CS for CS for SB's 2860 & 1196 Second Engrossed

20082860e2

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;

creating s. 624.4305, F.S.; requiring that an insurer

planning to nonrenew more than a specified number of

residential property insurance polices notify the Office

of Insurance Regulation and obtain approval for such

nonrenewals; specifying procedures for issuance of such

notice; prohibiting the office from approving a nonrenewal

plan unless it determines that the insurer has met certain

conditions; prohibiting the office from requiring certain

actions; limiting the ability of the office to disapprove

or restrict nonrenewal of certain policies under certain

conditions; 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

100

order, subject to waiver by all parties; authorizing an

101

insurer to request an expedited appellate review pursuant

102

to the Florida Rules of Appellate Procedure; expressing

103

legislative intent for an expedited appellate review;

104

requiring an administrative law judge in a hearing on an

105

insurance rate to grant a continuance if requested by a

106

party due to receiving additional information that was not

107

previously available; deleting provisions relating to the

108

submission of a disputed rate filing, other than a rate

109

filing for medical malpractice insurance, to an

110

arbitration panel in lieu of an administrative hearing if

111

the rate is filed before a specified date; requiring

112

certain officers and the chief actuary of a property

113

insurer to certify certain information as part of a rate

114

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

115

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

116

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

117

requiring that with respect to rate filings, insurers must

118

use actuarial methods or models found to be accurate or

119

reliable by the Florida Commission on Hurricane Loss

120

Projection Methodology; deleting the requirement for the

121

Office of Insurance Regulation and the Consumer Advocate

122

to have access to all assumptions of a hurricane loss

123

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

124

accurate and reliable by the Florida Commission on

125

Hurricane Loss Projection Methodology to be admissible in

126

a rate proceeding; deleting cross-references to conform to

127

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

128

requiring that the Office of Insurance Regulation develop

129

and make publicly available before a specified deadline a

130

proposed method for insurers to establish windstorm

131

mitigation premium discounts that correlate to the uniform

132

home rating scale; requiring that the Financial Services

133

Commission adopt rules before a specified deadline;

134

requiring insurers to make rate filings pursuant to such

135

method; authorizing the commission to make changes by rule

136

to the uniform home grading scale and specify by rule the

137

minimum required discounts, credits, or other rate

138

differentials; requiring that such rate differentials be

139

consistent with generally accepted actuarial principles

140

and wind loss mitigation studies; amending s. 627.351,

141

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

142

deleting a provision to conform to changes made in the

143

act; deleting provisions defining the terms "homestead

144

property" and "nonhomestead property"; deleting a

145

provision providing for the classification of certain

146

dwellings as "nonhomestead property"; deleting provisions

147

making dwellings and condominium units that have a

148

replacement cost above a specified value ineligible for

149

coverage after a specified date; deleting requirements for

150

certain properties to meeting building code plus

151

requirements as a condition of eligibility for coverage by

152

the corporation; requiring certain structures to have

153

opening protections as a condition of eligibility for

154

coverage after a specified date; requiring that the

155

corporation cease issuance of new wind-only coverage

156

beginning on a specified date; deleting outdated

157

provisions requiring the corporation to submit a report

158

for approval of offering multiperil coverage; revising

159

threshold amounts of deficits incurred in a calendar year

160

on which the decision to levy assessments and the types of

161

such assessments are based; revising the formula used to

162

calculate shares of assessments owed by certain assessable

163

insureds; requiring that the board of governors make

164

certain determinations before levying emergency

165

assessments; providing the board of governors with

166

discretion to set the amount of an emergency assessment

167

within specified limits; requiring the board of governors

168

to levy a Citizens policyholder surcharge under certain

169

conditions; deleting a provision requiring the levy of an

170

immediate assessment against certain policyholders under

171

such conditions; requiring that funds collected from the

172

levy of such surcharges be used for certain purposes;

173

providing that such surcharges are not considered premium

174

and are not subject to commissions, fees, or premium

175

taxes; requiring that the failure to pay such surcharges

176

be treated as failure to pay premium; requiring that the

177

amount of any assessment or surcharge which exceeds the

178

amount of deficits be remitted to and used by the

179

corporation for specified purposes; deleting provisions

180

requiring that the plan of operation of the corporation

181

provide for the levy of a Citizens policyholder surcharge

182

if regular deficit assessments are levied as a result of

183

deficits in certain accounts; deleting provisions related

184

to the calculation, classification, and nonpayment of such

185

surcharge; requiring that the corporation make an annual

186

filing for each personal or commercial line of business it

187

writes, beginning on a specified date; limiting the

188

overall average statewide premium increase and the

189

increase for an individual policyholder to a specified

190

amount for rates established for certain policies during a

191

specified period; deleting a provision requiring an

192

insurer to purchase bonds that remain unsold; requiring

193

the corporation to make its database of policies available

194

to prospective take-out insurers under certain conditions;

195

requiring the corporation to require agents to accept or

196

decline appointment for any policy selected; requiring the

197

corporation to notify the policyholder of certain

198

information if an insurer selected his or her policy for a

199

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

200

appointed; deleting provisions requiring the corporation

201

to make certain confidential underwriting and claims files

202

available to agents to conform to changes made by the act

203

relating to ineligibility of certain dwellings; clarifying

204

the right of certain parties to discover underwriting and

205

claims file records; authorizing the corporation to

206

release such records as it deems necessary; amending s.

207

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

208

insurer to notify a policyholder of cancellation or

209

nonrenewal of a personal lines or commercial residential

210

property insurance policy; making conforming changes;

211

creating s. 627.714, F.S.; requiring that personal lines

212

residential policies be guaranteed renewable for a

213

specified period if the dwelling meets certain

214

requirements for wind-borne debris protection; creating s.

215

689.262, F.S.; requiring a purchaser of residential

216

property to be presented with the windstorm mitigation

217

rating of the structure; authorizing the Financial

218

Services Commission to adopt rules; amending s. 817.2341,

219

F.S.; providing for criminal penalties to be imposed under

220

certain conditions against any person who willfully files

221

a materially false or misleading rate filing; requiring

222

Citizens Property Insurance Corporation to transfer funds

223

to the General Revenue Fund if the losses due to a

224

hurricane do not exceed a specified amount; requiring the

225

board of governors of Citizens Property Insurance

226

Corporation to make a reasonable estimate of such losses

227

by a certain date; making nonrecurring appropriations for

228

purposes of the Insurance Capital Build-Up Incentive

229

Program established pursuant to s. 215.5595, F.S., as

230

amended by the act; authorizing costs and fees to be paid

231

from funds appropriated, subject to specified limitations;

232

providing effective dates.

233

234

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

235

236

Section 1. Section 215.5595, Florida Statutes, is amended

237

to read:

238

215.5595 Insurance Capital Build-Up Incentive Program.--

239

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

240

Legislature finds that:

241

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

242

2005 have seriously strained the resources of both the voluntary

243

insurance market and the public sector mechanisms of Citizens

244

Property Insurance Corporation and the Florida Hurricane

245

Catastrophe Fund.

246

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

247

significantly greater cost to residential property insurers as

248

compared to 1 year ago, particularly for amounts below the

249

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

250

reimbursement is provided by the Florida Hurricane Catastrophe

251

Fund.

252

253

the insolvency of certain insurers may be imminent.

254

(d) Hurricane forecast experts predict that the 2006

255

hurricane season will be an active hurricane season and that the

256

Atlantic and Gulf Coast regions face an active hurricane cycle of

257

10 to 20 years or longer.

258

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

259

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

260

insurer writing residential property insurer in the state, and

261

faces the threat of a catastrophic loss that The number of

262

cancellations or nonrenewals of residential property insurance

263

policies is expected to increase and the number of new

264

residential policies written in the voluntary market are likely

265

to decrease, causing increased policy growth and exposure to the

266

state insurer of last resort, Citizens Property Insurance

267

Corporation, and threatening to increase the deficit of the

268

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

269

deficit must be funded by assessments against insurers and

270

policyholders, unless otherwise funded by the state.

271

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

272

and assessments that are increasingly making such coverage

273

unaffordable and that may force policyholders to sell their homes

274

and even leave the state.

275

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

276

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

277

this state, particularly the building and financing of

278

residential structures, and existing mortgages may be placed in

279

default.

280

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

281

expectation that the increase in hurricane activity will continue

282

for the foreseeable future, have caused both insurers and

283

reinsurers to limit the capital they are willing to commit to

284

covering the hurricane risk in Florida; attracting new capital to

285

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

286

cost source of capital would enable insurers to write additional

287

residential property insurance coverage and act to mitigate

288

premium increases.

289

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

290

as surplus notes issued by for residential property insurers,

291

under conditions requiring the insurer to contribute additional

292

private sector capital and to write a minimum level of premiums

293

for residential hurricane coverage, is a valid and important

294

public purpose.

295

(f) Extending the Insurance Capital Build-up Incentive

296

Program will provide an incentive for investors to commit

297

additional capital to Florida's residential insurance market.

298

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

299

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

300

authorized residential property insurers under the Insurance

301

Capital Build-Up Incentive Program administered by the State

302

Board of Administration, under the following conditions:

303

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

304

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

305

an insurer writing only manufactured housing policies, may not

306

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

307

appropriated for available under the program, whichever is

308

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

309

insurer group writing residential property insurance covering

310

only manufactured housing may not exceed $7 million.

311

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

312

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

313

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

314

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

315

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

316

the new capital that the insurer contributes to its surplus,

317

except that an insurer writing only manufactured housing policies

318

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

319

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

320

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

321

322

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

323

residential property insurance covering only manufactured

324

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

325

must total at least $14 million for insurers writing only

326

residential property insurance covering manufactured housing

327

policies as provided in paragraph (a).

328

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

329

residential property insurance, including the peril of wind, and

330

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

331

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

332

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

333

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

334

minimum writing ratio of gross written premium to surplus of at

335

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

336

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

337

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

338

the Office of Insurance Regulation and certified quarterly to the

339

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

340

means net written premium for residential property insurance in

341

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

342

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

343

the surplus note plus the amount of new capital contributed by

344

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

345

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

346

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

347

not including renewal premiums, for policies taken out of

348

Citizens Property Insurance Corporation, during each of the first

349

3 years after receiving the state funds in exchange for the

350

surplus note, which shall be determined by the Office of

351

Insurance Regulation and certified annually to the board. The

352

removal of such policies must result in a reduction in the

353

probable maximum loss in the account from which the policies are

354

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

355

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

356

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

357

loss model accepted by the Florida Commission on Hurricane Loss

358

Projection Methodology, which shall be determined by the Office

359

of Insurance Regulation and certified annually the board. If the

360

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

361

requirements of this paragraph required ratio is not maintained

362

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

363

interest rate, accelerate the repayment of interest and

364

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

365

approval by the Commissioner of Insurance of payments by the

366

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

367

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

368

may approve an application by an insurer for funds in exchange

369

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

370

the financial condition of the insurer and its business plan for

371

writing residential property insurance in Florida places an

372

unreasonably high level of financial risk to the state of

373

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

374

consult with the Office of Insurance Regulation and may contract

375

with independent financial and insurance consultants in making

376

this determination.

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

378

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

379

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

380

Treasury Bond rate, require the payment only of interest during

381

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

382

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

383

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

384

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

385

approved by the Commissioner of Insurance, who shall approve such

386

payment unless the commissioner determines that such payment will

387

substantially impair the financial condition of the insurer. If

388

such a determination is made, the commissioner shall approve such

389

payment that will not substantially impair the financial

390

condition of the insurer.

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

392

limited to the amount appropriated by the Legislature for this

393

purpose. If the amount of surplus notes requested by insurers

394

exceeds the amount of funds available, the board may prioritize

395

insurers that are eligible and approved, with priority for

396

funding given to insurers writing only manufactured housing

397

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

398

financial strength of the insurer, the viability of its proposed

399

business plan for writing additional residential property

400

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

401

residential property insurance market. Between insurers writing

402

residential property insurance covering manufactured housing,

403

priority shall be given to the insurer writing the highest

404

percentage of its policies covering manufactured housing.

405

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

406

for the program and establish dates for insurers to apply for

407

surplus notes from such allocation which are earlier than the

408

dates established in paragraph (b).

409

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

410

manufactured housing insurer that is eligible for a surplus note

411

under this section shall meet the premium to surplus ratio

412

provisions of s. 624.4095.

413

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

414

manufactured housing policies" includes:

415

1. A Florida domiciled insurer that begins writing personal

416

lines residential manufactured housing policies in Florida after

417

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

418

Citizens Property Insurance Corporation without accepting a

419

bonus, provided at least 25 percent of its policies cover

420

manufactured housing. Such an insurer may count any funds above

421

the minimum capital and surplus requirement that were contributed

422

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

423

section.

424

2. A Florida domiciled insurer that writes at least 40

425

percent of its policies covering manufactured housing in Florida.

426

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

427

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

428

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

429

Incentive Program established by this section.

430

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

431

the A surplus note provided to an insurer pursuant to this

432

section are is considered borrowed surplus an asset of the

433

insurer pursuant to s. 628.401 s. 625.012.

434

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

435

issuance of a surplus note pursuant to this section is rendered

436

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

437

for the unpaid principal and interest on the surplus note.

438

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

439

administration, and criteria for approving the applications of

440

insurers to receive funds in exchange for issuance of surplus

441

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

442

the procedures for emergency rules of chapter 120. Otherwise,

443

actions and determinations by the board pursuant to this section

444

are exempt from chapter 120.

445

(7) The board shall invest and reinvest the funds

446

appropriated for the program in accordance with s. 215.47 and

447

consistent with board policy.

448

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

449

President of the Senate and the Speaker of the House of

450

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

451

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

452

surplus note.

453

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

454

affect the terms or conditions of the surplus notes that were

455

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

456

renegotiate the terms of any surplus note issued by an insurer

457

prior to January 2008 under this program upon the agreement of

458

the insurer and the board and consistent with the requirements of

459

this section as amended in 2008.

460

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

461

shall transfer to Citizens Property Insurance Corporation any

462

funds that have not been committed or reserved for insurers

463

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

464

that were appropriated from Citizens Property Insurance

465

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

466

2009, and each quarter thereafter, the State Board of

467

Administration shall transfer any interest earned prior to

468

issuance of any surplus notes, interest paid, and principal

469

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

470

after December 1, 2008, to the Citizens Property Insurance

471

Corporation. Such transfers shall be in the proportion that

472

surplus notes were funded from 2008-2009 appropriations from

473

Citizens Property Insurance Corporation and shall be made until

474

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

475

notes funded from such appropriations. Citizens Property

476

Insurance Corporation shall deposit the transferred funds into

477

each of its accounts in the proportion that moneys were

478

transferred out of those accounts to the General Revenue Fund in

479

December 2008.

480

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

481

read:

482

542.20 Exemptions.--

483

(1) Any activity or conduct exempt under Florida statutory

484

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

485

of the United States is exempt from the provisions of this

486

chapter, except as provided in subsection (2).

487

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

488

provisions of this chapter. As applied to the business of

489

insurance, any legal action to seek penalties or damages for

490

violations or to otherwise enforce the provisions of this chapter

491

shall be brought only by the Attorney General or a state

492

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

493

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

494

notwithstanding any other provision of this chapter.

495

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

496

advisory organization from collecting claims, loss, or expense

497

data from insurers and filing rates or advisory rates with the

498

Office of Insurance Regulation, and does not prohibit any person

499

from engaging in acts expressly allowed by the Florida Insurance

500

Code, including, but not limited to, those listed in s. 627.314.

501

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

502

Florida Statutes, to read:

503

624.3161 Market conduct examinations.--

504

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

505

that an insurer has exhibited a pattern or practice of willful

506

violations of an unfair insurance trade practice related to

507

claims-handling which caused harm to policyholders, as prohibited

508

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

509

its claims-handling practices and procedures related to that line

510

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

511

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

512

claims-handling practices and procedures are public records and

513

are not trade secrets or otherwise exempt from the provisions of

514

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

515

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

516

standard operating procedures, instructions, or directives that

517

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

518

for benefits under any policy will be processed.

519

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

520

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

521

added to that section, to read:

522

624.4211 Administrative fine in lieu of suspension or

523

revocation.--

524

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

525

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

526

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

527

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

528

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

529

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

530

discovers a nonwillful violation, the insurer shall correct the

531

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

532

affected persons. Such restitution shall include interest at 12

533

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

534

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

535

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

536

premiums due provided that the interest accumulates shall

537

accumulate until the premiums are due. If the amount of

538

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

539

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

540

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

541

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

542

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

543

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

544

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

545

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

546

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

547

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

548

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

549

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

550

for all knowing and willful violations arising out of the same

551

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

552

restitution when due in accordance with the provisions of

553

subsection (2).

554

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

555

day the insurer is not in compliance with the Florida Insurance

556

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

557

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

558

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

559

by the most recent financial statements filed with the office.

560

This aggregate cap includes all fines imposed by the office under

561

this section.

562

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

563

consider:

564

(a) The degree of consumer harm caused or potentially

565

caused by the violation;

566

(b) Whether the violation constitutes an immediate danger

567

to the public;

568

569

to past violations by the insurer;

570

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

571

(e) The premium volume of the insurer; and

572

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

573

insurer's compliance with the Florida Insurance Code.

574

Section 5. Section 624.4213, Florida Statutes, is created

575

to read:

576

624.4213 Trade secret documents.--

577

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

578

other information to the office or department pursuant to the

579

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

580

commission claims that such submission contains a trade secret,

581

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

582

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

583

constitutes a waiver of any claim by such person that the

584

document or information is a trade secret.

585

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

586

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

587

"trade secret."

588

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

589

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

590

separate envelope clearly marked as "trade secret."

591

592

department, the submitting party must include an affidavit

593

certifying under oath to the truth of the following statements

594

concerning all documents or information that are claimed to be

595

trade secrets:

596

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

597

trade secret that has value and provides an advantage or an

598

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

599

use it.

600

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

601

disclosure of the information to anyone other that those who have

602

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

603

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

604

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

605

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

606

legitimate means.

607

4. The information is not publicly available elsewhere.

608

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

609

request for a document or information that is marked and

610

certified as a trade secret, the office or department shall

611

promptly notify the person that certified the document as a trade

612

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

613

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

614

file an action in circuit court seeking a determination whether

615

the document in question contains trade secrets and an order

616

barring public disclosure of the document. If that person or

617

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

618

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

619

release the documents pending the outcome of the legal action.

620

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

621

of any claim of confidentiality and the office or department

622

shall release the document as requested.

623

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

624

document or information certified as a trade secret, submitted to

625

the office or department under this section, and subsequently

626

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

627

the person certifying such document or information as a trade

628

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

629

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

630

the office or department.

631

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

632

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

633

or employee of another governmental agency whose use of the trade

634

secret is within the scope of his or her employment.

635

Section 6. Section 624.4305, Florida Statutes, is created to

636

read:

637

624.4305 Nonrenewal of residential property insurance

638

policies.--

639

(1) Any insurer planning to nonrenew more than 10,000

640

residential property insurance policies in this state within a

641

12-month period shall give notice in writing to the Office of

642

Insurance Regulation 90 days before the issuance of any notices

643

of nonrenewal. The notice provided to the office must set forth

644

the insurer's reasons for such action, the effective dates of

645

nonrenewal, and any arrangements made for other insurers to offer

646

coverage to affected policyholders.

647

(2) An insurer may not issue a notice of nonrenewal to

648

policyholders unless the office approves or fails to disapprove

649

the nonrenewal plan within 90 days after the date on which it

650

receives the notice from the insurer. The office may not approve

651

the plan unless it finds that the insurer has staggered the

652

nonrenewals over a reasonable period relative to the number of

653

nonrenewals, or has made arrangements for offers of replacement

654

coverage. The office may not require that the effective dates of

655

nonrenewal be staggered over a period longer than 24 months

656

unless the insurer is nonrenewing more than 100,000 policies, in

657

which case the office may not require that the effective dates of

658

nonrenewal be staggered over a period longer than 36 months. If

659

the insurer has arranged for an offer of coverage to be made to

660

an affected policyholder by an authorized insurer, the office may

661

not restrict or disapprove the nonrenewal of such policy beyond

662

what is required by law.

663

Section 7. Subsection (2) of section 626.9521, Florida

664

Statutes, is amended to read:

665

626.9521 Unfair methods of competition and unfair or

666

deceptive acts or practices prohibited; penalties.--

667

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

668

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

669

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

670

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

671

subsection imposed against an insurer may not exceed an aggregate

672

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

673

all nonwillful violations arising out of the same action or an

674

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

675

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

676

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

677

financial statements filed with the office. The fines authorized

678

by this subsection may be imposed in addition to any other

679

applicable penalty.

680

Section 8. Paragraph (i) of subsection (1) of section

681

626.9541, Florida Statutes, is amended to read:

682

626.9541 Unfair methods of competition and unfair or

683

deceptive acts or practices defined.--

684

(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE

685

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

686

and unfair or deceptive acts or practices:

687

(i) Unfair claim settlement practices.--

688

1. Attempting to settle claims on the basis of an

689

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

690

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

691

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

692

insured;

693

2. A material misrepresentation made to an insured or any

694

other person having an interest in the proceeds payable under a

695

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

696

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

697

contract or policy on less favorable terms than those provided

698

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

699

3. Committing or performing with such frequency as to

700

indicate a general business practice any of the following:

701

a. Failing to adopt and implement standards for the proper

702

investigation of claims.;

703

b. Misrepresenting pertinent facts or insurance policy

704

provisions relating to coverages at issue.;

705

c. Failing to acknowledge and act promptly upon

706

communications with respect to claims.;

707

d. Denying claims without conducting reasonable

708

investigations based upon available information.;

709

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

710

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

711

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

712

claim is being investigated, upon the written request of the

713

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

714

completed.;

715

f. Failing to promptly provide a reasonable explanation in

716

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

717

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

718

for the offer of a compromise settlement.;

719

g. Failing to promptly notify the insured of any additional

720

information necessary for the processing of a claim.; or

721

h. Failing to clearly explain the nature of the requested

722

information and the reasons why such information is necessary.

723

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

724

education, credit score, or any other personal characteristic of

725

a policyholder when evaluating, adjusting, settling, or

726

attempting to settle a property insurance claim; or

727

5. Failing to pay undisputed amounts of partial or full

728

benefits owed under first-party property insurance policies

729

within 90 days after determining the amounts of partial or full

730

benefits and agreeing to coverage.

731

Section 9. Paragraphs (a), (b), and (g) of subsection (2),

732

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

733

are amended to read:

734

627.062 Rate standards.--

735

(2) As to all such classes of insurance:

736

(a) Insurers or rating organizations shall establish and

737

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

738

insurer a reasonable rate of return on such classes of insurance

739

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

740

manuals, premium credits or discount schedules, and surcharge

741

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

742

under one of the following procedures except as provided in

743

subparagraph 3.:

744

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

745

proposed effective date and the filing is not implemented during

746

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

747

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

748

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

749

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

750

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

751

notice of intent to approve and the notice of intent to

752

disapprove constitute agency action for purposes of the

753

Administrative Procedure Act. Requests for supporting

754

information, requests for mathematical or mechanical corrections,

755

or notification to the insurer by the office of its preliminary

756

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

757

proceedings and subsequent judicial review. The rate shall be

758

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

759

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

760

after receipt of the filing.

761

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

762

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

763

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

764

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

765

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

766

by the office to return to policyholders portions of rates found

767

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

768

3. For all property insurance filings made or submitted

769

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

770

seeking a rate that is greater than the rate most recently

771

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

772

subparagraph applies to property insurance only. For purposes of

773

this subparagraph, motor vehicle collision and comprehensive

774

coverages are not considered to be property coverages.

775

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

776

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

777

or unfairly discriminatory. In making that determination, the

778

office shall, in accordance with generally accepted and

779

reasonable actuarial techniques, consider the following factors:

780

1. Past and prospective loss experience within and without

781

this state.

782

2. Past and prospective expenses.

783

3. The degree of competition among insurers for the risk

784

insured.

785

4. Investment income reasonably expected by the insurer,

786

consistent with the insurer's investment practices, from

787

investable premiums anticipated in the filing, plus any other

788

expected income from currently invested assets representing the

789

amount expected on unearned premium reserves and loss reserves.

790

The commission may adopt rules using utilizing reasonable

791

techniques of actuarial science and economics to specify the

792

manner in which insurers shall calculate investment income

793

attributable to such classes of insurance written in this state

794

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

795

calculate in the calculation of insurance rates. Such manner

796

shall contemplate allowances for an underwriting profit factor

797

and full consideration of investment income which produce a

798

reasonable rate of return; however, investment income from

799

invested surplus may shall not be considered.

800

5. The reasonableness of the judgment reflected in the

801

filing.

802

6. Dividends, savings, or unabsorbed premium deposits

803

allowed or returned to Florida policyholders, members, or

804

subscribers.

805

7. The adequacy of loss reserves.

806

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

807

a rate as excessive solely due to the insurer having obtained

808

catastrophic reinsurance to cover the insurer's estimated 250-

809

year probable maximum loss or any lower level of loss.

810

9. Trend factors, including trends in actual losses per

811

insured unit for the insurer making the filing.

812

10. Conflagration and catastrophe hazards, if applicable.

813

11. Projected hurricane losses, if applicable, which must

814

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

815

reliable by the Florida Commission on Hurricane Loss Projection

816

Methodology, and as further provided in s. 627.0628.

817

12.11. A reasonable margin for underwriting profit and

818

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

819

hurricanes and other catastrophic losses for which the insurer

820

has not purchased reinsurance and has exposed its capital and

821

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

822

that provides the insurer a reasonable rate of return that is

823

commensurate with such risk.

824

13.12. The cost of medical services, if applicable.

825

14.13. Other relevant factors which impact upon the

826

frequency or severity of claims or upon expenses.

827

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

828

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

829

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

830

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

831

unfairly discriminatory, the office shall initiate proceedings to

832

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

833

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

834

given final approval or which has been deemed approved for a

835

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

836

the office finds that a material misrepresentation or material

837

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

838

unless the insurer has nonrenewed a number or percentage of

839

policies which the office determines may result in the insurer

840

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

841

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

842

all information which, in the belief of the insurer or

843

organization, proves the reasonableness, adequacy, and fairness

844

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

845

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

846

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

847

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

848

administrative proceeding relating to the legality of the rate,

849

the insurer or rating organization shall carry the burden of

850

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

851

not excessive, inadequate, or unfairly discriminatory. After the

852

office notifies an insurer that a rate may be excessive,

853

inadequate, or unfairly discriminatory, unless the office

854

withdraws the notification, the insurer shall not alter the rate

855

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

856

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

857

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

858

subject to chapter 120, disapprove without the 60-day

859

notification any rate increase filed by an insurer within the

860

prohibited time period or during the time that the legality of

861

the increased rate is being contested.

862

863

The provisions of this subsection shall not apply to workers'

864

compensation and employer's liability insurance and to motor

865

vehicle insurance.

866

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

867

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

868

section, the director of the Division of Administrative Hearings

869

shall expedite the hearing and assign an administrative law judge

870

who shall commence the hearing within 30 days after the receipt

871

of the formal request and shall enter a recommended order within

872

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

873

hearing transcript by the administrative law judge, whichever is

874

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

875

written exceptions to the recommended order. The office shall

876

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

877

recommended order. The provisions of this paragraph may be waived

878

upon stipulation of all parties.

879

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

880

expedited appellate review pursuant to the Florida Rules of

881

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

882

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

883

expedited appellate review.

884

885

additional information related to a rate filing, other than

886

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

887

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

888

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

889

that the office issues a notice of intent to disapprove the

890

filing, the administrative law judge shall grant a continuance of

891

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

892

previously received the information. After any action with

893

respect to a rate filing that constitutes agency action for

894

purposes of the Administrative Procedure Act, except for a rate

895

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

896

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

897

rate filing. However, the arbitration option provision in this

898

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

899

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

900

Arbitration shall be conducted by a board of arbitrators

901

consisting of an arbitrator selected by the office, an arbitrator

902

selected by the insurer, and an arbitrator selected jointly by

903

the other two arbitrators. Each arbitrator must be certified by

904

the American Arbitration Association. A decision is valid only

905

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

906

arbitrator may be an employee of any insurance regulator or

907

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

908

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

909

the insurer must treat the decision of the arbitrators as the

910

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

911

paid by the insurer.

912

(b) Arbitration under this subsection shall be conducted

913

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

914

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

915

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

916

adopt rules for arbitration under this subsection, which rules

917

may not be inconsistent with the arbitration rules of the

918

American Arbitration Association as of January 1, 1996.

919

920

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

921

Administrative Procedure Act or any other provision of law;

922

however, such rights are restored to the insurer if the

923

arbitrators fail to render a decision within 90 days after

924

initiation of the arbitration process.

925

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

926

or chief financial officer of a property insurer and the chief

927

actuary of a property insurer must certify under oath and subject

928

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

929

the following information, which must accompany a rate filing:

930

1. The signing officer and actuary have reviewed the rate

931

filing;

932

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

933

the rate filing does not contain any untrue statement of a

934

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

935

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

936

which such statements were made, not misleading;

937

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

938

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

939

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

940

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

941

periods presented in the filing; and

942

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

943

the rate filing reflects all premium savings that are reasonably

944

expected to result from legislative enactments and are in

945

accordance with generally accepted and reasonable actuarial

946

techniques;.

947

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

948

the actuary responsible for preparing the rate filing reviewed

949

the rate indications used by the office in approving the

950

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

951

review, and identified factors used in the current rate filing

952

which are inconsistent with the factors used by the office in

953

developing such rate indications; and

954

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

955

the number and type of policies that the insurer intends to

956

nonrenew during the year following the proposed effective date of

957

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

958

risk of loss associated with such nonrenewals.

959

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

960

certification under this subsection commits a violation of s.

961

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

962

963

and actuary shall result in the rate filing being disapproved

964

without prejudice to be refiled.

965

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

966

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

967

Section 10. Subsection (1) of section 627.0613, Florida

968

Statutes, is amended to read:

969

627.0613 Consumer advocate.--The Chief Financial Officer

970

must appoint a consumer advocate who must represent the general

971

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

972

consumer advocate must report directly to the Chief Financial

973

Officer, but is not otherwise under the authority of the

974

department or of any employee of the department. The consumer

975

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

976

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

977

to, the powers to:

978

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

979

commencement of any proceeding or action; appear in any

980

proceeding or action before the department or office; or appear

981

in any proceeding before the Division of Administrative Hearings

982

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

983

subject matter under the jurisdiction of the department or

984

office.

985

Section 11. Paragraph (c) of subsection (1) and paragraph

986

987

amended to read:

988

627.0628 Florida Commission on Hurricane Loss Projection

989

Methodology; public records exemption; public meetings

990

exemption.--

991

(1) LEGISLATIVE FINDINGS AND INTENT.--

992

993

Florida Commission on Hurricane Loss Projection Methodology as a

994

panel of experts to provide the most actuarially sophisticated

995

guidelines and standards for projection of hurricane losses

996

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

997

further intent of the Legislature that such standards and

998

guidelines must be used by the State Board of Administration in

999

developing reimbursement premium rates for the Florida Hurricane

1000

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

1001

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

1002

in which such standards and guidelines were applied by the

1003

insurer was erroneous, as shown by a preponderance of the

1004

evidence.

1005

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

1006

1007

insurer must may employ and may not modify or adjust actuarial

1008

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

1009

the commission to be accurate or reliable in determining to

1010

determine hurricane loss factors used for use in a rate filing

1011

and in determining probable maximum loss levels for reinsurance

1012

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

1013

and factors are admissible and relevant in consideration of a

1014

rate filing by the office or in any arbitration or administrative

1015

or judicial review only if the office and the consumer advocate

1016

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

1017

assumptions and factors that were used in developing the

1018

actuarial methods, principles, standards, models, or output

1019

ranges, and are not precluded from disclosing such information in

1020

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

1021

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

1022

judge, or arbitration panel may determine whether the office and

1023

the consumer advocate were provided with access to all of the

1024

assumptions and factors that were used in developing the

1025

actuarial methods, principles, standards, models, or output

1026

ranges and to determine their admissibility.

1027

Section 12. Subsection (1) of section 627.0629, Florida

1028

Statutes, is amended to read:

1029

627.0629 Residential property insurance; rate filings.--

1030

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

1031

must provide savings to consumers who install or implement

1032

windstorm damage mitigation techniques, alterations, or solutions

1033

to their properties to prevent windstorm losses. A rate filing

1034

for residential property insurance must include actuarially

1035

reasonable discounts, credits, or other rate differentials, or

1036

appropriate reductions in deductibles, for properties on which

1037

fixtures or construction techniques demonstrated to reduce the

1038

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

1039

The fixtures or construction techniques shall include, but not be

1040

limited to, fixtures or construction techniques which enhance

1041

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

1042

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

1043

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

1044

rate differentials, or appropriate reductions in deductibles, for

1045

fixtures and construction techniques which meet the minimum

1046

requirements of the Florida Building Code must be included in the

1047

rate filing. All insurance companies must make a rate filing

1048

which includes the credits, discounts, or other rate

1049

differentials or reductions in deductibles by February 28, 2003.

1050

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

1051

credits, other rate differentials, and appropriate reductions in

1052

deductibles for fixtures and construction techniques that meet

1053

the minimum requirements of the Florida Building Code, based upon

1054

actual experience or any other loss relativity studies available

1055

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

1056

other rate differentials, and appropriate reductions in

1057

deductibles that reflect the full actuarial value of such

1058

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

1059

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

1060

Regulation, in consultation with the Department of Financial

1061

Services and the Department of Community Affairs, shall develop

1062

and make publicly available a proposed method for insurers to

1063

establish discounts, credits, or other rate differentials for

1064

hurricane mitigation measures which directly correlate to the

1065

numerical rating assigned to a structure pursuant to the uniform

1066

home grading scale adopted by the Financial Services Commission

1067

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

1068

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

1069

shall adopt rules requiring insurers to make rate filings for

1070

residential property insurance which revise insurers' discounts,

1071

credits, or other rate differentials for hurricane mitigation

1072

measures so that such rate differentials correlate directly to

1073

the uniform home grading scale. The rules may include such

1074

changes to the uniform home grading scale as the commission

1075

determines are necessary, and may specify the minimum required

1076

discounts, credits, or other rate differentials. Such rate

1077

differentials must be consistent with generally accepted

1078

actuarial principles and wind-loss mitigation studies. The rules

1079

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

1080

of the revised mitigation discounts, credits, or other rate

1081

differentials for a property owner to obtain an inspection or

1082

otherwise qualify for the revised credit, during which time the

1083

insurer shall continue to apply the mitigation credit that was

1084

applied immediately prior to the effective date of the revised

1085

credit.

1086

Section 13. Paragraph (b) of subsection (2) and paragraphs

1087

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

1088

(6) of section 627.351, Florida Statutes, are amended to read:

1089

627.351 Insurance risk apportionment plans.--

1090

(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--

1091

(b) The department shall require all insurers holding a

1092

certificate of authority to transact property insurance on a

1093

direct basis in this state, other than joint underwriting

1094

associations and other entities formed pursuant to this section,

1095

to provide windstorm coverage to applicants from areas determined

1096

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

1097

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

1098

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

1099

the equitable apportionment or sharing among such insurers of

1100

windstorm coverage, which may include formation of an association

1101

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

1102

insurance" means insurance on real or personal property, as

1103

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

1104

fire, allied lines, farmowners multiperil, homeowners'

1105

multiperil, commercial multiperil, and mobile homes, and

1106

including liability coverages on all such insurance, but

1107

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

1108

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

1109

insurance on mobile homes used as permanent dwellings. The

1110

department shall adopt rules that provide a formula for the

1111

recovery and repayment of any deferred assessments.

1112

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

1113

such windstorm coverage are defined as dwellings, buildings, and

1114

other structures, including mobile homes which are used as

1115

dwellings and which are tied down in compliance with mobile home

1116

tie-down requirements prescribed by the Department of Highway

1117

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

1118

contents of all such properties. An applicant or policyholder is

1119

eligible for coverage only if an offer of coverage cannot be

1120

obtained by or for the applicant or policyholder from an admitted

1121

insurer at approved rates.

1122

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

1123

association shall participate in its writings, expenses, and

1124

losses. Surplus of the association shall be retained for the

1125

payment of claims and shall not be distributed to the member

1126

insurers. Such participation by member insurers shall be in the

1127

proportion that the net direct premiums of each member insurer

1128

written for property insurance in this state during the preceding

1129

calendar year bear to the aggregate net direct premiums for

1130

property insurance of all member insurers, as reduced by any

1131

credits for voluntary writings, in this state during the

1132

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

1133

term "net direct premiums" means direct written premiums for

1134

property insurance, reduced by premium for liability coverage and

1135

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

1136

growing crops; livestock; association direct premiums booked;

1137

National Flood Insurance Program direct premiums; and similar

1138

deductions specifically authorized by the plan of operation and

1139

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

1140

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

1141

it is issued a certificate of authority to transact property

1142

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

1143

of the calendar year during which it no longer holds a

1144

certificate of authority to transact property insurance in the

1145

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

1146

reports, and any other statistics that the commissioner deems

1147

necessary, shall certify to the association the aggregate direct

1148

premiums written for property insurance in this state by all

1149

member insurers.

1150

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

1151

subject to the supervision and approval of a board of governors

1152

who are the same individuals that have been appointed by the

1153

Treasurer to serve on the board of governors of the Citizens

1154

Property Insurance Corporation.

1155

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

1156

a company voluntarily providing windstorm coverage in affected

1157

areas will be relieved wholly or partially from apportionment of

1158

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

1159

sub-sub-subparagraph d.(II).

1160

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

1161

under common management may elect to have its credits applied on

1162

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

1163

credits applied to any other company or group.

1164

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

1165

to a company for emergency assessments collected from its

1166

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

1167

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

1168

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

1169

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

1170

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

1171

the Residential Property and Casualty Joint Underwriting

1172

Association. In order to qualify for the exemption under this

1173

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

1174

least 40 percent of the policies removed from the Residential

1175

Property and Casualty Joint Underwriting Association cover risks

1176

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

1177

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

1178

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

1179

the policies so removed cover risks located in other coastal

1180

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

1181

the policies so removed may exclude windstorm coverage. With the

1182

approval of the department, the association may waive these

1183

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

1184

lesser of 100,000 Residential Property and Casualty Joint

1185

Underwriting Association policies or 15 percent of the total

1186

number of Residential Property and Casualty Joint Underwriting

1187

Association policies, provided the governing board of the

1188

Residential Property and Casualty Joint Underwriting Association

1189

certifies that the take-out plan will materially reduce the

1190

Residential Property and Casualty Joint Underwriting

1191

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

1192

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

1193

credits for an additional year if the insurer guarantees an

1194

additional year of renewability for all policies removed from the

1195

Residential Property and Casualty Joint Underwriting Association,

1196

or for 2 additional years if the insurer guarantees 2 additional

1197

years of renewability for all policies removed from the

1198

Residential Property and Casualty Joint Underwriting Association.

1199

b. Assessments to pay deficits in the association under

1200

this subparagraph shall be included as an appropriate factor in

1201

the making of rates as provided in s. 627.3512.

1202

c. The Legislature finds that the potential for unlimited

1203

deficit assessments under this subparagraph may induce insurers

1204

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

1205

that such actions would worsen the availability problems that the

1206

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

1207

Legislature that insurers remain fully responsible for paying

1208

regular assessments and collecting emergency assessments for any

1209

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

1210

the Legislature to provide a means by which assessment

1211

liabilities may be amortized over a period of years.

1212

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

1213

year is 10 percent or less of the aggregate statewide direct

1214

written premium for property insurance for the prior calendar

1215

year for all member insurers, the association shall levy an

1216

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

1217

(II) When the deficit incurred in a particular calendar

1218

year exceeds 10 percent of the aggregate statewide direct written

1219

premium for property insurance for the prior calendar year for

1220

all member insurers, the association shall levy an assessment on

1221

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

1222

of the deficit or 10 percent of the aggregate statewide direct

1223

written premium for property insurance for the prior calendar

1224

year for member insurers. Any remaining deficit shall be

1225

recovered through emergency assessments under sub-sub-

1226

subparagraph (III).

1227

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

1228

deficit exceeds the amount that will be recovered through regular

1229

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

1230

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

1231

verification by the department, emergency assessments to be

1232

collected by member insurers and by underwriting associations

1233

created pursuant to this section which write property insurance,

1234

upon issuance or renewal of property insurance policies other

1235

than National Flood Insurance policies in the year or years

1236

following levy of the regular assessments. The amount of the

1237

emergency assessment collected in a particular year shall be a

1238

uniform percentage of that year's direct written premium for

1239

property insurance for all member insurers and underwriting

1240

associations, excluding National Flood Insurance policy premiums,

1241

as annually determined by the board and verified by the

1242

department. The department shall verify the arithmetic

1243

calculations involved in the board's determination within 30 days

1244

after receipt of the information on which the determination was

1245

based. Notwithstanding any other provision of law, each member

1246

insurer and each underwriting association created pursuant to

1247

this section shall collect emergency assessments from its

1248

policyholders without such obligation being affected by any

1249

credit, limitation, exemption, or deferment. The emergency

1250

assessments so collected shall be transferred directly to the

1251

association on a periodic basis as determined by the association.

1252

The aggregate amount of emergency assessments levied under this

1253

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

1254

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

1255

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

1256

other costs associated with financing of the original deficit, or

1257

10 percent of the aggregate statewide direct written premium for

1258

property insurance written by member insurers and underwriting

1259

associations for the prior year, plus interest, fees,

1260

commissions, required reserves, and other costs associated with

1261

financing the original deficit. The board may pledge the proceeds

1262

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

1263

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

1264

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

1265

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

1266

efficiently recover the deficit. The emergency assessments under

1267

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

1268

issued or other indebtedness incurred with respect to a deficit

1269

for which the assessment was imposed remain outstanding, unless

1270

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

1271

other indebtedness pursuant to the document governing such bonds

1272

or other indebtedness. Emergency assessments collected under this

1273

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

1274

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

1275

commissions; however, failure to pay the emergency assessment

1276

shall be treated as failure to pay premium.

1277

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

1278

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

1279

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

1280

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

1281

year preceding the assessment bears to the aggregate statewide

1282

net direct premium for property insurance of all member insurers,

1283

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

1284

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

1285

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

1286

Residential Property and Casualty Joint Underwriting Association

1287

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

1288

the association shall levy upon the association's policyholders,

1289

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

1290

solely for this purpose, a market equalization surcharge in a

1291

percentage equal to the total amount of such regular assessments

1292

divided by the aggregate statewide direct written premium for

1293

property insurance for member insurers for the prior calendar

1294

year. Market equalization surcharges under this sub-sub-

1295

subparagraph are not considered premium and are not subject to

1296

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

1297

market equalization surcharge shall be treated as failure to pay

1298

premium.

1299

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

1300

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

1301

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

1302

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

1303

defraying deficits of the association. In order to avoid needless

1304

and indiscriminate proliferation, duplication, and fragmentation

1305

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

1306

residents of which are insured by the association, may provide

1307

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

1308

losses occurred within or outside of the territorial jurisdiction

1309

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

1310

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

1311

declared by executive order or proclamation of the Governor

1312

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

1313

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

1314

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

1315

of residents of this state and the protection and preservation of

1316

the economic stability of insurers operating in this state, and

1317

declaring it an essential public purpose to permit certain

1318

municipalities or counties to issue bonds as will provide relief

1319

to claimants and policyholders of the association and insurers

1320

responsible for apportionment of plan losses. Any such unit of

1321

local government may enter into such contracts with the

1322

association and with any other entity created pursuant to this

1323

subsection as are necessary to carry out this paragraph. Any

1324

bonds issued under this sub-subparagraph shall be payable from

1325

and secured by moneys received by the association from

1326

assessments under this subparagraph, and assigned and pledged to

1327

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

1328

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

1329

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

1330

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

1331

bonds remain unsold 60 days after issuance, the department shall

1332

require all insurers subject to assessment to purchase the bonds,

1333

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

1334

required to purchase that percentage of the unsold portion of the

1335

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

1336

liability under this subsection. An insurer shall not be required

1337

to purchase the bonds to the extent that the department

1338

determines that the purchase would endanger or impair the

1339

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

1340

subparagraph is additional to any bonding authority granted by

1341

subparagraph 6.

1342

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

1343

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

1344

percent or more of its total countrywide property insurance

1345

premiums in this state may petition the department, within the

1346

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

1347

apportionment company. The apportionment of such a member company

1348

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

1349

its gross participation, which shall not be affected by the

1350

formula for voluntary writings. In no event shall a limited

1351

apportionment company be required to participate in any

1352

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

1353

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

1354

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

1355

year. However, a limited apportionment company shall collect from

1356

its policyholders any emergency assessment imposed under sub-sub-

1357

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

1358

department determines that any regular assessment will result in

1359

an impairment of the surplus of a limited apportionment company,

1360

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

1361

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

1362

an emergency assessment to be collected from policyholders under

1363

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

1364

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

1365

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

1366

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

1367

for an emergency assessment collected from policyholders under

1368

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

1369

commissioner, payment of such regular assessment would endanger

1370

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

1371

regular assessment against a member insurer is deferred in whole

1372

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

1373

be assessed against the other member insurers in a manner

1374

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

1375

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

1376

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

1377

rules for classification of risks and rate modifications

1378

consistent with the objective of providing and maintaining funds

1379

sufficient to pay catastrophe losses.

1380

b. The association may require arbitration of a rate filing

1381

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

1382

rates for coverage provided by the association be actuarially

1383

sound and not competitive with approved rates charged in the

1384

admitted voluntary market such that the association functions as

1385

a residual market mechanism to provide insurance only when the

1386

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

1387

operation shall provide a mechanism to assure that, beginning no

1388

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

1389

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

1390

voluntary market for hurricane coverage for each line of business

1391

in the various areas eligible for association coverage.

1392

c. The association shall provide for windstorm coverage on

1393

residential properties in limits up to $10 million for commercial

1394

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

1395

residential risks. If coverage with the association is sought for

1396

a residential risk valued in excess of these limits, coverage

1397

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

1398

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

1399

if coverage for the risk cannot be located in the authorized

1400

market. The association must accept a commercial lines

1401

residential risk with limits above $10 million or a personal

1402

lines residential risk with limits above $1 million if coverage

1403

is not available in the authorized market. The association may

1404

write coverage above the limits specified in this subparagraph

1405

with or without facultative or other reinsurance coverage, as the

1406

association determines appropriate.

1407

d. The plan of operation must provide objective criteria

1408

and procedures, approved by the department, to be uniformly

1409

applied for all applicants in determining whether an individual

1410

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

1411

determination and in establishing the criteria and procedures,

1412

the following shall be considered:

1413

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

1414

risk is substantially higher than for other risks of the same

1415

class; and

1416

(II) Whether the uncertainty associated with the individual

1417

risk is such that an appropriate premium cannot be determined.

1418

1419

The acceptance or rejection of a risk by the association pursuant

1420

to such criteria and procedures must be construed as the private

1421

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

1422

apply.

1423

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

1424

market assistance program or through a mechanism established by

1425

the association, either before the policy is issued by the

1426

association or during the first 30 days of coverage by the

1427

association, and the producing agent who submitted the

1428

application to the association is not currently appointed by the

1429

insurer, the insurer shall:

1430

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

1431

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

1432

usual and customary commission for the type of policy written or

1433

a fee equal to the usual and customary commission of the

1434

association; or

1435

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

1436

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

1437

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

1438

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

1439

the type of policy written.

1440

1441

If the producing agent is unwilling or unable to accept

1442

appointment, the new insurer shall pay the agent in accordance

1443

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

1444

627.3517, the policies issued by the association must provide

1445

that if the association obtains an offer from an authorized

1446

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

1447

standard policy including wind coverage or, if consistent with

1448

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

1449

basic policy including wind coverage, the risk is no longer

1450

eligible for coverage through the association. Upon termination

1451

of eligibility, the association shall provide written notice to

1452

the policyholder and agent of record stating that the association

1453

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

1454

notice because of the offer of coverage from an authorized

1455

insurer. Other provisions of the insurance code relating to

1456

cancellation and notice of cancellation do not apply to actions

1457

under this sub-subparagraph.

1458

f. When the association enters into a contractual agreement

1459

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

1460

association policy is entitled to retain any unearned commission

1461

on the policy, and the insurer shall:

1462

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

1463

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

1464

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

1465

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

1466

the association; or

1467

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

1468

association policy to continue servicing the policy for a period

1469

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

1470

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

1471

for the type of policy written.

1472

1473

If the producing agent is unwilling or unable to accept

1474

appointment, the new insurer shall pay the agent in accordance

1475

with sub-sub-subparagraph (I).

1476

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

1477

private nonprofit corporation, a private nonprofit unincorporated

1478

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

1479

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

1480

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

1481

indebtedness and to accumulate reserves or funds to be used for

1482

the payment of insured catastrophe losses. The plan may authorize

1483

all actions necessary to facilitate the issuance of bonds,

1484

including the pledging of assessments or other revenues.

1485

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

1486

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

1487

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

1488

or sell assessments, market equalization surcharges and other

1489

surcharges, rights, premiums, contractual rights, projected

1490

recoveries from the Florida Hurricane Catastrophe Fund, other

1491

reinsurance recoverables, and other assets as security for such

1492

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

1493

agreements necessary or proper to accomplish such borrowings; and

1494

take other actions necessary to carry out the purposes of this

1495

subsection. The association may issue bonds or incur other

1496

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

1497

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

1498

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

1499

determination by the association subject to approval by the

1500

department that such action would enable it to efficiently meet

1501

the financial obligations of the association and that such

1502

financings are reasonably necessary to effectuate the

1503

requirements of this subsection. Any such entity may accumulate

1504

reserves and retain surpluses as of the end of any association

1505

year to provide for the payment of losses incurred by the

1506

association during that year or any future year. The association

1507

shall incorporate and continue the plan of operation and articles

1508

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

1509

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

1510

chapter 76-96, and as subsequently modified consistent with

1511

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

1512

serving shall continue to serve until their successors are duly

1513

qualified as provided under the plan. The assets and obligations

1514

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

1515

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

1516

of the successor plan created herein.

1517

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

1518

Constitution, prohibiting the impairment of obligations of

1519

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

1520

taken whose purpose is to impair any bond indenture or financing

1521

agreement or any revenue source committed by contract to such

1522

bond or other indebtedness issued or incurred by the association

1523

or any other entity created under this subsection.

1524

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

1525

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

1526

contract with the company with which the business is placed.

1527

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

1528

premium which is in excess of the standard premium of that

1529

company.

1530

8. Subject to approval by the department, the association

1531

may establish different eligibility requirements and operational

1532

procedures for any line or type of coverage for any specified

1533

eligible area or portion of an eligible area if the board

1534

determines that such changes to the eligibility requirements and

1535

operational procedures are justified due to the voluntary market

1536

being sufficiently stable and competitive in such area or for

1537

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

1538

faith, are unable to obtain insurance through the voluntary

1539

market through ordinary methods would continue to have access to

1540

coverage from the association. When coverage is sought in

1541

connection with a real property transfer, such requirements and

1542

procedures shall not provide for an effective date of coverage

1543

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

1544

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

1545

lender.

1546

9. Notwithstanding any other provision of law:

1547

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

1548

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

1549

association created or purported to be created pursuant to any

1550

financing documents to secure any bonds or other indebtedness of

1551

the association shall be and remain valid and enforceable,

1552

notwithstanding the commencement of and during the continuation

1553

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

1554

bankruptcy, receivership, conservatorship, reorganization, or

1555

similar proceeding against the association under the laws of this

1556

state or any other applicable laws.

1557

b. No such proceeding shall relieve the association of its

1558

obligation, or otherwise affect its ability to perform its

1559

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

1560

assessments, market equalization or other surcharges, projected

1561

recoveries from the Florida Hurricane Catastrophe Fund,

1562

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

1563

assets of the association pledged.

1564

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

1565

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

1566

security interest, any such assessments, emergency assessments,

1567

market equalization or renewal surcharges, projected recoveries

1568

from the Florida Hurricane Catastrophe Fund, reinsurance

1569

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

1570

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

1571

and during the pendency of or after any such proceeding shall

1572

continue unaffected by such proceeding.

1573

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

1574

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

1575

existing or hereafter created evidencing any bonds or other

1576

indebtedness of the association or pursuant to which any such

1577

bonds or other indebtedness has been or may be issued and

1578

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

1579

association are pledged or sold to secure the repayment of such

1580

bonds or indebtedness, together with the payment of interest on

1581

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

1582

obligation of the association related to such bonds or

1583

indebtedness.

1584

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

1585

contract rights or other rights or assets of the association

1586

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

1587

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

1588

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

1589

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

1590

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

1591

binding, and enforceable against the association or other entity

1592

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

1593

superior to any competing claims or obligations owed to any other

1594

person or entity, including policyholders in this state,

1595

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

1596

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

1597

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

1598

applicable financing documents, whether or not any such person or

1599

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

1600

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

1601

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

1602

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

1603

or its agents or employees, agents or employees of the

1604

association, members of the board of directors of the

1605

association, or the department or its representatives, for any

1606

action taken by them in the performance of their duties or

1607

responsibilities under this subsection. Such immunity does not

1608

apply to actions for breach of any contract or agreement

1609

pertaining to insurance, or any willful tort.

1610

(6) CITIZENS PROPERTY INSURANCE CORPORATION.--

1611

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

1612

the existence of an orderly market for property insurance for

1613

Floridians and Florida businesses. The Legislature finds that

1614

private insurers are unwilling or unable to provide affordable

1615

property insurance coverage in this state to the extent sought

1616

and needed. The absence of affordable property insurance

1617

threatens the public health, safety, and welfare and likewise

1618

threatens the economic health of the state. The state therefore

1619

has a compelling public interest and a public purpose to assist

1620

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

1621

insured at affordable rates so as to facilitate the remediation,

1622

reconstruction, and replacement of damaged or destroyed property

1623

in order to reduce or avoid the negative effects otherwise

1624

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

1625

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

1626

governments which are needed to provide for the public welfare.

1627

It is necessary, therefore, to provide affordable property

1628

insurance to applicants who are in good faith entitled to procure

1629

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

1630

The Legislature intends by this subsection that affordable

1631

property insurance be provided and that it continue to be

1632

provided, as long as necessary, through Citizens Property

1633

Insurance Corporation, a government entity that is an integral

1634

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

1635

To that end, Citizens Property Insurance Corporation shall strive

1636

to increase the availability of affordable property insurance in

1637

this state, while achieving efficiencies and economies, and while

1638

providing service to policyholders, applicants, and agents which

1639

is no less than the quality generally provided in the voluntary

1640

market, for the achievement of the foregoing public purposes.

1641

Because it is essential for this government entity to have the

1642

maximum financial resources to pay claims following a

1643

catastrophic hurricane, it is the intent of the Legislature that

1644

Citizens Property Insurance Corporation continue to be an

1645

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

1646

be exempt from federal income taxation and that interest on the

1647

debt obligations issued by the corporation be exempt from federal

1648

income taxation.

1649

2. The Residential Property and Casualty Joint Underwriting

1650

Association originally created by this statute shall be known, as

1651

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

1652

The corporation shall provide insurance for residential and

1653

commercial property, for applicants who are in good faith

1654

entitled, but are unable, to procure insurance through the

1655

voluntary market. The corporation shall operate pursuant to a

1656

plan of operation approved by order of the Financial Services

1657

Commission. The plan is subject to continuous review by the

1658

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

1659

all or part of a plan if the commission determines that

1660

conditions have changed since approval was granted and that the

1661

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

1662

shall continue to operate pursuant to the plan of operation

1663

approved by the Office of Insurance Regulation until October 1,

1664

2006. For the purposes of this subsection, residential coverage

1665

includes both personal lines residential coverage, which consists

1666

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

1667

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

1668

similar policies, and commercial lines residential coverage,

1669

which consists of the type of coverage provided by condominium

1670

association, apartment building, and similar policies.

1671

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

1672

property" means:

1673

a. Property that has been granted a homestead exemption

1674

under chapter 196;

1675

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

1676

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

1677

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

1678

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

1679

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

1680

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

1681

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

1682

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

1683

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

1684

d. Tenant's coverage;

1685

e. Commercial lines residential property; or

1686

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

1687

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

1688

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

1689

continuing care retirement community that is certified under

1690

chapter 651 and that receives an exemption from ad valorem taxes

1691

under chapter 196.

1692

4. For the purposes of this subsection, the term

1693

"nonhomestead property" means property that is not homestead

1694

property.

1695

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

1696

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

1697

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

1698

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

1699

eligible for coverage by the corporation. Such dwellings insured

1700

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

1701

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

1702

However, such dwellings that are insured by the corporation and

1703

become ineligible for coverage due to the provisions of this

1704

subparagraph may reapply and obtain coverage in the high-risk

1705

account and be considered "nonhomestead property" if the property

1706

owner provides the corporation with a sworn affidavit from one or

1707

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

1708

stating that the agents have made their best efforts to obtain

1709

coverage and that the property has been rejected for coverage by

1710

at least one authorized insurer and at least three surplus lines

1711

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

1712

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

1713

dwelling is ineligible for coverage. The office shall approve the

1714

method used by the corporation for valuing the dwelling

1715

replacement cost for the purposes of this subparagraph. If a

1716

policyholder is insured by the corporation prior to being

1717

determined to be ineligible pursuant to this subparagraph and

1718

such policyholder files a lawsuit challenging the determination,

1719

the policyholder may remain insured by the corporation until the

1720

conclusion of the litigation.

1721

6. For properties constructed on or after January 1, 2009,

1722

the corporation may not insure any property located within 2,500

1723

feet landward of the coastal construction control line created

1724

pursuant to s. 161.053 unless the property meets the requirements

1725

of the code-plus building standards developed by the Florida

1726

Building Commission.

1727

3.7. It is the intent of the Legislature that

1728

policyholders, applicants, and agents of the corporation receive

1729

service and treatment of the highest possible level but never

1730

less than that generally provided in the voluntary market. It

1731

also is intended that the corporation be held to service

1732

standards no less than those applied to insurers in the voluntary

1733

market by the office with respect to responsiveness, timeliness,

1734

customer courtesy, and overall dealings with policyholders,

1735

applicants, or agents of the corporation.

1736

4.8. Effective January 1, 2009, a personal lines

1737

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

1738

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

1739

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

1740

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

1741

unless the structure has opening protections as required under

1742

the Florida Building Code for a newly constructed residential

1743

structure in that area. A residential structure shall be deemed

1744

to comply with the requirements of this subparagraph if it has

1745

shutters or opening protections on all openings and if such

1746

opening protections complied with the Florida Building Code at

1747

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

1748

requirements of this subparagraph apply to a personal lines

1749

residential structure that is located in the wind-borne debris

1750

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

1751

or more.

1752

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

1753

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

1754

corporation and, for the purposes of this subsection, are

1755

referred to collectively as "assessable insurers." Insurers

1756

writing one or more subject lines of business in this state

1757

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

1758

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

1759

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

1760

assessment by the corporation and are referred to collectively as

1761

"assessable insureds." An authorized insurer's assessment

1762

liability shall begin on the first day of the calendar year

1763

following the year in which the insurer was issued a certificate

1764

of authority to transact insurance for subject lines of business

1765

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

1766

first calendar year during which the insurer no longer holds a

1767

certificate of authority to transact insurance for subject lines

1768

of business in this state.

1769

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

1770

expenses of the corporation shall be divided into three separate

1771

accounts as follows:

1772

(I) A personal lines account for personal residential

1773

policies issued by the corporation or issued by the Residential

1774

Property and Casualty Joint Underwriting Association and renewed

1775

by the corporation that provide comprehensive, multiperil

1776

coverage on risks that are not located in areas eligible for

1777

coverage in the Florida Windstorm Underwriting Association as

1778

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

1779

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

1780

risks that are located in such areas;

1781

(II) A commercial lines account for commercial residential

1782

and commercial nonresidential policies issued by the corporation

1783

or issued by the Residential Property and Casualty Joint

1784

Underwriting Association and renewed by the corporation that

1785

provide coverage for basic property perils on risks that are not

1786

located in areas eligible for coverage in the Florida Windstorm

1787

Underwriting Association as those areas were defined on January

1788

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

1789

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

1790

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

1791

and commercial residential and commercial nonresidential property

1792

policies issued by the corporation or transferred to the

1793

corporation that provide coverage for the peril of wind on risks

1794

that are located in areas eligible for coverage in the Florida

1795

Windstorm Underwriting Association as those areas were defined on

1796

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

1797

the Financial Services Commission and Legislative Budget

1798

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

1799

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

1800

policies that provide multiperil coverage and the corporation

1801

shall continue to offer policies that provide coverage only for

1802

the peril of wind for risks located in areas eligible for

1803

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

1804

corporation may not issue new policies that provide coverage only

1805

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

1806

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

1807

the corporation may use its approved policy forms and rates for

1808

the personal lines account. An applicant or insured who is

1809

eligible to purchase a multiperil policy from the corporation may

1810

purchase a multiperil policy from an authorized insurer without

1811

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

1812

prospectively purchase a policy that provides coverage only for

1813

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

1814

applicant or insured who is eligible for a corporation policy

1815

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

1816

purchase or retain such policy and also purchase or retain

1817

coverage excluding wind from an authorized insurer without

1818

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

1819

prospectively purchase a policy that provides multiperil coverage

1820

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

1821

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

1822

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

1823

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

1824

the corporation, and who then obtains a multiperil policy from

1825

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

1826

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

1827

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

1828

exempt status of the corporation or creditworthiness of or

1829

security for currently outstanding financing obligations or

1830

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

1831

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

1832

corporation shall prepare and submit for approval by the

1833

Financial Services Commission and Legislative Budget Commission a

1834

report detailing the corporation's business plan for issuing

1835

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

1836

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

1837

submitted or modified and resubmitted by the corporation. The

1838

business plan must include: the impact of such multiperil

1839

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

1840

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

1841

the manner in which the corporation plans to implement the

1842

processing of applications and policy forms for new and existing

1843

policyholders, the impact of such multiperil coverage on the

1844

corporation's ability to deliver customer service at the high

1845

level required by this subsection, the ability of the corporation

1846

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

1847

issue policies, the impact of such multiperil coverage on the

1848

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

1849

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

1850

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

1851

must also include quota share primary insurance under

1852

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

1853

risk account also includes the area within Port Canaveral, which

1854

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

1855

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

1856

Federal Government property.

1857

b. The three separate accounts must be maintained as long

1858

as financing obligations entered into by the Florida Windstorm

1859

Underwriting Association or Residential Property and Casualty

1860

Joint Underwriting Association are outstanding, in accordance

1861

with the terms of the corresponding financing documents. When the

1862

financing obligations are no longer outstanding, in accordance

1863

with the terms of the corresponding financing documents, the

1864

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

1865

liabilities, losses, and expenses of the corporation. Consistent

1866

with the requirement of this subparagraph and prudent investment

1867

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

1868

exercise its best efforts to retire existing debt or to obtain

1869

approval of necessary parties to amend the terms of existing

1870

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

1871

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

1872

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

1873

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

1874

House of Representatives which includes an analysis of

1875

consolidating the accounts, the actions the board has taken to

1876

minimize the cost of carrying debt, and its recommendations for

1877

executing the most efficient plan.

1878

c. Creditors of the Residential Property and Casualty Joint

1879

Underwriting Association and of the accounts specified in sub-

1880

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

1881

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

1882

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

1883

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

1884

Creditors of the Florida Windstorm Underwriting Association shall

1885

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

1886

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

1887

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

1888

a.(I) and (II).

1889

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

1890

attributable to particular accounts shall be prorated among the

1891

accounts.

1892

e. The Legislature finds that the revenues of the

1893

corporation are revenues that are necessary to meet the

1894

requirements set forth in documents authorizing the issuance of

1895

bonds under this subsection.

1896

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

1897

the benefit of any private person.

1898

3. With respect to a deficit in an account:

1899

a. When the deficit incurred in a particular calendar year

1900

is not greater than 8 10 percent of the aggregate statewide

1901

direct written premium for the subject lines of business for the

1902

prior calendar year, the entire deficit shall be recovered

1903

through regular assessments of assessable insurers under

1904

paragraph (p) and assessable insureds.

1905

b. When the deficit incurred in a particular calendar year

1906

exceeds 8 10 percent of the aggregate statewide direct written

1907

premium for the subject lines of business for the prior calendar

1908

year, the corporation shall levy regular assessments on

1909

assessable insurers under paragraph (p) and on assessable

1910

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

1911

deficit or 8 10 percent of the aggregate statewide direct written

1912

premium for the subject lines of business for the prior calendar

1913

year. Any remaining deficit shall be recovered through emergency

1914

assessments under sub-subparagraph d.

1915

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

1916

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

1917

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

1918

premium for the subject lines of business for the year preceding

1919

the assessment bears to the aggregate statewide direct written

1920

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

1921

assessment percentage applicable to each assessable insured is

1922

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

1923

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

1924

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

1925

Assessments levied by the corporation on assessable insurers

1926

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

1927

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

1928

notwithstanding any other provision of this subsection, the

1929

aggregate amount of a regular assessment for a deficit incurred

1930

in a particular calendar year shall be reduced by the estimated

1931

amount to be received by the corporation from the Citizens

1932

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

1933

collected or estimated to be collected from the assessment on

1934

Citizens policyholders pursuant to sub-subparagraph i.

1935

Assessments levied by the corporation on assessable insureds

1936

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

1937

surplus lines agent at the time the surplus lines agent collects

1938

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

1939

the Florida Surplus Lines Service Office at the time the surplus

1940

lines agent pays the surplus lines tax to the Florida Surplus

1941

Lines Service Office. Upon receipt of regular assessments from

1942

surplus lines agents, the Florida Surplus Lines Service Office

1943

shall transfer the assessments directly to the corporation as

1944

determined by the corporation.

1945

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

1946

deficit in an account exceeds the amount that will be recovered

1947

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

1948

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

1949

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

1950

projected deficit the board shall levy, after verification by the

1951

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

1952

cover the deficits, to be collected by assessable insurers and

1953

the corporation and collected from assessable insureds upon

1954

issuance or renewal of policies for subject lines of business,

1955

excluding National Flood Insurance policies. The amount of the

1956

emergency assessment collected in a particular year shall be a

1957

uniform percentage of that year's direct written premium for

1958

subject lines of business and all accounts of the corporation,

1959

excluding National Flood Insurance Program policy premiums, as

1960

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

1961

office shall verify the arithmetic calculations involved in the

1962

board's determination within 30 days after receipt of the

1963

information on which the determination was based. Notwithstanding

1964

any other provision of law, the corporation and each assessable

1965

insurer that writes subject lines of business shall collect

1966

emergency assessments from its policyholders without such

1967

obligation being affected by any credit, limitation, exemption,

1968

or deferment. Emergency assessments levied by the corporation on

1969

assessable insureds shall be collected by the surplus lines agent

1970

at the time the surplus lines agent collects the surplus lines

1971

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

1972

Surplus Lines Service Office at the time the surplus lines agent

1973

pays the surplus lines tax to the Florida Surplus Lines Service

1974

Office. The emergency assessments so collected shall be

1975

transferred directly to the corporation on a periodic basis as

1976

determined by the corporation and shall be held by the

1977

corporation solely in the applicable account. The aggregate

1978

amount of emergency assessments levied for an account under this

1979

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

1980

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

1981

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

1982

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

1983

other costs associated with financing of the original deficit, or

1984

10 percent of the aggregate statewide direct written premium for

1985

subject lines of business and for all accounts of the corporation

1986

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

1987

reserves, and other costs associated with financing the original

1988

deficit.

1989

e. The corporation may pledge the proceeds of assessments,

1990

projected recoveries from the Florida Hurricane Catastrophe Fund,

1991

other insurance and reinsurance recoverables, policyholder

1992

surcharges and other surcharges, and other funds available to the

1993

corporation as the source of revenue for and to secure bonds

1994

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

1995

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

1996

mechanisms issued or created under this subsection, or to retire

1997

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

1998

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

1999

will efficiently recover such deficits. The purpose of the lines

2000

of credit or other financing mechanisms is to provide additional

2001

resources to assist the corporation in covering claims and

2002

expenses attributable to a catastrophe. As used in this

2003

subsection, the term "assessments" includes regular assessments

2004

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

2005

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

2006

Emergency assessments collected under sub-subparagraph d. are not

2007

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

2008

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

2009

emergency assessment shall be treated as failure to pay premium.

2010

The emergency assessments under sub-subparagraph d. shall

2011

continue as long as any bonds issued or other indebtedness

2012

incurred with respect to a deficit for which the assessment was

2013

imposed remain outstanding, unless adequate provision has been

2014

made for the payment of such bonds or other indebtedness pursuant

2015

to the documents governing such bonds or other indebtedness.

2016

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

2017

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

2018

business" means insurance written by assessable insurers or

2019

procured by assessable insureds for all property and casualty

2020

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

2021

compensation or medical malpractice. As used in the sub-

2022

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

2023

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

2024

Premiums and Losses, in the annual statement required of

2025

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

2026

section, except for those lines identified as accident and health

2027

insurance and except for policies written under the National

2028

Flood Insurance Program or the Federal Crop Insurance Program.

2029

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

2030

compensation" includes both workers' compensation insurance and

2031

excess workers' compensation insurance.

2032

g. The Florida Surplus Lines Service Office shall determine

2033

annually the aggregate statewide written premium in subject lines

2034

of business procured by assessable insureds and shall report that

2035

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

2036

corporation specifies to ensure that the corporation can meet the

2037

requirements of this subsection and the corporation's financing

2038

obligations.

2039

h. The Florida Surplus Lines Service Office shall verify

2040

the proper application by surplus lines agents of assessment

2041

percentages for regular assessments and emergency assessments

2042

levied under this subparagraph on assessable insureds and shall

2043

assist the corporation in ensuring the accurate, timely

2044

collection and payment of assessments by surplus lines agents as

2045

required by the corporation.

2046

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

2047

thereafter, the board of governors shall levy a Citizens

2048

policyholder surcharge an immediate assessment against the

2049

premium of each nonhomestead property policyholder in all

2050

accounts of the corporation, as a uniform percentage of the

2051

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

2052

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

2053

insufficient to eliminate the deficit, the board of governors

2054

shall levy an additional assessment against all policyholders of

2055

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

2056

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

2057

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

2058

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

2059

deficit and reduce the amount of the regular assessment as

2060

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

2061

surcharges under this sub-subparagraph are not considered premium

2062

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

2063

However, failure to pay such surcharges shall be treated as

2064

failure to pay premium.

2065

j. If the amount of any assessments or surcharges collected

2066

from corporation policyholders, assessable insurers or their

2067

policyholders, or assessable insureds exceeds the amount of the

2068

deficits, such excess amounts shall be remitted to and retained

2069

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

2070

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

2071

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

2072

deficits or to reduce outstanding debt. The board of governors

2073

shall maintain separate accounting records that consolidate data

2074

for nonhomestead properties, including, but not limited to,

2075

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

2076

The board of governors shall annually report to the office and

2077

the Legislature a summary of such data.

2078

2079

1. Must provide for adoption of residential property and

2080

casualty insurance policy forms and commercial residential and

2081

nonresidential property insurance forms, which forms must be

2082

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

2083

the following policy forms:

2084

a. Standard personal lines policy forms that are

2085

comprehensive multiperil policies providing full coverage of a

2086

residential property equivalent to the coverage provided in the

2087

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

2088

b. Basic personal lines policy forms that are policies

2089

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

2090

coverage meeting the requirements of the secondary mortgage

2091

market, but which coverage is more limited than the coverage

2092

under a standard policy.

2093

c. Commercial lines residential and nonresidential policy

2094

forms that are generally similar to the basic perils of full

2095

coverage obtainable for commercial residential structures and

2096

commercial nonresidential structures in the admitted voluntary

2097

market.

2098

d. Personal lines and commercial lines residential property

2099

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

2100

applicable only to residential properties located in areas

2101

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

2102

sub-subparagraph (b)2.a.

2103

e. Commercial lines nonresidential property insurance forms

2104

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

2105

to nonresidential properties located in areas eligible for

2106

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

2107

subparagraph (b)2.a.

2108

f. The corporation may adopt variations of the policy forms

2109

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

2110

coverage.

2111

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

2112

which the corporation and authorized insurers enter into quota

2113

share primary insurance agreements for hurricane coverage, as

2114

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

2115

property insurance forms for eligible risks which cover the peril

2116

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

2117

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

2118

which the primary hurricane coverage of an eligible risk is

2119

provided in specified percentages by the corporation and an

2120

authorized insurer. The corporation and authorized insurer are

2121

each solely responsible for a specified percentage of hurricane

2122

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

2123

primary insurance agreement between the corporation and an

2124

authorized insurer and the insurance contract. The responsibility

2125

of the corporation or authorized insurer to pay its specified

2126

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

2127

in the quota share primary insurance agreement, may not be

2128

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

2129

pay its specified percentage of hurricane losses. Eligible risks

2130

that are provided hurricane coverage through a quota share

2131

primary insurance arrangement must be provided policy forms that

2132

set forth the obligations of the corporation and authorized

2133

insurer under the arrangement, clearly specify the percentages of

2134

quota share primary insurance provided by the corporation and

2135

authorized insurer, and conspicuously and clearly state that

2136

neither the authorized insurer nor the corporation may be held

2137

responsible beyond its specified percentage of coverage of

2138

hurricane losses.

2139

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

2140

commercial lines residential risks that meet the underwriting

2141

criteria of the corporation and are located in areas that were

2142

eligible for coverage by the Florida Windstorm Underwriting

2143

Association on January 1, 2002.

2144

b. The corporation may enter into quota share primary

2145

insurance agreements with authorized insurers at corporation

2146

coverage levels of 90 percent and 50 percent.

2147

c. If the corporation determines that additional coverage

2148

levels are necessary to maximize participation in quota share

2149

primary insurance agreements by authorized insurers, the

2150

corporation may establish additional coverage levels. However,

2151

the corporation's quota share primary insurance coverage level

2152

may not exceed 90 percent.

2153

d. Any quota share primary insurance agreement entered into

2154

between an authorized insurer and the corporation must provide

2155

for a uniform specified percentage of coverage of hurricane

2156

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

2157

board, for all eligible risks of the authorized insurer covered

2158

under the quota share primary insurance agreement.

2159

e. Any quota share primary insurance agreement entered into

2160

between an authorized insurer and the corporation is subject to

2161

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

2162

be authorized only as to insurance contracts entered into between

2163

an authorized insurer and an insured who is already insured by

2164

the corporation for wind coverage.

2165

f. For all eligible risks covered under quota share primary

2166

insurance agreements, the exposure and coverage levels for both

2167

the corporation and authorized insurers shall be reported by the

2168

corporation to the Florida Hurricane Catastrophe Fund. For all

2169

policies of eligible risks covered under quota share primary

2170

insurance agreements, the corporation and the authorized insurer

2171

shall maintain complete and accurate records for the purpose of

2172

exposure and loss reimbursement audits as required by Florida

2173

Hurricane Catastrophe Fund rules. The corporation and the

2174

authorized insurer shall each maintain duplicate copies of policy

2175

declaration pages and supporting claims documents.

2176

g. The corporation board shall establish in its plan of

2177

operation standards for quota share agreements which ensure that

2178

there is no discriminatory application among insurers as to the

2179

terms of quota share agreements, pricing of quota share

2180

agreements, incentive provisions if any, and consideration paid

2181

for servicing policies or adjusting claims.

2182

h. The quota share primary insurance agreement between the

2183

corporation and an authorized insurer must set forth the specific

2184

terms under which coverage is provided, including, but not

2185

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

2186

agreement by the insurance agent of the authorized insurer

2187

producing the business, the reporting of information concerning

2188

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

2189

arrangements for the adjustment and payment of hurricane claims

2190

incurred on eligible risks by the claims adjuster and personnel

2191

of the authorized insurer. Entering into a quota sharing

2192

insurance agreement between the corporation and an authorized

2193

insurer shall be voluntary and at the discretion of the

2194

authorized insurer.

2195

3. May provide that the corporation may employ or otherwise

2196

contract with individuals or other entities to provide

2197

administrative or professional services that may be appropriate

2198

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

2199

borrow funds, by issuing bonds or by incurring other

2200

indebtedness, and shall have other powers reasonably necessary to

2201

effectuate the requirements of this subsection, including,

2202

without limitation, the power to issue bonds and incur other

2203

indebtedness in order to refinance outstanding bonds or other

2204

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

2205

judicial validation of its bonds or other indebtedness under

2206

chapter 75. The corporation may issue bonds or incur other

2207

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

2208

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

2209

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

2210

determination by the corporation, subject to approval by the

2211

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

2212

financial obligations of the corporation and that such financings

2213

are reasonably necessary to effectuate the requirements of this

2214

subsection. The corporation is authorized to take all actions

2215

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

2216

indebtedness, including formation of trusts or other affiliated

2217

entities. The corporation shall have the authority to pledge

2218

assessments, projected recoveries from the Florida Hurricane

2219

Catastrophe Fund, other reinsurance recoverables, market

2220

equalization and other surcharges, and other funds available to

2221

the corporation as security for bonds or other indebtedness. In

2222

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

2223

prohibiting the impairment of obligations of contracts, it is the

2224

intent of the Legislature that no action be taken whose purpose

2225

is to impair any bond indenture or financing agreement or any

2226

revenue source committed by contract to such bond or other

2227

indebtedness.

2228

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

2229

the supervision and approval of a board of governors consisting

2230

of eight individuals who are residents of this state, from

2231

different geographical areas of this state. The Governor, the

2232

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

2233

Speaker of the House of Representatives shall each appoint two

2234

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

2235

by each appointing officer must have demonstrated expertise in

2236

insurance. The Chief Financial Officer shall designate one of the

2237

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

2238

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

2239

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

2240

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

2241

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

2242

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

2243

term by the appointing officer. The Chief Financial Officer shall

2244

appoint a technical advisory group to provide information and

2245

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

2246

duties under this subsection. The executive director and senior

2247

managers of the corporation shall be engaged by the board and

2248

serve at the pleasure of the board. Any executive director

2249

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

2250

the Senate. The executive director is responsible for employing

2251

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

2252

concurrence by the board.

2253

b. The board shall create a Market Accountability Advisory

2254

Committee to assist the corporation in developing awareness of

2255

its rates and its customer and agent service levels in

2256

relationship to the voluntary market insurers writing similar

2257

coverage. The members of the advisory committee shall consist of

2258

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

2259

the members of the committee: four representatives, one appointed

2260

by the Florida Association of Insurance Agents, one by the

2261

Florida Association of Insurance and Financial Advisors, one by

2262

the Professional Insurance Agents of Florida, and one by the

2263

Latin American Association of Insurance Agencies; three

2264

representatives appointed by the insurers with the three highest

2265

voluntary market share of residential property insurance business

2266

in the state; one representative from the Office of Insurance

2267

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

2268

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

2269

representative appointed by the Florida Association of Realtors;

2270

and one representative appointed by the Florida Bankers

2271

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

2272

serve for consecutive terms. The committee shall report to the

2273

corporation at each board meeting on insurance market issues

2274

which may include rates and rate competition with the voluntary

2275

market; service, including policy issuance, claims processing,

2276

and general responsiveness to policyholders, applicants, and

2277

agents; and matters relating to depopulation.

2278

5. Must provide a procedure for determining the eligibility

2279

of a risk for coverage, as follows:

2280

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

2281

to personal lines residential risks, if the risk is offered

2282

coverage from an authorized insurer at the insurer's approved

2283

rate under either a standard policy including wind coverage or,

2284

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

2285

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

2286

application to the corporation for coverage, the risk is not

2287

eligible for any policy issued by the corporation unless the

2288

premium for coverage from the authorized insurer is more than 15

2289

percent greater than the premium for comparable coverage from the

2290

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

2291

the risk is eligible for either a standard policy including wind

2292

coverage or a basic policy including wind coverage issued by the

2293

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

2294

standard policy including wind coverage regardless of market

2295

conditions, the risk shall be eligible for a basic policy

2296

including wind coverage unless rejected under subparagraph 9.

2297

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

2298

policyholder removed from the corporation through an assumption

2299

agreement until the end of the assumption period, the

2300

policyholder remains eligible for coverage from the corporation

2301

regardless of any offer of coverage from an authorized insurer or

2302

surplus lines insurer. The corporation shall determine the type

2303

of policy to be provided on the basis of objective standards

2304

specified in the underwriting manual and based on generally

2305

accepted underwriting practices.

2306

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

2307

market assistance plan or an offer of coverage through a

2308

mechanism established by the corporation before a policy is

2309

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

2310

of coverage by the corporation, and the producing agent who

2311

submitted the application to the plan or to the corporation is

2312

not currently appointed by the insurer, the insurer shall:

2313

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

2314

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

2315

usual and customary commission for the type of policy written or

2316

a fee equal to the usual and customary commission of the

2317

corporation; or

2318

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

2319

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

2320

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

2321

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

2322

the type of policy written.

2323

2324

If the producing agent is unwilling or unable to accept

2325

appointment, the new insurer shall pay the agent in accordance

2326

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

2327

(II) When the corporation enters into a contractual

2328

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

2329

the corporation policy is entitled to retain any unearned

2330

commission on the policy, and the insurer shall:

2331

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

2332

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

2333

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

2334

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

2335

the corporation; or

2336

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

2337

corporation policy to continue servicing the policy for a period

2338

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

2339

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

2340

for the type of policy written.

2341

2342

If the producing agent is unwilling or unable to accept

2343

appointment, the new insurer shall pay the agent in accordance

2344

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

2345

b. With respect to commercial lines residential risks, for

2346

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

2347

offered coverage under a policy including wind coverage from an

2348

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

2349

for any policy issued by the corporation unless the premium for

2350

coverage from the authorized insurer is more than 15 percent

2351

greater than the premium for comparable coverage from the

2352

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

2353

the risk is eligible for a policy including wind coverage issued

2354

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

2355

corporation or a policyholder removed from the corporation

2356

through an assumption agreement until the end of the assumption

2357

period, the policyholder remains eligible for coverage from the

2358

corporation regardless of any offer of coverage from an

2359

authorized insurer or surplus lines insurer.

2360

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

2361

market assistance plan or an offer of coverage through a

2362

mechanism established by the corporation before a policy is

2363

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

2364

of coverage by the corporation, and the producing agent who

2365

submitted the application to the plan or the corporation is not

2366

currently appointed by the insurer, the insurer shall:

2367

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

2368

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

2369

usual and customary commission for the type of policy written or

2370

a fee equal to the usual and customary commission of the

2371

corporation; or

2372

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

2373

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

2374

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

2375

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

2376

the type of policy written.

2377

2378

If the producing agent is unwilling or unable to accept

2379

appointment, the new insurer shall pay the agent in accordance

2380

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

2381

(II) When the corporation enters into a contractual

2382

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

2383

the corporation policy is entitled to retain any unearned

2384

commission on the policy, and the insurer shall:

2385

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

2386

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

2387

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

2388

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

2389

the corporation; or

2390

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

2391

corporation policy to continue servicing the policy for a period

2392

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

2393

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

2394

for the type of policy written.

2395

2396

If the producing agent is unwilling or unable to accept

2397

appointment, the new insurer shall pay the agent in accordance

2398

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

2399

c. For purposes of determining comparable coverage under

2400

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

2401

those forms and coverages that are reasonably comparable. The

2402

corporation may rely on a determination of comparable coverage

2403

and premium made by the producing agent who submits the

2404

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

2405

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

2406

premium with respect to the main building or structure only on

2407

the following basis: the same coverage A or other building

2408

limits; the same percentage hurricane deductible that applies on

2409

an annual basis or that applies to each hurricane for commercial

2410

residential property; the same percentage of ordinance and law

2411

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

2412

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

2413

extent the same types of credits are offered both by the

2414

corporation and the authorized insurer; the same method for loss

2415

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

2416

same method is offered both by the corporation and the authorized

2417

insurer in accordance with underwriting rules; and any other form

2418

or coverage that is reasonably comparable as determined by the

2419

board. If an application is submitted to the corporation for

2420

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

2421

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

2422

policy that is offered by an authorized insurer to the applicant

2423

shall be compared to the premium for multiperil coverage offered

2424

by an authorized insurer, subject to the standards for comparison

2425

specified in this subparagraph. If the corporation or the

2426

applicant requests from the authorized insurer a breakdown of the

2427

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

2428

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

2429

insurer refuses or is unable to provide such information, the

2430

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

2431

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

2432

6. Must include rules for classifications of risks and

2433

rates therefor.

2434

7. Must provide that if premium and investment income for

2435

an account attributable to a particular calendar year are in

2436

excess of projected losses and expenses for the account

2437

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

2438

in the account. Such surplus shall be available to defray

2439

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

2440

that purpose prior to assessing assessable insurers and

2441

assessable insureds as to any calendar year.

2442

8. Must provide objective criteria and procedures to be

2443

uniformly applied for all applicants in determining whether an

2444

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

2445

this determination and in establishing the criteria and

2446

procedures, the following shall be considered:

2447

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

2448

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

2449

and

2450

b. Whether the uncertainty associated with the individual

2451

risk is such that an appropriate premium cannot be determined.

2452

2453

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

2454

construed as the private placement of insurance, and the

2455

provisions of chapter 120 shall not apply.

2456

9. Must provide that the corporation shall make its best

2457

efforts to procure catastrophe reinsurance at reasonable rates,

2458

to cover its projected 100-year probable maximum loss as

2459

determined by the board of governors.

2460

10. Must provide that in the event of regular deficit

2461

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

2462

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

2463

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

2464

shall levy upon corporation policyholders in its next rate

2465

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

2466

Citizens policyholder surcharge arising from a regular assessment

2467

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

2468

regular assessments divided by the aggregate statewide direct

2469

written premium for subject lines of business for the prior

2470

calendar year. For purposes of calculating the Citizens

2471

policyholder surcharge to be levied under this subparagraph, the

2472

total amount of the regular assessment to which this surcharge is

2473

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

2474

without deducting the estimated Citizens policyholder surcharge.

2475

Citizens policyholder surcharges under this subparagraph are not

2476

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

2477

premium taxes; however, failure to pay a market equalization

2478

surcharge shall be treated as failure to pay premium.

2479

10.11. The policies issued by the corporation must provide

2480

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

2481

offer from an authorized insurer to cover the risk at its

2482

approved rates, the risk is no longer eligible for renewal

2483

through the corporation, except as otherwise provided in this

2484

subsection.

2485

11.12. Corporation policies and applications must include a

2486

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

2487

replaced with a policy issued by an authorized insurer that does

2488

not provide coverage identical to the coverage provided by the

2489

corporation. The notice shall also specify that acceptance of

2490

corporation coverage creates a conclusive presumption that the

2491

applicant or policyholder is aware of this potential.

2492

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

2493

different eligibility requirements and operational procedures for

2494

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

2495

the board determines that such changes to the eligibility

2496

requirements and operational procedures are justified due to the

2497

voluntary market being sufficiently stable and competitive in

2498

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

2499

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

2500

voluntary market through ordinary methods would continue to have

2501

access to coverage from the corporation. When coverage is sought

2502

in connection with a real property transfer, such requirements

2503

and procedures shall not provide for an effective date of

2504

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

2505

established by the transferor, the transferee, and, if

2506

applicable, the lender.

2507

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

2508

account, any assessable insurer with a surplus as to

2509

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

2510

of its total countrywide property insurance premiums in this

2511

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

2512

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

2513

regular assessment levied by the corporation on a limited

2514

apportionment company for a deficit incurred by the corporation

2515

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

2516

the corporation on a monthly basis as the assessments are

2517

collected by the limited apportionment company from its insureds

2518

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

2519

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

2520

limited apportionment company shall collect from its

2521

policyholders any emergency assessment imposed under sub-

2522

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

2523

determines that any regular assessment will result in an

2524

impairment of the surplus of a limited apportionment company, the

2525

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

2526

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

2527

limitation or deferment of an emergency assessment to be

2528

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

2529

14.15. Must provide that the corporation appoint as its

2530

licensed agents only those agents who also hold an appointment as

2531

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

2532

agent's initial appointment by the corporation is authorized to

2533

write and is actually writing personal lines residential property

2534

coverage, commercial residential property coverage, or commercial

2535

nonresidential property coverage within the state.

2536

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

2537

plan option to its policyholders which allows at a minimum for

2538

quarterly and semiannual payment of premiums. A monthly payment

2539

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

2540

16.17. Must limit coverage on mobile homes or manufactured

2541

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

2542

rather than replacement costs of the dwelling.

2543

17.18. May provide such limits of coverage as the board

2544

determines, consistent with the requirements of this subsection.

2545

18.19. May require commercial property to meet specified

2546

hurricane mitigation construction features as a condition of

2547

eligibility for coverage.

2548

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

2549

be actuarially sound and subject to the requirements of s.

2550

627.062, except as otherwise provided in this paragraph. The

2551

corporation shall file its recommended rates with the office at

2552

least annually. The corporation shall provide any additional

2553

information regarding the rates which the office requires. The

2554

office shall consider the recommendations of the board and issue

2555

a final order establishing the rates for the corporation within

2556

45 days after the recommended rates are filed. The corporation

2557

may not pursue an administrative challenge or judicial review of

2558

the final order of the office.

2559

2. In addition to the rates otherwise determined pursuant

2560

to this paragraph, the corporation shall impose and collect an

2561

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

2562

augment the financial resources of the corporation.

2563

3. After the public hurricane loss-projection model under

2564

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

2565

Florida Commission on Hurricane Loss Projection Methodology, that

2566

model shall serve as the minimum benchmark for determining the

2567

windstorm portion of the corporation's rates. This subparagraph

2568

does not require or allow the corporation to adopt rates lower

2569

than the rates otherwise required or allowed by this paragraph.

2570

4. The rate filings for the corporation which were approved

2571

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

2572

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

2573

possible, the corporation shall begin using the lower rates that

2574

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

2575

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

2576

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

2577

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

2578

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

2579

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

2580

a new rate filing recommended by the corporation and established

2581

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

2582

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

2583

thereafter, the corporation must make a recommended actuarially

2584

sound rate filing for each personal and commercial line of

2585

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

2586

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

2587

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

2588

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

2589

corporation for its personal residential multiperil policies, its

2590

commercial residential multiperil policies, and its commercial

2591

nonresidential multiperil policies may not result in an overall

2592

average statewide premium increase of more than 5 percent or an

2593

increase for any single policyholder of more than 5 percent,

2594

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

2595

overall average statewide premium increase of more than 10

2596

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

2597

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

2598

excluding coverage changes and surcharges.

2599

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

2600

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

2601

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

2602

its personal residential wind-only policies, its commercial

2603

residential wind-only policies, and its commercial nonresidential

2604

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

2605

premium increase of more than 10 percent, or an increase for any

2606

single policyholder of more than 10 percent, during the first 12-

2607

month period, and may not result in an overall average statewide

2608

premium increase of more than 10 percent, or an increase for any

2609

single policyholder of more than 10 percent, during each of the

2610

two subsequent 12-month periods, excluding coverage changes and

2611

surcharges.

2612

(p)1. The corporation shall certify to the office its needs

2613

for annual assessments as to a particular calendar year, and for

2614

any interim assessments that it deems to be necessary to sustain

2615

operations as to a particular year pending the receipt of annual

2616

assessments. Upon verification, the office shall approve such

2617

certification, and the corporation shall levy such annual or

2618

interim assessments. Such assessments shall be prorated as

2619

provided in paragraph (b). The corporation shall take all

2620

reasonable and prudent steps necessary to collect the amount of

2621

assessment due from each assessable insurer, including, if

2622

prudent, filing suit to collect such assessment. If the

2623

corporation is unable to collect an assessment from any

2624

assessable insurer, the uncollected assessments shall be levied

2625

as an additional assessment against the assessable insurers and

2626

any assessable insurer required to pay an additional assessment

2627

as a result of such failure to pay shall have a cause of action

2628

against such nonpaying assessable insurer. Assessments shall be

2629

included as an appropriate factor in the making of rates. The

2630

failure of a surplus lines agent to collect and remit any regular

2631

or emergency assessment levied by the corporation is considered

2632

to be a violation of s. 626.936 and subjects the surplus lines

2633

agent to the penalties provided in that section.

2634

2. The governing body of any unit of local government, any

2635

residents of which are insured by the corporation, may issue

2636

bonds as defined in s. 125.013 or s. 166.101 from time to time to

2637

fund an assistance program, in conjunction with the corporation,

2638

for the purpose of defraying deficits of the corporation. In

2639

order to avoid needless and indiscriminate proliferation,

2640

duplication, and fragmentation of such assistance programs, any

2641

unit of local government, any residents of which are insured by

2642

the corporation, may provide for the payment of losses,

2643

regardless of whether or not the losses occurred within or

2644

outside of the territorial jurisdiction of the local government.

2645

Revenue bonds under this subparagraph may not be issued until

2646

validated pursuant to chapter 75, unless a state of emergency is

2647

declared by executive order or proclamation of the Governor

2648

pursuant to s. 252.36 making such findings as are necessary to

2649

determine that it is in the best interests of, and necessary for,

2650

the protection of the public health, safety, and general welfare

2651

of residents of this state and declaring it an essential public

2652

purpose to permit certain municipalities or counties to issue

2653

such bonds as will permit relief to claimants and policyholders

2654

of the corporation. Any such unit of local government may enter

2655

into such contracts with the corporation and with any other

2656

entity created pursuant to this subsection as are necessary to

2657

carry out this paragraph. Any bonds issued under this

2658

subparagraph shall be payable from and secured by moneys received

2659

by the corporation from emergency assessments under sub-

2660

subparagraph (b)3.d., and assigned and pledged to or on behalf of

2661

the unit of local government for the benefit of the holders of

2662

such bonds. The funds, credit, property, and taxing power of the

2663

state or of the unit of local government shall not be pledged for

2664

the payment of such bonds. If any of the bonds remain unsold 60

2665

days after issuance, the office shall require all insurers

2666

subject to assessment to purchase the bonds, which shall be

2667

treated as admitted assets; each insurer shall be required to

2668

purchase that percentage of the unsold portion of the bond issue

2669

that equals the insurer's relative share of assessment liability

2670

under this subsection. An insurer shall not be required to

2671

purchase the bonds to the extent that the office determines that

2672

the purchase would endanger or impair the solvency of the

2673

insurer.

2674

3.a. The corporation shall adopt one or more programs

2675

subject to approval by the office for the reduction of both new

2676

and renewal writings in the corporation. Beginning January 1,

2677

2008, any program the corporation adopts for the payment of

2678

bonuses to an insurer for each risk the insurer removes from the

2679

corporation shall comply with s. 627.3511(2) and may not exceed

2680

the amount referenced in s. 627.3511(2) for each risk removed.

2681

The corporation may consider any prudent and not unfairly

2682

discriminatory approach to reducing corporation writings, and may

2683

adopt a credit against assessment liability or other liability

2684

that provides an incentive for insurers to take risks out of the

2685

corporation and to keep risks out of the corporation by

2686

maintaining or increasing voluntary writings in counties or areas

2687

in which corporation risks are highly concentrated and a program

2688

to provide a formula under which an insurer voluntarily taking

2689

risks out of the corporation by maintaining or increasing

2690

voluntary writings will be relieved wholly or partially from

2691

assessments under sub-subparagraphs (b)3.a. and b. However, any

2692

"take-out bonus" or payment to an insurer must be conditioned on

2693

the property being insured for at least 5 years by the insurer,

2694

unless canceled or nonrenewed by the policyholder. If the policy

2695

is canceled or nonrenewed by the policyholder before the end of

2696

the 5-year period, the amount of the take-out bonus must be

2697

prorated for the time period the policy was insured. When the

2698

corporation enters into a contractual agreement for a take-out

2699

plan, the producing agent of record of the corporation policy is

2700

entitled to retain any unearned commission on such policy, and

2701

the insurer shall either:

2702

(I) Pay to the producing agent of record of the policy, for

2703

the first year, an amount which is the greater of the insurer's

2704

usual and customary commission for the type of policy written or

2705

a policy fee equal to the usual and customary commission of the

2706

corporation; or

2707

(II) Offer to allow the producing agent of record of the

2708

policy to continue servicing the policy for a period of not less

2709

than 1 year and offer to pay the agent the insurer's usual and

2710

customary commission for the type of policy written. If the

2711

producing agent is unwilling or unable to accept appointment by

2712

the new insurer, the new insurer shall pay the agent in

2713

accordance with sub-sub-subparagraph (I).

2714

b. Any credit or exemption from regular assessments adopted

2715

under this subparagraph shall last no longer than the 3 years

2716

following the cancellation or expiration of the policy by the

2717

corporation. With the approval of the office, the board may

2718

extend such credits for an additional year if the insurer

2719

guarantees an additional year of renewability for all policies

2720

removed from the corporation, or for 2 additional years if the

2721

insurer guarantees 2 additional years of renewability for all

2722

policies so removed.

2723

c. There shall be no credit, limitation, exemption, or

2724

deferment from emergency assessments to be collected from

2725

policyholders pursuant to sub-subparagraph (b)3.d.

2726

d. Subject to the execution of the confidentiality

2727

agreement required by paragraph (w), the corporation shall make

2728

its database of policies available to prospective take-out

2729

insurers considering underwriting a risk insured by the

2730

corporation, without categorically eliminating policies from

2731

eligibility for removal. The corporation may not instruct or

2732

encourage prospective take-out insurers to avoid the selection of

2733

policies for which the agent has disapproved policy removals. The

2734

corporation must require agents to accept or decline appointment

2735

or a contract with the insurer for any policy selected and, in

2736

the case of a declination, must notify the policyholder that an

2737

insurer, identified by name, selected his or her policy for a

2738

take-out offer, but that the policyholder's agent did not accept

2739

an appointment or contract with the insurer. The notice must also

2740

provide the policyholder with the take-out insurer's contact

2741

information so that the policyholder may contact the company

2742

directly and make his or her own determination of whether to seek

2743

coverage from the take-out insurer.

2744

4. The plan shall provide for the deferment, in whole or in

2745

part, of the assessment of an assessable insurer, other than an

2746

emergency assessment collected from policyholders pursuant to

2747

sub-subparagraph (b)3.d., if the office finds that payment of the

2748

assessment would endanger or impair the solvency of the insurer.

2749

In the event an assessment against an assessable insurer is

2750

deferred in whole or in part, the amount by which such assessment

2751

is deferred may be assessed against the other assessable insurers

2752

in a manner consistent with the basis for assessments set forth

2753

in paragraph (b).

2754

5. Effective July 1, 2007, in order to evaluate the costs

2755

and benefits of approved take-out plans, if the corporation pays

2756

a bonus or other payment to an insurer for an approved take-out

2757

plan, it shall maintain a record of the address or such other

2758

identifying information on the property or risk removed in order

2759

to track if and when the property or risk is later insured by the

2760

corporation.

2761

6. Any policy taken out, assumed, or removed from the

2762

corporation is, as of the effective date of the take-out,

2763

assumption, or removal, direct insurance issued by the insurer

2764

and not by the corporation, even if the corporation continues to

2765

service the policies. This subparagraph applies to policies of

2766

the corporation and not policies taken out, assumed, or removed

2767

from any other entity.

2768

(dd)1. For policies subject to nonrenewal as a result of

2769

the risk being no longer eligible for coverage due to being

2770

valued at $1 million or more, the corporation shall, directly or

2771

through the market assistance plan, make information from

2772

confidential underwriting and claims files of policyholders

2773

available only to licensed general lines agents who register with

2774

the corporation to receive such information according to the

2775

following procedures:

2776

2. By August 1, 2006, the corporation shall provide such

2777

policyholders who are not eligible for renewal the opportunity to

2778

request in writing, within 30 days after the notification is

2779

sent, that information from their confidential underwriting and

2780

claims files not be released to licensed general lines agents

2781

registered pursuant to this paragraph.

2782

3. By August 1, 2006, the corporation shall make available

2783

to licensed general lines agents the registration procedures to

2784

be used to obtain confidential information from underwriting and

2785

claims files for such policies not eligible for renewal. As a

2786

condition of registration, the corporation shall require the

2787

licensed general lines agent to attest that the agent has the

2788

experience and relationships with authorized or surplus lines

2789

carriers to attempt to offer replacement coverage for such

2790

policies.

2791

4. By September 1, 2006, the corporation shall make

2792

available through a secured website to licensed general lines

2793

agents registered pursuant to this paragraph application, rating,

2794

loss history, mitigation, and policy type information relating to

2795

such policies not eligible for renewal and for which the

2796

policyholder has not requested the corporation withhold such

2797

information. The registered licensed general lines agent may use

2798

such information to contact and assist the policyholder in

2799

securing replacement policies, and the agent may disclose to the

2800

policyholder that such information was obtained from the

2801

corporation.

2802

(w)1. The following records of the corporation are

2803

confidential and exempt from the provisions of s. 119.07(1) and

2804

s. 24(a), Art. I of the State Constitution:

2805

a. Underwriting files, except that a policyholder or an

2806

applicant shall have access to his or her own underwriting files.

2807

Confidential and exempt underwriting file records may also be

2808

released to other governmental agencies upon written request and

2809

demonstration of need; such records held by the receiving agency

2810

remain confidential and exempt as provided herein.

2811

b. Claims files, until termination of all litigation and

2812

settlement of all claims arising out of the same incident,

2813

although portions of the claims files may remain exempt, as

2814

otherwise provided by law. Confidential and exempt claims file

2815

records may be released to other governmental agencies upon

2816

written request and demonstration of need; such records held by

2817

the receiving agency remain confidential and exempt as provided

2818

for herein.

2819

c. Records obtained or generated by an internal auditor

2820

pursuant to a routine audit, until the audit is completed, or if

2821

the audit is conducted as part of an investigation, until the

2822

investigation is closed or ceases to be active. An investigation

2823

is considered "active" while the investigation is being conducted

2824

with a reasonable, good faith belief that it could lead to the

2825

filing of administrative, civil, or criminal proceedings.

2826

d. Matters reasonably encompassed in privileged attorney-

2827

client communications.

2828

e. Proprietary information licensed to the corporation

2829

under contract and the contract provides for the confidentiality

2830

of such proprietary information.

2831

f. All information relating to the medical condition or

2832

medical status of a corporation employee which is not relevant to

2833

the employee's capacity to perform his or her duties, except as

2834

otherwise provided in this paragraph. Information that which is

2835

exempt shall include, but is not limited to, information relating

2836

to workers' compensation, insurance benefits, and retirement or

2837

disability benefits.

2838

g. Upon an employee's entrance into the employee assistance

2839

program, a program to assist any employee who has a behavioral or

2840

medical disorder, substance abuse problem, or emotional

2841

difficulty which affects the employee's job performance, all

2842

records relative to that participation shall be confidential and

2843

exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I

2844

of the State Constitution, except as otherwise provided in s.

2845

112.0455(11).

2846

h. Information relating to negotiations for financing,

2847

reinsurance, depopulation, or contractual services, until the

2848

conclusion of the negotiations.

2849

i. Minutes of closed meetings regarding underwriting files,

2850

and minutes of closed meetings regarding an open claims file

2851

until termination of all litigation and settlement of all claims

2852

with regard to that claim, except that information otherwise

2853

confidential or exempt by law shall will be redacted.

2854

2. If When an authorized insurer is considering

2855

underwriting a risk insured by the corporation, relevant

2856

underwriting files and confidential claims files may be released

2857

to the insurer provided the insurer agrees in writing, notarized

2858

and under oath, to maintain the confidentiality of such files. If

2859

When a file is transferred to an insurer that file is no longer a

2860

public record because it is not held by an agency subject to the

2861

provisions of the public records law. Underwriting files and

2862

confidential claims files may also be released to staff of and

2863

the board of governors of the market assistance plan established

2864

pursuant to s. 627.3515, who must retain the confidentiality of

2865

such files, except such files may be released to authorized

2866

insurers that are considering assuming the risks to which the

2867

files apply, provided the insurer agrees in writing, notarized

2868

and under oath, to maintain the confidentiality of such files.

2869

Finally, the corporation or the board or staff of the market

2870

assistance plan may make the following information obtained from

2871

underwriting files and confidential claims files available to

2872

licensed general lines insurance agents: name, address, and

2873

telephone number of the residential property owner or insured;

2874

location of the risk; rating information; loss history; and

2875

policy type. The receiving licensed general lines insurance agent

2876

must retain the confidentiality of the information received.

2877

3. A policyholder who has filed suit against the

2878

corporation has the right to discover the contents of his or her

2879

own claims file to the same extent that discovery of such

2880

contents would be available from a private insurer in litigation

2881

as provided by the Florida Rules of Civil Procedure, the Florida

2882

Evidence Code, and other applicable law. Pursuant to subpoena, a

2883

third party has the right to discover the contents of an

2884

insured's or applicant's underwriting or claims file to the same

2885

extent that discovery of such contents would be available from a

2886

private insurer by subpoena as provided by the Florida Rules of

2887

Civil Procedure, the Florida Evidence Code, and other applicable

2888

law, and subject to any confidentiality protections requested by

2889

the corporation and agreed to by the seeking party or ordered by

2890

the court. The corporation may release confidential underwriting

2891

and claims file contents and information as it deems necessary

2892

and appropriate to underwrite or service insurance policies and

2893

claims, subject to any confidentiality protections deemed

2894

necessary and appropriate by the corporation.

2895

4.2. Portions of meetings of the corporation are exempt

2896

from the provisions of s. 286.011 and s. 24(b), Art. I of the

2897

State Constitution wherein confidential underwriting files or

2898

confidential open claims files are discussed. All portions of

2899

corporation meetings which are closed to the public shall be

2900

recorded by a court reporter. The court reporter shall record the

2901

times of commencement and termination of the meeting, all

2902

discussion and proceedings, the names of all persons present at

2903

any time, and the names of all persons speaking. No portion of

2904

any closed meeting shall be off the record. Subject to the

2905

provisions hereof and s. 119.07(1)(e)-(g), the court reporter's

2906

notes of any closed meeting shall be retained by the corporation

2907

for a minimum of 5 years. A copy of the transcript, less any

2908

exempt matters, of any closed meeting wherein claims are

2909

discussed shall become public as to individual claims after

2910

settlement of the claim.

2911

(dd)(ee) The assets of the corporation may be invested and

2912

managed by the State Board of Administration.

2913

(ee)(ff) The office may establish a pilot program to offer

2914

optional sinkhole coverage in one or more counties or other

2915

territories of the corporation for the purpose of implementing s.

2916

627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.

2917

Under the pilot program, the corporation is not required to issue

2918

a notice of nonrenewal to exclude sinkhole coverage upon the

2919

renewal of existing policies, but may exclude such coverage using

2920

a notice of coverage change.

2921

Section 14. Paragraph (b) of subsection (2) of section

2922

627.4133, Florida Statutes, is amended to read:

2923

627.4133 Notice of cancellation, nonrenewal, or renewal

2924

premium.--

2925

(2) With respect to any personal lines or commercial

2926

residential property insurance policy, including, but not limited

2927

to, any homeowner's, mobile home owner's, farmowner's,

2928

condominium association, condominium unit owner's, apartment

2929

building, or other policy covering a residential structure or its

2930

contents:

2931

(b) The insurer shall give the named insured written notice

2932

of nonrenewal, cancellation, or termination at least 180 100 days

2933

prior to the effective date of the nonrenewal, cancellation, or

2934

termination. However, the insurer shall give at least 100 days'

2935

written notice, or written notice by June 1, whichever is

2936

earlier, for any nonrenewal, cancellation, or termination that

2937

would be effective between June 1 and November 30. The notice

2938

must include the reason or reasons for the nonrenewal,

2939

cancellation, or termination, except that:

2940

1. When cancellation is for nonpayment of premium, at least

2941

10 days' written notice of cancellation accompanied by the reason

2942

therefor shall be given. As used in this subparagraph, the term

2943

"nonpayment of premium" means failure of the named insured to

2944

discharge when due any of her or his obligations in connection

2945

with the payment of premiums on a policy or any installment of

2946

such premium, whether the premium is payable directly to the

2947

insurer or its agent or indirectly under any premium finance plan

2948

or extension of credit, or failure to maintain membership in an

2949

organization if such membership is a condition precedent to

2950

insurance coverage. "Nonpayment of premium" also means the

2951

failure of a financial institution to honor an insurance

2952

applicant's check after delivery to a licensed agent for payment

2953

of a premium, even if the agent has previously delivered or

2954

transferred the premium to the insurer. If a dishonored check

2955

represents the initial premium payment, the contract and all

2956

contractual obligations shall be void ab initio unless the

2957

nonpayment is cured within the earlier of 5 days after actual

2958

notice by certified mail is received by the applicant or 15 days

2959

after notice is sent to the applicant by certified mail or

2960

registered mail, and if the contract is void, any premium

2961

received by the insurer from a third party shall be refunded to

2962

that party in full.

2963

2. When such cancellation or termination occurs during the

2964

first 90 days during which the insurance is in force and the

2965

insurance is canceled or terminated for reasons other than

2966

nonpayment of premium, at least 20 days' written notice of

2967

cancellation or termination accompanied by the reason therefor

2968

shall be given except where there has been a material

2969

misstatement or misrepresentation or failure to comply with the

2970

underwriting requirements established by the insurer.

2971

3. The requirement for providing written notice of

2972

nonrenewal by June 1 of any nonrenewal that would be effective

2973

between June 1 and November 30 does not apply to the following

2974

situations, but the insurer remains subject to the requirement to

2975

provide such notice at least 100 days prior to the effective date

2976

of nonrenewal:

2977

a. A policy that is nonrenewed due to a revision in the

2978

coverage for sinkhole losses and catastrophic ground cover

2979

collapse pursuant to s. 627.730, as amended by s. 30, chapter

2980

2007-1, Laws of Florida.

2981

b. A policy that is nonrenewed by Citizens Property

2982

Insurance Corporation, pursuant to s. 627.351(6), for a policy

2983

that has been assumed by an authorized insurer offering

2984

replacement or renewal coverage to the policyholder.

2985

2986

After the policy has been in effect for 90 days, the policy shall

2987

not be canceled by the insurer except when there has been a

2988

material misstatement, a nonpayment of premium, a failure to

2989

comply with underwriting requirements established by the insurer

2990

within 90 days of the date of effectuation of coverage, or a

2991

substantial change in the risk covered by the policy or when the

2992

cancellation is for all insureds under such policies for a given

2993

class of insureds. This paragraph does not apply to individually

2994

rated risks having a policy term of less than 90 days.

2995

Section 15. Effective January 1, 2009, and applicable to

2996

policies issued or renewed on or after that date, section

2997

627.714, Florida Statutes, is created to read:

2998

627.714 Guaranteed renewability for mitigated homes.--A

2999

personal lines residential insurance policy shall be guaranteed

3000

renewable for at least 3 years if the dwelling has been built or

3001

retrofitted to meet the wind-borne-debris protection requirements

3002

of the Florida Building Code which apply to the wind-borne debris

3003

region as defined in the Florida Building Code. This requirement

3004

applies only for one 3-year period after the policy is issued or

3005

first renewed after the dwelling has been built or retrofitted to

3006

meet the wind-borne-debris protection requirements.

3007

Section 16. Effective January 1, 2011, section 689.262,

3008

Florida Statutes, is created to read:

3009

689.262 Sale of residential property; disclosure of

3010

windstorm mitigation rating.--A purchaser of residential property

3011

must be informed of the windstorm mitigation rating of the

3012

structure, based on the uniform home grading scale adopted

3013

pursuant to s. 215.55865. The rating must be included in the

3014

contract for sale or as a separate document attached to the

3015

contract for sale. The Financial Services Commission may adopt

3016

rules, consistent with other state laws, to administer this

3017

section, including the form of the disclosure and the

3018

requirements for the windstorm mitigation inspection or report

3019

that is required for purposes of determining the rating.

3020

Section 17. Effective October 1, 2008, subsection (1) of

3021

section 817.2341, Florida Statutes, is amended to read:

3022

817.2341 False or misleading statements or supporting

3023

documents; penalty.--

3024

(1) Any person who willfully files with the department or

3025

office, or who willfully signs for filing with the department or

3026

office, a materially false or materially misleading financial

3027

statement or document in support of such statement required by

3028

law or rule, or a materially false or materially misleading rate

3029

filing, with intent to deceive and with knowledge that the

3030

statement or document is materially false or materially

3031

misleading, commits a felony of the third degree, punishable as

3032

provided in s. 775.082, s. 775.083, or s. 775.084.

3033

Section 18. (1) By December 15, 2008, Citizens Property

3034

Insurance Corporation shall transfer $250 million to the General

3035

Revenue Fund by transferring an amount from the Personal Lines

3036

Account and the Commercial Lines Account, as defined in s.

3037

627.351(6), Florida Statutes, in proportion to the surplus of

3038

each account, if the combined losses in the Personal Lines

3039

Account and the Commercial Lines Account from one or more named

3040

hurricanes in 2008 do not exceed $750 million. The board of

3041

governors of Citizens Property Insurance Corporation must make a

3042

reasonable estimate of such losses on or after December 1, 2008,

3043

and no later than December 14, 2008, using generally accepted

3044

actuarial and accounting practices, recognizing that audited

3045

financial statements will not yet be available and that all

3046

losses will have not been reported or developed.

3047

(2) If Citizens Property Insurance Corporation transfers

3048

$250 million to General Revenue as provided in subsection (1),

3049

effective December 15, 2008, and for the 2008-2009 fiscal year,

3050

the sum of $250 million is appropriated from the General Revenue

3051

Fund on a nonrecurring basis to the State Board of Administration

3052

for purposes of the Insurance Capital Build-Up Incentive Program

3053

established pursuant to s. 215.5595, Florida Statutes, as amended

3054

by this act. Costs and fees incurred by the board in

3055

administering this program, including fees for investment

3056

services, shall be paid from funds appropriated by the

3057

Legislature for this program, but are limited to 1 percent of the

3058

amount appropriated. Notwithstanding the provisions of s.

3059

216.301, Florida Statutes, to the contrary, the unexpended

3060

balance of this appropriation shall not revert to the General

3061

Revenue Fund until June 30, 2009.

3062

Section 19. Except as otherwise expressly provided in this

3063

act, this act shall take effect July 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.