall execute
2925
assumptions and instruments as the trustees or other parties to
2926
the financing documents of the Florida Windstorm Underwriting
2927
Association or the Residential Property and Casualty Joint
2928
Underwriting Association may reasonably request to further
2929
evidence the transfers and assumptions, which transfers and
2930
assumptions, however, are effective on the date provided under
2931
this paragraph whether or not, and regardless of the date on
2932
which, the assumptions or instruments are executed by the
2933
corporation. Subject to the relevant financing documents
2934
pertaining to their outstanding bonds, notes, indebtedness, or
2935
other financing obligations, the moneys, investments,
2936
receivables, choses in action, and other intangibles of the
2937
Florida Windstorm Underwriting Association shall be credited to
2938
the high-risk account of the corporation, and those of the
2939
personal lines residential coverage account and the commercial
2940
lines residential coverage account of the Residential Property
2941
and Casualty Joint Underwriting Association shall be credited to
2942
the personal lines account and the commercial lines account,
2943
respectively, of the corporation.
2944
4. Effective July 1, 2002, a new applicant for property
2945
insurance coverage who would otherwise have been eligible for
2946
coverage in the Florida Windstorm Underwriting Association is
2947
eligible for coverage from the corporation as provided in this
2948
subsection.
2949
5. The transfer of all policies, obligations, rights,
2950
assets, and liabilities from the Florida Windstorm Underwriting
2951
Association to the corporation and the renaming of the
2952
Residential Property and Casualty Joint Underwriting Association
2953
as the corporation shall in no way affect the coverage with
2954
respect to covered policies as defined in s. 215.555(2)(c)
2955
provided to these entities by the Florida Hurricane Catastrophe
2956
Fund. The coverage provided by the Florida Hurricane Catastrophe
2957
Fund to the Florida Windstorm Underwriting Association based on
2958
its exposures as of June 30, 2002, and each June 30 thereafter
2959
shall be redesignated as coverage for the high-risk account of
2960
the corporation. Notwithstanding any other provision of law, the
2961
coverage provided by the Florida Hurricane Catastrophe Fund to
2962
the Residential Property and Casualty Joint Underwriting
2963
Association based on its exposures as of June 30, 2002, and each
2964
June 30 thereafter shall be transferred to the personal lines
2965
account and the commercial lines account of the corporation.
2966
Notwithstanding any other provision of law, the high-risk account
2967
shall be treated, for all Florida Hurricane Catastrophe Fund
2968
purposes, as if it were a separate participating insurer with its
2969
own exposures, reimbursement premium, and loss reimbursement.
2970
Likewise, the personal lines and commercial lines accounts shall
2971
be viewed together, for all Florida Hurricane Catastrophe Fund
2972
purposes, as if the two accounts were one and represent a single,
2973
separate participating insurer with its own exposures,
2974
reimbursement premium, and loss reimbursement. The coverage
2975
provided by the Florida Hurricane Catastrophe Fund to the
2976
corporation shall constitute and operate as a full transfer of
2977
coverage from the Florida Windstorm Underwriting Association and
2978
Residential Property and Casualty Joint Underwriting to the
2979
corporation.
2980
(v) Notwithstanding any other provision of law:
2981
1. The pledge or sale of, the lien upon, and the security
2982
interest in any rights, revenues, or other assets of the
2983
corporation created or purported to be created pursuant to any
2984
financing documents to secure any bonds or other indebtedness of
2985
the corporation shall be and remain valid and enforceable,
2986
notwithstanding the commencement of and during the continuation
2987
of, and after, any rehabilitation, insolvency, liquidation,
2988
bankruptcy, receivership, conservatorship, reorganization, or
2989
similar proceeding against the corporation under the laws of this
2990
state.
2991
2. No such proceeding shall relieve the corporation of its
2992
obligation, or otherwise affect its ability to perform its
2993
obligation, to continue to collect, or levy and collect,
2994
assessments, market equalization or other surcharges under
2995
subparagraph (c)11., or any other rights, revenues, or other
2996
assets of the corporation pledged pursuant to any financing
2997
documents.
2998
3. Each such pledge or sale of, lien upon, and security
2999
interest in, including the priority of such pledge, lien, or
3000
security interest, any such assessments, market equalization or
3001
other surcharges, or other rights, revenues, or other assets
3002
which are collected, or levied and collected, after the
3003
commencement of and during the pendency of, or after, any such
3004
proceeding shall continue unaffected by such proceeding. As used
3005
in this subsection, the term "financing documents" means any
3006
agreement or agreements, instrument or instruments, or other
3007
document or documents now existing or hereafter created
3008
evidencing any bonds or other indebtedness of the corporation or
3009
pursuant to which any such bonds or other indebtedness has been
3010
or may be issued and pursuant to which any rights, revenues, or
3011
other assets of the corporation are pledged or sold to secure the
3012
repayment of such bonds or indebtedness, together with the
3013
payment of interest on such bonds or such indebtedness, or the
3014
payment of any other obligation or financial product, as defined
3015
in the plan of operation of the corporation related to such bonds
3016
or indebtedness.
3017
4. Any such pledge or sale of assessments, revenues,
3018
contract rights, or other rights or assets of the corporation
3019
shall constitute a lien and security interest, or sale, as the
3020
case may be, that is immediately effective and attaches to such
3021
assessments, revenues, or contract rights or other rights or
3022
assets, whether or not imposed or collected at the time the
3023
pledge or sale is made. Any such pledge or sale is effective,
3024
valid, binding, and enforceable against the corporation or other
3025
entity making such pledge or sale, and valid and binding against
3026
and superior to any competing claims or obligations owed to any
3027
other person or entity, including policyholders in this state,
3028
asserting rights in any such assessments, revenues, or contract
3029
rights or other rights or assets to the extent set forth in and
3030
in accordance with the terms of the pledge or sale contained in
3031
the applicable financing documents, whether or not any such
3032
person or entity has notice of such pledge or sale and without
3033
the need for any physical delivery, recordation, filing, or other
3034
action.
3035
5. As long as the corporation has any bonds outstanding,
3036
the corporation may not file a voluntary petition under chapter 9
3037
of the federal Bankruptcy Code or such corresponding chapter or
3038
sections as may be in effect, from time to time, and a public
3039
officer or any organization, entity, or other person may not
3040
authorize the corporation to be or become a debtor under chapter
3041
9 of the federal Bankruptcy Code or such corresponding chapter or
3042
sections as may be in effect, from time to time, during any such
3043
period.
3044
6. If ordered by a court of competent jurisdiction, the
3045
corporation may assume policies or otherwise provide coverage for
3046
policyholders of an insurer placed in liquidation under chapter
3047
631, under such forms, rates, terms, and conditions as the
3048
corporation deems appropriate, subject to approval by the office.
3049
(w)1. The following records of the corporation are
3050
confidential and exempt from the provisions of s. 119.07(1) and
3051
s. 24(a), Art. I of the State Constitution:
3052
a. Underwriting files, except that a policyholder or an
3053
applicant shall have access to his or her own underwriting files.
3054
b. Claims files, until termination of all litigation and
3055
settlement of all claims arising out of the same incident,
3056
although portions of the claims files may remain exempt, as
3057
otherwise provided by law. Confidential and exempt claims file
3058
records may be released to other governmental agencies upon
3059
written request and demonstration of need; such records held by
3060
the receiving agency remain confidential and exempt as provided
3061
for herein.
3062
c. Records obtained or generated by an internal auditor
3063
pursuant to a routine audit, until the audit is completed, or if
3064
the audit is conducted as part of an investigation, until the
3065
investigation is closed or ceases to be active. An investigation
3066
is considered "active" while the investigation is being conducted
3067
with a reasonable, good faith belief that it could lead to the
3068
filing of administrative, civil, or criminal proceedings.
3069
d. Matters reasonably encompassed in privileged attorney-
3070
client communications.
3071
e. Proprietary information licensed to the corporation
3072
under contract and the contract provides for the confidentiality
3073
of such proprietary information.
3074
f. All information relating to the medical condition or
3075
medical status of a corporation employee which is not relevant to
3076
the employee's capacity to perform his or her duties, except as
3077
otherwise provided in this paragraph. Information which is exempt
3078
shall include, but is not limited to, information relating to
3079
workers' compensation, insurance benefits, and retirement or
3080
disability benefits.
3081
g. Upon an employee's entrance into the employee assistance
3082
program, a program to assist any employee who has a behavioral or
3083
medical disorder, substance abuse problem, or emotional
3084
difficulty which affects the employee's job performance, all
3085
records relative to that participation shall be confidential and
3086
exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
3087
of the State Constitution, except as otherwise provided in s.
3088
112.0455(11).
3089
h. Information relating to negotiations for financing,
3090
reinsurance, depopulation, or contractual services, until the
3091
conclusion of the negotiations.
3092
i. Minutes of closed meetings regarding underwriting files,
3093
and minutes of closed meetings regarding an open claims file
3094
until termination of all litigation and settlement of all claims
3095
with regard to that claim, except that information otherwise
3096
confidential or exempt by law will be redacted.
3097
3098
When an authorized insurer is considering underwriting a risk
3099
insured by the corporation, relevant underwriting files and
3100
confidential claims files may be released to the insurer provided
3101
the insurer agrees in writing, notarized and under oath, to
3102
maintain the confidentiality of such files. When a file is
3103
transferred to an insurer that file is no longer a public record
3104
because it is not held by an agency subject to the provisions of
3105
the public records law. Underwriting files and confidential
3106
claims files may also be released to staff of and the board of
3107
governors of the market assistance plan established pursuant to
3108
s. 627.3515, who must retain the confidentiality of such files,
3109
except such files may be released to authorized insurers that are
3110
considering assuming the risks to which the files apply, provided
3111
the insurer agrees in writing, notarized and under oath, to
3112
maintain the confidentiality of such files. Finally, the
3113
corporation or the board or staff of the market assistance plan
3114
may make the following information obtained from underwriting
3115
files and confidential claims files available to licensed general
3116
lines insurance agents: name, address, and telephone number of
3117
the residential property owner or insured; location of the risk;
3118
rating information; loss history; and policy type. The receiving
3119
licensed general lines insurance agent must retain the
3120
confidentiality of the information received.
3121
2. Portions of meetings of the corporation are exempt from
3122
the provisions of s. 286.011 and s. 24(b), Art. I of the State
3123
Constitution wherein confidential underwriting files or
3124
confidential open claims files are discussed. All portions of
3125
corporation meetings which are closed to the public shall be
3126
recorded by a court reporter. The court reporter shall record the
3127
times of commencement and termination of the meeting, all
3128
discussion and proceedings, the names of all persons present at
3129
any time, and the names of all persons speaking. No portion of
3130
any closed meeting shall be off the record. Subject to the
3131
provisions hereof and s. 119.07(1)(e)-(g), the court reporter's
3132
notes of any closed meeting shall be retained by the corporation
3133
for a minimum of 5 years. A copy of the transcript, less any
3134
exempt matters, of any closed meeting wherein claims are
3135
discussed shall become public as to individual claims after
3136
settlement of the claim.
3137
(x) It is the intent of the Legislature that the amendments
3138
to this subsection enacted in 2002 should, over time, reduce the
3139
probable maximum windstorm losses in the residual markets and
3140
should reduce the potential assessments to be levied on property
3141
insurers and policyholders statewide. In furtherance of this
3142
intent:
3143
1. The board shall, on or before February 1 of each year,
3144
provide a report to the President of the Senate and the Speaker
3145
of the House of Representatives showing the reduction or increase
3146
in the 100-year probable maximum loss attributable to wind-only
3147
coverages and the quota share program under this subsection
3148
combined, as compared to the benchmark 100-year probable maximum
3149
loss of the Florida Windstorm Underwriting Association. For
3150
purposes of this paragraph, the benchmark 100-year probable
3151
maximum loss of the Florida Windstorm Underwriting Association
3152
shall be the calculation dated February 2001 and based on
3153
November 30, 2000, exposures. In order to ensure comparability of
3154
data, the board shall use the same methods for calculating its
3155
probable maximum loss as were used to calculate the benchmark
3156
probable maximum loss.
3157
2. Beginning February 1, 2010, if the report under
3158
subparagraph 1. for any year indicates that the 100-year probable
3159
maximum loss attributable to wind-only coverages and the quota
3160
share program combined does not reflect a reduction of at least
3161
25 percent from the benchmark, the board shall reduce the
3162
boundaries of the high-risk area eligible for wind-only coverages
3163
under this subsection in a manner calculated to reduce such
3164
probable maximum loss to an amount at least 25 percent below the
3165
benchmark.
3166
3. Beginning February 1, 2015, if the report under
3167
subparagraph 1. for any year indicates that the 100-year probable
3168
maximum loss attributable to wind-only coverages and the quota
3169
share program combined does not reflect a reduction of at least
3170
50 percent from the benchmark, the boundaries of the high-risk
3171
area eligible for wind-only coverages under this subsection shall
3172
be reduced by the elimination of any area that is not seaward of
3173
a line 1,000 feet inland from the Intracoastal Waterway.
3174
(y) In enacting the provisions of this section, the
3175
Legislature recognizes that both the Florida Windstorm
3176
Underwriting Association and the Residential Property and
3177
Casualty Joint Underwriting Association have entered into
3178
financing arrangements that obligate each entity to service its
3179
debts and maintain the capacity to repay funds secured under
3180
these financing arrangements. It is the intent of the Legislature
3181
that nothing in this section be construed to compromise,
3182
diminish, or interfere with the rights of creditors under such
3183
financing arrangements. It is further the intent of the
3184
Legislature to preserve the obligations of the Florida Windstorm
3185
Underwriting Association and Residential Property and Casualty
3186
Joint Underwriting Association with regard to outstanding
3187
financing arrangements, with such obligations passing entirely
3188
and unchanged to the corporation and, specifically, to the
3189
applicable account of the corporation. So long as any bonds,
3190
notes, indebtedness, or other financing obligations of the
3191
Florida Windstorm Underwriting Association or the Residential
3192
Property and Casualty Joint Underwriting Association are
3193
outstanding, under the terms of the financing documents
3194
pertaining to them, the governing board of the corporation shall
3195
have and shall exercise the authority to levy, charge, collect,
3196
and receive all premiums, assessments, surcharges, charges,
3197
revenues, and receipts that the associations had authority to
3198
levy, charge, collect, or receive under the provisions of
3199
subsection (2) and this subsection, respectively, as they existed
3200
on January 1, 2002, to provide moneys, without exercise of the
3201
authority provided by this subsection, in at least the amounts,
3202
and by the times, as would be provided under those former
3203
provisions of subsection (2) or this subsection, respectively, so
3204
that the value, amount, and collectability of any assets,
3205
revenues, or revenue source pledged or committed to, or any lien
3206
thereon securing such outstanding bonds, notes, indebtedness, or
3207
other financing obligations will not be diminished, impaired, or
3208
adversely affected by the amendments made by this act and to
3209
permit compliance with all provisions of financing documents
3210
pertaining to such bonds, notes, indebtedness, or other financing
3211
obligations, or the security or credit enhancement for them, and
3212
any reference in this subsection to bonds, notes, indebtedness,
3213
financing obligations, or similar obligations, of the corporation
3214
shall include like instruments or contracts of the Florida
3215
Windstorm Underwriting Association and the Residential Property
3216
and Casualty Joint Underwriting Association to the extent not
3217
inconsistent with the provisions of the financing documents
3218
pertaining to them.
3219
(z) The corporation shall not require the securing of flood
3220
insurance as a condition of coverage if the insured or applicant
3221
executes a form approved by the office affirming that flood
3222
insurance is not provided by the corporation and that if flood
3223
insurance is not secured by the applicant or insured in addition
3224
to coverage by the corporation, the risk will not be covered for
3225
flood damage. A corporation policyholder electing not to secure
3226
flood insurance and executing a form as provided herein making a
3227
claim for water damage against the corporation shall have the
3228
burden of proving the damage was not caused by flooding.
3229
Notwithstanding other provisions of this subsection, the
3230
corporation may deny coverage to an applicant or insured who
3231
refuses to execute the form described herein.
3232
(aa) A salaried employee of the corporation who performs
3233
policy administration services subsequent to the effectuation of
3234
a corporation policy is not required to be licensed as an agent
3235
under the provisions of s. 626.112.
3236
(bb) By February 1, 2007, the corporation shall submit a
3237
report to the President of the Senate, the Speaker of the House
3238
of Representatives, the minority party leaders of the Senate and
3239
the House of Representatives, and the chairs of the standing
3240
committees of the Senate and the House of Representatives having
3241
jurisdiction over matters relating to property and casualty
3242
insurance. In preparing the report, the corporation shall consult
3243
with the Office of Insurance Regulation, the Department of
3244
Financial Services, and any other party the corporation
3245
determines appropriate. The report must include all findings and
3246
recommendations on the feasibility of requiring authorized
3247
insurers that issue and service personal and commercial
3248
residential policies and commercial nonresidential policies that
3249
provide coverage for basic property perils except for the peril
3250
of wind to issue and service for a fee personal and commercial
3251
residential policies and commercial nonresidential policies
3252
providing coverage for the peril of wind issued by the
3253
corporation. The report must include:
3254
1. The expense savings to the corporation of issuing and
3255
servicing such policies as determined by a cost-benefit analysis.
3256
2. The expenses and liability to authorized insurers
3257
associated with issuing and servicing such policies.
3258
3. The effect on service to policyholders of the
3259
corporation relating to issuing and servicing such policies.
3260
4. The effect on the producing agent of the corporation of
3261
issuing and servicing such policies.
3262
5. Recommendations as to the amount of the fee which should
3263
be paid to authorized insurers for issuing and servicing such
3264
policies.
3265
6. The effect that issuing and servicing such policies will
3266
have on the corporation's number of policies, total insured
3267
value, and probable maximum loss.
3268
(cc) There shall be no liability on the part of, and no
3269
cause of action of any nature shall arise against, producing
3270
agents of record of the corporation or employees of such agents
3271
for insolvency of any take-out insurer.
3272
(dd)1. For policies subject to nonrenewal as a result of
3273
the risk being no longer eligible for coverage due to being
3274
valued at $1 million or more, the corporation shall, directly or
3275
through the market assistance plan, make information from
3276
confidential underwriting and claims files of policyholders
3277
available only to licensed general lines agents who register with
3278
the corporation to receive such information according to the
3279
following procedures:
3280
2. By August 1, 2006, the corporation shall provide such
3281
policyholders who are not eligible for renewal the opportunity to
3282
request in writing, within 30 days after the notification is
3283
sent, that information from their confidential underwriting and
3284
claims files not be released to licensed general lines agents
3285
registered pursuant to this paragraph.
3286
3. By August 1, 2006, the corporation shall make available
3287
to licensed general lines agents the registration procedures to
3288
be used to obtain confidential information from underwriting and
3289
claims files for such policies not eligible for renewal. As a
3290
condition of registration, the corporation shall require the
3291
licensed general lines agent to attest that the agent has the
3292
experience and relationships with authorized or surplus lines
3293
carriers to attempt to offer replacement coverage for such
3294
policies.
3295
4. By September 1, 2006, the corporation shall make
3296
available through a secured website to licensed general lines
3297
agents registered pursuant to this paragraph application, rating,
3298
loss history, mitigation, and policy type information relating to
3299
such policies not eligible for renewal and for which the
3300
policyholder has not requested the corporation withhold such
3301
information. The registered licensed general lines agent may use
3302
such information to contact and assist the policyholder in
3303
securing replacement policies, and the agent may disclose to the
3304
policyholder that such information was obtained from the
3305
corporation.
3306
(dd)(ee) The assets of the corporation may be invested and
3307
managed by the State Board of Administration.
3308
(ee)(ff) The office may establish a pilot program to offer
3309
optional sinkhole coverage in one or more counties or other
3310
territories of the corporation for the purpose of implementing s.
3311
627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.
3312
Under the pilot program, the corporation is not required to issue
3313
a notice of nonrenewal to exclude sinkhole coverage upon the
3314
renewal of existing policies, but may exclude such coverage using
3315
a notice of coverage change.
3316
Section 16. Effective October 1, 2008, and applicable to
3317
policies issued or renewed on or after that date, section
3318
627.714, Florida Statutes, is created to read:
3319
627.714 Guaranteed renewability for mitigated homes.--A
3320
personal lines residential insurance policy shall be guaranteed
3321
renewable for at least 3 years if the dwelling has been built or
3322
retrofitted to meet the wind-borne-debris protection requirements
3323
of Florida Building Code which apply to the wind-borne-debris
3324
region as defined in the Florida Building Code.
3325
Section 17. Effective January 1, 2011, section 689.262,
3326
Florida Statutes, is created to read:
3327
689.262 Sale of residential property; disclosure of
3328
windstorm mitigation rating.--A purchaser of residential property
3329
must be informed of the windstorm mitigation rating of the
3330
structure, based on the uniform home grading scale adopted
3331
pursuant to s. 215.55865. The rating must be included in the
3332
contract for sale or as a separate document attached to the
3333
contract for sale. The Financial Services Commission may adopt
3334
rules, consistent with other state laws, to administer this
3335
section, including the form of the disclosure and the
3336
requirements for the windstorm mitigation inspection or report
3337
that is required for purposes of determining the rating.
3338
Section 18. Effective October 1, 2008, section 817.2341,
3339
Florida Statutes, is amended to read:
3340
817.2341 False or misleading statements or supporting
3341
documents; corrupt obstruction of the lawful regulation of
3342
insurance; penalty.--
3343
(1) Any person who willfully files with the department or
3344
office, or who willfully signs for filing with the department or
3345
office, a materially false or materially misleading financial
3346
statement or document in support of such statement required by
3347
law or rule, or a materially false or materially misleading rate
3348
filing, with intent to deceive and with knowledge that the
3349
statement or document is materially false or materially
3350
misleading, commits a felony of the third degree, punishable as
3352
(2)(a) Any person who makes a false entry of a material
3353
fact in any book, report, or statement relating to a transaction
3354
of an insurer or entity organized pursuant to chapter 624 or
3355
chapter 641, intending to deceive any person about the financial
3356
condition or solvency of the insurer or entity, commits a felony
3357
of the third degree, punishable as provided in s. 775.082, s.
3359
(b) If the false entry of a material fact is made with the
3360
intent to deceive any person as to the impairment of capital, as
3361
defined in s. 631.011(12), of the insurer or entity or is the
3362
significant cause of the insurer or entity being placed in
3363
conservation, rehabilitation, or liquidation by a court, the
3364
person commits a felony of the first degree, punishable as
3366
(3)(a) Any person who knowingly makes a material false
3367
statement or report to the department or office or any agent of
3368
the department or office, or knowingly and materially overvalues
3369
any property in any document or report prepared to be presented
3370
to the department or office or any agent of the department or
3371
office, commits a felony of the third degree, punishable as
3373
(b) If the material false statement or report or the
3374
material overvaluation is made with the intent to deceive any
3375
person as to the impairment of capital, as defined in s.
3376
631.011(12), of an insurer or entity organized pursuant to
3377
chapter 624 or chapter 641, or is the significant cause of the
3378
insurer or entity being placed in receivership by a court, the
3379
person commits a felony of the first degree, punishable as
3381
(4) Any person who attempts to corruptly influence,
3382
obstruct, or impede the lawful regulation of the business of
3383
insurance by the department or office, or by any agent or
3384
examiner appointed by the department or office, commits a felony
3385
of the third degree, punishable as provided in s. 775.082, s.
3387
Section 19. Except as otherwise expressly provided in this
3388
act, this act shall take effect upon becoming a law.
CODING: Words stricken are deletions; words underlined are additions.