Florida Senate - 2008 CS for CS for SB's 2860 & 1196

By the Committees on General Government Appropriations; Banking and Insurance; and Senators Atwater, Geller, Fasano, Garcia, Jones and Gaetz

601-07018-08 20082860c2

A bill to be entitled

An act relating to insurance; amending s. 215.5595, F.S.;

revising legislative findings with respect to the

Insurance Capital Build-Up Incentive Program and the

appropriation of state funds for surplus notes issued by

residential property insurers; revising the conditions and

requirements for providing funds to insurers under the

program; requiring a commitment by the insurer to meet

minimum premium-to-surplus writing ratios for residential

property insurance, for taking policies out of Citizens

Property Insurance Corporation, and for maintaining

certain surplus and reinsurance; establishing deadlines

for insurers to apply for funds; authorizing the State

Board of Administration to charge a late fee for payment

of remittances; requiring the board to submit semiannual

reports to the Legislature regarding the program;

providing that amendments made by the act do not affect

the terms of surplus notes approved prior to a specified

date, but authorizing the board and an insurer to

renegotiate such terms consistent with such amendments;

requiring the board to transfer to Citizens Property

Insurance Corporation any funds that have not been

reserved for insurers approved to receive such funds under

the program, from the funds that were appropriated from

Citizens; requiring the board to transfer to Citizens

interest and principal payments to Citizens Property

Insurance Corporation for surplus note funded from

appropriations from Citizens; requiring Citizens to

deposit such funds into accounts from which appropriations

were made; amending s. 542.20, F.S.; subjecting the

business of insurance to the Florida Antitrust Act;

limiting enforcement to actions by the Attorney General or

a state attorney; providing exceptions; amending s.

624.3161, F.S.; authorizing the Office of Insurance

Regulation to require an insurer to file its claims

handling practices and procedures as a public record based

on findings of a market conduct examination; amending s.

624.4211, F.S.; increasing the maximum amounts of

administrative fines that may be imposed upon an insurer

by the Office of Insurance Regulation for nonwillful and

willful violations of an order or rule of the office or

any provision of the Florida Insurance Code; authorizing

the office to impose a fine for each day of noncompliance

up to a maximum amount; providing factors to consider when

determining the amount of the fine; creating s. 624.4213,

F.S.; specifying requirements for submission of a document

or information to the Office of Insurance Regulation or

the Department of Financial Services in order for a person

to claim that the document is a trade secret; requiring

each page or portion to be labeled as a trade secret and

be separated from non-trade secret material; requiring the

submitting party to include an affidavit certifying

certain information about the documents claimed to be

trade secrets; requiring the office or department to

notify persons who submit trade secret documents of any

public-records request and the opportunity to file a court

action to bar disclosure; specifying conditions for the

office to retain or release such documents; requiring an

award of attorney's fees against a person who certified a

document as trade secret if a court or administrative

tribunal finds that the document is not a trade secret;

amending s. 626.9521, F.S.; increasing the maximum fines

that may be imposed by the office or department for

nonwillful and willful violations of state law regarding

unfair methods of competition and unfair or deceptive acts

or practices related to insurance; amending s. 626.9541,

F.S.; prohibiting an insurer from considering certain

factors when evaluating or adjusting a property insurance

claim; prohibiting an insurer from failing to pay

undisputed amounts of benefits owed under a property

insurance policy within a certain period; amending s.

627.062, F.S.; requiring that an insurer seeking a rate

for property insurance that is greater than the rate most

recently approved by the Office of Insurance Regulation

make a "file and use" filing for all such rate filings

made after a specified date; revising the factors the

office must consider in reviewing a rate filing;

prohibiting the Office of Insurance Regulation from

disapproving as excessive a rate solely because the

insurer obtained reinsurance covering a specified probably

maximum loss; allowing the office to disapprove a rate as

excessive within 1 year after the rate has been approved

under certain conditions related to nonrenewal of policies

by the insurer; requiring the Division of Administrative

Hearings to expedite a hearing request by an insurer and

for the administrative law judge to commence the hearing

within a specified time; establishing time limits for

entry of a recommended order, for parties to submit

written exceptions, and for the office to enter a final

order, subject to waiver by all parties; authorizing an

insurer to request an expedited appellate review pursuant

to the Florida Rules of Appellate Procedure; expressing

legislative intent for an expedited appellate review;

requiring an administrative law judge in a hearing on an

insurance rate to grant a continuance if requested by a

party due to receiving additional information that was not

previously available; deleting provisions relating to the

submission of a disputed rate filing, other than a rate

filing for medical malpractice insurance, to an

100

arbitration panel in lieu of an administrative hearing if

101

the rate is filed before a specified date; requiring

102

certain officers and the chief actuary of a property

103

insurer to certify certain information as part of a rate

104

filing, subject to the penalty of perjury; amending s.

105

627.0613, F.S.; deleting cross-references to conform to

106

changes made by the act; amending s. 627.0628, F.S.;

107

requiring that with respect to rate filings, insurers must

108

use actuarial methods or models found to be accurate or

109

reliable by the Florida Commission on Hurricane Loss

110

Projection Methodology; deleting the requirement for the

111

Office of Insurance Regulation and the Consumer Advocate

112

to have access to all assumptions of a hurricane loss

113

model in order for a model that has been found to be

114

accurate and reliable by the Florida Commission on

115

Hurricane Loss Projection Methodology to be admissible in

116

a rate proceeding; deleting cross-references to conform to

117

changes made by the act; amending s. 627.0629, F.S.;

118

requiring that the Office of Insurance Regulation develop

119

and make publicly available before a specified deadline a

120

proposed method for insurers to establish windstorm

121

mitigation premium discounts that correlate to the uniform

122

home rating scale; requiring that the Financial Services

123

Commission adopt rules before a specified deadline;

124

requiring insurers to make rate filings pursuant to such

125

method; authorizing the commission to make changes by rule

126

to the uniform home grading scale and specify by rule the

127

minimum required discounts, credits, or other rate

128

differentials; requiring that such rate differentials be

129

consistent with generally accepted actuarial principles

130

and wind loss mitigation studies; amending s. 627.351,

131

F.S., relating to Citizens Property Insurance Corporation;

132

deleting a provision to conform to changes made in the

133

act; deleting provisions defining the terms "homestead

134

property" and "nonhomestead property"; deleting a

135

provision providing for the classification of certain

136

dwellings as "nonhomestead property"; deleting provisions

137

making dwellings and condominium units that have a

138

replacement cost above a specified value ineligible for

139

coverage after a specified date; requiring certain

140

structures to have opening protections as a condition of

141

eligibility for coverage after a specified date; requiring

142

that the corporation cease issuance of new wind-only

143

coverage beginning on a specified date; deleting outdated

144

provisions requiring the corporation to submit a report

145

for approval of offering multiperil coverage; revising

146

threshold amounts of deficits incurred in a calendar year

147

on which the decision to levy assessments and the types of

148

such assessments are based; revising the formula used to

149

calculate shares of assessments owed by certain assessable

150

insureds; requiring that the board of governors make

151

certain determinations before levying emergency

152

assessments; providing the board of governors with

153

discretion to set the amount of an emergency assessment

154

within specified limits; requiring the board of governors

155

to levy a Citizens policyholder surcharge under certain

156

conditions; deleting a provision requiring the levy of an

157

immediate assessment against certain policyholders under

158

such conditions; requiring that funds collected from the

159

levy of such surcharges be used for certain purposes;

160

providing that such surcharges are not considered premium

161

and are not subject to commissions, fees, or premium

162

taxes; requiring that the failure to pay such surcharges

163

be treated as failure to pay premium; requiring that the

164

amount of any assessment or surcharge which exceeds the

165

amount of deficits be remitted to and used by the

166

corporation for specified purposes; deleting provisions

167

requiring that the plan of operation of the corporation

168

provide for the levy of a Citizens policyholder surcharge

169

if regular deficit assessments are levied as a result of

170

deficits in certain accounts; deleting provisions related

171

to the calculation, classification, and nonpayment of such

172

surcharge; requiring that the corporation make an annual

173

filing for each personal or commercial line of business it

174

writes, beginning on a specified date; limiting the

175

overall average statewide premium increase and the

176

increase for an individual policyholder to a specified

177

amount for rates established for certain policies during a

178

specified period; deleting a provision requiring an

179

insurer to purchase bonds that remain unsold; requiring

180

the corporation to make its database of policies available

181

to prospective take-out insurers under certain conditions;

182

requiring the corporation to require agents to accept or

183

decline appointment for any policy selected; requiring the

184

corporation to notify the policyholder of certain

185

information if an insurer selected his or her policy for a

186

take-out offer but the policyholder's agent refused to be

187

appointed; deleting provisions requiring the corporation

188

to make certain confidential underwriting and claims files

189

available to agents to conform to changes made by the act

190

relating to ineligibility of certain dwellings; amending

191

s. 627.4133, F.S.; increasing the required time period for

192

an insurer to notify a policyholder of cancellation or

193

nonrenewal of a personal lines or commercial residential

194

property insurance policy; making conforming changes;

195

creating s. 689.262, F.S.; requiring a purchaser of

196

residential property to be presented with the windstorm

197

mitigation rating of the structure; authorizing the

198

Financial Services Commission to adopt rules; amending s.

199

817.2341, F.S.; providing for criminal penalties to be

200

imposed under certain conditions against any person who

201

willfully files a materially false or misleading rate

202

filing; requiring Citizens Property Insurance Corporation

203

to transfer funds to the General Revenue Fund Revenue Fund

204

if the losses due to a hurricane do not exceed a specified

205

amount; requiring the board of governors of Citizens

206

Property Insurance Corporation to make a reasonable

207

estimate of such losses by a certain date; making

208

nonrecurring appropriations for purposes of the Insurance

209

Capital Build-Up Incentive Program established pursuant to

210

s. 215.5595, F.S., as amended by the act; authorizing

211

costs and fees to be paid from funds appropriated, subject

212

to specified limitations; providing effective dates.

213

214

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

215

216

Section 1. Section 215.5595, Florida Statutes, is amended

217

to read:

218

215.5595 Insurance Capital Build-Up Incentive Program.--

219

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

220

Legislature finds that:

221

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

222

2005 have seriously strained the resources of both the voluntary

223

insurance market and the public sector mechanisms of Citizens

224

Property Insurance Corporation and the Florida Hurricane

225

Catastrophe Fund.

226

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

227

significantly greater cost to residential property insurers as

228

compared to 1 year ago, particularly for amounts below the

229

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

230

reimbursement is provided by the Florida Hurricane Catastrophe

231

Fund.

232

233

the insolvency of certain insurers may be imminent.

234

(d) Hurricane forecast experts predict that the 2006

235

hurricane season will be an active hurricane season and that the

236

Atlantic and Gulf Coast regions face an active hurricane cycle of

237

10 to 20 years or longer.

238

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

239

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

240

insurer writing residential property insurer in the state, and

241

faces the threat of a catastrophic loss that The number of

242

cancellations or nonrenewals of residential property insurance

243

policies is expected to increase and the number of new

244

residential policies written in the voluntary market are likely

245

to decrease, causing increased policy growth and exposure to the

246

state insurer of last resort, Citizens Property Insurance

247

Corporation, and threatening to increase the deficit of the

248

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

249

deficit must be funded by assessments against insurers and

250

policyholders, unless otherwise funded by the state.

251

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

252

and assessments that are increasingly making such coverage

253

unaffordable and that may force policyholders to sell their homes

254

and even leave the state.

255

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

256

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

257

this state, particularly the building and financing of

258

residential structures, and existing mortgages may be placed in

259

default.

260

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

261

expectation that the increase in hurricane activity will continue

262

for the foreseeable future, have caused both insurers and

263

reinsurers to limit the capital they are willing to commit to

264

covering the hurricane risk in Florida; attracting new capital to

265

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

266

cost source of capital would enable insurers to write additional

267

residential property insurance coverage and act to mitigate

268

premium increases.

269

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

270

as surplus notes issued by for residential property insurers,

271

under conditions requiring the insurer to contribute additional

272

private sector capital and to write a minimum level of premiums

273

for residential hurricane coverage, is a valid and important

274

public purpose.

275

(f) Extending the Insurance Capital Build-up Incentive

276

Program will provide an incentive for investors to commit

277

additional capital to Florida's residential insurance market.

278

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

279

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

280

authorized residential property insurers under the Insurance

281

Capital Build-Up Incentive Program administered by the State

282

Board of Administration, under the following conditions:

283

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

284

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

285

an insurer writing only manufactured housing policies, may not

286

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

287

appropriated for available under the program, whichever is

288

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

289

insurer group writing residential property insurance covering

290

only manufactured housing may not exceed $7 million.

291

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

292

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

293

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

294

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

295

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

296

the new capital that the insurer contributes to its surplus,

297

except that an insurer writing only manufactured housing policies

298

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

299

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

300

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

301

302

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

303

residential property insurance covering only manufactured

304

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

305

must total at least $14 million for insurers writing only

306

residential property insurance covering manufactured housing

307

policies as provided in paragraph (a).

308

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

309

residential property insurance, including the peril of wind, and

310

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

311

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

312

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

313

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

314

minimum writing ratio of gross written premium to surplus of at

315

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

316

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

317

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

318

the Office of Insurance Regulation and certified quarterly to the

319

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

320

means net written premium for residential property insurance in

321

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

322

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

323

the surplus note plus the amount of new capital contributed by

324

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

325

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

326

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

327

not including renewal premiums, for policies taken out of

328

Citizens Property Insurance Corporation, during each of the first

329

3 years after receiving the state funds in exchange for the

330

surplus note, which shall be determined by the Office of

331

Insurance Regulation and certified annually to the board. The

332

removal of such policies must result in a reduction in the

333

probable maximum loss in the account from which the policies are

334

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

335

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

336

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

337

loss model accepted by the Florida Commission on Hurricane Loss

338

Projection Methodology, which shall be determined by the Office

339

of Insurance Regulation and certified annually the board. If the

340

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

341

requirements of this paragraph required ratio is not maintained

342

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

343

interest rate, accelerate the repayment of interest and

344

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

345

approval by the Commissioner of Insurance of payments by the

346

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

347

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

348

may approve an application by an insurer for funds in exchange

349

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

350

the financial condition of the insurer and its business plan for

351

writing residential property insurance in Florida places an

352

unreasonably high level of financial risk to the state of

353

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

354

consult with the Office of Insurance Regulation and may contract

355

with independent financial and insurance consultants in making

356

this determination.

357

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

358

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

359

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

360

Treasury Bond rate, require the payment only of interest during

361

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

362

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

363

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

364

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

365

approved by the Commissioner of Insurance, who shall approve such

366

payment unless the commissioner determines that such payment will

367

substantially impair the financial condition of the insurer. If

368

such a determination is made, the commissioner shall approve such

369

payment that will not substantially impair the financial

370

condition of the insurer.

371

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

372

limited to the amount appropriated by the Legislature for this

373

purpose. If the amount of surplus notes requested by insurers

374

exceeds the amount of funds available, the board may prioritize

375

insurers that are eligible and approved, with priority for

376

funding given to insurers writing only manufactured housing

377

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

378

financial strength of the insurer, the viability of its proposed

379

business plan for writing additional residential property

380

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

381

residential property insurance market. Between insurers writing

382

residential property insurance covering manufactured housing,

383

priority shall be given to the insurer writing the highest

384

percentage of its policies covering manufactured housing.

385

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

386

for the program and establish dates for insurers to apply for

387

surplus notes from such allocation which are earlier than the

388

dates established in paragraph (b).

389

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

390

manufactured housing insurer that is eligible for a surplus note

391

under this section shall meet the premium to surplus ratio

392

provisions of s. 624.4095.

393

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

394

manufactured housing policies" includes:

395

1. A Florida domiciled insurer that begins writing personal

396

lines residential manufactured housing policies in Florida after

397

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

398

Citizens Property Insurance Corporation without accepting a

399

bonus, provided at least 25 percent of its policies cover

400

manufactured housing. Such an insurer may count any funds above

401

the minimum capital and surplus requirement that were contributed

402

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

403

section.

404

2. A Florida domiciled insurer that writes at least 40

405

percent of its policies covering manufactured housing in Florida.

406

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

407

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

408

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

409

Incentive Program established by this section.

410

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

411

the A surplus note provided to an insurer pursuant to this

412

section are is considered borrowed surplus an asset of the

413

insurer pursuant to s. 628.401 s. 625.012.

414

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

415

issuance of a surplus note pursuant to this section is rendered

416

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

417

for the unpaid principal and interest on the surplus note.

418

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

419

administration, and criteria for approving the applications of

420

insurers to receive funds in exchange for issuance of surplus

421

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

422

the procedures for emergency rules of chapter 120. Otherwise,

423

actions and determinations by the board pursuant to this section

424

are exempt from chapter 120.

425

(7) The board shall invest and reinvest the funds

426

appropriated for the program in accordance with s. 215.47 and

427

consistent with board policy.

428

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

429

President of the Senate and the Speaker of the House of

430

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

431

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

432

surplus note.

433

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

434

affect the terms or conditions of the surplus notes that were

435

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

436

renegotiate the terms of any surplus note issued by an insurer

437

prior to January 2008 under this program upon the agreement of

438

the insurer and the board and consistent with the requirements of

439

this section as amended in 2008.

440

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

441

shall transfer to Citizens Property Insurance Corporation any

442

funds that have not been committed or reserved for insurers

443

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

444

that were appropriated from Citizens Property Insurance

445

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

446

2009, and each quarter thereafter, the State Board of

447

Administration shall transfer any interest earned prior to

448

issuance of any surplus notes, interest paid, and principal

449

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

450

after December 1, 2008, to the Citizens Property Insurance

451

Corporation. Such transfers shall be in the proportion that

452

surplus notes were funded from 2008-2009 appropriations from

453

Citizens Property Insurance Corporation and shall be made until

454

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

455

notes funded from such appropriations. Citizens Property

456

Insurance Corporation shall deposit the transferred funds into

457

each of its accounts in the proportion that moneys were

458

transferred out of those accounts to the General Revenue Fund in

459

December 2008.

460

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

461

read:

462

542.20 Exemptions.--

463

(1) Any activity or conduct exempt under Florida statutory

464

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

465

of the United States is exempt from the provisions of this

466

chapter, except as provided in subsection (2).

467

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

468

provisions of this chapter. As applied to the business of

469

insurance, any legal action to seek penalties or damages for

470

violations or to otherwise enforce the provisions of this chapter

471

shall be brought only by the Attorney General or a state

472

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

473

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

474

notwithstanding any other provision of this chapter.

475

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

476

advisory organization from collecting claims, loss, or expense

477

data from insurers and filing rates or advisory rates with the

478

Office of Insurance Regulation.

479

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

480

Florida Statutes, to read:

481

624.3161 Market conduct examinations.--

482

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

483

that an insurer has exhibited a pattern or practice of willful

484

violations of an unfair insurance trade practice related to

485

claims-handling which caused harm to policyholders, as prohibited

486

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

487

its claims-handling practices and procedures related to that line

488

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

489

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

490

claims-handling practices and procedures are public records and

491

are not trade secrets or otherwise exempt from the provisions of

492

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

493

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

494

standard operating procedures, instructions, or directives that

495

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

496

for benefits under any policy will be processed.

497

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

498

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

499

added to that section, to read:

500

624.4211 Administrative fine in lieu of suspension or

501

revocation.--

502

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

503

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

504

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

505

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

506

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

507

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

508

discovers a nonwillful violation, the insurer shall correct the

509

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

510

affected persons. Such restitution shall include interest at 12

511

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

512

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

513

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

514

premiums due provided that the interest accumulates shall

515

accumulate until the premiums are due. If the amount of

516

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

517

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

518

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

519

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

520

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

521

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

522

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

523

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

524

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

525

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

526

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

527

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

528

for all knowing and willful violations arising out of the same

529

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

530

restitution when due in accordance with the provisions of

531

subsection (2).

532

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

533

day the insurer is not in compliance with the Florida Insurance

534

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

535

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

536

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

537

by the most recent financial statements filed with the office.

538

This aggregate cap includes all fines imposed by the office under

539

this section.

540

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

541

consider:

542

(a) The degree of consumer harm caused or potentially

543

caused by the violation;

544

(b) Whether the violation constitutes an immediate danger

545

to the public;

546

547

to past violations by the insurer;

548

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

549

(e) The premium volume of the insurer; and

550

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

551

insurer's compliance with the Florida Insurance Code.

552

Section 5. Section 624.4213, Florida Statutes, is created

553

to read:

554

624.4213 Trade secret documents.--

555

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

556

other information to the office or department pursuant to the

557

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

558

commission claims that such submission contains a trade secret,

559

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

560

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

561

constitutes a waiver of any claim by such person that the

562

document or information is a trade secret.

563

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

564

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

565

"trade secret."

566

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

567

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

568

separate envelope clearly marked as "trade secret."

569

570

department, the submitting party must include an affidavit

571

certifying under oath to the truth of the following statements

572

concerning all documents or information that are claimed to be

573

trade secrets:

574

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

575

trade secret that has value and provides an advantage or an

576

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

577

use it.

578

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

579

disclosure of the information to anyone other that those who have

580

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

581

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

582

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

583

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

584

legitimate means.

585

4. The information is not publicly available elsewhere.

586

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

587

request for a document or information that is marked and

588

certified as a trade secret, the office or department shall

589

promptly notify the person that certified the document as a trade

590

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

591

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

592

file an action in circuit court seeking a determination whether

593

the document in question contains trade secrets and an order

594

barring public disclosure of the document. If that person or

595

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

596

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

597

release the documents pending the outcome of the legal action.

598

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

599

of any claim of confidentiality and the office or department

600

shall release the document as requested.

601

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

602

document or information certified as a trade secret, submitted to

603

the office or department under this section, and subsequently

604

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

605

the person certifying such document or information as a trade

606

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

607

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

608

the office or department.

609

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

610

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

611

or employee of another governmental agency whose use of the trade

612

secret is within the scope of his or her employment.

613

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

614

Statutes, is amended to read:

615

626.9521 Unfair methods of competition and unfair or

616

deceptive acts or practices prohibited; penalties.--

617

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

618

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

619

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

620

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

621

subsection imposed against an insurer may not exceed an aggregate

622

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

623

all nonwillful violations arising out of the same action or an

624

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

625

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

626

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

627

financial statements filed with the office. The fines authorized

628

by this subsection may be imposed in addition to any other

629

applicable penalty.

630

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

631

626.9541, Florida Statutes, is amended to read:

632

626.9541 Unfair methods of competition and unfair or

633

deceptive acts or practices defined.--

634

(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE

635

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

636

and unfair or deceptive acts or practices:

637

(i) Unfair claim settlement practices.--

638

1. Attempting to settle claims on the basis of an

639

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

640

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

641

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

642

insured;

643

2. A material misrepresentation made to an insured or any

644

other person having an interest in the proceeds payable under a

645

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

646

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

647

contract or policy on less favorable terms than those provided

648

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

649

3. Committing or performing with such frequency as to

650

indicate a general business practice any of the following:

651

a. Failing to adopt and implement standards for the proper

652

investigation of claims.;

653

b. Misrepresenting pertinent facts or insurance policy

654

provisions relating to coverages at issue.;

655

c. Failing to acknowledge and act promptly upon

656

communications with respect to claims.;

657

d. Denying claims without conducting reasonable

658

investigations based upon available information.;

659

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

660

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

661

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

662

claim is being investigated, upon the written request of the

663

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

664

completed.;

665

f. Failing to promptly provide a reasonable explanation in

666

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

667

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

668

for the offer of a compromise settlement.;

669

g. Failing to promptly notify the insured of any additional

670

information necessary for the processing of a claim.; or

671

h. Failing to clearly explain the nature of the requested

672

information and the reasons why such information is necessary.

673

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

674

education, credit score, or any other personal characteristic of

675

a policyholder when evaluating, adjusting, settling, or

676

attempting to settle a property insurance claim; or

677

5. Failing to pay undisputed amounts of partial or full

678

benefits owed under first-party property insurance policies

679

within 90 days after determining the amounts of partial or full

680

benefits and agreeing to coverage.

681

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

682

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

683

are amended to read:

684

627.062 Rate standards.--

685

(2) As to all such classes of insurance:

686

(a) Insurers or rating organizations shall establish and

687

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

688

insurer a reasonable rate of return on such classes of insurance

689

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

690

manuals, premium credits or discount schedules, and surcharge

691

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

692

under one of the following procedures except as provided in

693

subparagraph 3.:

694

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

695

proposed effective date and the filing is not implemented during

696

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

697

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

698

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

699

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

700

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

701

notice of intent to approve and the notice of intent to

702

disapprove constitute agency action for purposes of the

703

Administrative Procedure Act. Requests for supporting

704

information, requests for mathematical or mechanical corrections,

705

or notification to the insurer by the office of its preliminary

706

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

707

proceedings and subsequent judicial review. The rate shall be

708

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

709

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

710

after receipt of the filing.

711

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

712

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

713

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

714

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

715

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

716

by the office to return to policyholders portions of rates found

717

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

718

3. For all property insurance filings made or submitted

719

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

720

seeking a rate that is greater than the rate most recently

721

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

722

subparagraph applies to property insurance only. For purposes of

723

this subparagraph, motor vehicle collision and comprehensive

724

coverages are not considered to be property coverages.

725

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

726

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

727

or unfairly discriminatory. In making that determination, the

728

office shall, in accordance with generally accepted and

729

reasonable actuarial techniques, consider the following factors:

730

1. Past and prospective loss experience within and without

731

this state.

732

2. Past and prospective expenses.

733

3. The degree of competition among insurers for the risk

734

insured.

735

4. Investment income reasonably expected by the insurer,

736

consistent with the insurer's investment practices, from

737

investable premiums anticipated in the filing, plus any other

738

expected income from currently invested assets representing the

739

amount expected on unearned premium reserves and loss reserves.

740

The commission may adopt rules using utilizing reasonable

741

techniques of actuarial science and economics to specify the

742

manner in which insurers shall calculate investment income

743

attributable to such classes of insurance written in this state

744

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

745

calculate in the calculation of insurance rates. Such manner

746

shall contemplate allowances for an underwriting profit factor

747

and full consideration of investment income which produce a

748

reasonable rate of return; however, investment income from

749

invested surplus may shall not be considered.

750

5. The reasonableness of the judgment reflected in the

751

filing.

752

6. Dividends, savings, or unabsorbed premium deposits

753

allowed or returned to Florida policyholders, members, or

754

subscribers.

755

7. The adequacy of loss reserves.

756

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

757

a rate as excessive solely due to the insurer having obtained

758

catastrophic reinsurance to cover the insurer's estimated 250-

759

year probable maximum loss or any lower level of loss.

760

9. Trend factors, including trends in actual losses per

761

insured unit for the insurer making the filing.

762

10. Conflagration and catastrophe hazards, if applicable.

763

11. Projected hurricane losses, if applicable, which must

764

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

765

reliable by the Florida Commission on Hurricane Loss Projection

766

Methodology, and as further provided in s. 627.0628.

767

12.11. A reasonable margin for underwriting profit and

768

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

769

hurricanes and other catastrophic losses for which the insurer

770

has not purchased reinsurance and has exposed its capital and

771

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

772

that provides the insurer a reasonable rate of return that is

773

commensurate with such risk.

774

13.12. The cost of medical services, if applicable.

775

14.13. Other relevant factors which impact upon the

776

frequency or severity of claims or upon expenses.

777

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

778

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

779

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

780

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

781

unfairly discriminatory, the office shall initiate proceedings to

782

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

783

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

784

given final approval or which has been deemed approved for a

785

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

786

the office finds that a material misrepresentation or material

787

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

788

unless the insurer has nonrenewed a number or percentage of

789

policies which the office determines may result in the insurer

790

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

791

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

792

all information which, in the belief of the insurer or

793

organization, proves the reasonableness, adequacy, and fairness

794

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

795

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

796

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

797

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

798

administrative proceeding relating to the legality of the rate,

799

the insurer or rating organization shall carry the burden of

800

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

801

not excessive, inadequate, or unfairly discriminatory. After the

802

office notifies an insurer that a rate may be excessive,

803

inadequate, or unfairly discriminatory, unless the office

804

withdraws the notification, the insurer shall not alter the rate

805

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

806

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

807

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

808

subject to chapter 120, disapprove without the 60-day

809

notification any rate increase filed by an insurer within the

810

prohibited time period or during the time that the legality of

811

the increased rate is being contested.

812

813

The provisions of this subsection shall not apply to workers'

814

compensation and employer's liability insurance and to motor

815

vehicle insurance.

816

(6)(a) If an insurer requests an administrative hearing

817

pursuant to s. 120.57 related to a rate filing under this

818

section, the director of the Division of Administrative Hearings

819

shall expedite the hearing and assign an administrative law judge

820

who shall commence the hearing within 30 days after the receipt

821

of the formal request and shall enter a recommended order within

822

30 days after the hearing or within 30 days after receipt of the

823

hearing transcript by the administrative law judge, whichever is

824

later. Each party shall be allowed 10 days in which to submit

825

written exceptions to the recommended order. The office shall

826

enter a final order within 30 days after the entry of the

827

recommended order. The provisions of this paragraph may be waived

828

upon stipulation of all parties.

829

(b) Upon entry of a final order, the insurer may request a

830

expedited appellate review pursuant to the Florida Rules of

831

Appellate Procedure. It is the intent of the Legislature that the

832

First District Court of Appeal grant an insurer's request for an

833

expedited appellate review.

834

835

additional information related to a rate filing, other than

836

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

837

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

838

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

839

that the office issues a notice of intent to disapprove the

840

filing, the administrative law judge shall grant a continuance of

841

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

842

previously received the information. After any action with

843

respect to a rate filing that constitutes agency action for

844

purposes of the Administrative Procedure Act, except for a rate

845

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

846

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

847

rate filing. However, the arbitration option provision in this

848

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

849

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

850

Arbitration shall be conducted by a board of arbitrators

851

consisting of an arbitrator selected by the office, an arbitrator

852

selected by the insurer, and an arbitrator selected jointly by

853

the other two arbitrators. Each arbitrator must be certified by

854

the American Arbitration Association. A decision is valid only

855

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

856

arbitrator may be an employee of any insurance regulator or

857

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

858

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

859

the insurer must treat the decision of the arbitrators as the

860

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

861

paid by the insurer.

862

(b) Arbitration under this subsection shall be conducted

863

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

864

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

865

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

866

adopt rules for arbitration under this subsection, which rules

867

may not be inconsistent with the arbitration rules of the

868

American Arbitration Association as of January 1, 1996.

869

870

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

871

Administrative Procedure Act or any other provision of law;

872

however, such rights are restored to the insurer if the

873

arbitrators fail to render a decision within 90 days after

874

initiation of the arbitration process.

875

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

876

or chief financial officer of a property insurer and the chief

877

actuary of a property insurer must certify under oath and subject

878

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

879

the following information, which must accompany a rate filing:

880

1. The signing officer and actuary have reviewed the rate

881

filing;

882

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

883

the rate filing does not contain any untrue statement of a

884

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

885

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

886

which such statements were made, not misleading;

887

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

888

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

889

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

890

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

891

periods presented in the filing; and

892

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

893

the rate filing reflects all premium savings that are reasonably

894

expected to result from legislative enactments and are in

895

accordance with generally accepted and reasonable actuarial

896

techniques;.

897

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

898

the actuary responsible for preparing the rate filing reviewed

899

the rate indications used by the office in approving the

900

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

901

review, and identified factors used in the current rate filing

902

which are inconsistent with the factors used by the office in

903

developing such rate indications; and

904

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

905

the number and type of policies that the insurer intends to

906

nonrenew during the year following the proposed effective date of

907

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

908

risk of loss associated with such nonrenewals.

909

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

910

certification under this subsection commits a violation of s.

911

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

912

913

and actuary shall result in the rate filing being disapproved

914

without prejudice to be refiled.

915

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

916

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

917

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

918

Statutes, is amended to read:

919

627.0613 Consumer advocate.--The Chief Financial Officer

920

must appoint a consumer advocate who must represent the general

921

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

922

consumer advocate must report directly to the Chief Financial

923

Officer, but is not otherwise under the authority of the

924

department or of any employee of the department. The consumer

925

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

926

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

927

to, the powers to:

928

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

929

commencement of any proceeding or action; appear in any

930

proceeding or action before the department or office; or appear

931

in any proceeding before the Division of Administrative Hearings

932

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

933

subject matter under the jurisdiction of the department or

934

office.

935

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

936

937

amended to read:

938

627.0628 Florida Commission on Hurricane Loss Projection

939

Methodology; public records exemption; public meetings

940

exemption.--

941

(1) LEGISLATIVE FINDINGS AND INTENT.--

942

943

Florida Commission on Hurricane Loss Projection Methodology as a

944

panel of experts to provide the most actuarially sophisticated

945

guidelines and standards for projection of hurricane losses

946

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

947

further intent of the Legislature that such standards and

948

guidelines must be used by the State Board of Administration in

949

developing reimbursement premium rates for the Florida Hurricane

950

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

951

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

952

in which such standards and guidelines were applied by the

953

insurer was erroneous, as shown by a preponderance of the

954

evidence.

955

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

956

957

insurer must may employ and may not modify or adjust actuarial

958

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

959

the commission to be accurate or reliable in determining to

960

determine hurricane loss factors used for use in a rate filing

961

and in determining probable maximum loss levels for reinsurance

962

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

963

and factors are admissible and relevant in consideration of a

964

rate filing by the office or in any arbitration or administrative

965

or judicial review only if the office and the consumer advocate

966

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

967

assumptions and factors that were used in developing the

968

actuarial methods, principles, standards, models, or output

969

ranges, and are not precluded from disclosing such information in

970

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

971

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

972

judge, or arbitration panel may determine whether the office and

973

the consumer advocate were provided with access to all of the

974

assumptions and factors that were used in developing the

975

actuarial methods, principles, standards, models, or output

976

ranges and to determine their admissibility.

977

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

978

Statutes, is amended to read:

979

627.0629 Residential property insurance; rate filings.--

980

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

981

must provide savings to consumers who install or implement

982

windstorm damage mitigation techniques, alterations, or solutions

983

to their properties to prevent windstorm losses. A rate filing

984

for residential property insurance must include actuarially

985

reasonable discounts, credits, or other rate differentials, or

986

appropriate reductions in deductibles, for properties on which

987

fixtures or construction techniques demonstrated to reduce the

988

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

989

The fixtures or construction techniques shall include, but not be

990

limited to, fixtures or construction techniques which enhance

991

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

992

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

993

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

994

rate differentials, or appropriate reductions in deductibles, for

995

fixtures and construction techniques which meet the minimum

996

requirements of the Florida Building Code must be included in the

997

rate filing. All insurance companies must make a rate filing

998

which includes the credits, discounts, or other rate

999

differentials or reductions in deductibles by February 28, 2003.

1000

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

1001

credits, other rate differentials, and appropriate reductions in

1002

deductibles for fixtures and construction techniques that meet

1003

the minimum requirements of the Florida Building Code, based upon

1004

actual experience or any other loss relativity studies available

1005

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

1006

other rate differentials, and appropriate reductions in

1007

deductibles that reflect the full actuarial value of such

1008

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

1009

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

1010

Regulation, in consultation with the Department of Financial

1011

Services and the Department of Community Affairs, shall develop

1012

and make publicly available a proposed method for insurers to

1013

establish discounts, credits, or other rate differentials for

1014

hurricane mitigation measures which directly correlate to the

1015

numerical rating assigned to a structure pursuant to the uniform

1016

home grading scale adopted by the Financial Services Commission

1017

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

1018

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

1019

shall adopt rules requiring insurers to make rate filings for

1020

residential property insurance which revise insurers' discounts,

1021

credits, or other rate differentials for hurricane mitigation

1022

measures so that such rate differentials correlate directly to

1023

the uniform home grading scale. The rules may include such

1024

changes to the uniform home grading scale as the commission

1025

determines are necessary, and may specify the minimum required

1026

discounts, credits, or other rate differentials. Such rate

1027

differentials must be consistent with generally accepted

1028

actuarial principles and wind-loss mitigation studies. The rules

1029

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

1030

of the revised mitigation discounts, credits, or other rate

1031

differentials for a property owner to obtain an inspection or

1032

otherwise qualify for the revised credit, during which time the

1033

insurer shall continue to apply the mitigation credit that was

1034

applied immediately prior to the effective date of the revised

1035

credit.

1036

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

1037

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

1038

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

1039

627.351 Insurance risk apportionment plans.--

1040

(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--

1041

(b) The department shall require all insurers holding a

1042

certificate of authority to transact property insurance on a

1043

direct basis in this state, other than joint underwriting

1044

associations and other entities formed pursuant to this section,

1045

to provide windstorm coverage to applicants from areas determined

1046

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

1047

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

1048

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

1049

the equitable apportionment or sharing among such insurers of

1050

windstorm coverage, which may include formation of an association

1051

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

1052

insurance" means insurance on real or personal property, as

1053

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

1054

fire, allied lines, farmowners multiperil, homeowners'

1055

multiperil, commercial multiperil, and mobile homes, and

1056

including liability coverages on all such insurance, but

1057

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

1058

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

1059

insurance on mobile homes used as permanent dwellings. The

1060

department shall adopt rules that provide a formula for the

1061

recovery and repayment of any deferred assessments.

1062

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

1063

such windstorm coverage are defined as dwellings, buildings, and

1064

other structures, including mobile homes which are used as

1065

dwellings and which are tied down in compliance with mobile home

1066

tie-down requirements prescribed by the Department of Highway

1067

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

1068

contents of all such properties. An applicant or policyholder is

1069

eligible for coverage only if an offer of coverage cannot be

1070

obtained by or for the applicant or policyholder from an admitted

1071

insurer at approved rates.

1072

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

1073

association shall participate in its writings, expenses, and

1074

losses. Surplus of the association shall be retained for the

1075

payment of claims and shall not be distributed to the member

1076

insurers. Such participation by member insurers shall be in the

1077

proportion that the net direct premiums of each member insurer

1078

written for property insurance in this state during the preceding

1079

calendar year bear to the aggregate net direct premiums for

1080

property insurance of all member insurers, as reduced by any

1081

credits for voluntary writings, in this state during the

1082

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

1083

term "net direct premiums" means direct written premiums for

1084

property insurance, reduced by premium for liability coverage and

1085

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

1086

growing crops; livestock; association direct premiums booked;

1087

National Flood Insurance Program direct premiums; and similar

1088

deductions specifically authorized by the plan of operation and

1089

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

1090

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

1091

it is issued a certificate of authority to transact property

1092

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

1093

of the calendar year during which it no longer holds a

1094

certificate of authority to transact property insurance in the

1095

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

1096

reports, and any other statistics that the commissioner deems

1097

necessary, shall certify to the association the aggregate direct

1098

premiums written for property insurance in this state by all

1099

member insurers.

1100

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

1101

subject to the supervision and approval of a board of governors

1102

who are the same individuals that have been appointed by the

1103

Treasurer to serve on the board of governors of the Citizens

1104

Property Insurance Corporation.

1105

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

1106

a company voluntarily providing windstorm coverage in affected

1107

areas will be relieved wholly or partially from apportionment of

1108

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

1109

sub-sub-subparagraph d.(II).

1110

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

1111

under common management may elect to have its credits applied on

1112

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

1113

credits applied to any other company or group.

1114

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

1115

to a company for emergency assessments collected from its

1116

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

1117

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

1118

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

1119

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

1120

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

1121

the Residential Property and Casualty Joint Underwriting

1122

Association. In order to qualify for the exemption under this

1123

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

1124

least 40 percent of the policies removed from the Residential

1125

Property and Casualty Joint Underwriting Association cover risks

1126

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

1127

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

1128

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

1129

the policies so removed cover risks located in other coastal

1130

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

1131

the policies so removed may exclude windstorm coverage. With the

1132

approval of the department, the association may waive these

1133

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

1134

lesser of 100,000 Residential Property and Casualty Joint

1135

Underwriting Association policies or 15 percent of the total

1136

number of Residential Property and Casualty Joint Underwriting

1137

Association policies, provided the governing board of the

1138

Residential Property and Casualty Joint Underwriting Association

1139

certifies that the take-out plan will materially reduce the

1140

Residential Property and Casualty Joint Underwriting

1141

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

1142

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

1143

credits for an additional year if the insurer guarantees an

1144

additional year of renewability for all policies removed from the

1145

Residential Property and Casualty Joint Underwriting Association,

1146

or for 2 additional years if the insurer guarantees 2 additional

1147

years of renewability for all policies removed from the

1148

Residential Property and Casualty Joint Underwriting Association.

1149

b. Assessments to pay deficits in the association under

1150

this subparagraph shall be included as an appropriate factor in

1151

the making of rates as provided in s. 627.3512.

1152

c. The Legislature finds that the potential for unlimited

1153

deficit assessments under this subparagraph may induce insurers

1154

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

1155

that such actions would worsen the availability problems that the

1156

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

1157

Legislature that insurers remain fully responsible for paying

1158

regular assessments and collecting emergency assessments for any

1159

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

1160

the Legislature to provide a means by which assessment

1161

liabilities may be amortized over a period of years.

1162

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

1163

year is 10 percent or less of the aggregate statewide direct

1164

written premium for property insurance for the prior calendar

1165

year for all member insurers, the association shall levy an

1166

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

1167

(II) When the deficit incurred in a particular calendar

1168

year exceeds 10 percent of the aggregate statewide direct written

1169

premium for property insurance for the prior calendar year for

1170

all member insurers, the association shall levy an assessment on

1171

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

1172

of the deficit or 10 percent of the aggregate statewide direct

1173

written premium for property insurance for the prior calendar

1174

year for member insurers. Any remaining deficit shall be

1175

recovered through emergency assessments under sub-sub-

1176

subparagraph (III).

1177

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

1178

deficit exceeds the amount that will be recovered through regular

1179

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

1180

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

1181

verification by the department, emergency assessments to be

1182

collected by member insurers and by underwriting associations

1183

created pursuant to this section which write property insurance,

1184

upon issuance or renewal of property insurance policies other

1185

than National Flood Insurance policies in the year or years

1186

following levy of the regular assessments. The amount of the

1187

emergency assessment collected in a particular year shall be a

1188

uniform percentage of that year's direct written premium for

1189

property insurance for all member insurers and underwriting

1190

associations, excluding National Flood Insurance policy premiums,

1191

as annually determined by the board and verified by the

1192

department. The department shall verify the arithmetic

1193

calculations involved in the board's determination within 30 days

1194

after receipt of the information on which the determination was

1195

based. Notwithstanding any other provision of law, each member

1196

insurer and each underwriting association created pursuant to

1197

this section shall collect emergency assessments from its

1198

policyholders without such obligation being affected by any

1199

credit, limitation, exemption, or deferment. The emergency

1200

assessments so collected shall be transferred directly to the

1201

association on a periodic basis as determined by the association.

1202

The aggregate amount of emergency assessments levied under this

1203

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

1204

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

1205

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

1206

other costs associated with financing of the original deficit, or

1207

10 percent of the aggregate statewide direct written premium for

1208

property insurance written by member insurers and underwriting

1209

associations for the prior year, plus interest, fees,

1210

commissions, required reserves, and other costs associated with

1211

financing the original deficit. The board may pledge the proceeds

1212

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

1213

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

1214

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

1215

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

1216

efficiently recover the deficit. The emergency assessments under

1217

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

1218

issued or other indebtedness incurred with respect to a deficit

1219

for which the assessment was imposed remain outstanding, unless

1220

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

1221

other indebtedness pursuant to the document governing such bonds

1222

or other indebtedness. Emergency assessments collected under this

1223

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

1224

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

1225

commissions; however, failure to pay the emergency assessment

1226

shall be treated as failure to pay premium.

1227

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

1228

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

1229

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

1230

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

1231

year preceding the assessment bears to the aggregate statewide

1232

net direct premium for property insurance of all member insurers,

1233

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

1234

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

1235

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

1236

Residential Property and Casualty Joint Underwriting Association

1237

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

1238

the association shall levy upon the association's policyholders,

1239

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

1240

solely for this purpose, a market equalization surcharge in a

1241

percentage equal to the total amount of such regular assessments

1242

divided by the aggregate statewide direct written premium for

1243

property insurance for member insurers for the prior calendar

1244

year. Market equalization surcharges under this sub-sub-

1245

subparagraph are not considered premium and are not subject to

1246

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

1247

market equalization surcharge shall be treated as failure to pay

1248

premium.

1249

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

1250

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

1251

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

1252

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

1253

defraying deficits of the association. In order to avoid needless

1254

and indiscriminate proliferation, duplication, and fragmentation

1255

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

1256

residents of which are insured by the association, may provide

1257

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

1258

losses occurred within or outside of the territorial jurisdiction

1259

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

1260

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

1261

declared by executive order or proclamation of the Governor

1262

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

1263

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

1264

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

1265

of residents of this state and the protection and preservation of

1266

the economic stability of insurers operating in this state, and

1267

declaring it an essential public purpose to permit certain

1268

municipalities or counties to issue bonds as will provide relief

1269

to claimants and policyholders of the association and insurers

1270

responsible for apportionment of plan losses. Any such unit of

1271

local government may enter into such contracts with the

1272

association and with any other entity created pursuant to this

1273

subsection as are necessary to carry out this paragraph. Any

1274

bonds issued under this sub-subparagraph shall be payable from

1275

and secured by moneys received by the association from

1276

assessments under this subparagraph, and assigned and pledged to

1277

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

1278

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

1279

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

1280

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

1281

bonds remain unsold 60 days after issuance, the department shall

1282

require all insurers subject to assessment to purchase the bonds,

1283

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

1284

required to purchase that percentage of the unsold portion of the

1285

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

1286

liability under this subsection. An insurer shall not be required

1287

to purchase the bonds to the extent that the department

1288

determines that the purchase would endanger or impair the

1289

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

1290

subparagraph is additional to any bonding authority granted by

1291

subparagraph 6.

1292

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

1293

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

1294

percent or more of its total countrywide property insurance

1295

premiums in this state may petition the department, within the

1296

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

1297

apportionment company. The apportionment of such a member company

1298

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

1299

its gross participation, which shall not be affected by the

1300

formula for voluntary writings. In no event shall a limited

1301

apportionment company be required to participate in any

1302

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

1303

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

1304

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

1305

year. However, a limited apportionment company shall collect from

1306

its policyholders any emergency assessment imposed under sub-sub-

1307

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

1308

department determines that any regular assessment will result in

1309

an impairment of the surplus of a limited apportionment company,

1310

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

1311

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

1312

an emergency assessment to be collected from policyholders under

1313

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

1314

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

1315

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

1316

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

1317

for an emergency assessment collected from policyholders under

1318

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

1319

commissioner, payment of such regular assessment would endanger

1320

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

1321

regular assessment against a member insurer is deferred in whole

1322

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

1323

be assessed against the other member insurers in a manner

1324

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

1325

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

1326

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

1327

rules for classification of risks and rate modifications

1328

consistent with the objective of providing and maintaining funds

1329

sufficient to pay catastrophe losses.

1330

b. The association may require arbitration of a rate filing

1331

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

1332

rates for coverage provided by the association be actuarially

1333

sound and not competitive with approved rates charged in the

1334

admitted voluntary market such that the association functions as

1335

a residual market mechanism to provide insurance only when the

1336

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

1337

operation shall provide a mechanism to assure that, beginning no

1338

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

1339

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

1340

voluntary market for hurricane coverage for each line of business

1341

in the various areas eligible for association coverage.

1342

c. The association shall provide for windstorm coverage on

1343

residential properties in limits up to $10 million for commercial

1344

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

1345

residential risks. If coverage with the association is sought for

1346

a residential risk valued in excess of these limits, coverage

1347

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

1348

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

1349

if coverage for the risk cannot be located in the authorized

1350

market. The association must accept a commercial lines

1351

residential risk with limits above $10 million or a personal

1352

lines residential risk with limits above $1 million if coverage

1353

is not available in the authorized market. The association may

1354

write coverage above the limits specified in this subparagraph

1355

with or without facultative or other reinsurance coverage, as the

1356

association determines appropriate.

1357

d. The plan of operation must provide objective criteria

1358

and procedures, approved by the department, to be uniformly

1359

applied for all applicants in determining whether an individual

1360

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

1361

determination and in establishing the criteria and procedures,

1362

the following shall be considered:

1363

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

1364

risk is substantially higher than for other risks of the same

1365

class; and

1366

(II) Whether the uncertainty associated with the individual

1367

risk is such that an appropriate premium cannot be determined.

1368

1369

The acceptance or rejection of a risk by the association pursuant

1370

to such criteria and procedures must be construed as the private

1371

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

1372

apply.

1373

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

1374

market assistance program or through a mechanism established by

1375

the association, either before the policy is issued by the

1376

association or during the first 30 days of coverage by the

1377

association, and the producing agent who submitted the

1378

application to the association is not currently appointed by the

1379

insurer, the insurer shall:

1380

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

1381

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

1382

usual and customary commission for the type of policy written or

1383

a fee equal to the usual and customary commission of the

1384

association; or

1385

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

1386

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

1387

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

1388

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

1389

the type of policy written.

1390

1391

If the producing agent is unwilling or unable to accept

1392

appointment, the new insurer shall pay the agent in accordance

1393

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

1394

627.3517, the policies issued by the association must provide

1395

that if the association obtains an offer from an authorized

1396

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

1397

standard policy including wind coverage or, if consistent with

1398

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

1399

basic policy including wind coverage, the risk is no longer

1400

eligible for coverage through the association. Upon termination

1401

of eligibility, the association shall provide written notice to

1402

the policyholder and agent of record stating that the association

1403

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

1404

notice because of the offer of coverage from an authorized

1405

insurer. Other provisions of the insurance code relating to

1406

cancellation and notice of cancellation do not apply to actions

1407

under this sub-subparagraph.

1408

f. When the association enters into a contractual agreement

1409

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

1410

association policy is entitled to retain any unearned commission

1411

on the policy, and the insurer shall:

1412

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

1413

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

1414

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

1415

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

1416

the association; or

1417

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

1418

association policy to continue servicing the policy for a period

1419

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

1420

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

1421

for the type of policy written.

1422

1423

If the producing agent is unwilling or unable to accept

1424

appointment, the new insurer shall pay the agent in accordance

1425

with sub-sub-subparagraph (I).

1426

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

1427

private nonprofit corporation, a private nonprofit unincorporated

1428

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

1429

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

1430

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

1431

indebtedness and to accumulate reserves or funds to be used for

1432

the payment of insured catastrophe losses. The plan may authorize

1433

all actions necessary to facilitate the issuance of bonds,

1434

including the pledging of assessments or other revenues.

1435

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

1436

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

1437

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

1438

or sell assessments, market equalization surcharges and other

1439

surcharges, rights, premiums, contractual rights, projected

1440

recoveries from the Florida Hurricane Catastrophe Fund, other

1441

reinsurance recoverables, and other assets as security for such

1442

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

1443

agreements necessary or proper to accomplish such borrowings; and

1444

take other actions necessary to carry out the purposes of this

1445

subsection. The association may issue bonds or incur other

1446

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

1447

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

1448

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

1449

determination by the association subject to approval by the

1450

department that such action would enable it to efficiently meet

1451

the financial obligations of the association and that such

1452

financings are reasonably necessary to effectuate the

1453

requirements of this subsection. Any such entity may accumulate

1454

reserves and retain surpluses as of the end of any association

1455

year to provide for the payment of losses incurred by the

1456

association during that year or any future year. The association

1457

shall incorporate and continue the plan of operation and articles

1458

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

1459

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

1460

chapter 76-96, and as subsequently modified consistent with

1461

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

1462

serving shall continue to serve until their successors are duly

1463

qualified as provided under the plan. The assets and obligations

1464

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

1465

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

1466

of the successor plan created herein.

1467

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

1468

Constitution, prohibiting the impairment of obligations of

1469

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

1470

taken whose purpose is to impair any bond indenture or financing

1471

agreement or any revenue source committed by contract to such

1472

bond or other indebtedness issued or incurred by the association

1473

or any other entity created under this subsection.

1474

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

1475

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

1476

contract with the company with which the business is placed.

1477

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

1478

premium which is in excess of the standard premium of that

1479

company.

1480

8. Subject to approval by the department, the association

1481

may establish different eligibility requirements and operational

1482

procedures for any line or type of coverage for any specified

1483

eligible area or portion of an eligible area if the board

1484

determines that such changes to the eligibility requirements and

1485

operational procedures are justified due to the voluntary market

1486

being sufficiently stable and competitive in such area or for

1487

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

1488

faith, are unable to obtain insurance through the voluntary

1489

market through ordinary methods would continue to have access to

1490

coverage from the association. When coverage is sought in

1491

connection with a real property transfer, such requirements and

1492

procedures shall not provide for an effective date of coverage

1493

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

1494

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

1495

lender.

1496

9. Notwithstanding any other provision of law:

1497

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

1498

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

1499

association created or purported to be created pursuant to any

1500

financing documents to secure any bonds or other indebtedness of

1501

the association shall be and remain valid and enforceable,

1502

notwithstanding the commencement of and during the continuation

1503

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

1504

bankruptcy, receivership, conservatorship, reorganization, or

1505

similar proceeding against the association under the laws of this

1506

state or any other applicable laws.

1507

b. No such proceeding shall relieve the association of its

1508

obligation, or otherwise affect its ability to perform its

1509

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

1510

assessments, market equalization or other surcharges, projected

1511

recoveries from the Florida Hurricane Catastrophe Fund,

1512

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

1513

assets of the association pledged.

1514

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

1515

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

1516

security interest, any such assessments, emergency assessments,

1517

market equalization or renewal surcharges, projected recoveries

1518

from the Florida Hurricane Catastrophe Fund, reinsurance

1519

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

1520

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

1521

and during the pendency of or after any such proceeding shall

1522

continue unaffected by such proceeding.

1523

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

1524

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

1525

existing or hereafter created evidencing any bonds or other

1526

indebtedness of the association or pursuant to which any such

1527

bonds or other indebtedness has been or may be issued and

1528

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

1529

association are pledged or sold to secure the repayment of such

1530

bonds or indebtedness, together with the payment of interest on

1531

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

1532

obligation of the association related to such bonds or

1533

indebtedness.

1534

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

1535

contract rights or other rights or assets of the association

1536

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

1537

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

1538

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

1539

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

1540

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

1541

binding, and enforceable against the association or other entity

1542

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

1543

superior to any competing claims or obligations owed to any other

1544

person or entity, including policyholders in this state,

1545

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

1546

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

1547

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

1548

applicable financing documents, whether or not any such person or

1549

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

1550

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

1551

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

1552

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

1553

or its agents or employees, agents or employees of the

1554

association, members of the board of directors of the

1555

association, or the department or its representatives, for any

1556

action taken by them in the performance of their duties or

1557

responsibilities under this subsection. Such immunity does not

1558

apply to actions for breach of any contract or agreement

1559

pertaining to insurance, or any willful tort.

1560

(6) CITIZENS PROPERTY INSURANCE CORPORATION.--

1561

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

1562

the existence of an orderly market for property insurance for

1563

Floridians and Florida businesses. The Legislature finds that

1564

private insurers are unwilling or unable to provide affordable

1565

property insurance coverage in this state to the extent sought

1566

and needed. The absence of affordable property insurance

1567

threatens the public health, safety, and welfare and likewise

1568

threatens the economic health of the state. The state therefore

1569

has a compelling public interest and a public purpose to assist

1570

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

1571

insured at affordable rates so as to facilitate the remediation,

1572

reconstruction, and replacement of damaged or destroyed property

1573

in order to reduce or avoid the negative effects otherwise

1574

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

1575

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

1576

governments which are needed to provide for the public welfare.

1577

It is necessary, therefore, to provide affordable property

1578

insurance to applicants who are in good faith entitled to procure

1579

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

1580

The Legislature intends by this subsection that affordable

1581

property insurance be provided and that it continue to be

1582

provided, as long as necessary, through Citizens Property

1583

Insurance Corporation, a government entity that is an integral

1584

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

1585

To that end, Citizens Property Insurance Corporation shall strive

1586

to increase the availability of affordable property insurance in

1587

this state, while achieving efficiencies and economies, and while

1588

providing service to policyholders, applicants, and agents which

1589

is no less than the quality generally provided in the voluntary

1590

market, for the achievement of the foregoing public purposes.

1591

Because it is essential for this government entity to have the

1592

maximum financial resources to pay claims following a

1593

catastrophic hurricane, it is the intent of the Legislature that

1594

Citizens Property Insurance Corporation continue to be an

1595

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

1596

be exempt from federal income taxation and that interest on the

1597

debt obligations issued by the corporation be exempt from federal

1598

income taxation.

1599

2. The Residential Property and Casualty Joint Underwriting

1600

Association originally created by this statute shall be known, as

1601

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

1602

The corporation shall provide insurance for residential and

1603

commercial property, for applicants who are in good faith

1604

entitled, but are unable, to procure insurance through the

1605

voluntary market. The corporation shall operate pursuant to a

1606

plan of operation approved by order of the Financial Services

1607

Commission. The plan is subject to continuous review by the

1608

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

1609

all or part of a plan if the commission determines that

1610

conditions have changed since approval was granted and that the

1611

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

1612

shall continue to operate pursuant to the plan of operation

1613

approved by the Office of Insurance Regulation until October 1,

1614

2006. For the purposes of this subsection, residential coverage

1615

includes both personal lines residential coverage, which consists

1616

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

1617

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

1618

similar policies, and commercial lines residential coverage,

1619

which consists of the type of coverage provided by condominium

1620

association, apartment building, and similar policies.

1621

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

1622

property" means:

1623

a. Property that has been granted a homestead exemption

1624

under chapter 196;

1625

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

1626

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

1627

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

1628

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

1629

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

1630

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

1631

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

1632

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

1633

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

1634

d. Tenant's coverage;

1635

e. Commercial lines residential property; or

1636

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

1637

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

1638

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

1639

continuing care retirement community that is certified under

1640

chapter 651 and that receives an exemption from ad valorem taxes

1641

under chapter 196.

1642

4. For the purposes of this subsection, the term

1643

"nonhomestead property" means property that is not homestead

1644

property.

1645

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

1646

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

1647

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

1648

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

1649

eligible for coverage by the corporation. Such dwellings insured

1650

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

1651

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

1652

However, such dwellings that are insured by the corporation and

1653

become ineligible for coverage due to the provisions of this

1654

subparagraph may reapply and obtain coverage in the high-risk

1655

account and be considered "nonhomestead property" if the property

1656

owner provides the corporation with a sworn affidavit from one or

1657

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

1658

stating that the agents have made their best efforts to obtain

1659

coverage and that the property has been rejected for coverage by

1660

at least one authorized insurer and at least three surplus lines

1661

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

1662

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

1663

dwelling is ineligible for coverage. The office shall approve the

1664

method used by the corporation for valuing the dwelling

1665

replacement cost for the purposes of this subparagraph. If a

1666

policyholder is insured by the corporation prior to being

1667

determined to be ineligible pursuant to this subparagraph and

1668

such policyholder files a lawsuit challenging the determination,

1669

the policyholder may remain insured by the corporation until the

1670

conclusion of the litigation.

1671

3.6. For properties constructed on or after January 1,

1672

2009, the corporation may not insure any property located within

1673

2,500 feet landward of the coastal construction control line

1674

created pursuant to s. 161.053 unless the property meets the

1675

requirements of the code-plus building standards developed by the

1676

Florida Building Commission.

1677

4.7. It is the intent of the Legislature that

1678

policyholders, applicants, and agents of the corporation receive

1679

service and treatment of the highest possible level but never

1680

less than that generally provided in the voluntary market. It

1681

also is intended that the corporation be held to service

1682

standards no less than those applied to insurers in the voluntary

1683

market by the office with respect to responsiveness, timeliness,

1684

customer courtesy, and overall dealings with policyholders,

1685

applicants, or agents of the corporation.

1686

5.8. Effective January 1, 2009, a personal lines

1687

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

1688

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

1689

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

1690

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

1691

unless the structure has opening protections as required under

1692

the Florida Building Code for a newly constructed residential

1693

structure in that area. A residential structure shall be deemed

1694

to comply with the requirements of this subparagraph if it has

1695

shutters or opening protections on all openings and if such

1696

opening protections complied with the Florida Building Code at

1697

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

1698

requirements of this subparagraph apply to a personal lines

1699

residential structure that is located in the wind-borne debris

1700

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

1701

or more.

1702

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

1703

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

1704

corporation and, for the purposes of this subsection, are

1705

referred to collectively as "assessable insurers." Insurers

1706

writing one or more subject lines of business in this state

1707

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

1708

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

1709

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

1710

assessment by the corporation and are referred to collectively as

1711

"assessable insureds." An authorized insurer's assessment

1712

liability shall begin on the first day of the calendar year

1713

following the year in which the insurer was issued a certificate

1714

of authority to transact insurance for subject lines of business

1715

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

1716

first calendar year during which the insurer no longer holds a

1717

certificate of authority to transact insurance for subject lines

1718

of business in this state.

1719

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

1720

expenses of the corporation shall be divided into three separate

1721

accounts as follows:

1722

(I) A personal lines account for personal residential

1723

policies issued by the corporation or issued by the Residential

1724

Property and Casualty Joint Underwriting Association and renewed

1725

by the corporation that provide comprehensive, multiperil

1726

coverage on risks that are not located in areas eligible for

1727

coverage in the Florida Windstorm Underwriting Association as

1728

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

1729

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

1730

risks that are located in such areas;

1731

(II) A commercial lines account for commercial residential

1732

and commercial nonresidential policies issued by the corporation

1733

or issued by the Residential Property and Casualty Joint

1734

Underwriting Association and renewed by the corporation that

1735

provide coverage for basic property perils on risks that are not

1736

located in areas eligible for coverage in the Florida Windstorm

1737

Underwriting Association as those areas were defined on January

1738

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

1739

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

1740

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

1741

and commercial residential and commercial nonresidential property

1742

policies issued by the corporation or transferred to the

1743

corporation that provide coverage for the peril of wind on risks

1744

that are located in areas eligible for coverage in the Florida

1745

Windstorm Underwriting Association as those areas were defined on

1746

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

1747

the Financial Services Commission and Legislative Budget

1748

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

1749

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

1750

policies that provide multiperil coverage and the corporation

1751

shall continue to offer policies that provide coverage only for

1752

the peril of wind for risks located in areas eligible for

1753

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

1754

corporation may not issue new policies that provide coverage only

1755

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

1756

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

1757

the corporation may use its approved policy forms and rates for

1758

the personal lines account. An applicant or insured who is

1759

eligible to purchase a multiperil policy from the corporation may

1760

purchase a multiperil policy from an authorized insurer without

1761

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

1762

prospectively purchase a policy that provides coverage only for

1763

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

1764

applicant or insured who is eligible for a corporation policy

1765

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

1766

purchase or retain such policy and also purchase or retain

1767

coverage excluding wind from an authorized insurer without

1768

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

1769

prospectively purchase a policy that provides multiperil coverage

1770

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

1771

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

1772

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

1773

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

1774

the corporation, and who then obtains a multiperil policy from

1775

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

1776

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

1777

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

1778

exempt status of the corporation or creditworthiness of or

1779

security for currently outstanding financing obligations or

1780

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

1781

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

1782

corporation shall prepare and submit for approval by the

1783

Financial Services Commission and Legislative Budget Commission a

1784

report detailing the corporation's business plan for issuing

1785

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

1786

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

1787

submitted or modified and resubmitted by the corporation. The

1788

business plan must include: the impact of such multiperil

1789

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

1790

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

1791

the manner in which the corporation plans to implement the

1792

processing of applications and policy forms for new and existing

1793

policyholders, the impact of such multiperil coverage on the

1794

corporation's ability to deliver customer service at the high

1795

level required by this subsection, the ability of the corporation

1796

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

1797

issue policies, the impact of such multiperil coverage on the

1798

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

1799

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

1800

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

1801

must also include quota share primary insurance under

1802

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

1803

risk account also includes the area within Port Canaveral, which

1804

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

1805

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

1806

Federal Government property.

1807

b. The three separate accounts must be maintained as long

1808

as financing obligations entered into by the Florida Windstorm

1809

Underwriting Association or Residential Property and Casualty

1810

Joint Underwriting Association are outstanding, in accordance

1811

with the terms of the corresponding financing documents. When the

1812

financing obligations are no longer outstanding, in accordance

1813

with the terms of the corresponding financing documents, the

1814

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

1815

liabilities, losses, and expenses of the corporation. Consistent

1816

with the requirement of this subparagraph and prudent investment

1817

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

1818

exercise its best efforts to retire existing debt or to obtain

1819

approval of necessary parties to amend the terms of existing

1820

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

1821

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

1822

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

1823

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

1824

House of Representatives which includes an analysis of

1825

consolidating the accounts, the actions the board has taken to

1826

minimize the cost of carrying debt, and its recommendations for

1827

executing the most efficient plan.

1828

c. Creditors of the Residential Property and Casualty Joint

1829

Underwriting Association and of the accounts specified in sub-

1830

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

1831

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

1832

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

1833

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

1834

Creditors of the Florida Windstorm Underwriting Association shall

1835

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

1836

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

1837

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

1838

a.(I) and (II).

1839

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

1840

attributable to particular accounts shall be prorated among the

1841

accounts.

1842

e. The Legislature finds that the revenues of the

1843

corporation are revenues that are necessary to meet the

1844

requirements set forth in documents authorizing the issuance of

1845

bonds under this subsection.

1846

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

1847

the benefit of any private person.

1848

3. With respect to a deficit in an account:

1849

a. When the deficit incurred in a particular calendar year

1850

is not greater than 8 10 percent of the aggregate statewide

1851

direct written premium for the subject lines of business for the

1852

prior calendar year, the entire deficit shall be recovered

1853

through regular assessments of assessable insurers under

1854

paragraph (p) and assessable insureds.

1855

b. When the deficit incurred in a particular calendar year

1856

exceeds 8 10 percent of the aggregate statewide direct written

1857

premium for the subject lines of business for the prior calendar

1858

year, the corporation shall levy regular assessments on

1859

assessable insurers under paragraph (p) and on assessable

1860

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

1861

deficit or 8 10 percent of the aggregate statewide direct written

1862

premium for the subject lines of business for the prior calendar

1863

year. Any remaining deficit shall be recovered through emergency

1864

assessments under sub-subparagraph d.

1865

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

1866

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

1867

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

1868

premium for the subject lines of business for the year preceding

1869

the assessment bears to the aggregate statewide direct written

1870

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

1871

assessment percentage applicable to each assessable insured is

1872

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

1873

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

1874

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

1875

Assessments levied by the corporation on assessable insurers

1876

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

1877

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

1878

notwithstanding any other provision of this subsection, the

1879

aggregate amount of a regular assessment for a deficit incurred

1880

in a particular calendar year shall be reduced by the estimated

1881

amount to be received by the corporation from the Citizens

1882

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

1883

collected or estimated to be collected from the assessment on

1884

Citizens policyholders pursuant to sub-subparagraph i.

1885

Assessments levied by the corporation on assessable insureds

1886

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

1887

surplus lines agent at the time the surplus lines agent collects

1888

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

1889

the Florida Surplus Lines Service Office at the time the surplus

1890

lines agent pays the surplus lines tax to the Florida Surplus

1891

Lines Service Office. Upon receipt of regular assessments from

1892

surplus lines agents, the Florida Surplus Lines Service Office

1893

shall transfer the assessments directly to the corporation as

1894

determined by the corporation.

1895

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

1896

deficit in an account exceeds the amount that will be recovered

1897

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

1898

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

1899

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

1900

projected deficit the board shall levy, after verification by the

1901

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

1902

cover the deficits, to be collected by assessable insurers and

1903

the corporation and collected from assessable insureds upon

1904

issuance or renewal of policies for subject lines of business,

1905

excluding National Flood Insurance policies. The amount of the

1906

emergency assessment collected in a particular year shall be a

1907

uniform percentage of that year's direct written premium for

1908

subject lines of business and all accounts of the corporation,

1909

excluding National Flood Insurance Program policy premiums, as

1910

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

1911

office shall verify the arithmetic calculations involved in the

1912

board's determination within 30 days after receipt of the

1913

information on which the determination was based. Notwithstanding

1914

any other provision of law, the corporation and each assessable

1915

insurer that writes subject lines of business shall collect

1916

emergency assessments from its policyholders without such

1917

obligation being affected by any credit, limitation, exemption,

1918

or deferment. Emergency assessments levied by the corporation on

1919

assessable insureds shall be collected by the surplus lines agent

1920

at the time the surplus lines agent collects the surplus lines

1921

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

1922

Surplus Lines Service Office at the time the surplus lines agent

1923

pays the surplus lines tax to the Florida Surplus Lines Service

1924

Office. The emergency assessments so collected shall be

1925

transferred directly to the corporation on a periodic basis as

1926

determined by the corporation and shall be held by the

1927

corporation solely in the applicable account. The aggregate

1928

amount of emergency assessments levied for an account under this

1929

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

1930

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

1931

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

1932

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

1933

other costs associated with financing of the original deficit, or

1934

10 percent of the aggregate statewide direct written premium for

1935

subject lines of business and for all accounts of the corporation

1936

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

1937

reserves, and other costs associated with financing the original

1938

deficit.

1939

e. The corporation may pledge the proceeds of assessments,

1940

projected recoveries from the Florida Hurricane Catastrophe Fund,

1941

other insurance and reinsurance recoverables, policyholder

1942

surcharges and other surcharges, and other funds available to the

1943

corporation as the source of revenue for and to secure bonds

1944

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

1945

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

1946

mechanisms issued or created under this subsection, or to retire

1947

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

1948

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

1949

will efficiently recover such deficits. The purpose of the lines

1950

of credit or other financing mechanisms is to provide additional

1951

resources to assist the corporation in covering claims and

1952

expenses attributable to a catastrophe. As used in this

1953

subsection, the term "assessments" includes regular assessments

1954

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

1955

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

1956

Emergency assessments collected under sub-subparagraph d. are not

1957

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

1958

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

1959

emergency assessment shall be treated as failure to pay premium.

1960

The emergency assessments under sub-subparagraph d. shall

1961

continue as long as any bonds issued or other indebtedness

1962

incurred with respect to a deficit for which the assessment was

1963

imposed remain outstanding, unless adequate provision has been

1964

made for the payment of such bonds or other indebtedness pursuant

1965

to the documents governing such bonds or other indebtedness.

1966

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

1967

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

1968

business" means insurance written by assessable insurers or

1969

procured by assessable insureds for all property and casualty

1970

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

1971

compensation or medical malpractice. As used in the sub-

1972

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

1973

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

1974

Premiums and Losses, in the annual statement required of

1975

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

1976

section, except for those lines identified as accident and health

1977

insurance and except for policies written under the National

1978

Flood Insurance Program or the Federal Crop Insurance Program.

1979

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

1980

compensation" includes both workers' compensation insurance and

1981

excess workers' compensation insurance.

1982

g. The Florida Surplus Lines Service Office shall determine

1983

annually the aggregate statewide written premium in subject lines

1984

of business procured by assessable insureds and shall report that

1985

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

1986

corporation specifies to ensure that the corporation can meet the

1987

requirements of this subsection and the corporation's financing

1988

obligations.

1989

h. The Florida Surplus Lines Service Office shall verify

1990

the proper application by surplus lines agents of assessment

1991

percentages for regular assessments and emergency assessments

1992

levied under this subparagraph on assessable insureds and shall

1993

assist the corporation in ensuring the accurate, timely

1994

collection and payment of assessments by surplus lines agents as

1995

required by the corporation.

1996

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

1997

thereafter, the board of governors shall levy a Citizens

1998

policyholder surcharge an immediate assessment against the

1999

premium of each nonhomestead property policyholder in all

2000

accounts of the corporation, as a uniform percentage of the

2001

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

2002

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

2003

insufficient to eliminate the deficit, the board of governors

2004

shall levy an additional assessment against all policyholders of

2005

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

2006

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

2007

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

2008

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

2009

deficit and reduce the amount of the regular assessment as

2010

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

2011

surcharges under this sub-subparagraph are not considered premium

2012

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

2013

However, failure to pay such surcharges shall be treated as

2014

failure to pay premium.

2015

j. If the amount of any assessments or surcharges collected

2016

from corporation policyholders, assessable insurers or their

2017

policyholders, or assessable insureds exceeds the amount of the

2018

deficits, such excess amounts shall be remitted to and retained

2019

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

2020

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

2021

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

2022

deficits or to reduce outstanding debt. The board of governors

2023

shall maintain separate accounting records that consolidate data

2024

for nonhomestead properties, including, but not limited to,

2025

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

2026

The board of governors shall annually report to the office and

2027

the Legislature a summary of such data.

2028

2029

1. Must provide for adoption of residential property and

2030

casualty insurance policy forms and commercial residential and

2031

nonresidential property insurance forms, which forms must be

2032

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

2033

the following policy forms:

2034

a. Standard personal lines policy forms that are

2035

comprehensive multiperil policies providing full coverage of a

2036

residential property equivalent to the coverage provided in the

2037

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

2038

b. Basic personal lines policy forms that are policies

2039

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

2040

coverage meeting the requirements of the secondary mortgage

2041

market, but which coverage is more limited than the coverage

2042

under a standard policy.

2043

c. Commercial lines residential and nonresidential policy

2044

forms that are generally similar to the basic perils of full

2045

coverage obtainable for commercial residential structures and

2046

commercial nonresidential structures in the admitted voluntary

2047

market.

2048

d. Personal lines and commercial lines residential property

2049

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

2050

applicable only to residential properties located in areas

2051

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

2052

sub-subparagraph (b)2.a.

2053

e. Commercial lines nonresidential property insurance forms

2054

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

2055

to nonresidential properties located in areas eligible for

2056

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

2057

subparagraph (b)2.a.

2058

f. The corporation may adopt variations of the policy forms

2059

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

2060

coverage.

2061

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

2062

which the corporation and authorized insurers enter into quota

2063

share primary insurance agreements for hurricane coverage, as

2064

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

2065

property insurance forms for eligible risks which cover the peril

2066

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

2067

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

2068

which the primary hurricane coverage of an eligible risk is

2069

provided in specified percentages by the corporation and an

2070

authorized insurer. The corporation and authorized insurer are

2071

each solely responsible for a specified percentage of hurricane

2072

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

2073

primary insurance agreement between the corporation and an

2074

authorized insurer and the insurance contract. The responsibility

2075

of the corporation or authorized insurer to pay its specified

2076

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

2077

in the quota share primary insurance agreement, may not be

2078

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

2079

pay its specified percentage of hurricane losses. Eligible risks

2080

that are provided hurricane coverage through a quota share

2081

primary insurance arrangement must be provided policy forms that

2082

set forth the obligations of the corporation and authorized

2083

insurer under the arrangement, clearly specify the percentages of

2084

quota share primary insurance provided by the corporation and

2085

authorized insurer, and conspicuously and clearly state that

2086

neither the authorized insurer nor the corporation may be held

2087

responsible beyond its specified percentage of coverage of

2088

hurricane losses.

2089

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

2090

commercial lines residential risks that meet the underwriting

2091

criteria of the corporation and are located in areas that were

2092

eligible for coverage by the Florida Windstorm Underwriting

2093

Association on January 1, 2002.

2094

b. The corporation may enter into quota share primary

2095

insurance agreements with authorized insurers at corporation

2096

coverage levels of 90 percent and 50 percent.

2097

c. If the corporation determines that additional coverage

2098

levels are necessary to maximize participation in quota share

2099

primary insurance agreements by authorized insurers, the

2100

corporation may establish additional coverage levels. However,

2101

the corporation's quota share primary insurance coverage level

2102

may not exceed 90 percent.

2103

d. Any quota share primary insurance agreement entered into

2104

between an authorized insurer and the corporation must provide

2105

for a uniform specified percentage of coverage of hurricane

2106

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

2107

board, for all eligible risks of the authorized insurer covered

2108

under the quota share primary insurance agreement.

2109

e. Any quota share primary insurance agreement entered into

2110

between an authorized insurer and the corporation is subject to

2111

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

2112

be authorized only as to insurance contracts entered into between

2113

an authorized insurer and an insured who is already insured by

2114

the corporation for wind coverage.

2115

f. For all eligible risks covered under quota share primary

2116

insurance agreements, the exposure and coverage levels for both

2117

the corporation and authorized insurers shall be reported by the

2118

corporation to the Florida Hurricane Catastrophe Fund. For all

2119

policies of eligible risks covered under quota share primary

2120

insurance agreements, the corporation and the authorized insurer

2121

shall maintain complete and accurate records for the purpose of

2122

exposure and loss reimbursement audits as required by Florida

2123

Hurricane Catastrophe Fund rules. The corporation and the

2124

authorized insurer shall each maintain duplicate copies of policy

2125

declaration pages and supporting claims documents.

2126

g. The corporation board shall establish in its plan of

2127

operation standards for quota share agreements which ensure that

2128

there is no discriminatory application among insurers as to the

2129

terms of quota share agreements, pricing of quota share

2130

agreements, incentive provisions if any, and consideration paid

2131

for servicing policies or adjusting claims.

2132

h. The quota share primary insurance agreement between the

2133

corporation and an authorized insurer must set forth the specific

2134

terms under which coverage is provided, including, but not

2135

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

2136

agreement by the insurance agent of the authorized insurer

2137

producing the business, the reporting of information concerning

2138

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

2139

arrangements for the adjustment and payment of hurricane claims

2140

incurred on eligible risks by the claims adjuster and personnel

2141

of the authorized insurer. Entering into a quota sharing

2142

insurance agreement between the corporation and an authorized

2143

insurer shall be voluntary and at the discretion of the

2144

authorized insurer.

2145

3. May provide that the corporation may employ or otherwise

2146

contract with individuals or other entities to provide

2147

administrative or professional services that may be appropriate

2148

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

2149

borrow funds, by issuing bonds or by incurring other

2150

indebtedness, and shall have other powers reasonably necessary to

2151

effectuate the requirements of this subsection, including,

2152

without limitation, the power to issue bonds and incur other

2153

indebtedness in order to refinance outstanding bonds or other

2154

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

2155

judicial validation of its bonds or other indebtedness under

2156

chapter 75. The corporation may issue bonds or incur other

2157

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

2158

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

2159

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

2160

determination by the corporation, subject to approval by the

2161

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

2162

financial obligations of the corporation and that such financings

2163

are reasonably necessary to effectuate the requirements of this

2164

subsection. The corporation is authorized to take all actions

2165

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

2166

indebtedness, including formation of trusts or other affiliated

2167

entities. The corporation shall have the authority to pledge

2168

assessments, projected recoveries from the Florida Hurricane

2169

Catastrophe Fund, other reinsurance recoverables, market

2170

equalization and other surcharges, and other funds available to

2171

the corporation as security for bonds or other indebtedness. In

2172

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

2173

prohibiting the impairment of obligations of contracts, it is the

2174

intent of the Legislature that no action be taken whose purpose

2175

is to impair any bond indenture or financing agreement or any

2176

revenue source committed by contract to such bond or other

2177

indebtedness.

2178

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

2179

the supervision and approval of a board of governors consisting

2180

of eight individuals who are residents of this state, from

2181

different geographical areas of this state. The Governor, the

2182

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

2183

Speaker of the House of Representatives shall each appoint two

2184

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

2185

by each appointing officer must have demonstrated expertise in

2186

insurance. The Chief Financial Officer shall designate one of the

2187

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

2188

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

2189

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

2190

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

2191

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

2192

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

2193

term by the appointing officer. The Chief Financial Officer shall

2194

appoint a technical advisory group to provide information and

2195

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

2196

duties under this subsection. The executive director and senior

2197

managers of the corporation shall be engaged by the board and

2198

serve at the pleasure of the board. Any executive director

2199

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

2200

the Senate. The executive director is responsible for employing

2201

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

2202

concurrence by the board.

2203

b. The board shall create a Market Accountability Advisory

2204

Committee to assist the corporation in developing awareness of

2205

its rates and its customer and agent service levels in

2206

relationship to the voluntary market insurers writing similar

2207

coverage. The members of the advisory committee shall consist of

2208

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

2209

the members of the committee: four representatives, one appointed

2210

by the Florida Association of Insurance Agents, one by the

2211

Florida Association of Insurance and Financial Advisors, one by

2212

the Professional Insurance Agents of Florida, and one by the

2213

Latin American Association of Insurance Agencies; three

2214

representatives appointed by the insurers with the three highest

2215

voluntary market share of residential property insurance business

2216

in the state; one representative from the Office of Insurance

2217

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

2218

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

2219

representative appointed by the Florida Association of Realtors;

2220

and one representative appointed by the Florida Bankers

2221

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

2222

serve for consecutive terms. The committee shall report to the

2223

corporation at each board meeting on insurance market issues

2224

which may include rates and rate competition with the voluntary

2225

market; service, including policy issuance, claims processing,

2226

and general responsiveness to policyholders, applicants, and

2227

agents; and matters relating to depopulation.

2228

5. Must provide a procedure for determining the eligibility

2229

of a risk for coverage, as follows:

2230

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

2231

to personal lines residential risks, if the risk is offered

2232

coverage from an authorized insurer at the insurer's approved

2233

rate under either a standard policy including wind coverage or,

2234

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

2235

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

2236

application to the corporation for coverage, the risk is not

2237

eligible for any policy issued by the corporation unless the

2238

premium for coverage from the authorized insurer is more than 15

2239

percent greater than the premium for comparable coverage from the

2240

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

2241

the risk is eligible for either a standard policy including wind

2242

coverage or a basic policy including wind coverage issued by the

2243

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

2244

standard policy including wind coverage regardless of market

2245

conditions, the risk shall be eligible for a basic policy

2246

including wind coverage unless rejected under subparagraph 9.

2247

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

2248

policyholder removed from the corporation through an assumption

2249

agreement until the end of the assumption period, the

2250

policyholder remains eligible for coverage from the corporation

2251

regardless of any offer of coverage from an authorized insurer or

2252

surplus lines insurer. The corporation shall determine the type

2253

of policy to be provided on the basis of objective standards

2254

specified in the underwriting manual and based on generally

2255

accepted underwriting practices.

2256

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

2257

market assistance plan or an offer of coverage through a

2258

mechanism established by the corporation before a policy is

2259

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

2260

of coverage by the corporation, and the producing agent who

2261

submitted the application to the plan or to the corporation is

2262

not currently appointed by the insurer, the insurer shall:

2263

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

2264

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

2265

usual and customary commission for the type of policy written or

2266

a fee equal to the usual and customary commission of the

2267

corporation; or

2268

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

2269

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

2270

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

2271

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

2272

the type of policy written.

2273

2274

If the producing agent is unwilling or unable to accept

2275

appointment, the new insurer shall pay the agent in accordance

2276

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

2277

(II) When the corporation enters into a contractual

2278

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

2279

the corporation policy is entitled to retain any unearned

2280

commission on the policy, and the insurer shall:

2281

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

2282

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

2283

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

2284

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

2285

the corporation; or

2286

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

2287

corporation policy to continue servicing the policy for a period

2288

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

2289

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

2290

for the type of policy written.

2291

2292

If the producing agent is unwilling or unable to accept

2293

appointment, the new insurer shall pay the agent in accordance

2294

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

2295

b. With respect to commercial lines residential risks, for

2296

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

2297

offered coverage under a policy including wind coverage from an

2298

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

2299

for any policy issued by the corporation unless the premium for

2300

coverage from the authorized insurer is more than 15 percent

2301

greater than the premium for comparable coverage from the

2302

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

2303

the risk is eligible for a policy including wind coverage issued

2304

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

2305

corporation or a policyholder removed from the corporation

2306

through an assumption agreement until the end of the assumption

2307

period, the policyholder remains eligible for coverage from the

2308

corporation regardless of any offer of coverage from an

2309

authorized insurer or surplus lines insurer.

2310

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

2311

market assistance plan or an offer of coverage through a

2312

mechanism established by the corporation before a policy is

2313

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

2314

of coverage by the corporation, and the producing agent who

2315

submitted the application to the plan or the corporation is not

2316

currently appointed by the insurer, the insurer shall:

2317

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

2318

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

2319

usual and customary commission for the type of policy written or

2320

a fee equal to the usual and customary commission of the

2321

corporation; or

2322

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

2323

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

2324

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

2325

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

2326

the type of policy written.

2327

2328

If the producing agent is unwilling or unable to accept

2329

appointment, the new insurer shall pay the agent in accordance

2330

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

2331

(II) When the corporation enters into a contractual

2332

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

2333

the corporation policy is entitled to retain any unearned

2334

commission on the policy, and the insurer shall:

2335

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

2336

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

2337

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

2338

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

2339

the corporation; or

2340

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

2341

corporation policy to continue servicing the policy for a period

2342

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

2343

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

2344

for the type of policy written.

2345

2346

If the producing agent is unwilling or unable to accept

2347

appointment, the new insurer shall pay the agent in accordance

2348

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

2349

c. For purposes of determining comparable coverage under

2350

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

2351

those forms and coverages that are reasonably comparable. The

2352

corporation may rely on a determination of comparable coverage

2353

and premium made by the producing agent who submits the

2354

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

2355

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

2356

premium with respect to the main building or structure only on

2357

the following basis: the same coverage A or other building

2358

limits; the same percentage hurricane deductible that applies on

2359

an annual basis or that applies to each hurricane for commercial

2360

residential property; the same percentage of ordinance and law

2361

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

2362

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

2363

extent the same types of credits are offered both by the

2364

corporation and the authorized insurer; the same method for loss

2365

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

2366

same method is offered both by the corporation and the authorized

2367

insurer in accordance with underwriting rules; and any other form

2368

or coverage that is reasonably comparable as determined by the

2369

board. If an application is submitted to the corporation for

2370

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

2371

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

2372

policy that is offered by an authorized insurer to the applicant

2373

shall be compared to the premium for multiperil coverage offered

2374

by an authorized insurer, subject to the standards for comparison

2375

specified in this subparagraph. If the corporation or the

2376

applicant requests from the authorized insurer a breakdown of the

2377

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

2378

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

2379

insurer refuses or is unable to provide such information, the

2380

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

2381

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

2382

6. Must include rules for classifications of risks and

2383

rates therefor.

2384

7. Must provide that if premium and investment income for

2385

an account attributable to a particular calendar year are in

2386

excess of projected losses and expenses for the account

2387

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

2388

in the account. Such surplus shall be available to defray

2389

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

2390

that purpose prior to assessing assessable insurers and

2391

assessable insureds as to any calendar year.

2392

8. Must provide objective criteria and procedures to be

2393

uniformly applied for all applicants in determining whether an

2394

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

2395

this determination and in establishing the criteria and

2396

procedures, the following shall be considered:

2397

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

2398

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

2399

and

2400

b. Whether the uncertainty associated with the individual

2401

risk is such that an appropriate premium cannot be determined.

2402

2403

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

2404

construed as the private placement of insurance, and the

2405

provisions of chapter 120 shall not apply.

2406

9. Must provide that the corporation shall make its best

2407

efforts to procure catastrophe reinsurance at reasonable rates,

2408

to cover its projected 100-year probable maximum loss as

2409

determined by the board of governors.

2410

10. Must provide that in the event of regular deficit

2411

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

2412

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

2413

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

2414

shall levy upon corporation policyholders in its next rate

2415

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

2416

Citizens policyholder surcharge arising from a regular assessment

2417

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

2418

regular assessments divided by the aggregate statewide direct

2419

written premium for subject lines of business for the prior

2420

calendar year. For purposes of calculating the Citizens

2421

policyholder surcharge to be levied under this subparagraph, the

2422

total amount of the regular assessment to which this surcharge is

2423

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

2424

without deducting the estimated Citizens policyholder surcharge.

2425

Citizens policyholder surcharges under this subparagraph are not

2426

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

2427

premium taxes; however, failure to pay a market equalization

2428

surcharge shall be treated as failure to pay premium.

2429

10.11. The policies issued by the corporation must provide

2430

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

2431

offer from an authorized insurer to cover the risk at its

2432

approved rates, the risk is no longer eligible for renewal

2433

through the corporation, except as otherwise provided in this

2434

subsection.

2435

11.12. Corporation policies and applications must include a

2436

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

2437

replaced with a policy issued by an authorized insurer that does

2438

not provide coverage identical to the coverage provided by the

2439

corporation. The notice shall also specify that acceptance of

2440

corporation coverage creates a conclusive presumption that the

2441

applicant or policyholder is aware of this potential.

2442

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

2443

different eligibility requirements and operational procedures for

2444

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

2445

the board determines that such changes to the eligibility

2446

requirements and operational procedures are justified due to the

2447

voluntary market being sufficiently stable and competitive in

2448

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

2449

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

2450

voluntary market through ordinary methods would continue to have

2451

access to coverage from the corporation. When coverage is sought

2452

in connection with a real property transfer, such requirements

2453

and procedures shall not provide for an effective date of

2454

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

2455

established by the transferor, the transferee, and, if

2456

applicable, the lender.

2457

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

2458

account, any assessable insurer with a surplus as to

2459

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

2460

of its total countrywide property insurance premiums in this

2461

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

2462

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

2463

regular assessment levied by the corporation on a limited

2464

apportionment company for a deficit incurred by the corporation

2465

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

2466

the corporation on a monthly basis as the assessments are

2467

collected by the limited apportionment company from its insureds

2468

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

2469

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

2470

limited apportionment company shall collect from its

2471

policyholders any emergency assessment imposed under sub-

2472

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

2473

determines that any regular assessment will result in an

2474

impairment of the surplus of a limited apportionment company, the

2475

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

2476

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

2477

limitation or deferment of an emergency assessment to be

2478

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

2479

14.15. Must provide that the corporation appoint as its

2480

licensed agents only those agents who also hold an appointment as

2481

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

2482

agent's initial appointment by the corporation is authorized to

2483

write and is actually writing personal lines residential property

2484

coverage, commercial residential property coverage, or commercial

2485

nonresidential property coverage within the state.

2486

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

2487

plan option to its policyholders which allows at a minimum for

2488

quarterly and semiannual payment of premiums. A monthly payment

2489

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

2490

16.17. Must limit coverage on mobile homes or manufactured

2491

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

2492

rather than replacement costs of the dwelling.

2493

17.18. May provide such limits of coverage as the board

2494

determines, consistent with the requirements of this subsection.

2495

18.19. May require commercial property to meet specified

2496

hurricane mitigation construction features as a condition of

2497

eligibility for coverage.

2498

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

2499

be actuarially sound and subject to the requirements of s.

2500

627.062, except as otherwise provided in this paragraph. The

2501

corporation shall file its recommended rates with the office at

2502

least annually. The corporation shall provide any additional

2503

information regarding the rates which the office requires. The

2504

office shall consider the recommendations of the board and issue

2505

a final order establishing the rates for the corporation within

2506

45 days after the recommended rates are filed. The corporation

2507

may not pursue an administrative challenge or judicial review of

2508

the final order of the office.

2509

2. In addition to the rates otherwise determined pursuant

2510

to this paragraph, the corporation shall impose and collect an

2511

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

2512

augment the financial resources of the corporation.

2513

3. After the public hurricane loss-projection model under

2514

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

2515

Florida Commission on Hurricane Loss Projection Methodology, that

2516

model shall serve as the minimum benchmark for determining the

2517

windstorm portion of the corporation's rates. This subparagraph

2518

does not require or allow the corporation to adopt rates lower

2519

than the rates otherwise required or allowed by this paragraph.

2520

4. The rate filings for the corporation which were approved

2521

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

2522

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

2523

possible, the corporation shall begin using the lower rates that

2524

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

2525

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

2526

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

2527

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

2528

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

2529

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

2530

a new rate filing recommended by the corporation and established

2531

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

2532

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

2533

thereafter, the corporation must make a recommended actuarially

2534

sound rate filing for each personal and commercial line of

2535

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

2536

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

2537

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

2538

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

2539

corporation for its personal residential multiperil policies, its

2540

commercial residential multiperil policies, and its commercial

2541

nonresidential multiperil policies may not result in an overall

2542

average statewide premium increase of more than 5 percent or an

2543

increase for any single policyholder of more than 5 percent,

2544

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

2545

overall average statewide premium increase of more than 10

2546

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

2547

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

2548

excluding coverage changes and surcharges.

2549

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

2550

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

2551

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

2552

its personal residential wind-only policies, its commercial

2553

residential wind-only policies, and its commercial nonresidential

2554

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

2555

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

2556

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

2557

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

2558

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

2559

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

2560

two subsequent 12-month periods, excluding coverage changes and

2561

surcharges.

2562

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

2563

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

2564

any interim assessments that it deems to be necessary to sustain

2565

operations as to a particular year pending the receipt of annual

2566

assessments. Upon verification, the office shall approve such

2567

certification, and the corporation shall levy such annual or

2568

interim assessments. Such assessments shall be prorated as

2569

provided in paragraph (b). The corporation shall take all

2570

reasonable and prudent steps necessary to collect the amount of

2571

assessment due from each assessable insurer, including, if

2572

prudent, filing suit to collect such assessment. If the

2573

corporation is unable to collect an assessment from any

2574

assessable insurer, the uncollected assessments shall be levied

2575

as an additional assessment against the assessable insurers and

2576

any assessable insurer required to pay an additional assessment

2577

as a result of such failure to pay shall have a cause of action

2578

against such nonpaying assessable insurer. Assessments shall be

2579

included as an appropriate factor in the making of rates. The

2580

failure of a surplus lines agent to collect and remit any regular

2581

or emergency assessment levied by the corporation is considered

2582

to be a violation of s. 626.936 and subjects the surplus lines

2583

agent to the penalties provided in that section.

2584

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

2585

residents of which are insured by the corporation, may issue

2586

bonds as defined in s. 125.013 or s. 166.101 from time to time to

2587

fund an assistance program, in conjunction with the corporation,

2588

for the purpose of defraying deficits of the corporation. In

2589

order to avoid needless and indiscriminate proliferation,

2590

duplication, and fragmentation of such assistance programs, any

2591

unit of local government, any residents of which are insured by

2592

the corporation, may provide for the payment of losses,

2593

regardless of whether or not the losses occurred within or

2594

outside of the territorial jurisdiction of the local government.

2595

Revenue bonds under this subparagraph may not be issued until

2596

validated pursuant to chapter 75, unless a state of emergency is

2597

declared by executive order or proclamation of the Governor

2598

pursuant to s. 252.36 making such findings as are necessary to

2599

determine that it is in the best interests of, and necessary for,

2600

the protection of the public health, safety, and general welfare

2601

of residents of this state and declaring it an essential public

2602

purpose to permit certain municipalities or counties to issue

2603

such bonds as will permit relief to claimants and policyholders

2604

of the corporation. Any such unit of local government may enter

2605

into such contracts with the corporation and with any other

2606

entity created pursuant to this subsection as are necessary to

2607

carry out this paragraph. Any bonds issued under this

2608

subparagraph shall be payable from and secured by moneys received

2609

by the corporation from emergency assessments under sub-

2610

subparagraph (b)3.d., and assigned and pledged to or on behalf of

2611

the unit of local government for the benefit of the holders of

2612

such bonds. The funds, credit, property, and taxing power of the

2613

state or of the unit of local government shall not be pledged for

2614

the payment of such bonds. If any of the bonds remain unsold 60

2615

days after issuance, the office shall require all insurers

2616

subject to assessment to purchase the bonds, which shall be

2617

treated as admitted assets; each insurer shall be required to

2618

purchase that percentage of the unsold portion of the bond issue

2619

that equals the insurer's relative share of assessment liability

2620

under this subsection. An insurer shall not be required to

2621

purchase the bonds to the extent that the office determines that

2622

the purchase would endanger or impair the solvency of the

2623

insurer.

2624

3.a. The corporation shall adopt one or more programs

2625

subject to approval by the office for the reduction of both new

2626

and renewal writings in the corporation. Beginning January 1,

2627

2008, any program the corporation adopts for the payment of

2628

bonuses to an insurer for each risk the insurer removes from the

2629

corporation shall comply with s. 627.3511(2) and may not exceed

2630

the amount referenced in s. 627.3511(2) for each risk removed.

2631

The corporation may consider any prudent and not unfairly

2632

discriminatory approach to reducing corporation writings, and may

2633

adopt a credit against assessment liability or other liability

2634

that provides an incentive for insurers to take risks out of the

2635

corporation and to keep risks out of the corporation by

2636

maintaining or increasing voluntary writings in counties or areas

2637

in which corporation risks are highly concentrated and a program

2638

to provide a formula under which an insurer voluntarily taking

2639

risks out of the corporation by maintaining or increasing

2640

voluntary writings will be relieved wholly or partially from

2641

assessments under sub-subparagraphs (b)3.a. and b. However, any

2642

"take-out bonus" or payment to an insurer must be conditioned on

2643

the property being insured for at least 5 years by the insurer,

2644

unless canceled or nonrenewed by the policyholder. If the policy

2645

is canceled or nonrenewed by the policyholder before the end of

2646

the 5-year period, the amount of the take-out bonus must be

2647

prorated for the time period the policy was insured. When the

2648

corporation enters into a contractual agreement for a take-out

2649

plan, the producing agent of record of the corporation policy is

2650

entitled to retain any unearned commission on such policy, and

2651

the insurer shall either:

2652

(I) Pay to the producing agent of record of the policy, for

2653

the first year, an amount which is the greater of the insurer's

2654

usual and customary commission for the type of policy written or

2655

a policy fee equal to the usual and customary commission of the

2656

corporation; or

2657

(II) Offer to allow the producing agent of record of the

2658

policy to continue servicing the policy for a period of not less

2659

than 1 year and offer to pay the agent the insurer's usual and

2660

customary commission for the type of policy written. If the

2661

producing agent is unwilling or unable to accept appointment by

2662

the new insurer, the new insurer shall pay the agent in

2663

accordance with sub-sub-subparagraph (I).

2664

b. Any credit or exemption from regular assessments adopted

2665

under this subparagraph shall last no longer than the 3 years

2666

following the cancellation or expiration of the policy by the

2667

corporation. With the approval of the office, the board may

2668

extend such credits for an additional year if the insurer

2669

guarantees an additional year of renewability for all policies

2670

removed from the corporation, or for 2 additional years if the

2671

insurer guarantees 2 additional years of renewability for all

2672

policies so removed.

2673

c. There shall be no credit, limitation, exemption, or

2674

deferment from emergency assessments to be collected from

2675

policyholders pursuant to sub-subparagraph (b)3.d.

2676

d. Subject to the execution of the confidentiality

2677

agreement required by paragraph (w), the corporation shall make

2678

its database of policies available to prospective take-out

2679

insurers considering underwriting a risk insured by the

2680

corporation, without categorically eliminating policies from

2681

eligibility for removal. The corporation may not instruct or

2682

encourage prospective take-out insurers to avoid the selection of

2683

policies for which the agent has disapproved policy removals. The

2684

corporation must require agents to accept or decline appointment

2685

for any policy selected and, in the case of a declination, must

2686

notify the policyholder that an insurer, identified by name,

2687

selected his or her policy for a take-out offer, but that the

2688

policyholder's agent refused to be appointed by the insurer. The

2689

notice must also provide the policyholder with the take-out

2690

insurer's contact information so that the policyholder may

2691

contact the company directly and make his or her own

2692

determination of whether to seek coverage from the take-out

2693

insurer.

2694

4. The plan shall provide for the deferment, in whole or in

2695

part, of the assessment of an assessable insurer, other than an

2696

emergency assessment collected from policyholders pursuant to

2697

sub-subparagraph (b)3.d., if the office finds that payment of the

2698

assessment would endanger or impair the solvency of the insurer.

2699

In the event an assessment against an assessable insurer is

2700

deferred in whole or in part, the amount by which such assessment

2701

is deferred may be assessed against the other assessable insurers

2702

in a manner consistent with the basis for assessments set forth

2703

in paragraph (b).

2704

5. Effective July 1, 2007, in order to evaluate the costs

2705

and benefits of approved take-out plans, if the corporation pays

2706

a bonus or other payment to an insurer for an approved take-out

2707

plan, it shall maintain a record of the address or such other

2708

identifying information on the property or risk removed in order

2709

to track if and when the property or risk is later insured by the

2710

corporation.

2711

6. Any policy taken out, assumed, or removed from the

2712

corporation is, as of the effective date of the take-out,

2713

assumption, or removal, direct insurance issued by the insurer

2714

and not by the corporation, even if the corporation continues to

2715

service the policies. This subparagraph applies to policies of

2716

the corporation and not policies taken out, assumed, or removed

2717

from any other entity.

2718

(dd)1. For policies subject to nonrenewal as a result of

2719

the risk being no longer eligible for coverage due to being

2720

valued at $1 million or more, the corporation shall, directly or

2721

through the market assistance plan, make information from

2722

confidential underwriting and claims files of policyholders

2723

available only to licensed general lines agents who register with

2724

the corporation to receive such information according to the

2725

following procedures:

2726

2. By August 1, 2006, the corporation shall provide such

2727

policyholders who are not eligible for renewal the opportunity to

2728

request in writing, within 30 days after the notification is

2729

sent, that information from their confidential underwriting and

2730

claims files not be released to licensed general lines agents

2731

registered pursuant to this paragraph.

2732

3. By August 1, 2006, the corporation shall make available

2733

to licensed general lines agents the registration procedures to

2734

be used to obtain confidential information from underwriting and

2735

claims files for such policies not eligible for renewal. As a

2736

condition of registration, the corporation shall require the

2737

licensed general lines agent to attest that the agent has the

2738

experience and relationships with authorized or surplus lines

2739

carriers to attempt to offer replacement coverage for such

2740

policies.

2741

4. By September 1, 2006, the corporation shall make

2742

available through a secured website to licensed general lines

2743

agents registered pursuant to this paragraph application, rating,

2744

loss history, mitigation, and policy type information relating to

2745

such policies not eligible for renewal and for which the

2746

policyholder has not requested the corporation withhold such

2747

information. The registered licensed general lines agent may use

2748

such information to contact and assist the policyholder in

2749

securing replacement policies, and the agent may disclose to the

2750

policyholder that such information was obtained from the

2751

corporation.

2752

(dd)(ee) The assets of the corporation may be invested and

2753

managed by the State Board of Administration.

2754

(ee)(ff) The office may establish a pilot program to offer

2755

optional sinkhole coverage in one or more counties or other

2756

territories of the corporation for the purpose of implementing s.

2757

627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.

2758

Under the pilot program, the corporation is not required to issue

2759

a notice of nonrenewal to exclude sinkhole coverage upon the

2760

renewal of existing policies, but may exclude such coverage using

2761

a notice of coverage change.

2762

Section 13. Paragraph (b) of subsection (2) of section

2763

627.4133, Florida Statutes, is amended to read:

2764

(2) With respect to any personal lines or commercial

2765

residential property insurance policy, including, but not limited

2766

to, any homeowner's, mobile home owner's, farmowner's,

2767

condominium association, condominium unit owner's, apartment

2768

building, or other policy covering a residential structure or its

2769

contents:

2770

(b) The insurer shall give the named insured written notice

2771

of nonrenewal, cancellation, or termination at least 180 100 days

2772

prior to the effective date of the nonrenewal, cancellation, or

2773

termination. However, the insurer shall give at least 100 days'

2774

written notice, or written notice by June 1, whichever is

2775

earlier, for any nonrenewal, cancellation, or termination that

2776

would be effective between June 1 and November 30. The notice

2777

must include the reason or reasons for the nonrenewal,

2778

cancellation, or termination, except that:

2779

1. When cancellation is for nonpayment of premium, at least

2780

10 days' written notice of cancellation accompanied by the reason

2781

therefor shall be given. As used in this subparagraph, the term

2782

"nonpayment of premium" means failure of the named insured to

2783

discharge when due any of her or his obligations in connection

2784

with the payment of premiums on a policy or any installment of

2785

such premium, whether the premium is payable directly to the

2786

insurer or its agent or indirectly under any premium finance plan

2787

or extension of credit, or failure to maintain membership in an

2788

organization if such membership is a condition precedent to

2789

insurance coverage. "Nonpayment of premium" also means the

2790

failure of a financial institution to honor an insurance

2791

applicant's check after delivery to a licensed agent for payment

2792

of a premium, even if the agent has previously delivered or

2793

transferred the premium to the insurer. If a dishonored check

2794

represents the initial premium payment, the contract and all

2795

contractual obligations shall be void ab initio unless the

2796

nonpayment is cured within the earlier of 5 days after actual

2797

notice by certified mail is received by the applicant or 15 days

2798

after notice is sent to the applicant by certified mail or

2799

registered mail, and if the contract is void, any premium

2800

received by the insurer from a third party shall be refunded to

2801

that party in full.

2802

2. When such cancellation or termination occurs during the

2803

first 90 days during which the insurance is in force and the

2804

insurance is canceled or terminated for reasons other than

2805

nonpayment of premium, at least 20 days' written notice of

2806

cancellation or termination accompanied by the reason therefor

2807

shall be given except where there has been a material

2808

misstatement or misrepresentation or failure to comply with the

2809

underwriting requirements established by the insurer.

2810

3. The requirement for providing written notice of

2811

nonrenewal by June 1 of any nonrenewal that would be effective

2812

between June 1 and November 30 does not apply to the following

2813

situations, but the insurer remains subject to the requirement to

2814

provide such notice at least 100 days prior to the effective date

2815

of nonrenewal:

2816

a. A policy that is nonrenewed due to a revision in the

2817

coverage for sinkhole losses and catastrophic ground cover

2818

collapse pursuant to s. 627.730, as amended by s. 30, chapter

2819

2007-1, Laws of Florida.

2820

b. A policy that is nonrenewed by Citizens Property

2821

Insurance Corporation, pursuant to s. 627.351(6), for a policy

2822

that has been assumed by an authorized insurer offering

2823

replacement or renewal coverage to the policyholder.

2824

2825

After the policy has been in effect for 90 days, the policy shall

2826

not be canceled by the insurer except when there has been a

2827

material misstatement, a nonpayment of premium, a failure to

2828

comply with underwriting requirements established by the insurer

2829

within 90 days of the date of effectuation of coverage, or a

2830

substantial change in the risk covered by the policy or when the

2831

cancellation is for all insureds under such policies for a given

2832

class of insureds. This paragraph does not apply to individually

2833

rated risks having a policy term of less than 90 days.

2834

Section 14. Effective January 1, 2011, section 689.262,

2835

Florida Statutes, is created to read:

2836

689.262 Sale of residential property; disclosure of

2837

windstorm mitigation rating.--A purchaser of residential property

2838

must be informed of the windstorm mitigation rating of the

2839

structure, based on the uniform home grading scale adopted

2840

pursuant to s. 215.55865. The rating must be included in the

2841

contract for sale or as a separate document attached to the

2842

contract for sale. The Financial Services Commission may adopt

2843

rules, consistent with other state laws, to administer this

2844

section, including the form of the disclosure and the

2845

requirements for the windstorm mitigation inspection or report

2846

that is required for purposes of determining the rating.

2847

Section 15. Effective October 1, 2008, subsection (1) of

2848

section 817.2341, Florida Statutes, is amended to read:

2849

817.2341 False or misleading statements or supporting

2850

documents; penalty.--

2851

(1) Any person who willfully files with the department or

2852

office, or who willfully signs for filing with the department or

2853

office, a materially false or materially misleading financial

2854

statement or document in support of such statement required by

2855

law or rule, or a materially false or materially misleading rate

2856

filing, with intent to deceive and with knowledge that the

2857

statement or document is materially false or materially

2858

misleading, commits a felony of the third degree, punishable as

2859

provided in s. 775.082, s. 775.083, or s. 775.084.

2860

Section 16. (1) By December 15, 2008, Citizens Property

2861

Insurance Corporation shall transfer $250 million to the General

2862

Revenue Fund by transferring an amount from the Personal Lines

2863

Account and the Commercial Lines Account, as defined in s.

2864

627.351(6), Florida Statutes, in proportion to the surplus of

2865

each account, if the combined losses in the Personal Lines

2866

Account and the Commercial Lines Account from one or more named

2867

hurricanes in 2008 do not exceed $750 million. The board of

2868

governors of Citizens Property Insurance Corporation must make a

2869

reasonable estimate of such losses on or after December 1, 2008,

2870

and no later than December 14, 2008, using generally accepted

2871

actuarial and accounting practices, recognizing that audited

2872

financial statements will not yet be available and that all

2873

losses will have not been reported or developed.

2874

(2) If Citizens Property Insurance Corporation transfers

2875

$250 million to General Revenue as provided in subsection (1),

2876

effective December 15, 2008, and for the 2008-2009 fiscal year,

2877

the sum of $250 million is appropriated from the General Revenue

2878

Fund on a nonrecurring basis to the State Board of Administration

2879

for purposes of the Insurance Capital Build-Up Incentive Program

2880

established pursuant to s. 215.5595, Florida Statutes, as amended

2881

by this act. Costs and fees incurred by the board in

2882

administering this program, including fees for investment

2883

services, shall be paid from funds appropriated by the

2884

Legislature for this program, but are limited to 1 percent of the

2885

amount appropriated. Notwithstanding the provisions of s.

2886

216.301, Florida Statutes, to the contrary, the unexpended

2887

balance of this appropriation shall not revert to the General

2888

Revenue Fund until June 30, 2009.

2889

Section 17. Except as otherwise expressly provided in this

2890

act, this act shall take effect July 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.