CS for CS for SB's 2860 & 1196 Third Engrossed
20082860e3
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A bill to be entitled
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An act relating to insurance; providing a short title;
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amending s. 215.5595, F.S.; revising legislative findings;
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providing for an appropriation of state funds in exchange
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for surplus notes issued by residential property insurers
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under the program; revising the conditions and
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requirements for providing funds to insurers under the
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program; requiring a commitment by the insurer to meet
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minimum premium-to-surplus writing ratios for residential
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property insurance and for taking policies out of Citizens
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Property Insurance Corporation; requiring insurers to
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commit to maintaining certain levels of surplus and
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reinsurance; authorizing the State Board of Administration
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to charge a fee for late payments; providing for payment
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of costs and fees incurred by the board in administering
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the program from funds appropriated to the program,
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subject to a specified limit; requiring the board to
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submit an annual report to the Legislature on the program
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and insurer compliance with certain requirements;
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providing that amendments made by the act do not affect
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the terms of surplus notes approved prior to a specified
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date; authorizing the State Board of Administration and an
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insurer to renegotiate such terms consistent with such
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amendments; requiring the State Board of Administration to
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transfer to Citizens Property Insurance Corporation
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certain uncommitted or unreserved funds; amending s.
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624.3161, F.S.; authorizing the Office of Insurance
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Regulation to require an insurer to file its claims
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handling practices and procedures as a public record based
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on findings of a market conduct examination; amending s.
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624.4211, F.S.; increasing the maximum amounts of
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administrative fines that may be imposed upon an insurer
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by the Office of Insurance Regulation for nonwillful and
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willful violations of an order or rule of the office or
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any provision of the Florida Insurance Code; creating s.
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624.4213, F.S.; specifying requirements for submission of
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a document or information to the Office of Insurance
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Regulation or the Department of Financial Services in
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order for a person to claim that the document is a trade
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secret; requiring each page or portion to be labeled as a
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trade secret and be separated from non-trade secret
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material; requiring the submitting party to include an
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affidavit certifying certain information about the
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documents claimed to be trade secrets; requiring the
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office or department to notify persons who submit trade
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secret documents of any public-records request and the
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opportunity to file a court action to bar disclosure;
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specifying conditions for the office to retain or release
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such documents; creating s. 624.4305, F.S.; requiring that
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an insurer planning to nonrenew more than a specified
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number of residential property insurance policies notify
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the Office of Insurance Regulation and obtain approval for
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such nonrenewals; specifying procedures for issuance of
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such notice; amending s. 626.9521, F.S.; increasing the
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maximum fines that may be imposed by the office or
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department for nonwillful and willful violations of state
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law regarding unfair methods of competition and unfair or
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deceptive acts or practices related to insurance; amending
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s. 626.9541, F.S.; specifying an additional unfair claims
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settlement practice; amending s. 627.0612, F.S.; providing
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criteria for administrative hearings to determine whether
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an insurer's property insurance rates, rating manuals,
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premium credits, discount schedules, and surcharge
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schedules comply with the law; providing for entry of
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certain orders; amending s. 627.062, F.S.; requiring that
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an insurer seeking a rate for property insurance that is
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greater than the rate most recently approved by the Office
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of Insurance Regulation make a "file and use" filing for
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all such rate filings made after a specified date;
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revising the factors the office must consider in reviewing
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a rate filing; prohibiting the Office of Insurance
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Regulation from disapproving as excessive a rate solely
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because the insurer obtained reinsurance covering a
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specified probably maximum loss; allowing the office to
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disapprove a rate as excessive within 1 year after the
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rate has been approved under certain conditions related to
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nonrenewal of policies by the insurer; requiring the
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Division of Administrative Hearings to expedite a hearing
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request by an insurer and for the administrative law judge
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to commence the hearing within a specified time;
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authorizing an insurer to request an expedited appellate
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review pursuant to the Florida Rules of Appellate
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Procedure; expressing legislative intent for an expedited
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appellate review; revising provisions relating to the
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submission of a disputed rate filing, other than a rate
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filing for medical malpractice insurance, to an
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arbitration panel in lieu of an administrative hearing if
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the rate is filed before a specified date; deleting
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provisions relating to mandatory arbitration in lieu of
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certain hearings; amending s. 627.0628, F.S.; providing
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legislative findings relating to final agency action for
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insurance ratemaking; requiring the Financial Services
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Commission to consider and adopt findings relating to
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certain actuarial models, principles, standards, or models
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for certain maximum loss level calculations; requiring
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that with respect to rate filings, insurers must use
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actuarial methods or models found to be accurate or
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reliable by the Florida Commission on Hurricane Loss
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Projection Methodology; deleting the requirement for the
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Office of Insurance Regulation and the Consumer Advocate
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to have access to all assumptions of a hurricane loss
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model in order for a model that has been found to be
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accurate and reliable by the Florida Commission on
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Hurricane Loss Projection Methodology to be admissible in
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a rate proceeding; deleting cross-references to conform to
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changes made by the act; amending s. 627.0629, F.S.;
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requiring that the Office of Insurance Regulation develop
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and make publicly available before a specified deadline a
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proposed method for insurers to establish windstorm
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mitigation premium discounts that correlate to the uniform
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home rating scale; requiring that the Financial Services
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Commission adopt rules before a specified deadline;
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requiring insurers to make rate filings pursuant to such
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method; authorizing the commission to make changes by rule
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to the uniform home grading scale and specify by rule the
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minimum required discounts, credits, or other rate
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differentials; requiring that such rate differentials be
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consistent with generally accepted actuarial principles
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and wind loss mitigation studies; amending s. 627.351,
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F.S., relating to Citizens Property Insurance Corporation;
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deleting a provision to conform to changes made in the
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act; deleting provisions defining the terms "homestead
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property" and "nonhomestead property"; increasing
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threshold replacement costs of certain structures for
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eligibility for coverage by the corporation; deleting
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requirements for certain properties to meeting building
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code plus requirements as a condition of eligibility for
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coverage by the corporation; decreasing the value at which
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certain structures are eligible for coverage; requiring
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written disclosure of windstorm mitigation ratings for
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certain structures; deleting outdated provisions requiring
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the corporation to submit a report for approval of
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offering multiperil coverage; revising threshold amounts
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of deficits incurred in a calendar year on which the
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decision to levy assessments and the types of such
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assessments are based; revising the formula used to
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calculate shares of assessments owed by certain assessable
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insureds; requiring that the board of governors make
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certain determinations before levying emergency
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assessments; providing the board of governors with
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discretion to set the amount of an emergency assessment
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within specified limits; requiring the board of governors
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to levy a Citizens policyholder surcharge under certain
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conditions; increasing the amount of the surcharge;
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deleting a provision requiring the levy of an immediate
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assessment against certain policyholders under such
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conditions; requiring that funds collected from the levy
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of such surcharges be used for certain purposes; providing
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that such surcharges are not considered premium and are
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not subject to commissions, fees, or premium taxes;
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requiring that the failure to pay such surcharges be
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treated as failure to pay premium; requiring that the
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amount of any assessment or surcharge which exceeds the
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amount of deficits be remitted to and used by the
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corporation for specified purposes; deleting provisions
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requiring that the plan of operation of the corporation
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provide for the levy of a Citizens policyholder surcharge
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if regular deficit assessments are levied as a result of
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deficits in certain accounts; deleting provisions related
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to the calculation, classification, and nonpayment of such
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surcharge; requiring that the corporation make an annual
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filing for each personal or commercial line of business it
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writes, beginning on a specified date; deleting a
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provision requiring an insurer to purchase bonds that
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remain unsold; deleting provisions requiring the
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corporation to make certain confidential underwriting and
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claims files available to agents to conform to changes
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made by the act relating to ineligibility of certain
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dwellings; clarifying the right of certain parties to
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discover underwriting and claims file records; authorizing
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the corporation to release such records as it deems
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necessary; amending s. 627.4133, F.S.; requiring insurers
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to provide written notice of certain cancellations,
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nonrenewals, or terminations; creating s. 689.262, F.S.;
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requiring a purchaser of residential property in wind-
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borne debris regions to be presented with the windstorm
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mitigation rating of the structure; authorizing the
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Financial Services Commission to adopt rules; requiring
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Citizens Property Insurance Corporation to transfer funds
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to the General Revenue Fund if the losses due to a
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hurricane do not exceed a specified amount; requiring the
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board of governors of Citizens Property Insurance
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Corporation to make a reasonable estimate of such losses
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by a certain date; requiring the board to make quarterly
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transfers of funds to the corporation under certain
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circumstances; requiring the corporation to credit certain
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accounts for funds removed to make certain transfers;
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requiring the State Board of Administration to transfer to
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Citizens Property Insurance Corporation certain
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uncommitted or unreserved funds under certain
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circumstances; prohibiting Citizens Property Insurance
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Corporation from using certain statutory changes or
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authorized transfers of funds as justification or cause to
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seek any rate or assessment increase; amending s.
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627.06281, F.S.; providing for residential property
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insurers to have access to and use a public hurricane loss
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projection model; requiring the office to establish a fee
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schedule for such model access and use; amending s.
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627.0655, F.S.; expanding application of policyholder loss
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or expense-related premium discounts; creating the
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Citizens Property Insurance Corporation Mission Review
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Task Force; providing purposes; requiring a report;
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providing report requirements; providing for appointment
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of members; providing responsibilities; specifying service
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without compensation; providing for reimbursement of per
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diem and travel expenses; providing meeting requirements;
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requiring the corporation to assist the task force;
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providing for the expiration of the task force; requiring
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the Chief Financial Officer to provide a report on the
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economic impact on the state of certain hurricanes;
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providing report requirements; creating s. 627.0621, F.S.;
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providing requirements for transparency in rate
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regulation; providing definitions; providing for a website
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for public access to rate filing information; providing
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requirements; providing for application of public meeting
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requirements; specifying nonapplication of attorney-client
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or work-product privileges to certain communications in
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certain administrative or judicial proceedings under
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certain circumstances; specifying criteria; amending s.
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215.555, F.S.; extending for an additional year the offer
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of reimbursement coverage for specified insurers; revising
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the qualifying criteria for such insurers; revising
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provisions to conform; amending s. 627.0613, F.S.;
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deleting cross-references to conform to changes made by
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the act; amending s. 627.712, F.S.; requiring insurers to
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provide notice to mortgageholders or lienholders of
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certain policies not providing wind coverage for certain
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structures; providing for provisions of the act to
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supersede and control over conflicting provisions of House
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Bill 5057; providing effective dates.
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Be It Enacted by the Legislature of the State of Florida:
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Section 1. This act may be cited as the "Homeowner's Bill
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of Rights Act."
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Section 2. Section 215.5595, Florida Statutes, is amended
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to read:
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215.5595 Insurance Capital Build-Up Incentive Program.--
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(1) Upon entering the 2008 2006 hurricane season, the
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Legislature finds that:
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(a) The losses in this state Florida from eight hurricanes
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in 2004 and 2005 have seriously strained the resources of both
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the voluntary insurance market and the public sector mechanisms
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of Citizens Property Insurance Corporation and the Florida
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Hurricane Catastrophe Fund.
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(b) Private reinsurance is much less available and at a
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significantly greater cost to residential property insurers as
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compared to 1 year ago, particularly for amounts below the
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insurer's retention or retained losses that must be paid before
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reimbursement is provided by the Florida Hurricane Catastrophe
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Fund.
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(c) The Office of Insurance Regulation has reported that
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the insolvency of certain insurers may be imminent.
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(d) Hurricane forecast experts predict that the 2006
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hurricane season will be an active hurricane season and that the
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Atlantic and Gulf Coast regions face an active hurricane cycle of
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10 to 20 years or longer.
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(b)(e) Citizens Property Insurance Corporation has over 1.2
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million policies in force, has the largest market share of any
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insurer writing residential property insurer in the state, and
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faces the threat of a catastrophic loss that The number of
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cancellations or nonrenewals of residential property insurance
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policies is expected to increase and the number of new
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residential policies written in the voluntary market are likely
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to decrease, causing increased policy growth and exposure to the
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state insurer of last resort, Citizens Property Insurance
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Corporation, and threatening to increase the deficit of the
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corporation, currently estimated to be over $1.7 billion. This
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deficit must be funded by assessments against insurers and
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policyholders, unless otherwise funded by the state. The program
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has a substantial positive effect on the depopulation efforts of
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Citizens Property Insurance Corporation since companies
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participating in the program have removed over 199,000 policies
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from the corporation. Companies participating in the program have
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issued a significant number of new policies, thereby keeping an
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estimated 480,000 new policies out of the corporation.
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(c)(f) Policyholders are subject to high increased premiums
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and assessments that are increasingly making such coverage
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unaffordable and that may force policyholders to sell their homes
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and even leave the state.
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(d)(g) The increased risk to the public sector and private
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sector continues to pose poses a serious threat to the economy of
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this state, particularly the building and financing of
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residential structures, and existing mortgages may be placed in
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default.
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(h) The losses from 2004 and 2005, combined with the
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expectation that the increase in hurricane activity will continue
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for the foreseeable future, have caused both insurers and
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reinsurers to limit the capital they are willing to commit to
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covering the hurricane risk in Florida; attracting new capital to
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the Florida market is a critical priority; and providing a low-
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cost source of capital would enable insurers to write additional
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residential property insurance coverage and act to mitigate
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premium increases.
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(e)(i) Appropriating state funds to be exchanged for used
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as surplus notes issued by for residential property insurers,
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under conditions requiring the insurer to contribute additional
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private sector capital and to write a minimum level of premiums
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for residential hurricane coverage, is a valid and important
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public purpose.
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(f) Extending the Insurance Capital Build-up Incentive
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Program will provide an incentive for investors to commit
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additional capital to Florida's residential insurance market.
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(2) The purpose of this section is to provide funds in
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exchange for surplus notes to be issued by to new or existing
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authorized residential property insurers under the Insurance
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Capital Build-Up Incentive Program administered by the State
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Board of Administration, under the following conditions:
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(a) The amount of state funds provided in exchange for a
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the surplus note to for any insurer or insurer group, other than
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an insurer writing only manufactured housing policies, may not
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exceed $25 million or 20 percent of the total amount of funds
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appropriated for available under the program, whichever is
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greater. The amount of the surplus note for any insurer or
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insurer group writing residential property insurance covering
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only manufactured housing may not exceed $7 million.
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(b) On or after April 1, 2008, the insurer must contribute
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an amount of new capital to its surplus which is at least equal
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to the amount of the surplus note and must apply to the board by
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September 1, 2008 July 1, 2006. If an insurer applies after
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September 1, 2008 July 1, 2006, but before June 1, 2009 2007, the
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amount of the surplus note is limited to one-half of the new
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capital that the insurer contributes to its surplus, except that
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an insurer writing only manufactured housing policies is eligible
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to receive a surplus note of up to $7 million. For purposes of
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this section, new capital must be in the form of cash or cash
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equivalents as specified in s. 625.012(1).
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(c) The insurer's surplus, new capital, and the surplus
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note must total at least $50 million, except for insurers writing
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residential property insurance covering only manufactured
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housing. The insurer's surplus, new capital, and the surplus note
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must total at least $14 million for insurers writing only
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residential property insurance covering manufactured housing
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policies as provided in paragraph (a).
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(d) The insurer must commit to increase its writings of
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residential property insurance, including the peril of wind, and
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to meet meeting a minimum writing ratio of net written premium to
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surplus of at least 1:1 for the first calendar year after
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receiving the state funds or renegotiation of the surplus note,
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1.5:1 for the second calendar year, and 2:1 for the remaining
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term of the surplus note. Alternatively, the insurer must meet a
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minimum writing ratio of gross written premium to surplus of at
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least 3:1 for the first calendar year after receiving the state
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funds or renegotiation of the surplus note, 4.5:1 for the second
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calendar year, and 6:1 for the remaining term of the surplus
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note. The writing ratios, which shall be determined by the Office
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of Insurance Regulation and certified quarterly to the board. For
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this purpose, the term "premium" "net written premium" means net
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written premium for residential property insurance in this state
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Florida, including the peril of wind, and "surplus" means the new
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capital and surplus note refers to the entire surplus of the
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insurer. An insurer that makes an initial application after July
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1, 2008, must also commit to writing at least 15 percent of its
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net or gross written premium for new policies, not including
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renewal premiums, for policies taken out of Citizens Property
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Insurance Corporation, during each of the first 3 years after
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receiving the state funds in exchange for the surplus note, which
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shall be determined by the Office of Insurance Regulation and
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certified annually to the board. The insurer must also commit to
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maintaining a level of surplus and reinsurance sufficient to
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cover in excess of its 1-in-100 year probable maximum loss, as
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determined by a hurricane loss model accepted by the Florida
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Commission on Hurricane Loss Projection Methodology, which shall
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be determined by the Office of Insurance Regulation and certified
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annually to the board. If the board determines that the insurer
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has failed to meet any of the requirements of this paragraph
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required ratio is not maintained during the term of the surplus
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note, the board may increase the interest rate, accelerate the
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repayment of interest and principal, or shorten the term of the
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surplus note, subject to approval by the Commissioner of
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Insurance of payments by the insurer of principal and interest as
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provided in paragraph (f).
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(e) If the requirements of this section are met, the board
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may approve an application by an insurer for funds in exchange
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for issuance of a surplus note, unless the board determines that
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the financial condition of the insurer and its business plan for
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writing residential property insurance in Florida places an
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unreasonably high level of financial risk to the state of
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nonpayment in full of the interest and principal. The board shall
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consult with the Office of Insurance Regulation and may contract
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with independent financial and insurance consultants in making
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this determination.
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(f) The surplus note must be repayable to the state with a
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term of 20 years. The surplus note shall accrue interest on the
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unpaid principal balance at a rate equivalent to the 10-year U.S.
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Treasury Bond rate, require the payment only of interest during
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the first 3 years, and include such other terms as approved by
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the board. The board may charge late fees up to 5 percent for
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late payments or other late remittances. Payment of principal, or
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interest, or late fees by the insurer on the surplus note must be
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approved by the Commissioner of Insurance, who shall approve such
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payment unless the commissioner determines that such payment will
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substantially impair the financial condition of the insurer. If
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such a determination is made, the commissioner shall approve such
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payment that will not substantially impair the financial
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condition of the insurer.
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(g) The total amount of funds available for the program is
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limited to the amount appropriated by the Legislature for this
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purpose. If the amount of surplus notes requested by insurers
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exceeds the amount of funds available, the board may prioritize
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insurers that are eligible and approved, with priority for
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funding given to insurers writing only manufactured housing
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policies, regardless of the date of application, based on the
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financial strength of the insurer, the viability of its proposed
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business plan for writing additional residential property
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insurance in the state, and the effect on competition in the
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residential property insurance market. Between insurers writing
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residential property insurance covering manufactured housing,
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priority shall be given to the insurer writing the highest
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percentage of its policies covering manufactured housing.
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(h) The board may allocate portions of the funds available
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for the program and establish dates for insurers to apply for
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surplus notes from such allocation which are earlier than the
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dates established in paragraph (b).
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(h)(i) Notwithstanding paragraph (d), a newly formed
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manufactured housing insurer that is eligible for a surplus note
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under this section shall meet the premium to surplus ratio
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provisions of s. 624.4095.
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(i)(j) As used in this section, "an insurer writing only
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manufactured housing policies" includes:
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1. A Florida domiciled insurer that begins writing personal
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lines residential manufactured housing policies in Florida after
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March 1, 2007, and that removes a minimum of 50,000 policies from
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Citizens Property Insurance Corporation without accepting a
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bonus, provided at least 25 percent of its policies cover
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manufactured housing. Such an insurer may count any funds above
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the minimum capital and surplus requirement that were contributed
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into the insurer after March 1, 2007, as new capital under this
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section.
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2. A Florida domiciled insurer that writes at least 40
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percent of its policies covering manufactured housing in Florida.
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(3) As used in this section, the term:
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(a) "Board" means the State Board of Administration.
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(b) "Program" means the Insurance Capital Build-Up
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Incentive Program established by this section.
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(4) The state funds provided to the insurer in exchange for
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the A surplus note provided to an insurer pursuant to this
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section are is considered borrowed surplus an asset of the
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(5) If an insurer that receives funds in exchange for
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issuance of a surplus note pursuant to this section is rendered
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insolvent, the state is a class 3 creditor pursuant to s. 631.271
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for the unpaid principal and interest on the surplus note.
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(6) The board shall adopt rules prescribing the procedures,
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administration, and criteria for approving the applications of
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insurers to receive funds in exchange for issuance of surplus
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notes pursuant to this section, which may be adopted pursuant to
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the procedures for emergency rules of chapter 120. Otherwise,
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actions and determinations by the board pursuant to this section
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are exempt from chapter 120.
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(7) The board shall invest and reinvest the funds
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appropriated for the program in accordance with s. 215.47 and
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consistent with board policy.
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(8) Costs and fees incurred by the board in administering
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this program, including fees for investment services, shall be
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paid from funds appropriated by the Legislature for this program,
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but are limited to 1 percent of the amount appropriated.
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(9) The board shall submit a report to the President of the
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Senate and the Speaker of the House of Representatives by
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February 1 of each year as to the results of the program and each
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insurer's compliance with the terms of its surplus note.
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(10) The amendments to this section enacted in 2008 do not
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affect the terms or conditions of the surplus notes that were
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approved prior to January 1, 2008. However, the board may
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renegotiate the terms of any surplus note issued by an insurer
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prior to January 2008 under this program upon the agreement of
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the insurer and the board and consistent with the requirements of
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this section as amended in 2008.
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(11) On January 15, 2009, the State Board of Administration
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shall transfer to Citizens Property Insurance Corporation any
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funds that have not been committed or reserved for insurers
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approved to receive such funds under the program, from the funds
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that were transferred from Citizens Property Insurance
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Corporation in 2008-2009 for such purposes.
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Section 3. Subsection (6) is added to section, 624.3161,
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Florida Statutes, to read:
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624.3161 Market conduct examinations.--
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(6) Based on the findings of a market conduct examination
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that an insurer has exhibited a pattern or practice of willful
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violations of an unfair insurance trade practice related to
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claims-handling which caused harm to policyholders, as prohibited
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by s. 626.9541(1)(i), the office may order an insurer pursuant to
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chapter 120 to file its claims-handling practices and procedures
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related to that line of insurance with the office for review and
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inspection, to be held by the office for the following 36-month
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period. Such claims-handling practices and procedures are public
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records and are not trade secrets or otherwise exempt from the
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provisions of s. 119.07(1). As used in this section, "claims-
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handling practices and procedures" are any policies, guidelines,
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rules, protocols, standard operating procedures, instructions, or
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directives that govern or guide how and the manner in which an
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insured's claims for benefits under any policy will be processed.
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Section 4. Subsections (2) and (3) of section 624.4211,
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Florida Statutes, are amended to read:
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624.4211 Administrative fine in lieu of suspension or
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revocation.--
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(2) With respect to any nonwillful violation, such fine may
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shall not exceed $5,000 $2,500 per violation. In no event shall
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such fine exceed an aggregate amount of $20,000 $10,000 for all
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nonwillful violations arising out of the same action. If When an
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insurer discovers a nonwillful violation, the insurer shall
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correct the violation and, if restitution is due, make
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restitution to all affected persons. Such restitution shall
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include interest at 12 percent per year from either the date of
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the violation or the date of inception of the affected person's
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policy, at the insurer's option. The restitution may be a credit
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against future premiums due provided that the interest
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accumulates shall accumulate until the premiums are due. If the
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amount of restitution due to any person is $50 or more and the
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insurer wishes to credit it against future premiums, it shall
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notify such person that she or he may receive a check instead of
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a credit. If the credit is on a policy that which is not renewed,
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the insurer shall pay the restitution to the person to whom it is
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due.
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(3) With respect to any knowing and willful violation of a
516
lawful order or rule of the office or commission or a provision
517
of this code, the office may impose a fine upon the insurer in an
518
amount not to exceed $40,000 $20,000 for each such violation. In
519
no event shall such fine exceed an aggregate amount of $200,000
520
$100,000 for all knowing and willful violations arising out of
521
the same action. In addition to such fines, the such insurer
522
shall make restitution when due in accordance with the provisions
523
of subsection (2).
524
Section 5. Section 624.4213, Florida Statutes, is created
525
to read:
526
624.4213 Trade secret documents.--
527
(1) If any person who is required to submit documents or
528
other information to the office or department pursuant to the
529
Insurance Code or by rule or order of the office, department, or
530
commission claims that such submission contains a trade secret,
531
such person may file with the office or department a notice of
532
trade secret as provided in this section. Failure to do so
533
constitutes a waiver of any claim by such person that the
534
document or information is a trade secret.
535
(a) Each page of such document or specific portion of a
536
document claimed to be a trade secret must be clearly marked as
537
"trade secret."
538
(b) All material marked as a trade secret must be separated
539
from all non-trade secret material, such as being submitted in a
540
separate envelope clearly marked as "trade secret."
541
(c) In submitting a notice of trade secret to the office or
542
department, the submitting party must include an affidavit
543
certifying under oath to the truth of the following statements
544
concerning all documents or information that are claimed to be
545
trade secrets:
546
1. [I consider/My company considers] this information a
547
trade secret that has value and provides an advantage or an
548
opportunity to obtain an advantage over those who do not know or
549
use it.
550
2. [I have/My company has] taken measures to prevent the
551
disclosure of the information to anyone other that those who have
552
been selected to have access for limited purposes, and [I
553
intend/my company intends] to continue to take such measures.
554
3. The information is not, and has not been, reasonably
555
obtainable without [my/our] consent by other persons by use of
556
legitimate means.
557
4. The information is not publicly available elsewhere.
558
(2) If the office or department receives a public-records
559
request for a document or information that is marked and
560
certified as a trade secret, the office or department shall
561
promptly notify the person that certified the document as a trade
562
secret. The notice shall inform such person that he or she or his
563
or her company has 30 days following receipt of such notice to
564
file an action in circuit court seeking a determination whether
565
the document in question contains trade secrets and an order
566
barring public disclosure of the document. If that person or
567
company files an action within 30 days after receipt of notice of
568
the public-records request, the office or department may not
569
release the documents pending the outcome of the legal action.
570
The failure to file an action within 30 days constitutes a waiver
571
of any claim of confidentiality and the office or department
572
shall release the document as requested.
573
(3) The office or department may disclose a trade secret,
574
together with the claim that it is a trade secret, to an officer
575
or employee of another governmental agency whose use of the trade
576
secret is within the scope of his or her employment.
577
Section 6. Section 624.4305, Florida Statutes, is created to
578
read:
579
624.4305 Nonrenewal of residential property insurance
580
policies.--Any insurer planning to nonrenew more than 10,000
581
residential property insurance policies in this state within a
582
12-month period shall give notice in writing to the Office of
583
Insurance Regulation for informational purposes 90 days before
584
the issuance of any notices of nonrenewal. The notice provided to
585
the office must set forth the insurer's reasons for such action,
586
the effective dates of nonrenewal, and any arrangements made for
587
other insurers to offer coverage to affected policyholders.
588
Section 7. Subsection (2) of section 626.9521, Florida
589
Statutes, is amended to read:
590
626.9521 Unfair methods of competition and unfair or
591
deceptive acts or practices prohibited; penalties.--
592
(2) Any person who violates any provision of this part
593
shall be subject to a fine in an amount not greater than $5,000
594
$2,500 for each nonwillful violation and not greater than $40,000
595
$20,000 for each willful violation. Fines under this subsection
596
imposed against an insurer may not exceed an aggregate amount of
597
$20,000 $10,000 for all nonwillful violations arising out of the
598
same action or an aggregate amount of $200,000 $100,000 for all
599
willful violations arising out of the same action. The fines
600
authorized by this subsection may be imposed in addition to any
601
other applicable penalty.
602
Section 8. Paragraph (i) of subsection (1) of section
603
626.9541, Florida Statutes, is amended to read:
604
626.9541 Unfair methods of competition and unfair or
605
deceptive acts or practices defined.--
606
(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
607
ACTS.--The following are defined as unfair methods of competition
608
and unfair or deceptive acts or practices:
609
(i) Unfair claim settlement practices.--
610
1. Attempting to settle claims on the basis of an
611
application, when serving as a binder or intended to become a
612
part of the policy, or any other material document which was
613
altered without notice to, or knowledge or consent of, the
614
insured;
615
2. A material misrepresentation made to an insured or any
616
other person having an interest in the proceeds payable under
617
such contract or policy, for the purpose and with the intent of
618
effecting settlement of such claims, loss, or damage under such
619
contract or policy on less favorable terms than those provided
620
in, and contemplated by, such contract or policy; or
621
3. Committing or performing with such frequency as to
622
indicate a general business practice any of the following:
623
a. Failing to adopt and implement standards for the proper
624
investigation of claims;
625
b. Misrepresenting pertinent facts or insurance policy
626
provisions relating to coverages at issue;
627
c. Failing to acknowledge and act promptly upon
628
communications with respect to claims;
629
d. Denying claims without conducting reasonable
630
investigations based upon available information;
631
e. Failing to affirm or deny full or partial coverage of
632
claims, and, as to partial coverage, the dollar amount or extent
633
of coverage, or failing to provide a written statement that the
634
claim is being investigated, upon the written request of the
635
insured within 30 days after proof-of-loss statements have been
636
completed;
637
f. Failing to promptly provide a reasonable explanation in
638
writing to the insured of the basis in the insurance policy, in
639
relation to the facts or applicable law, for denial of a claim or
640
for the offer of a compromise settlement;
641
g. Failing to promptly notify the insured of any additional
642
information necessary for the processing of a claim; or
643
h. Failing to clearly explain the nature of the requested
644
information and the reasons why such information is necessary.
645
4. Failing to pay undisputed amounts of partial or full
646
benefits owed under first-party property insurance policies
647
within 90 days after an insurer receives notice of a residential
648
property insurance claim, determines the amounts of partial or
649
full benefits, and agrees to coverage, unless payment of the
650
undisputed benefits is prevented by an act of God, prevented by
651
the impossibility of performance, or due to actions by the
652
insured or claimant that constitute fraud, lack of cooperation,
653
or intentional misrepresentation regarding the claim for which
654
benefits are owed.
655
Section 9. Section 627.0612, Florida Statutes, is amended
656
to read:
657
627.0612 Administrative proceedings in rating
658
determinations.--
659
(1) In any proceeding to determine whether rates, rating
660
plans, or other matters governed by this part comply with the
661
law, the appellate court shall set aside a final order of the
662
office if the office has violated s. 120.57(1)(k) by substituting
663
its findings of fact for findings of an administrative law judge
664
which were supported by competent substantial evidence.
665
(2) In an administrative hearing to determine whether an
666
insurer's rates, rating schedules, rating manuals, premium
667
credits, discount schedules, surcharge schedules, or changes
668
thereto, for property insurance comply with the law, in addition
669
to any other findings of fact, findings on the following matters
670
shall be considered findings of fact:
671
(a) Whether a factor or factors used in a rate filing or
672
applied by the office is consistent with standard actuarial
673
techniques or practices or are otherwise based on reasonable
674
actuarial judgment.
675
(b) Whether a factor for underwriting profit and
676
contingencies is reasonable or excessive.
677
(c) Whether the cost of reinsurance is reasonable or
678
excessive.
679
(3) In an administrative hearing to determine whether an
680
insurer's rates, rating schedules, rating manuals, premium
681
credits, discount schedules, surcharge schedules, or changes
682
thereto, for property insurance comply with the law, a
683
recommended order may be entered that approves, modifies, or
684
rejects the requested change. A recommended order modifying the
685
requested rate change shall recommend such change as is supported
686
by the record in the case.
687
Section 10. Paragraphs (a), (b), and (g) of subsection (2),
688
subsection (6), and paragraph (a) of subsection (9) of section
689
627.062, Florida Statutes, are amended to read:
690
627.062 Rate standards.--
691
(2) As to all such classes of insurance:
692
(a) Insurers or rating organizations shall establish and
693
use rates, rating schedules, or rating manuals to allow the
694
insurer a reasonable rate of return on such classes of insurance
695
written in this state. A copy of rates, rating schedules, rating
696
manuals, premium credits or discount schedules, and surcharge
697
schedules, and changes thereto, shall be filed with the office
698
under one of the following procedures except as provided in
699
subparagraph 3.:
700
1. If the filing is made at least 90 days before the
701
proposed effective date and the filing is not implemented during
702
the office's review of the filing and any proceeding and judicial
703
review, then such filing shall be considered a "file and use"
704
filing. In such case, the office shall finalize its review by
705
issuance of a notice of intent to approve or a notice of intent
706
to disapprove within 90 days after receipt of the filing. The
707
notice of intent to approve and the notice of intent to
708
disapprove constitute agency action for purposes of the
709
Administrative Procedure Act. Requests for supporting
710
information, requests for mathematical or mechanical corrections,
711
or notification to the insurer by the office of its preliminary
712
findings shall not toll the 90-day period during any such
713
proceedings and subsequent judicial review. The rate shall be
714
deemed approved if the office does not issue a notice of intent
715
to approve or a notice of intent to disapprove within 90 days
716
after receipt of the filing.
717
2. If the filing is not made in accordance with the
718
provisions of subparagraph 1., such filing shall be made as soon
719
as practicable, but no later than 30 days after the effective
720
date, and shall be considered a "use and file" filing. An insurer
721
making a "use and file" filing is potentially subject to an order
722
by the office to return to policyholders portions of rates found
723
to be excessive, as provided in paragraph (h).
724
3. For all property insurance filings made or submitted
725
after January 25, 2007, but before December 31, 2009 2008, an
726
insurer seeking a rate that is greater than the rate most
727
recently approved by the office shall make a "file and use"
728
filing. This subparagraph applies to property insurance only. For
729
purposes of this subparagraph, motor vehicle collision and
730
comprehensive coverages are not considered to be property
731
coverages.
732
(b) Upon receiving a rate filing, the office shall review
733
the rate filing to determine if a rate is excessive, inadequate,
734
or unfairly discriminatory. In making that determination, the
735
office shall, in accordance with generally accepted and
736
reasonable actuarial techniques, consider the following factors:
737
1. Past and prospective loss experience within and without
738
this state.
739
2. Past and prospective expenses.
740
3. The degree of competition among insurers for the risk
741
insured.
742
4. Investment income reasonably expected by the insurer,
743
consistent with the insurer's investment practices, from
744
investable premiums anticipated in the filing, plus any other
745
expected income from currently invested assets representing the
746
amount expected on unearned premium reserves and loss reserves.
747
The commission may adopt rules using utilizing reasonable
748
techniques of actuarial science and economics to specify the
749
manner in which insurers shall calculate investment income
750
attributable to such classes of insurance written in this state
751
and the manner in which such investment income shall be used to
752
calculate in the calculation of insurance rates. Such manner
753
shall contemplate allowances for an underwriting profit factor
754
and full consideration of investment income which produce a
755
reasonable rate of return; however, investment income from
756
invested surplus may shall not be considered.
757
5. The reasonableness of the judgment reflected in the
758
filing.
759
6. Dividends, savings, or unabsorbed premium deposits
760
allowed or returned to Florida policyholders, members, or
761
subscribers.
762
7. The adequacy of loss reserves.
763
8. The cost of reinsurance. The office shall not disapprove
764
a rate as excessive solely due to the insurer having obtained
765
catastrophic reinsurance to cover the insurer's estimated 250-
766
year probable maximum loss or any lower level of loss.
767
9. Trend factors, including trends in actual losses per
768
insured unit for the insurer making the filing.
769
10. Conflagration and catastrophe hazards, if applicable.
770
11. Projected hurricane losses, if applicable, which must
771
be estimated using a model or method found to be acceptable or
772
reliable by the Florida Commission on Hurricane Loss Projection
773
Methodology, and as further provided in s. 627.0628.
774
12.11. A reasonable margin for underwriting profit and
775
contingencies. For that portion of the rate covering the risk of
776
hurricanes and other catastrophic losses for which the insurer
777
has not purchased reinsurance and has exposed its capital and
778
surplus to such risk, the office must approve a rating factor
779
that provides the insurer a reasonable rate of return that is
780
commensurate with such risk.
781
13.12. The cost of medical services, if applicable.
782
14.13. Other relevant factors which impact upon the
783
frequency or severity of claims or upon expenses.
784
(g) The office may at any time review a rate, rating
785
schedule, rating manual, or rate change; the pertinent records of
786
the insurer; and market conditions. If the office finds on a
787
preliminary basis that a rate may be excessive, inadequate, or
788
unfairly discriminatory, the office shall initiate proceedings to
789
disapprove the rate and shall so notify the insurer. However, the
790
office may not disapprove as excessive any rate for which it has
791
given final approval or which has been deemed approved for a
792
period of 1 year after the effective date of the filing unless
793
the office finds that a material misrepresentation or material
794
error was made by the insurer or was contained in the filing.
795
Upon being so notified, the insurer or rating organization shall,
796
within 60 days, file with the office all information which, in
797
the belief of the insurer or organization, proves the
798
reasonableness, adequacy, and fairness of the rate or rate
799
change. The office shall issue a notice of intent to approve or a
800
notice of intent to disapprove pursuant to the procedures of
801
paragraph (a) within 90 days after receipt of the insurer's
802
initial response. In such instances and in any administrative
803
proceeding relating to the legality of the rate, the insurer or
804
rating organization shall carry the burden of proof by a
805
preponderance of the evidence to show that the rate is not
806
excessive, inadequate, or unfairly discriminatory. After the
807
office notifies an insurer that a rate may be excessive,
808
inadequate, or unfairly discriminatory, unless the office
809
withdraws the notification, the insurer shall not alter the rate
810
except to conform with the office's notice until the earlier of
811
120 days after the date the notification was provided or 180 days
812
after the date of the implementation of the rate. The office may,
813
subject to chapter 120, disapprove without the 60-day
814
notification any rate increase filed by an insurer within the
815
prohibited time period or during the time that the legality of
816
the increased rate is being contested.
817
818
The provisions of this subsection shall not apply to workers'
819
compensation and employer's liability insurance and to motor
820
vehicle insurance.
821
(6)(a) If an insurer requests an administrative hearing
822
pursuant to s. 120.57 related to a rate filing under this
823
section, the director of the Division of Administrative Hearings
824
shall expedite the hearing and assign an administrative law judge
825
who shall commence the hearing within 30 days after the receipt
826
of the formal request and shall enter a recommended order within
827
30 days after the hearing or within 30 days after receipt of the
828
hearing transcript by the administrative law judge, whichever is
829
later. Each party shall be allowed 10 days in which to submit
830
written exceptions to the recommended order. The office shall
831
enter a final order within 30 days after the entry of the
832
recommended order. The provisions of this paragraph may be waived
833
upon stipulation of all parties.
834
(b) Upon entry of a final order, the insurer may request a
835
expedited appellate review pursuant to the Florida Rules of
836
Appellate Procedure. It is the intent of the Legislature that the
837
First District Court of Appeal grant an insurer's request for an
838
expedited appellate review.
839
(a) After any action with respect to a rate filing that
840
constitutes agency action for purposes of the Administrative
841
Procedure Act, except for a rate filing for medical malpractice,
842
an insurer may, in lieu of demanding a hearing under s. 120.57,
843
require arbitration of the rate filing. However, the arbitration
844
option provision in this subsection does not apply to a rate
845
filing that is made on or after the effective date of this act
846
until January 1, 2009. Arbitration shall be conducted by a board
847
of arbitrators consisting of an arbitrator selected by the
848
office, an arbitrator selected by the insurer, and an arbitrator
849
selected jointly by the other two arbitrators. Each arbitrator
850
must be certified by the American Arbitration Association. A
851
decision is valid only upon the affirmative vote of at least two
852
of the arbitrators. No arbitrator may be an employee of any
853
insurance regulator or regulatory body or of any insurer,
854
regardless of whether or not the employing insurer does business
855
in this state. The office and the insurer must treat the decision
856
of the arbitrators as the final approval of a rate filing. Costs
857
of arbitration shall be paid by the insurer.
858
(b) Arbitration under this subsection shall be conducted
860
party may apply to the circuit court to vacate or modify the
862
adopt rules for arbitration under this subsection, which rules
863
may not be inconsistent with the arbitration rules of the
864
American Arbitration Association as of January 1, 1996.
865
(c) Upon initiation of the arbitration process, the insurer
866
waives all rights to challenge the action of the office under the
867
Administrative Procedure Act or any other provision of law;
868
however, such rights are restored to the insurer if the
869
arbitrators fail to render a decision within 90 days after
870
initiation of the arbitration process.
871
(9)(a) Effective March 1, 2007, The chief executive officer
872
or chief financial officer of a property insurer and the chief
873
actuary of a property insurer must certify under oath and subject
874
to the penalty of perjury, on a form approved by the commission,
875
the following information, which must accompany a rate filing:
876
1. The signing officer and actuary have reviewed the rate
877
filing;
878
2. Based on the signing officer's and actuary's knowledge,
879
the rate filing does not contain any untrue statement of a
880
material fact or omit to state a material fact necessary in order
881
to make the statements made, in light of the circumstances under
882
which such statements were made, not misleading;
883
3. Based on the signing officer's and actuary's knowledge,
884
the information and other factors described in paragraph (2)(b),
885
including, but not limited to, investment income, fairly present
886
in all material respects the basis of the rate filing for the
887
periods presented in the filing; and
888
4. Based on the signing officer's and actuary's knowledge,
889
the rate filing reflects all premium savings that are reasonably
890
expected to result from legislative enactments and are in
891
accordance with generally accepted and reasonable actuarial
892
techniques.
893
Section 11. Paragraph (c) of subsection (1) and subsection
894
(3) of section 627.0628, Florida Statutes, are amended, and
895
paragraph (e) is added to subsection (1) of that section, to
896
read:
897
627.0628 Florida Commission on Hurricane Loss Projection
898
Methodology; public records exemption; public meetings
899
exemption.--
900
(1) LEGISLATIVE FINDINGS AND INTENT.--
901
(c) It is the intent of the Legislature to create the
902
Florida Commission on Hurricane Loss Projection Methodology as a
903
panel of experts to provide the most actuarially sophisticated
904
guidelines and standards for projection of hurricane losses
905
possible, given the current state of actuarial science. It is the
906
further intent of the Legislature that such standards and
907
guidelines must be used by the State Board of Administration in
908
developing reimbursement premium rates for the Florida Hurricane
909
Catastrophe Fund, and, subject to paragraph (3)(c), must may be
910
used by insurers in rate filings under s. 627.062 unless the way
911
in which such standards and guidelines were applied by the
912
insurer was erroneous, as shown by a preponderance of the
913
evidence.
914
(e) The Legislature finds that the authority to take final
915
agency action with respect to insurance ratemaking is vested in
916
the Office of Insurance Regulation and the Financial Services
917
Commission, and that the processes, standards, and guidelines of
918
the Florida Commission on Hurricane Loss Projection Methodology
919
do not constitute final agency action or statements of general
920
applicability that implement, interpret, or prescribe law or
921
policy; accordingly, chapter 120 does not apply to the processes,
922
standards, and guidelines of the Florida Commission on Hurricane
923
Loss Projection Methodology.
924
(3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
925
(a) The commission shall consider any actuarial methods,
926
principles, standards, models, or output ranges that have the
927
potential for improving the accuracy of or reliability of the
928
hurricane loss projections used in residential property insurance
929
rate filings. The commission shall, from time to time, adopt
930
findings as to the accuracy or reliability of particular methods,
931
principles, standards, models, or output ranges.
932
(b) The commission shall consider any actuarial methods,
933
principles, standards, or models that have the potential for
934
improving the accuracy of or reliability of projecting probable
935
maximum loss levels. The commission shall adopt findings as to
936
the accuracy or reliability of particular methods, principles,
937
standards, or models related to probable maximum loss
938
calculations.
939
(c)(b) In establishing reimbursement premiums for the
940
Florida Hurricane Catastrophe Fund, the State Board of
941
Administration must, to the extent feasible, employ actuarial
942
methods, principles, standards, models, or output ranges found by
943
the commission to be accurate or reliable.
944
(d)(c) With respect to a rate filing under s. 627.062, an
945
insurer shall may employ and may not modify or adjust actuarial
946
methods, principles, standards, models, or output ranges found by
947
the commission to be accurate or reliable in determining to
948
determine hurricane loss factors for use in a rate filing under
949
s. 627.062. An insurer shall employ and may not modify or adjust
950
models found by the commission to be accurate or reliable in
951
determining probable maximum loss levels pursuant to paragraph
952
(b) with respect to a rate filing under s. 627.062 made more than
953
60 days after the commission has made such findings. Such
954
findings and factors are admissible and relevant in consideration
955
of a rate filing by the office or in any arbitration or
956
administrative or judicial review only if the office and the
957
consumer advocate appointed pursuant to s. 627.0613 have access
958
to all of the assumptions and factors that were used in
959
developing the actuarial methods, principles, standards, models,
960
or output ranges, and are not precluded from disclosing such
961
information in a rate proceeding. In any rate hearing under s.
963
hearing officer, judge, or arbitration panel may determine
964
whether the office and the consumer advocate were provided with
965
access to all of the assumptions and factors that were used in
966
developing the actuarial methods, principles, standards, models,
967
or output ranges and to determine their admissibility.
968
(e)(d) The commission shall adopt revisions to previously
969
adopted actuarial methods, principles, standards, models, or
970
output ranges at least annually.
971
(f)(e)1. A trade secret, as defined in s. 812.081, that is
972
used in designing and constructing a hurricane loss model and
973
that is provided pursuant to this section, by a private company,
974
to the commission, office, or consumer advocate appointed
975
pursuant to s. 627.0613, is confidential and exempt from s.
976
119.07(1) and s. 24(a), Art. I of the State Constitution.
977
2. That portion of a meeting of the commission or of a rate
978
proceeding on an insurer's rate filing at which a trade secret
979
made confidential and exempt by this paragraph is discussed is
980
exempt from s. 286.011 and s. 24(b), Art. I of the State
981
Constitution.
982
3. This paragraph is subject to the Open Government Sunset
983
Review Act of 1995 in accordance with s. 119.15, and shall stand
984
repealed on October 2, 2010, unless reviewed and saved from
985
repeal through reenactment by the Legislature.
986
Section 12. Subsection (1) of section 627.0629, Florida
987
Statutes, is amended to read:
988
627.0629 Residential property insurance; rate filings.--
989
(1)(a) It is the intent of the Legislature that insurers
990
must provide savings to consumers who install or implement
991
windstorm damage mitigation techniques, alterations, or solutions
992
to their properties to prevent windstorm losses. A rate filing
993
for residential property insurance must include actuarially
994
reasonable discounts, credits, or other rate differentials, or
995
appropriate reductions in deductibles, for properties on which
996
fixtures or construction techniques demonstrated to reduce the
997
amount of loss in a windstorm have been installed or implemented.
998
The fixtures or construction techniques shall include, but not be
999
limited to, fixtures or construction techniques which enhance
1000
roof strength, roof covering performance, roof-to-wall strength,
1001
wall-to-floor-to-foundation strength, opening protection, and
1002
window, door, and skylight strength. Credits, discounts, or other
1003
rate differentials, or appropriate reductions in deductibles, for
1004
fixtures and construction techniques which meet the minimum
1005
requirements of the Florida Building Code must be included in the
1006
rate filing. All insurance companies must make a rate filing
1007
which includes the credits, discounts, or other rate
1008
differentials or reductions in deductibles by February 28, 2003.
1009
By July 1, 2007, the office shall reevaluate the discounts,
1010
credits, other rate differentials, and appropriate reductions in
1011
deductibles for fixtures and construction techniques that meet
1012
the minimum requirements of the Florida Building Code, based upon
1013
actual experience or any other loss relativity studies available
1014
to the office. The office shall determine the discounts, credits,
1015
other rate differentials, and appropriate reductions in
1016
deductibles that reflect the full actuarial value of such
1017
revaluation, which may be used by insurers in rate filings.
1018
(b) By February 1, 2011, the Office of Insurance
1019
Regulation, in consultation with the Department of Financial
1020
Services and the Department of Community Affairs, shall develop
1021
and make publicly available a proposed method for insurers to
1022
establish discounts, credits, or other rate differentials for
1023
hurricane mitigation measures which directly correlate to the
1024
numerical rating assigned to a structure pursuant to the uniform
1025
home grading scale adopted by the Financial Services Commission
1026
pursuant to s. 215.55865, including any proposed changes to the
1027
uniform home grading scale. By October 1, 2011, the commission
1028
shall adopt rules requiring insurers to make rate filings for
1029
residential property insurance which revise insurers' discounts,
1030
credits, or other rate differentials for hurricane mitigation
1031
measures so that such rate differentials correlate directly to
1032
the uniform home grading scale. The rules may include such
1033
changes to the uniform home grading scale as the commission
1034
determines are necessary, and may specify the minimum required
1035
discounts, credits, or other rate differentials. Such rate
1036
differentials must be consistent with generally accepted
1037
actuarial principles and wind-loss mitigation studies. The rules
1038
shall allow a period of at least 2 years after the effective date
1039
of the revised mitigation discounts, credits, or other rate
1040
differentials for a property owner to obtain an inspection or
1041
otherwise qualify for the revised credit, during which time the
1042
insurer shall continue to apply the mitigation credit that was
1043
applied immediately prior to the effective date of the revised
1044
credit.
1045
Section 13. Subsection (2) and paragraphs (a), (b), (c),
1046
(m), (p), (w), (dd), (ee), and (ff) of subsection (6) of section
1047
627.351, Florida Statutes, are amended to read:
1048
627.351 Insurance risk apportionment plans.--
1049
(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
1050
(b) The department shall require all insurers holding a
1051
certificate of authority to transact property insurance on a
1052
direct basis in this state, other than joint underwriting
1053
associations and other entities formed pursuant to this section,
1054
to provide windstorm coverage to applicants from areas determined
1055
to be eligible pursuant to paragraph (c) who in good faith are
1056
entitled to, but are unable to procure, such coverage through
1057
ordinary means; or it shall adopt a reasonable plan or plans for
1058
the equitable apportionment or sharing among such insurers of
1059
windstorm coverage, which may include formation of an association
1060
for this purpose. As used in this subsection, the term "property
1061
insurance" means insurance on real or personal property, as
1062
defined in s. 624.604, including insurance for fire, industrial
1063
fire, allied lines, farmowners multiperil, homeowners'
1064
multiperil, commercial multiperil, and mobile homes, and
1065
including liability coverages on all such insurance, but
1066
excluding inland marine as defined in s. 624.607(3) and excluding
1067
vehicle insurance as defined in s. 624.605(1)(a) other than
1068
insurance on mobile homes used as permanent dwellings. The
1069
department shall adopt rules that provide a formula for the
1070
recovery and repayment of any deferred assessments.
1071
1. For the purpose of this section, properties eligible for
1072
such windstorm coverage are defined as dwellings, buildings, and
1073
other structures, including mobile homes which are used as
1074
dwellings and which are tied down in compliance with mobile home
1075
tie-down requirements prescribed by the Department of Highway
1076
Safety and Motor Vehicles pursuant to s. 320.8325, and the
1077
contents of all such properties. An applicant or policyholder is
1078
eligible for coverage only if an offer of coverage cannot be
1079
obtained by or for the applicant or policyholder from an admitted
1080
insurer at approved rates.
1081
2.a.(I) All insurers required to be members of such
1082
association shall participate in its writings, expenses, and
1083
losses. Surplus of the association shall be retained for the
1084
payment of claims and shall not be distributed to the member
1085
insurers. Such participation by member insurers shall be in the
1086
proportion that the net direct premiums of each member insurer
1087
written for property insurance in this state during the preceding
1088
calendar year bear to the aggregate net direct premiums for
1089
property insurance of all member insurers, as reduced by any
1090
credits for voluntary writings, in this state during the
1091
preceding calendar year. For the purposes of this subsection, the
1092
term "net direct premiums" means direct written premiums for
1093
property insurance, reduced by premium for liability coverage and
1094
for the following if included in allied lines: rain and hail on
1095
growing crops; livestock; association direct premiums booked;
1096
National Flood Insurance Program direct premiums; and similar
1097
deductions specifically authorized by the plan of operation and
1098
approved by the department. A member's participation shall begin
1099
on the first day of the calendar year following the year in which
1100
it is issued a certificate of authority to transact property
1101
insurance in the state and shall terminate 1 year after the end
1102
of the calendar year during which it no longer holds a
1103
certificate of authority to transact property insurance in the
1104
state. The commissioner, after review of annual statements, other
1105
reports, and any other statistics that the commissioner deems
1106
necessary, shall certify to the association the aggregate direct
1107
premiums written for property insurance in this state by all
1108
member insurers.
1109
(II) Effective July 1, 2002, the association shall operate
1110
subject to the supervision and approval of a board of governors
1111
who are the same individuals that have been appointed by the
1112
Treasurer to serve on the board of governors of the Citizens
1113
Property Insurance Corporation.
1114
(III) The plan of operation shall provide a formula whereby
1115
a company voluntarily providing windstorm coverage in affected
1116
areas will be relieved wholly or partially from apportionment of
1117
a regular assessment pursuant to sub-sub-subparagraph d.(I) or
1118
sub-sub-subparagraph d.(II).
1119
(IV) A company which is a member of a group of companies
1120
under common management may elect to have its credits applied on
1121
a group basis, and any company or group may elect to have its
1122
credits applied to any other company or group.
1123
(V) There shall be no credits or relief from apportionment
1124
to a company for emergency assessments collected from its
1125
policyholders under sub-sub-subparagraph d.(III).
1126
(VI) The plan of operation may also provide for the award
1127
of credits, for a period not to exceed 3 years, from a regular
1128
assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
1129
subparagraph d.(II) as an incentive for taking policies out of
1130
the Residential Property and Casualty Joint Underwriting
1131
Association. In order to qualify for the exemption under this
1132
sub-sub-subparagraph, the take-out plan must provide that at
1133
least 40 percent of the policies removed from the Residential
1134
Property and Casualty Joint Underwriting Association cover risks
1135
located in Dade, Broward, and Palm Beach Counties or at least 30
1136
percent of the policies so removed cover risks located in Dade,
1137
Broward, and Palm Beach Counties and an additional 50 percent of
1138
the policies so removed cover risks located in other coastal
1139
counties, and must also provide that no more than 15 percent of
1140
the policies so removed may exclude windstorm coverage. With the
1141
approval of the department, the association may waive these
1142
geographic criteria for a take-out plan that removes at least the
1143
lesser of 100,000 Residential Property and Casualty Joint
1144
Underwriting Association policies or 15 percent of the total
1145
number of Residential Property and Casualty Joint Underwriting
1146
Association policies, provided the governing board of the
1147
Residential Property and Casualty Joint Underwriting Association
1148
certifies that the take-out plan will materially reduce the
1149
Residential Property and Casualty Joint Underwriting
1150
Association's 100-year probable maximum loss from hurricanes.
1151
With the approval of the department, the board may extend such
1152
credits for an additional year if the insurer guarantees an
1153
additional year of renewability for all policies removed from the
1154
Residential Property and Casualty Joint Underwriting Association,
1155
or for 2 additional years if the insurer guarantees 2 additional
1156
years of renewability for all policies removed from the
1157
Residential Property and Casualty Joint Underwriting Association.
1158
b. Assessments to pay deficits in the association under
1159
this subparagraph shall be included as an appropriate factor in
1160
the making of rates as provided in s. 627.3512.
1161
c. The Legislature finds that the potential for unlimited
1162
deficit assessments under this subparagraph may induce insurers
1163
to attempt to reduce their writings in the voluntary market, and
1164
that such actions would worsen the availability problems that the
1165
association was created to remedy. It is the intent of the
1166
Legislature that insurers remain fully responsible for paying
1167
regular assessments and collecting emergency assessments for any
1168
deficits of the association; however, it is also the intent of
1169
the Legislature to provide a means by which assessment
1170
liabilities may be amortized over a period of years.
1171
d.(I) When the deficit incurred in a particular calendar
1172
year is 10 percent or less of the aggregate statewide direct
1173
written premium for property insurance for the prior calendar
1174
year for all member insurers, the association shall levy an
1175
assessment on member insurers in an amount equal to the deficit.
1176
(II) When the deficit incurred in a particular calendar
1177
year exceeds 10 percent of the aggregate statewide direct written
1178
premium for property insurance for the prior calendar year for
1179
all member insurers, the association shall levy an assessment on
1180
member insurers in an amount equal to the greater of 10 percent
1181
of the deficit or 10 percent of the aggregate statewide direct
1182
written premium for property insurance for the prior calendar
1183
year for member insurers. Any remaining deficit shall be
1184
recovered through emergency assessments under sub-sub-
1185
subparagraph (III).
1186
(III) Upon a determination by the board of directors that a
1187
deficit exceeds the amount that will be recovered through regular
1188
assessments on member insurers, pursuant to sub-sub-subparagraph
1189
(I) or sub-sub-subparagraph (II), the board shall levy, after
1190
verification by the department, emergency assessments to be
1191
collected by member insurers and by underwriting associations
1192
created pursuant to this section which write property insurance,
1193
upon issuance or renewal of property insurance policies other
1194
than National Flood Insurance policies in the year or years
1195
following levy of the regular assessments. The amount of the
1196
emergency assessment collected in a particular year shall be a
1197
uniform percentage of that year's direct written premium for
1198
property insurance for all member insurers and underwriting
1199
associations, excluding National Flood Insurance policy premiums,
1200
as annually determined by the board and verified by the
1201
department. The department shall verify the arithmetic
1202
calculations involved in the board's determination within 30 days
1203
after receipt of the information on which the determination was
1204
based. Notwithstanding any other provision of law, each member
1205
insurer and each underwriting association created pursuant to
1206
this section shall collect emergency assessments from its
1207
policyholders without such obligation being affected by any
1208
credit, limitation, exemption, or deferment. The emergency
1209
assessments so collected shall be transferred directly to the
1210
association on a periodic basis as determined by the association.
1211
The aggregate amount of emergency assessments levied under this
1212
sub-sub-subparagraph in any calendar year may not exceed the
1213
greater of 10 percent of the amount needed to cover the original
1214
deficit, plus interest, fees, commissions, required reserves, and
1215
other costs associated with financing of the original deficit, or
1216
10 percent of the aggregate statewide direct written premium for
1217
property insurance written by member insurers and underwriting
1218
associations for the prior year, plus interest, fees,
1219
commissions, required reserves, and other costs associated with
1220
financing the original deficit. The board may pledge the proceeds
1221
of the emergency assessments under this sub-sub-subparagraph as
1222
the source of revenue for bonds, to retire any other debt
1223
incurred as a result of the deficit or events giving rise to the
1224
deficit, or in any other way that the board determines will
1225
efficiently recover the deficit. The emergency assessments under
1226
this sub-sub-subparagraph shall continue as long as any bonds
1227
issued or other indebtedness incurred with respect to a deficit
1228
for which the assessment was imposed remain outstanding, unless
1229
adequate provision has been made for the payment of such bonds or
1230
other indebtedness pursuant to the document governing such bonds
1231
or other indebtedness. Emergency assessments collected under this
1232
sub-sub-subparagraph are not part of an insurer's rates, are not
1233
premium, and are not subject to premium tax, fees, or
1234
commissions; however, failure to pay the emergency assessment
1235
shall be treated as failure to pay premium.
1236
(IV) Each member insurer's share of the total regular
1237
assessments under sub-sub-subparagraph (I) or sub-sub-
1238
subparagraph (II) shall be in the proportion that the insurer's
1239
net direct premium for property insurance in this state, for the
1240
year preceding the assessment bears to the aggregate statewide
1241
net direct premium for property insurance of all member insurers,
1242
as reduced by any credits for voluntary writings for that year.
1243
(V) If regular deficit assessments are made under sub-sub-
1244
subparagraph (I) or sub-sub-subparagraph (II), or by the
1245
Residential Property and Casualty Joint Underwriting Association
1246
under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,
1247
the association shall levy upon the association's policyholders,
1248
as part of its next rate filing, or by a separate rate filing
1249
solely for this purpose, a market equalization surcharge in a
1250
percentage equal to the total amount of such regular assessments
1251
divided by the aggregate statewide direct written premium for
1252
property insurance for member insurers for the prior calendar
1253
year. Market equalization surcharges under this sub-sub-
1254
subparagraph are not considered premium and are not subject to
1255
commissions, fees, or premium taxes; however, failure to pay a
1256
market equalization surcharge shall be treated as failure to pay
1257
premium.
1258
e. The governing body of any unit of local government, any
1259
residents of which are insured under the plan, may issue bonds as
1261
program, in conjunction with the association, for the purpose of
1262
defraying deficits of the association. In order to avoid needless
1263
and indiscriminate proliferation, duplication, and fragmentation
1264
of such assistance programs, any unit of local government, any
1265
residents of which are insured by the association, may provide
1266
for the payment of losses, regardless of whether or not the
1267
losses occurred within or outside of the territorial jurisdiction
1268
of the local government. Revenue bonds may not be issued until
1269
validated pursuant to chapter 75, unless a state of emergency is
1270
declared by executive order or proclamation of the Governor
1271
pursuant to s. 252.36 making such findings as are necessary to
1272
determine that it is in the best interests of, and necessary for,
1273
the protection of the public health, safety, and general welfare
1274
of residents of this state and the protection and preservation of
1275
the economic stability of insurers operating in this state, and
1276
declaring it an essential public purpose to permit certain
1277
municipalities or counties to issue bonds as will provide relief
1278
to claimants and policyholders of the association and insurers
1279
responsible for apportionment of plan losses. Any such unit of
1280
local government may enter into such contracts with the
1281
association and with any other entity created pursuant to this
1282
subsection as are necessary to carry out this paragraph. Any
1283
bonds issued under this sub-subparagraph shall be payable from
1284
and secured by moneys received by the association from
1285
assessments under this subparagraph, and assigned and pledged to
1286
or on behalf of the unit of local government for the benefit of
1287
the holders of such bonds. The funds, credit, property, and
1288
taxing power of the state or of the unit of local government
1289
shall not be pledged for the payment of such bonds. If any of the
1290
bonds remain unsold 60 days after issuance, the department shall
1291
require all insurers subject to assessment to purchase the bonds,
1292
which shall be treated as admitted assets; each insurer shall be
1293
required to purchase that percentage of the unsold portion of the
1294
bond issue that equals the insurer's relative share of assessment
1295
liability under this subsection. An insurer shall not be required
1296
to purchase the bonds to the extent that the department
1297
determines that the purchase would endanger or impair the
1298
solvency of the insurer. The authority granted by this sub-
1299
subparagraph is additional to any bonding authority granted by
1300
subparagraph 6.
1301
3. The plan shall also provide that any member with a
1302
surplus as to policyholders of $20 million or less writing 25
1303
percent or more of its total countrywide property insurance
1304
premiums in this state may petition the department, within the
1305
first 90 days of each calendar year, to qualify as a limited
1306
apportionment company. The apportionment of such a member company
1307
in any calendar year for which it is qualified shall not exceed
1308
its gross participation, which shall not be affected by the
1309
formula for voluntary writings. In no event shall a limited
1310
apportionment company be required to participate in any
1311
apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
1312
or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
1313
$50 million after payment of available plan funds in any calendar
1314
year. However, a limited apportionment company shall collect from
1315
its policyholders any emergency assessment imposed under sub-sub-
1316
subparagraph 2.d.(III). The plan shall provide that, if the
1317
department determines that any regular assessment will result in
1318
an impairment of the surplus of a limited apportionment company,
1319
the department may direct that all or part of such assessment be
1320
deferred. However, there shall be no limitation or deferment of
1321
an emergency assessment to be collected from policyholders under
1322
sub-sub-subparagraph 2.d.(III).
1323
4. The plan shall provide for the deferment, in whole or in
1324
part, of a regular assessment of a member insurer under sub-sub-
1325
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not
1326
for an emergency assessment collected from policyholders under
1327
sub-sub-subparagraph 2.d.(III), if, in the opinion of the
1328
commissioner, payment of such regular assessment would endanger
1329
or impair the solvency of the member insurer. In the event a
1330
regular assessment against a member insurer is deferred in whole
1331
or in part, the amount by which such assessment is deferred may
1332
be assessed against the other member insurers in a manner
1333
consistent with the basis for assessments set forth in sub-sub-
1334
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
1335
5.a. The plan of operation may include deductibles and
1336
rules for classification of risks and rate modifications
1337
consistent with the objective of providing and maintaining funds
1338
sufficient to pay catastrophe losses.
1339
b. The association may require arbitration of a rate filing
1340
under s. 627.062(6). It is the intent of the Legislature that the
1341
rates for coverage provided by the association be actuarially
1342
sound and not competitive with approved rates charged in the
1343
admitted voluntary market such that the association functions as
1344
a residual market mechanism to provide insurance only when the
1345
insurance cannot be procured in the voluntary market. The plan of
1346
operation shall provide a mechanism to assure that, beginning no
1347
later than January 1, 1999, the rates charged by the association
1348
for each line of business are reflective of approved rates in the
1349
voluntary market for hurricane coverage for each line of business
1350
in the various areas eligible for association coverage.
1351
c. The association shall provide for windstorm coverage on
1352
residential properties in limits up to $10 million for commercial
1353
lines residential risks and up to $1 million for personal lines
1354
residential risks. If coverage with the association is sought for
1355
a residential risk valued in excess of these limits, coverage
1356
shall be available to the risk up to the replacement cost or
1357
actual cash value of the property, at the option of the insured,
1358
if coverage for the risk cannot be located in the authorized
1359
market. The association must accept a commercial lines
1360
residential risk with limits above $10 million or a personal
1361
lines residential risk with limits above $1 million if coverage
1362
is not available in the authorized market. The association may
1363
write coverage above the limits specified in this subparagraph
1364
with or without facultative or other reinsurance coverage, as the
1365
association determines appropriate.
1366
d. The plan of operation must provide objective criteria
1367
and procedures, approved by the department, to be uniformly
1368
applied for all applicants in determining whether an individual
1369
risk is so hazardous as to be uninsurable. In making this
1370
determination and in establishing the criteria and procedures,
1371
the following shall be considered:
1372
(I) Whether the likelihood of a loss for the individual
1373
risk is substantially higher than for other risks of the same
1374
class; and
1375
(II) Whether the uncertainty associated with the individual
1376
risk is such that an appropriate premium cannot be determined.
1377
1378
The acceptance or rejection of a risk by the association pursuant
1379
to such criteria and procedures must be construed as the private
1380
placement of insurance, and the provisions of chapter 120 do not
1381
apply.
1382
e. If the risk accepts an offer of coverage through the
1383
market assistance program or through a mechanism established by
1384
the association, either before the policy is issued by the
1385
association or during the first 30 days of coverage by the
1386
association, and the producing agent who submitted the
1387
application to the association is not currently appointed by the
1388
insurer, the insurer shall:
1389
(I) Pay to the producing agent of record of the policy, for
1390
the first year, an amount that is the greater of the insurer's
1391
usual and customary commission for the type of policy written or
1392
a fee equal to the usual and customary commission of the
1393
association; or
1394
(II) Offer to allow the producing agent of record of the
1395
policy to continue servicing the policy for a period of not less
1396
than 1 year and offer to pay the agent the greater of the
1397
insurer's or the association's usual and customary commission for
1398
the type of policy written.
1399
1400
If the producing agent is unwilling or unable to accept
1401
appointment, the new insurer shall pay the agent in accordance
1402
with sub-sub-subparagraph (I). Subject to the provisions of s.
1403
627.3517, the policies issued by the association must provide
1404
that if the association obtains an offer from an authorized
1405
insurer to cover the risk at its approved rates under either a
1406
standard policy including wind coverage or, if consistent with
1407
the insurer's underwriting rules as filed with the department, a
1408
basic policy including wind coverage, the risk is no longer
1409
eligible for coverage through the association. Upon termination
1410
of eligibility, the association shall provide written notice to
1411
the policyholder and agent of record stating that the association
1412
policy must be canceled as of 60 days after the date of the
1413
notice because of the offer of coverage from an authorized
1414
insurer. Other provisions of the insurance code relating to
1415
cancellation and notice of cancellation do not apply to actions
1416
under this sub-subparagraph.
1417
f. When the association enters into a contractual agreement
1418
for a take-out plan, the producing agent of record of the
1419
association policy is entitled to retain any unearned commission
1420
on the policy, and the insurer shall:
1421
(I) Pay to the producing agent of record of the association
1422
policy, for the first year, an amount that is the greater of the
1423
insurer's usual and customary commission for the type of policy
1424
written or a fee equal to the usual and customary commission of
1425
the association; or
1426
(II) Offer to allow the producing agent of record of the
1427
association policy to continue servicing the policy for a period
1428
of not less than 1 year and offer to pay the agent the greater of
1429
the insurer's or the association's usual and customary commission
1430
for the type of policy written.
1431
1432
If the producing agent is unwilling or unable to accept
1433
appointment, the new insurer shall pay the agent in accordance
1434
with sub-sub-subparagraph (I).
1435
6.a. The plan of operation may authorize the formation of a
1436
private nonprofit corporation, a private nonprofit unincorporated
1437
association, a partnership, a trust, a limited liability company,
1438
or a nonprofit mutual company which may be empowered, among other
1439
things, to borrow money by issuing bonds or by incurring other
1440
indebtedness and to accumulate reserves or funds to be used for
1441
the payment of insured catastrophe losses. The plan may authorize
1442
all actions necessary to facilitate the issuance of bonds,
1443
including the pledging of assessments or other revenues.
1444
b. Any entity created under this subsection, or any entity
1445
formed for the purposes of this subsection, may sue and be sued,
1446
may borrow money; issue bonds, notes, or debt instruments; pledge
1447
or sell assessments, market equalization surcharges and other
1448
surcharges, rights, premiums, contractual rights, projected
1449
recoveries from the Florida Hurricane Catastrophe Fund, other
1450
reinsurance recoverables, and other assets as security for such
1451
bonds, notes, or debt instruments; enter into any contracts or
1452
agreements necessary or proper to accomplish such borrowings; and
1453
take other actions necessary to carry out the purposes of this
1454
subsection. The association may issue bonds or incur other
1455
indebtedness, or have bonds issued on its behalf by a unit of
1456
local government pursuant to subparagraph (6)(p)2., in the
1457
absence of a hurricane or other weather-related event, upon a
1458
determination by the association subject to approval by the
1459
department that such action would enable it to efficiently meet
1460
the financial obligations of the association and that such
1461
financings are reasonably necessary to effectuate the
1462
requirements of this subsection. Any such entity may accumulate
1463
reserves and retain surpluses as of the end of any association
1464
year to provide for the payment of losses incurred by the
1465
association during that year or any future year. The association
1466
shall incorporate and continue the plan of operation and articles
1467
of agreement in effect on the effective date of chapter 76-96,
1468
Laws of Florida, to the extent that it is not inconsistent with
1469
chapter 76-96, and as subsequently modified consistent with
1470
chapter 76-96. The board of directors and officers currently
1471
serving shall continue to serve until their successors are duly
1472
qualified as provided under the plan. The assets and obligations
1473
of the plan in effect immediately prior to the effective date of
1474
chapter 76-96 shall be construed to be the assets and obligations
1475
of the successor plan created herein.
1476
c. In recognition of s. 10, Art. I of the State
1477
Constitution, prohibiting the impairment of obligations of
1478
contracts, it is the intent of the Legislature that no action be
1479
taken whose purpose is to impair any bond indenture or financing
1480
agreement or any revenue source committed by contract to such
1481
bond or other indebtedness issued or incurred by the association
1482
or any other entity created under this subsection.
1483
7. On such coverage, an agent's remuneration shall be that
1484
amount of money payable to the agent by the terms of his or her
1485
contract with the company with which the business is placed.
1486
However, no commission will be paid on that portion of the
1487
premium which is in excess of the standard premium of that
1488
company.
1489
8. Subject to approval by the department, the association
1490
may establish different eligibility requirements and operational
1491
procedures for any line or type of coverage for any specified
1492
eligible area or portion of an eligible area if the board
1493
determines that such changes to the eligibility requirements and
1494
operational procedures are justified due to the voluntary market
1495
being sufficiently stable and competitive in such area or for
1496
such line or type of coverage and that consumers who, in good
1497
faith, are unable to obtain insurance through the voluntary
1498
market through ordinary methods would continue to have access to
1499
coverage from the association. When coverage is sought in
1500
connection with a real property transfer, such requirements and
1501
procedures shall not provide for an effective date of coverage
1502
later than the date of the closing of the transfer as established
1503
by the transferor, the transferee, and, if applicable, the
1504
lender.
1505
9. Notwithstanding any other provision of law:
1506
a. The pledge or sale of, the lien upon, and the security
1507
interest in any rights, revenues, or other assets of the
1508
association created or purported to be created pursuant to any
1509
financing documents to secure any bonds or other indebtedness of
1510
the association shall be and remain valid and enforceable,
1511
notwithstanding the commencement of and during the continuation
1512
of, and after, any rehabilitation, insolvency, liquidation,
1513
bankruptcy, receivership, conservatorship, reorganization, or
1514
similar proceeding against the association under the laws of this
1515
state or any other applicable laws.
1516
b. No such proceeding shall relieve the association of its
1517
obligation, or otherwise affect its ability to perform its
1518
obligation, to continue to collect, or levy and collect,
1519
assessments, market equalization or other surcharges, projected
1520
recoveries from the Florida Hurricane Catastrophe Fund,
1521
reinsurance recoverables, or any other rights, revenues, or other
1522
assets of the association pledged.
1523
c. Each such pledge or sale of, lien upon, and security
1524
interest in, including the priority of such pledge, lien, or
1525
security interest, any such assessments, emergency assessments,
1526
market equalization or renewal surcharges, projected recoveries
1527
from the Florida Hurricane Catastrophe Fund, reinsurance
1528
recoverables, or other rights, revenues, or other assets which
1529
are collected, or levied and collected, after the commencement of
1530
and during the pendency of or after any such proceeding shall
1531
continue unaffected by such proceeding.
1532
d. As used in this subsection, the term "financing
1533
documents" means any agreement, instrument, or other document now
1534
existing or hereafter created evidencing any bonds or other
1535
indebtedness of the association or pursuant to which any such
1536
bonds or other indebtedness has been or may be issued and
1537
pursuant to which any rights, revenues, or other assets of the
1538
association are pledged or sold to secure the repayment of such
1539
bonds or indebtedness, together with the payment of interest on
1540
such bonds or such indebtedness, or the payment of any other
1541
obligation of the association related to such bonds or
1542
indebtedness.
1543
e. Any such pledge or sale of assessments, revenues,
1544
contract rights or other rights or assets of the association
1545
shall constitute a lien and security interest, or sale, as the
1546
case may be, that is immediately effective and attaches to such
1547
assessments, revenues, contract, or other rights or assets,
1548
whether or not imposed or collected at the time the pledge or
1549
sale is made. Any such pledge or sale is effective, valid,
1550
binding, and enforceable against the association or other entity
1551
making such pledge or sale, and valid and binding against and
1552
superior to any competing claims or obligations owed to any other
1553
person or entity, including policyholders in this state,
1554
asserting rights in any such assessments, revenues, contract, or
1555
other rights or assets to the extent set forth in and in
1556
accordance with the terms of the pledge or sale contained in the
1557
applicable financing documents, whether or not any such person or
1558
entity has notice of such pledge or sale and without the need for
1559
any physical delivery, recordation, filing, or other action.
1560
f. There shall be no liability on the part of, and no cause
1561
of action of any nature shall arise against, any member insurer
1562
or its agents or employees, agents or employees of the
1563
association, members of the board of directors of the
1564
association, or the department or its representatives, for any
1565
action taken by them in the performance of their duties or
1566
responsibilities under this subsection. Such immunity does not
1567
apply to actions for breach of any contract or agreement
1568
pertaining to insurance, or any willful tort.
1569
(6) CITIZENS PROPERTY INSURANCE CORPORATION.--
1570
(a)1. It is the public purpose of this subsection to ensure
1571
the existence of an orderly market for property insurance for
1572
Floridians and Florida businesses. The Legislature finds that
1573
private insurers are unwilling or unable to provide affordable
1574
property insurance coverage in this state to the extent sought
1575
and needed. The absence of affordable property insurance
1576
threatens the public health, safety, and welfare and likewise
1577
threatens the economic health of the state. The state therefore
1578
has a compelling public interest and a public purpose to assist
1579
in assuring that property in the state is insured and that it is
1580
insured at affordable rates so as to facilitate the remediation,
1581
reconstruction, and replacement of damaged or destroyed property
1582
in order to reduce or avoid the negative effects otherwise
1583
resulting to the public health, safety, and welfare, to the
1584
economy of the state, and to the revenues of the state and local
1585
governments which are needed to provide for the public welfare.
1586
It is necessary, therefore, to provide affordable property
1587
insurance to applicants who are in good faith entitled to procure
1588
insurance through the voluntary market but are unable to do so.
1589
The Legislature intends by this subsection that affordable
1590
property insurance be provided and that it continue to be
1591
provided, as long as necessary, through Citizens Property
1592
Insurance Corporation, a government entity that is an integral
1593
part of the state, and that is not a private insurance company.
1594
To that end, Citizens Property Insurance Corporation shall strive
1595
to increase the availability of affordable property insurance in
1596
this state, while achieving efficiencies and economies, and while
1597
providing service to policyholders, applicants, and agents which
1598
is no less than the quality generally provided in the voluntary
1599
market, for the achievement of the foregoing public purposes.
1600
Because it is essential for this government entity to have the
1601
maximum financial resources to pay claims following a
1602
catastrophic hurricane, it is the intent of the Legislature that
1603
Citizens Property Insurance Corporation continue to be an
1604
integral part of the state and that the income of the corporation
1605
be exempt from federal income taxation and that interest on the
1606
debt obligations issued by the corporation be exempt from federal
1607
income taxation.
1608
2. The Residential Property and Casualty Joint Underwriting
1609
Association originally created by this statute shall be known, as
1610
of July 1, 2002, as the Citizens Property Insurance Corporation.
1611
The corporation shall provide insurance for residential and
1612
commercial property, for applicants who are in good faith
1613
entitled, but are unable, to procure insurance through the
1614
voluntary market. The corporation shall operate pursuant to a
1615
plan of operation approved by order of the Financial Services
1616
Commission. The plan is subject to continuous review by the
1617
commission. The commission may, by order, withdraw approval of
1618
all or part of a plan if the commission determines that
1619
conditions have changed since approval was granted and that the
1620
purposes of the plan require changes in the plan. The corporation
1621
shall continue to operate pursuant to the plan of operation
1622
approved by the Office of Insurance Regulation until October 1,
1623
2006. For the purposes of this subsection, residential coverage
1624
includes both personal lines residential coverage, which consists
1625
of the type of coverage provided by homeowner's, mobile home
1626
owner's, dwelling, tenant's, condominium unit owner's, and
1627
similar policies, and commercial lines residential coverage,
1628
which consists of the type of coverage provided by condominium
1629
association, apartment building, and similar policies.
1630
3. For the purposes of this subsection, the term "homestead
1631
property" means:
1632
a. Property that has been granted a homestead exemption
1633
under chapter 196;
1634
b. Property for which the owner has a current, written
1635
lease with a renter for a term of at least 7 months and for which
1636
the dwelling is insured by the corporation for $200,000 or less;
1637
c. An owner-occupied mobile home or manufactured home, as
1638
defined in s. 320.01, which is permanently affixed to real
1639
property, is owned by a Florida resident, and has been granted a
1640
homestead exemption under chapter 196 or, if the owner does not
1641
own the real property, the owner certifies that the mobile home
1642
or manufactured home is his or her principal place of residence;
1643
d. Tenant's coverage;
1644
e. Commercial lines residential property; or
1645
f. Any county, district, or municipal hospital; a hospital
1646
licensed by any not-for-profit corporation qualified under s.
1647
501(c)(3) of the United States Internal Revenue Code; or a
1648
continuing care retirement community that is certified under
1649
chapter 651 and that receives an exemption from ad valorem taxes
1650
under chapter 196.
1651
4. For the purposes of this subsection, the term
1652
"nonhomestead property" means property that is not homestead
1653
property.
1654
3.5. Effective January 1, 2009, a personal lines
1655
residential structure that has a dwelling replacement cost of $2
1656
$1 million or more, or a single condominium unit that has a
1657
combined dwelling and content replacement cost of $2 $1 million
1658
or more is not eligible for coverage by the corporation. Such
1659
dwellings insured by the corporation on December 31, 2008, may
1660
continue to be covered by the corporation until the end of the
1661
policy term. However, such dwellings that are insured by the
1662
corporation and become ineligible for coverage due to the
1663
provisions of this subparagraph may reapply and obtain coverage
1664
in the high-risk account and be considered "nonhomestead
1665
property" if the property owner provides the corporation with a
1666
sworn affidavit from one or more insurance agents, on a form
1667
provided by the corporation, stating that the agents have made
1668
their best efforts to obtain coverage and that the property has
1669
been rejected for coverage by at least one authorized insurer and
1670
at least three surplus lines insurers. If such conditions are
1671
met, the dwelling may be insured by the corporation for up to 3
1672
years, after which time the dwelling is ineligible for coverage.
1673
The office shall approve the method used by the corporation for
1674
valuing the dwelling replacement cost for the purposes of this
1675
subparagraph. If a policyholder is insured by the corporation
1676
prior to being determined to be ineligible pursuant to this
1677
subparagraph and such policyholder files a lawsuit challenging
1678
the determination, the policyholder may remain insured by the
1679
corporation until the conclusion of the litigation.
1680
6. For properties constructed on or after January 1, 2009,
1681
the corporation may not insure any property located within 2,500
1682
feet landward of the coastal construction control line created
1683
pursuant to s. 161.053 unless the property meets the requirements
1684
of the code-plus building standards developed by the Florida
1685
Building Commission.
1686
4.7. It is the intent of the Legislature that
1687
policyholders, applicants, and agents of the corporation receive
1688
service and treatment of the highest possible level but never
1689
less than that generally provided in the voluntary market. It
1690
also is intended that the corporation be held to service
1691
standards no less than those applied to insurers in the voluntary
1692
market by the office with respect to responsiveness, timeliness,
1693
customer courtesy, and overall dealings with policyholders,
1694
applicants, or agents of the corporation.
1695
5.8. Effective January 1, 2009, a personal lines
1696
residential structure that is located in the "wind-borne debris
1697
region," as defined in s. 1609.2, International Building Code
1698
(2006), and that has an insured value on the structure of
1699
$750,000 or more is not eligible for coverage by the corporation
1700
unless the structure has opening protections as required under
1701
the Florida Building Code for a newly constructed residential
1702
structure in that area. A residential structure shall be deemed
1703
to comply with the requirements of this subparagraph if it has
1704
shutters or opening protections on all openings and if such
1705
opening protections complied with the Florida Building Code at
1706
the time they were installed. Effective January 1, 2010, for
1707
personal lines residential property insured by the corporation
1708
that is located in the wind-borne debris region and has an
1709
insured value on the structure of $500,000 or more, a prospective
1710
purchaser of any such residential property must be provided by
1711
the seller a written disclosure that contains the structure's
1712
windstorm mitigation rating based on the uniform home grading
1713
scale adopted under s. 215.55865. Such rating shall be provided
1714
to the purchaser at or before the time the purchaser executes a
1715
contract for sale and purchase.
1716
(b)1. All insurers authorized to write one or more subject
1717
lines of business in this state are subject to assessment by the
1718
corporation and, for the purposes of this subsection, are
1719
referred to collectively as "assessable insurers." Insurers
1720
writing one or more subject lines of business in this state
1721
pursuant to part VIII of chapter 626 are not assessable insurers,
1722
but insureds who procure one or more subject lines of business in
1723
this state pursuant to part VIII of chapter 626 are subject to
1724
assessment by the corporation and are referred to collectively as
1725
"assessable insureds." An authorized insurer's assessment
1726
liability shall begin on the first day of the calendar year
1727
following the year in which the insurer was issued a certificate
1728
of authority to transact insurance for subject lines of business
1729
in this state and shall terminate 1 year after the end of the
1730
first calendar year during which the insurer no longer holds a
1731
certificate of authority to transact insurance for subject lines
1732
of business in this state.
1733
2.a. All revenues, assets, liabilities, losses, and
1734
expenses of the corporation shall be divided into three separate
1735
accounts as follows:
1736
(I) A personal lines account for personal residential
1737
policies issued by the corporation or issued by the Residential
1738
Property and Casualty Joint Underwriting Association and renewed
1739
by the corporation that provide comprehensive, multiperil
1740
coverage on risks that are not located in areas eligible for
1741
coverage in the Florida Windstorm Underwriting Association as
1742
those areas were defined on January 1, 2002, and for such
1743
policies that do not provide coverage for the peril of wind on
1744
risks that are located in such areas;
1745
(II) A commercial lines account for commercial residential
1746
and commercial nonresidential policies issued by the corporation
1747
or issued by the Residential Property and Casualty Joint
1748
Underwriting Association and renewed by the corporation that
1749
provide coverage for basic property perils on risks that are not
1750
located in areas eligible for coverage in the Florida Windstorm
1751
Underwriting Association as those areas were defined on January
1752
1, 2002, and for such policies that do not provide coverage for
1753
the peril of wind on risks that are located in such areas; and
1754
(III) A high-risk account for personal residential policies
1755
and commercial residential and commercial nonresidential property
1756
policies issued by the corporation or transferred to the
1757
corporation that provide coverage for the peril of wind on risks
1758
that are located in areas eligible for coverage in the Florida
1759
Windstorm Underwriting Association as those areas were defined on
1760
January 1, 2002. Subject to the approval of a business plan by
1761
the Financial Services Commission and Legislative Budget
1762
Commission as provided in this sub-sub-subparagraph, but no
1763
earlier than March 31, 2007, The corporation may offer policies
1764
that provide multiperil coverage and the corporation shall
1765
continue to offer policies that provide coverage only for the
1766
peril of wind for risks located in areas eligible for coverage in
1767
the high-risk account. In issuing multiperil coverage, the
1768
corporation may use its approved policy forms and rates for the
1769
personal lines account. An applicant or insured who is eligible
1770
to purchase a multiperil policy from the corporation may purchase
1771
a multiperil policy from an authorized insurer without prejudice
1772
to the applicant's or insured's eligibility to prospectively
1773
purchase a policy that provides coverage only for the peril of
1774
wind from the corporation. An applicant or insured who is
1775
eligible for a corporation policy that provides coverage only for
1776
the peril of wind may elect to purchase or retain such policy and
1777
also purchase or retain coverage excluding wind from an
1778
authorized insurer without prejudice to the applicant's or
1779
insured's eligibility to prospectively purchase a policy that
1780
provides multiperil coverage from the corporation. It is the goal
1781
of the Legislature that there would be an overall average savings
1782
of 10 percent or more for a policyholder who currently has a
1783
wind-only policy with the corporation, and an ex-wind policy with
1784
a voluntary insurer or the corporation, and who then obtains a
1785
multiperil policy from the corporation. It is the intent of the
1786
Legislature that the offer of multiperil coverage in the high-
1787
risk account be made and implemented in a manner that does not
1788
adversely affect the tax-exempt status of the corporation or
1789
creditworthiness of or security for currently outstanding
1790
financing obligations or credit facilities of the high-risk
1791
account, the personal lines account, or the commercial lines
1792
account. By March 1, 2007, the corporation shall prepare and
1793
submit for approval by the Financial Services Commission and
1794
Legislative Budget Commission a report detailing the
1795
corporation's business plan for issuing multiperil coverage in
1796
the high-risk account. The business plan shall be approved or
1797
disapproved within 30 days after receipt, as submitted or
1798
modified and resubmitted by the corporation. The business plan
1799
must include: the impact of such multiperil coverage on the
1800
corporation's financial resources, the impact of such multiperil
1801
coverage on the corporation's tax-exempt status, the manner in
1802
which the corporation plans to implement the processing of
1803
applications and policy forms for new and existing policyholders,
1804
the impact of such multiperil coverage on the corporation's
1805
ability to deliver customer service at the high level required by
1806
this subsection, the ability of the corporation to process
1807
claims, the ability of the corporation to quote and issue
1808
policies, the impact of such multiperil coverage on the
1809
corporation's agents, the impact of such multiperil coverage on
1810
the corporation's existing policyholders, and the impact of such
1811
multiperil coverage on rates and premium. The high-risk account
1812
must also include quota share primary insurance under
1813
subparagraph (c)2. The area eligible for coverage under the high-
1814
risk account also includes the area within Port Canaveral, which
1815
is bordered on the south by the City of Cape Canaveral, bordered
1816
on the west by the Banana River, and bordered on the north by
1817
Federal Government property.
1818
b. The three separate accounts must be maintained as long
1819
as financing obligations entered into by the Florida Windstorm
1820
Underwriting Association or Residential Property and Casualty
1821
Joint Underwriting Association are outstanding, in accordance
1822
with the terms of the corresponding financing documents. When the
1823
financing obligations are no longer outstanding, in accordance
1824
with the terms of the corresponding financing documents, the
1825
corporation may use a single account for all revenues, assets,
1826
liabilities, losses, and expenses of the corporation. Consistent
1827
with the requirement of this subparagraph and prudent investment
1828
policies that minimize the cost of carrying debt, the board shall
1829
exercise its best efforts to retire existing debt or to obtain
1830
approval of necessary parties to amend the terms of existing
1831
debt, so as to structure the most efficient plan to consolidate
1832
the three separate accounts into a single account. By February 1,
1833
2007, the board shall submit a report to the Financial Services
1834
Commission, the President of the Senate, and the Speaker of the
1835
House of Representatives which includes an analysis of
1836
consolidating the accounts, the actions the board has taken to
1837
minimize the cost of carrying debt, and its recommendations for
1838
executing the most efficient plan.
1839
c. Creditors of the Residential Property and Casualty Joint
1840
Underwriting Association and of the accounts specified in sub-
1841
sub-subparagraphs a.(I) and (II) may have a claim against, and
1842
recourse to, the accounts referred to in sub-sub-subparagraphs
1843
a.(I) and (II) and shall have no claim against, or recourse to,
1844
the account referred to in sub-sub-subparagraph a.(III).
1845
Creditors of the Florida Windstorm Underwriting Association shall
1846
have a claim against, and recourse to, the account referred to in
1847
sub-sub-subparagraph a.(III) and shall have no claim against, or
1848
recourse to, the accounts referred to in sub-sub-subparagraphs
1849
a.(I) and (II).
1850
d. Revenues, assets, liabilities, losses, and expenses not
1851
attributable to particular accounts shall be prorated among the
1852
accounts.
1853
e. The Legislature finds that the revenues of the
1854
corporation are revenues that are necessary to meet the
1855
requirements set forth in documents authorizing the issuance of
1856
bonds under this subsection.
1857
f. No part of the income of the corporation may inure to
1858
the benefit of any private person.
1859
3. With respect to a deficit in an account:
1860
a. After accounting for the Citizens policyholder surcharge
1861
imposed under sub-subparagraph i., when the remaining projected
1862
deficit incurred in a particular calendar year is not greater
1863
than 6 10 percent of the aggregate statewide direct written
1864
premium for the subject lines of business for the prior calendar
1865
year, the entire deficit shall be recovered through regular
1866
assessments of assessable insurers under paragraph (p) and
1867
assessable insureds.
1868
b. After accounting for the Citizens policyholder surcharge
1869
imposed under sub-subparagraph i., when the remaining projected
1870
deficit incurred in a particular calendar year exceeds 6 10
1871
percent of the aggregate statewide direct written premium for the
1872
subject lines of business for the prior calendar year, the
1873
corporation shall levy regular assessments on assessable insurers
1874
under paragraph (p) and on assessable insureds in an amount equal
1875
to the greater of 6 10 percent of the deficit or 6 10 percent of
1876
the aggregate statewide direct written premium for the subject
1877
lines of business for the prior calendar year. Any remaining
1878
deficit shall be recovered through emergency assessments under
1879
sub-subparagraph d.
1880
c. Each assessable insurer's share of the amount being
1881
assessed under sub-subparagraph a. or sub-subparagraph b. shall
1882
be in the proportion that the assessable insurer's direct written
1883
premium for the subject lines of business for the year preceding
1884
the assessment bears to the aggregate statewide direct written
1885
premium for the subject lines of business for that year. The
1886
assessment percentage applicable to each assessable insured is
1887
the ratio of the amount being assessed under sub-subparagraph a.
1888
or sub-subparagraph b. to the aggregate statewide direct written
1889
premium for the subject lines of business for the prior year.
1890
Assessments levied by the corporation on assessable insurers
1891
under sub-subparagraphs a. and b. shall be paid as required by
1892
the corporation's plan of operation and paragraph (p).
1893
notwithstanding any other provision of this subsection, the
1894
aggregate amount of a regular assessment for a deficit incurred
1895
in a particular calendar year shall be reduced by the estimated
1896
amount to be received by the corporation from the Citizens
1897
policyholder surcharge under subparagraph (c)10. and the amount
1898
collected or estimated to be collected from the assessment on
1899
Citizens policyholders pursuant to sub-subparagraph i.
1900
Assessments levied by the corporation on assessable insureds
1901
under sub-subparagraphs a. and b. shall be collected by the
1902
surplus lines agent at the time the surplus lines agent collects
1903
the surplus lines tax required by s. 626.932 and shall be paid to
1904
the Florida Surplus Lines Service Office at the time the surplus
1905
lines agent pays the surplus lines tax to the Florida Surplus
1906
Lines Service Office. Upon receipt of regular assessments from
1907
surplus lines agents, the Florida Surplus Lines Service Office
1908
shall transfer the assessments directly to the corporation as
1909
determined by the corporation.
1910
d. Upon a determination by the board of governors that a
1911
deficit in an account exceeds the amount that will be recovered
1912
through regular assessments under sub-subparagraph a. or sub-
1913
subparagraph b., plus the amount that is expected to be recovered
1914
through surcharges under sub-subparagraph i., as to the remaining
1915
projected deficit the board shall levy, after verification by the
1916
office, emergency assessments, for as many years as necessary to
1917
cover the deficits, to be collected by assessable insurers and
1918
the corporation and collected from assessable insureds upon
1919
issuance or renewal of policies for subject lines of business,
1920
excluding National Flood Insurance policies. The amount of the
1921
emergency assessment collected in a particular year shall be a
1922
uniform percentage of that year's direct written premium for
1923
subject lines of business and all accounts of the corporation,
1924
excluding National Flood Insurance Program policy premiums, as
1925
annually determined by the board and verified by the office. The
1926
office shall verify the arithmetic calculations involved in the
1927
board's determination within 30 days after receipt of the
1928
information on which the determination was based. Notwithstanding
1929
any other provision of law, the corporation and each assessable
1930
insurer that writes subject lines of business shall collect
1931
emergency assessments from its policyholders without such
1932
obligation being affected by any credit, limitation, exemption,
1933
or deferment. Emergency assessments levied by the corporation on
1934
assessable insureds shall be collected by the surplus lines agent
1935
at the time the surplus lines agent collects the surplus lines
1936
tax required by s. 626.932 and shall be paid to the Florida
1937
Surplus Lines Service Office at the time the surplus lines agent
1938
pays the surplus lines tax to the Florida Surplus Lines Service
1939
Office. The emergency assessments so collected shall be
1940
transferred directly to the corporation on a periodic basis as
1941
determined by the corporation and shall be held by the
1942
corporation solely in the applicable account. The aggregate
1943
amount of emergency assessments levied for an account under this
1944
sub-subparagraph in any calendar year may, at the discretion of
1945
the board of governors, be less than but may not exceed the
1946
greater of 10 percent of the amount needed to cover the original
1947
deficit, plus interest, fees, commissions, required reserves, and
1948
other costs associated with financing of the original deficit, or
1949
10 percent of the aggregate statewide direct written premium for
1950
subject lines of business and for all accounts of the corporation
1951
for the prior year, plus interest, fees, commissions, required
1952
reserves, and other costs associated with financing the original
1953
deficit.
1954
e. The corporation may pledge the proceeds of assessments,
1955
projected recoveries from the Florida Hurricane Catastrophe Fund,
1956
other insurance and reinsurance recoverables, policyholder
1957
surcharges and other surcharges, and other funds available to the
1958
corporation as the source of revenue for and to secure bonds
1959
issued under paragraph (p), bonds or other indebtedness issued
1960
under subparagraph (c)3., or lines of credit or other financing
1961
mechanisms issued or created under this subsection, or to retire
1962
any other debt incurred as a result of deficits or events giving
1963
rise to deficits, or in any other way that the board determines
1964
will efficiently recover such deficits. The purpose of the lines
1965
of credit or other financing mechanisms is to provide additional
1966
resources to assist the corporation in covering claims and
1967
expenses attributable to a catastrophe. As used in this
1968
subsection, the term "assessments" includes regular assessments
1969
under sub-subparagraph a., sub-subparagraph b., or subparagraph
1970
(p)1. and emergency assessments under sub-subparagraph d.
1971
Emergency assessments collected under sub-subparagraph d. are not
1972
part of an insurer's rates, are not premium, and are not subject
1973
to premium tax, fees, or commissions; however, failure to pay the
1974
emergency assessment shall be treated as failure to pay premium.
1975
The emergency assessments under sub-subparagraph d. shall
1976
continue as long as any bonds issued or other indebtedness
1977
incurred with respect to a deficit for which the assessment was
1978
imposed remain outstanding, unless adequate provision has been
1979
made for the payment of such bonds or other indebtedness pursuant
1980
to the documents governing such bonds or other indebtedness.
1981
f. As used in this subsection for purposes of any deficit
1982
incurred on or after January 25, 2007, the term "subject lines of
1983
business" means insurance written by assessable insurers or
1984
procured by assessable insureds for all property and casualty
1985
lines of business in this state, but not including workers'
1986
compensation or medical malpractice. As used in the sub-
1987
subparagraph, the term "property and casualty lines of business"
1988
includes all lines of business identified on Form 2, Exhibit of
1989
Premiums and Losses, in the annual statement required of
1990
authorized insurers by s. 624.424 and any rule adopted under this
1991
section, except for those lines identified as accident and health
1992
insurance and except for policies written under the National
1993
Flood Insurance Program or the Federal Crop Insurance Program.
1994
For purposes of this sub-subparagraph, the term "workers'
1995
compensation" includes both workers' compensation insurance and
1996
excess workers' compensation insurance.
1997
g. The Florida Surplus Lines Service Office shall determine
1998
annually the aggregate statewide written premium in subject lines
1999
of business procured by assessable insureds and shall report that
2000
information to the corporation in a form and at a time the
2001
corporation specifies to ensure that the corporation can meet the
2002
requirements of this subsection and the corporation's financing
2003
obligations.
2004
h. The Florida Surplus Lines Service Office shall verify
2005
the proper application by surplus lines agents of assessment
2006
percentages for regular assessments and emergency assessments
2007
levied under this subparagraph on assessable insureds and shall
2008
assist the corporation in ensuring the accurate, timely
2009
collection and payment of assessments by surplus lines agents as
2010
required by the corporation.
2011
i. If a deficit is incurred in any account in 2008 or
2012
thereafter, the board of governors shall levy a Citizens
2013
policyholder surcharge an immediate assessment against the
2014
premium of each nonhomestead property policyholder in all
2015
accounts of the corporation, as a uniform percentage of the
2016
premium of the policy of up to 10 percent of such premium, which
2017
funds shall be used to offset the deficit. If this assessment is
2018
insufficient to eliminate the deficit, the board of governors
2019
shall levy an additional assessment against all policyholders of
2020
the corporation for a 12-month period, which shall be collected
2021
at the time of issuance or renewal of a policy, as a uniform
2022
percentage of the premium for the policy of up to 15 10 percent
2023
of such premium, which funds shall be used to further offset the
2024
deficit. Citizens policyholder surcharges under this sub-
2025
subparagraph are not considered premium and are not subject to
2026
commissions, fees, or premium taxes. However, failure to pay such
2027
surcharges shall be treated as failure to pay premium.
2028
j. If the amount of any assessments or surcharges collected
2029
from corporation policyholders, assessable insurers or their
2030
policyholders, or assessable insureds exceeds the amount of the
2031
deficits, such excess amounts shall be remitted to and retained
2032
by the corporation in a reserve to be used by the corporation, as
2033
determined by the board of governors and approved by the office,
2034
to pay claims or reduce any past, present, or future plan-year
2035
deficits or to reduce outstanding debt. The board of governors
2036
shall maintain separate accounting records that consolidate data
2037
for nonhomestead properties, including, but not limited to,
2038
number of policies, insured values, premiums written, and losses.
2039
The board of governors shall annually report to the office and
2040
the Legislature a summary of such data.
2041
(c) The plan of operation of the corporation:
2042
1. Must provide for adoption of residential property and
2043
casualty insurance policy forms and commercial residential and
2044
nonresidential property insurance forms, which forms must be
2045
approved by the office prior to use. The corporation shall adopt
2046
the following policy forms:
2047
a. Standard personal lines policy forms that are
2048
comprehensive multiperil policies providing full coverage of a
2049
residential property equivalent to the coverage provided in the
2050
private insurance market under an HO-3, HO-4, or HO-6 policy.
2051
b. Basic personal lines policy forms that are policies
2052
similar to an HO-8 policy or a dwelling fire policy that provide
2053
coverage meeting the requirements of the secondary mortgage
2054
market, but which coverage is more limited than the coverage
2055
under a standard policy.
2056
c. Commercial lines residential and nonresidential policy
2057
forms that are generally similar to the basic perils of full
2058
coverage obtainable for commercial residential structures and
2059
commercial nonresidential structures in the admitted voluntary
2060
market.
2061
d. Personal lines and commercial lines residential property
2062
insurance forms that cover the peril of wind only. The forms are
2063
applicable only to residential properties located in areas
2064
eligible for coverage under the high-risk account referred to in
2065
sub-subparagraph (b)2.a.
2066
e. Commercial lines nonresidential property insurance forms
2067
that cover the peril of wind only. The forms are applicable only
2068
to nonresidential properties located in areas eligible for
2069
coverage under the high-risk account referred to in sub-
2070
subparagraph (b)2.a.
2071
f. The corporation may adopt variations of the policy forms
2072
listed in sub-subparagraphs a.-e. that contain more restrictive
2073
coverage.
2074
2.a. Must provide that the corporation adopt a program in
2075
which the corporation and authorized insurers enter into quota
2076
share primary insurance agreements for hurricane coverage, as
2077
defined in s. 627.4025(2)(a), for eligible risks, and adopt
2078
property insurance forms for eligible risks which cover the peril
2079
of wind only. As used in this subsection, the term:
2080
(I) "Quota share primary insurance" means an arrangement in
2081
which the primary hurricane coverage of an eligible risk is
2082
provided in specified percentages by the corporation and an
2083
authorized insurer. The corporation and authorized insurer are
2084
each solely responsible for a specified percentage of hurricane
2085
coverage of an eligible risk as set forth in a quota share
2086
primary insurance agreement between the corporation and an
2087
authorized insurer and the insurance contract. The responsibility
2088
of the corporation or authorized insurer to pay its specified
2089
percentage of hurricane losses of an eligible risk, as set forth
2090
in the quota share primary insurance agreement, may not be
2091
altered by the inability of the other party to the agreement to
2092
pay its specified percentage of hurricane losses. Eligible risks
2093
that are provided hurricane coverage through a quota share
2094
primary insurance arrangement must be provided policy forms that
2095
set forth the obligations of the corporation and authorized
2096
insurer under the arrangement, clearly specify the percentages of
2097
quota share primary insurance provided by the corporation and
2098
authorized insurer, and conspicuously and clearly state that
2099
neither the authorized insurer nor the corporation may be held
2100
responsible beyond its specified percentage of coverage of
2101
hurricane losses.
2102
(II) "Eligible risks" means personal lines residential and
2103
commercial lines residential risks that meet the underwriting
2104
criteria of the corporation and are located in areas that were
2105
eligible for coverage by the Florida Windstorm Underwriting
2106
Association on January 1, 2002.
2107
b. The corporation may enter into quota share primary
2108
insurance agreements with authorized insurers at corporation
2109
coverage levels of 90 percent and 50 percent.
2110
c. If the corporation determines that additional coverage
2111
levels are necessary to maximize participation in quota share
2112
primary insurance agreements by authorized insurers, the
2113
corporation may establish additional coverage levels. However,
2114
the corporation's quota share primary insurance coverage level
2115
may not exceed 90 percent.
2116
d. Any quota share primary insurance agreement entered into
2117
between an authorized insurer and the corporation must provide
2118
for a uniform specified percentage of coverage of hurricane
2119
losses, by county or territory as set forth by the corporation
2120
board, for all eligible risks of the authorized insurer covered
2121
under the quota share primary insurance agreement.
2122
e. Any quota share primary insurance agreement entered into
2123
between an authorized insurer and the corporation is subject to
2124
review and approval by the office. However, such agreement shall
2125
be authorized only as to insurance contracts entered into between
2126
an authorized insurer and an insured who is already insured by
2127
the corporation for wind coverage.
2128
f. For all eligible risks covered under quota share primary
2129
insurance agreements, the exposure and coverage levels for both
2130
the corporation and authorized insurers shall be reported by the
2131
corporation to the Florida Hurricane Catastrophe Fund. For all
2132
policies of eligible risks covered under quota share primary
2133
insurance agreements, the corporation and the authorized insurer
2134
shall maintain complete and accurate records for the purpose of
2135
exposure and loss reimbursement audits as required by Florida
2136
Hurricane Catastrophe Fund rules. The corporation and the
2137
authorized insurer shall each maintain duplicate copies of policy
2138
declaration pages and supporting claims documents.
2139
g. The corporation board shall establish in its plan of
2140
operation standards for quota share agreements which ensure that
2141
there is no discriminatory application among insurers as to the
2142
terms of quota share agreements, pricing of quota share
2143
agreements, incentive provisions if any, and consideration paid
2144
for servicing policies or adjusting claims.
2145
h. The quota share primary insurance agreement between the
2146
corporation and an authorized insurer must set forth the specific
2147
terms under which coverage is provided, including, but not
2148
limited to, the sale and servicing of policies issued under the
2149
agreement by the insurance agent of the authorized insurer
2150
producing the business, the reporting of information concerning
2151
eligible risks, the payment of premium to the corporation, and
2152
arrangements for the adjustment and payment of hurricane claims
2153
incurred on eligible risks by the claims adjuster and personnel
2154
of the authorized insurer. Entering into a quota sharing
2155
insurance agreement between the corporation and an authorized
2156
insurer shall be voluntary and at the discretion of the
2157
authorized insurer.
2158
3. May provide that the corporation may employ or otherwise
2159
contract with individuals or other entities to provide
2160
administrative or professional services that may be appropriate
2161
to effectuate the plan. The corporation shall have the power to
2162
borrow funds, by issuing bonds or by incurring other
2163
indebtedness, and shall have other powers reasonably necessary to
2164
effectuate the requirements of this subsection, including,
2165
without limitation, the power to issue bonds and incur other
2166
indebtedness in order to refinance outstanding bonds or other
2167
indebtedness. The corporation may, but is not required to, seek
2168
judicial validation of its bonds or other indebtedness under
2169
chapter 75. The corporation may issue bonds or incur other
2170
indebtedness, or have bonds issued on its behalf by a unit of
2171
local government pursuant to subparagraph (p)2., in the absence
2172
of a hurricane or other weather-related event, upon a
2173
determination by the corporation, subject to approval by the
2174
office, that such action would enable it to efficiently meet the
2175
financial obligations of the corporation and that such financings
2176
are reasonably necessary to effectuate the requirements of this
2177
subsection. The corporation is authorized to take all actions
2178
needed to facilitate tax-free status for any such bonds or
2179
indebtedness, including formation of trusts or other affiliated
2180
entities. The corporation shall have the authority to pledge
2181
assessments, projected recoveries from the Florida Hurricane
2182
Catastrophe Fund, other reinsurance recoverables, market
2183
equalization and other surcharges, and other funds available to
2184
the corporation as security for bonds or other indebtedness. In
2185
recognition of s. 10, Art. I of the State Constitution,
2186
prohibiting the impairment of obligations of contracts, it is the
2187
intent of the Legislature that no action be taken whose purpose
2188
is to impair any bond indenture or financing agreement or any
2189
revenue source committed by contract to such bond or other
2190
indebtedness.
2191
4.a. Must require that the corporation operate subject to
2192
the supervision and approval of a board of governors consisting
2193
of eight individuals who are residents of this state, from
2194
different geographical areas of this state. The Governor, the
2195
Chief Financial Officer, the President of the Senate, and the
2196
Speaker of the House of Representatives shall each appoint two
2197
members of the board. At least one of the two members appointed
2198
by each appointing officer must have demonstrated expertise in
2199
insurance. The Chief Financial Officer shall designate one of the
2200
appointees as chair. All board members serve at the pleasure of
2201
the appointing officer. All members of the board of governors are
2202
subject to removal at will by the officers who appointed them.
2203
All board members, including the chair, must be appointed to
2204
serve for 3-year terms beginning annually on a date designated by
2205
the plan. Any board vacancy shall be filled for the unexpired
2206
term by the appointing officer. The Chief Financial Officer shall
2207
appoint a technical advisory group to provide information and
2208
advice to the board of governors in connection with the board's
2209
duties under this subsection. The executive director and senior
2210
managers of the corporation shall be engaged by the board and
2211
serve at the pleasure of the board. Any executive director
2212
appointed on or after July 1, 2006, is subject to confirmation by
2213
the Senate. The executive director is responsible for employing
2214
other staff as the corporation may require, subject to review and
2215
concurrence by the board.
2216
b. The board shall create a Market Accountability Advisory
2217
Committee to assist the corporation in developing awareness of
2218
its rates and its customer and agent service levels in
2219
relationship to the voluntary market insurers writing similar
2220
coverage. The members of the advisory committee shall consist of
2221
the following 11 persons, one of whom must be elected chair by
2222
the members of the committee: four representatives, one appointed
2223
by the Florida Association of Insurance Agents, one by the
2224
Florida Association of Insurance and Financial Advisors, one by
2225
the Professional Insurance Agents of Florida, and one by the
2226
Latin American Association of Insurance Agencies; three
2227
representatives appointed by the insurers with the three highest
2228
voluntary market share of residential property insurance business
2229
in the state; one representative from the Office of Insurance
2230
Regulation; one consumer appointed by the board who is insured by
2231
the corporation at the time of appointment to the committee; one
2232
representative appointed by the Florida Association of Realtors;
2233
and one representative appointed by the Florida Bankers
2234
Association. All members must serve for 3-year terms and may
2235
serve for consecutive terms. The committee shall report to the
2236
corporation at each board meeting on insurance market issues
2237
which may include rates and rate competition with the voluntary
2238
market; service, including policy issuance, claims processing,
2239
and general responsiveness to policyholders, applicants, and
2240
agents; and matters relating to depopulation.
2241
5. Must provide a procedure for determining the eligibility
2242
of a risk for coverage, as follows:
2243
a. Subject to the provisions of s. 627.3517, with respect
2244
to personal lines residential risks, if the risk is offered
2245
coverage from an authorized insurer at the insurer's approved
2246
rate under either a standard policy including wind coverage or,
2247
if consistent with the insurer's underwriting rules as filed with
2248
the office, a basic policy including wind coverage, for a new
2249
application to the corporation for coverage, the risk is not
2250
eligible for any policy issued by the corporation unless the
2251
premium for coverage from the authorized insurer is more than 15
2252
percent greater than the premium for comparable coverage from the
2253
corporation. If the risk is not able to obtain any such offer,
2254
the risk is eligible for either a standard policy including wind
2255
coverage or a basic policy including wind coverage issued by the
2256
corporation; however, if the risk could not be insured under a
2257
standard policy including wind coverage regardless of market
2258
conditions, the risk shall be eligible for a basic policy
2259
including wind coverage unless rejected under subparagraph 9.
2260
However, with regard to a policyholder of the corporation or a
2261
policyholder removed from the corporation through an assumption
2262
agreement until the end of the assumption period, the
2263
policyholder remains eligible for coverage from the corporation
2264
regardless of any offer of coverage from an authorized insurer or
2265
surplus lines insurer. The corporation shall determine the type
2266
of policy to be provided on the basis of objective standards
2267
specified in the underwriting manual and based on generally
2268
accepted underwriting practices.
2269
(I) If the risk accepts an offer of coverage through the
2270
market assistance plan or an offer of coverage through a
2271
mechanism established by the corporation before a policy is
2272
issued to the risk by the corporation or during the first 30 days
2273
of coverage by the corporation, and the producing agent who
2274
submitted the application to the plan or to the corporation is
2275
not currently appointed by the insurer, the insurer shall:
2276
(A) Pay to the producing agent of record of the policy, for
2277
the first year, an amount that is the greater of the insurer's
2278
usual and customary commission for the type of policy written or
2279
a fee equal to the usual and customary commission of the
2280
corporation; or
2281
(B) Offer to allow the producing agent of record of the
2282
policy to continue servicing the policy for a period of not less
2283
than 1 year and offer to pay the agent the greater of the
2284
insurer's or the corporation's usual and customary commission for
2285
the type of policy written.
2286
2287
If the producing agent is unwilling or unable to accept
2288
appointment, the new insurer shall pay the agent in accordance
2289
with sub-sub-sub-subparagraph (A).
2290
(II) When the corporation enters into a contractual
2291
agreement for a take-out plan, the producing agent of record of
2292
the corporation policy is entitled to retain any unearned
2293
commission on the policy, and the insurer shall:
2294
(A) Pay to the producing agent of record of the corporation
2295
policy, for the first year, an amount that is the greater of the
2296
insurer's usual and customary commission for the type of policy
2297
written or a fee equal to the usual and customary commission of
2298
the corporation; or
2299
(B) Offer to allow the producing agent of record of the
2300
corporation policy to continue servicing the policy for a period
2301
of not less than 1 year and offer to pay the agent the greater of
2302
the insurer's or the corporation's usual and customary commission
2303
for the type of policy written.
2304
2305
If the producing agent is unwilling or unable to accept
2306
appointment, the new insurer shall pay the agent in accordance
2307
with sub-sub-sub-subparagraph (A).
2308
b. With respect to commercial lines residential risks, for
2309
a new application to the corporation for coverage, if the risk is
2310
offered coverage under a policy including wind coverage from an
2311
authorized insurer at its approved rate, the risk is not eligible
2312
for any policy issued by the corporation unless the premium for
2313
coverage from the authorized insurer is more than 15 percent
2314
greater than the premium for comparable coverage from the
2315
corporation. If the risk is not able to obtain any such offer,
2316
the risk is eligible for a policy including wind coverage issued
2317
by the corporation. However, with regard to a policyholder of the
2318
corporation or a policyholder removed from the corporation
2319
through an assumption agreement until the end of the assumption
2320
period, the policyholder remains eligible for coverage from the
2321
corporation regardless of any offer of coverage from an
2322
authorized insurer or surplus lines insurer.
2323
(I) If the risk accepts an offer of coverage through the
2324
market assistance plan or an offer of coverage through a
2325
mechanism established by the corporation before a policy is
2326
issued to the risk by the corporation or during the first 30 days
2327
of coverage by the corporation, and the producing agent who
2328
submitted the application to the plan or the corporation is not
2329
currently appointed by the insurer, the insurer shall:
2330
(A) Pay to the producing agent of record of the policy, for
2331
the first year, an amount that is the greater of the insurer's
2332
usual and customary commission for the type of policy written or
2333
a fee equal to the usual and customary commission of the
2334
corporation; or
2335
(B) Offer to allow the producing agent of record of the
2336
policy to continue servicing the policy for a period of not less
2337
than 1 year and offer to pay the agent the greater of the
2338
insurer's or the corporation's usual and customary commission for
2339
the type of policy written.
2340
2341
If the producing agent is unwilling or unable to accept
2342
appointment, the new insurer shall pay the agent in accordance
2343
with sub-sub-sub-subparagraph (A).
2344
(II) When the corporation enters into a contractual
2345
agreement for a take-out plan, the producing agent of record of
2346
the corporation policy is entitled to retain any unearned
2347
commission on the policy, and the insurer shall:
2348
(A) Pay to the producing agent of record of the corporation
2349
policy, for the first year, an amount that is the greater of the
2350
insurer's usual and customary commission for the type of policy
2351
written or a fee equal to the usual and customary commission of
2352
the corporation; or
2353
(B) Offer to allow the producing agent of record of the
2354
corporation policy to continue servicing the policy for a period
2355
of not less than 1 year and offer to pay the agent the greater of
2356
the insurer's or the corporation's usual and customary commission
2357
for the type of policy written.
2358
2359
If the producing agent is unwilling or unable to accept
2360
appointment, the new insurer shall pay the agent in accordance
2361
with sub-sub-sub-subparagraph (A).
2362
c. For purposes of determining comparable coverage under
2363
sub-subparagraphs a. and b., the comparison shall be based on
2364
those forms and coverages that are reasonably comparable. The
2365
corporation may rely on a determination of comparable coverage
2366
and premium made by the producing agent who submits the
2367
application to the corporation, made in the agent's capacity as
2368
the corporation's agent. A comparison may be made solely of the
2369
premium with respect to the main building or structure only on
2370
the following basis: the same coverage A or other building
2371
limits; the same percentage hurricane deductible that applies on
2372
an annual basis or that applies to each hurricane for commercial
2373
residential property; the same percentage of ordinance and law
2374
coverage, if the same limit is offered by both the corporation
2375
and the authorized insurer; the same mitigation credits, to the
2376
extent the same types of credits are offered both by the
2377
corporation and the authorized insurer; the same method for loss
2378
payment, such as replacement cost or actual cash value, if the
2379
same method is offered both by the corporation and the authorized
2380
insurer in accordance with underwriting rules; and any other form
2381
or coverage that is reasonably comparable as determined by the
2382
board. If an application is submitted to the corporation for
2383
wind-only coverage in the high-risk account, the premium for the
2384
corporation's wind-only policy plus the premium for the ex-wind
2385
policy that is offered by an authorized insurer to the applicant
2386
shall be compared to the premium for multiperil coverage offered
2387
by an authorized insurer, subject to the standards for comparison
2388
specified in this subparagraph. If the corporation or the
2389
applicant requests from the authorized insurer a breakdown of the
2390
premium of the offer by types of coverage so that a comparison
2391
may be made by the corporation or its agent and the authorized
2392
insurer refuses or is unable to provide such information, the
2393
corporation may treat the offer as not being an offer of coverage
2394
from an authorized insurer at the insurer's approved rate.
2395
6. Must include rules for classifications of risks and
2396
rates therefor.
2397
7. Must provide that if premium and investment income for
2398
an account attributable to a particular calendar year are in
2399
excess of projected losses and expenses for the account
2400
attributable to that year, such excess shall be held in surplus
2401
in the account. Such surplus shall be available to defray
2402
deficits in that account as to future years and shall be used for
2403
that purpose prior to assessing assessable insurers and
2404
assessable insureds as to any calendar year.
2405
8. Must provide objective criteria and procedures to be
2406
uniformly applied for all applicants in determining whether an
2407
individual risk is so hazardous as to be uninsurable. In making
2408
this determination and in establishing the criteria and
2409
procedures, the following shall be considered:
2410
a. Whether the likelihood of a loss for the individual risk
2411
is substantially higher than for other risks of the same class;
2412
and
2413
b. Whether the uncertainty associated with the individual
2414
risk is such that an appropriate premium cannot be determined.
2415
2416
The acceptance or rejection of a risk by the corporation shall be
2417
construed as the private placement of insurance, and the
2418
provisions of chapter 120 shall not apply.
2419
9. Must provide that the corporation shall make its best
2420
efforts to procure catastrophe reinsurance at reasonable rates,
2421
to cover its projected 100-year probable maximum loss as
2422
determined by the board of governors.
2423
10. Must provide that in the event of regular deficit
2424
assessments under sub-subparagraph (b)3.a. or sub-subparagraph
2425
(b)3.b., in the personal lines account, the commercial lines
2426
residential account, or the high-risk account, the corporation
2427
shall levy upon corporation policyholders in its next rate
2428
filing, or by a separate rate filing solely for this purpose, a
2429
Citizens policyholder surcharge arising from a regular assessment
2430
in such account in a percentage equal to the total amount of such
2431
regular assessments divided by the aggregate statewide direct
2432
written premium for subject lines of business for the prior
2433
calendar year. For purposes of calculating the Citizens
2434
policyholder surcharge to be levied under this subparagraph, the
2435
total amount of the regular assessment to which this surcharge is
2436
related shall be determined as set forth in subparagraph (b)3.,
2437
without deducting the estimated Citizens policyholder surcharge.
2438
Citizens policyholder surcharges under this subparagraph are not
2439
considered premium and are not subject to commissions, fees, or
2440
premium taxes; however, failure to pay a market equalization
2441
surcharge shall be treated as failure to pay premium.
2442
10.11. The policies issued by the corporation must provide
2443
that, if the corporation or the market assistance plan obtains an
2444
offer from an authorized insurer to cover the risk at its
2445
approved rates, the risk is no longer eligible for renewal
2446
through the corporation, except as otherwise provided in this
2447
subsection.
2448
11.12. Corporation policies and applications must include a
2449
notice that the corporation policy could, under this section, be
2450
replaced with a policy issued by an authorized insurer that does
2451
not provide coverage identical to the coverage provided by the
2452
corporation. The notice shall also specify that acceptance of
2453
corporation coverage creates a conclusive presumption that the
2454
applicant or policyholder is aware of this potential.
2455
12.13. May establish, subject to approval by the office,
2456
different eligibility requirements and operational procedures for
2457
any line or type of coverage for any specified county or area if
2458
the board determines that such changes to the eligibility
2459
requirements and operational procedures are justified due to the
2460
voluntary market being sufficiently stable and competitive in
2461
such area or for such line or type of coverage and that consumers
2462
who, in good faith, are unable to obtain insurance through the
2463
voluntary market through ordinary methods would continue to have
2464
access to coverage from the corporation. When coverage is sought
2465
in connection with a real property transfer, such requirements
2466
and procedures shall not provide for an effective date of
2467
coverage later than the date of the closing of the transfer as
2468
established by the transferor, the transferee, and, if
2469
applicable, the lender.
2470
13.14. Must provide that, with respect to the high-risk
2471
account, any assessable insurer with a surplus as to
2472
policyholders of $25 million or less writing 25 percent or more
2473
of its total countrywide property insurance premiums in this
2474
state may petition the office, within the first 90 days of each
2475
calendar year, to qualify as a limited apportionment company. A
2476
regular assessment levied by the corporation on a limited
2477
apportionment company for a deficit incurred by the corporation
2478
for the high-risk account in 2006 or thereafter may be paid to
2479
the corporation on a monthly basis as the assessments are
2480
collected by the limited apportionment company from its insureds
2481
pursuant to s. 627.3512, but the regular assessment must be paid
2482
in full within 12 months after being levied by the corporation. A
2483
limited apportionment company shall collect from its
2484
policyholders any emergency assessment imposed under sub-
2485
subparagraph (b)3.d. The plan shall provide that, if the office
2486
determines that any regular assessment will result in an
2487
impairment of the surplus of a limited apportionment company, the
2488
office may direct that all or part of such assessment be deferred
2489
as provided in subparagraph (p)4. However, there shall be no
2490
limitation or deferment of an emergency assessment to be
2491
collected from policyholders under sub-subparagraph (b)3.d.
2492
14.15. Must provide that the corporation appoint as its
2493
licensed agents only those agents who also hold an appointment as
2494
defined in s. 626.015(3) with an insurer who at the time of the
2495
agent's initial appointment by the corporation is authorized to
2496
write and is actually writing personal lines residential property
2497
coverage, commercial residential property coverage, or commercial
2498
nonresidential property coverage within the state.
2499
15.16. Must provide, by July 1, 2007, a premium payment
2500
plan option to its policyholders which allows at a minimum for
2501
quarterly and semiannual payment of premiums. A monthly payment
2502
plan may, but is not required to, be offered.
2503
16.17. Must limit coverage on mobile homes or manufactured
2504
homes built prior to 1994 to actual cash value of the dwelling
2505
rather than replacement costs of the dwelling.
2506
17.18. May provide such limits of coverage as the board
2507
determines, consistent with the requirements of this subsection.
2508
18.19. May require commercial property to meet specified
2509
hurricane mitigation construction features as a condition of
2510
eligibility for coverage.
2511
(m)1. Rates for coverage provided by the corporation shall
2512
be actuarially sound and subject to the requirements of s.
2513
627.062, except as otherwise provided in this paragraph. The
2514
corporation shall file its recommended rates with the office at
2515
least annually. The corporation shall provide any additional
2516
information regarding the rates which the office requires. The
2517
office shall consider the recommendations of the board and issue
2518
a final order establishing the rates for the corporation within
2519
45 days after the recommended rates are filed. The corporation
2520
may not pursue an administrative challenge or judicial review of
2521
the final order of the office.
2522
2. In addition to the rates otherwise determined pursuant
2523
to this paragraph, the corporation shall impose and collect an
2524
amount equal to the premium tax provided for in s. 624.509 to
2525
augment the financial resources of the corporation.
2526
3. After the public hurricane loss-projection model under
2527
s. 627.06281 has been found to be accurate and reliable by the
2528
Florida Commission on Hurricane Loss Projection Methodology, that
2529
model shall serve as the minimum benchmark for determining the
2530
windstorm portion of the corporation's rates. This subparagraph
2531
does not require or allow the corporation to adopt rates lower
2532
than the rates otherwise required or allowed by this paragraph.
2533
4. The rate filings for the corporation which were approved
2534
by the office and which took effect January 1, 2007, are
2535
rescinded, except for those rates that were lowered. As soon as
2536
possible, the corporation shall begin using the lower rates that
2537
were in effect on December 31, 2006, and shall provide refunds to
2538
policyholders who have paid higher rates as a result of that rate
2539
filing. The rates in effect on December 31, 2006, shall remain in
2540
effect for the 2007 and 2008 calendar years except for any rate
2541
change that results in a lower rate. The next rate change that
2542
may increase rates shall take effect January 1, 2009, pursuant to
2543
a new rate filing recommended by the corporation and established
2544
by the office, subject to the requirements of this paragraph.
2545
5. Beginning on July 15, 2009, and each year thereafter,
2546
the corporation must make a recommended actuarially sound rate
2547
filing for each personal and commercial line of business it
2548
writes, to be effective no earlier than January 1, 2010.
2549
(p)1. The corporation shall certify to the office its needs
2550
for annual assessments as to a particular calendar year, and for
2551
any interim assessments that it deems to be necessary to sustain
2552
operations as to a particular year pending the receipt of annual
2553
assessments. Upon verification, the office shall approve such
2554
certification, and the corporation shall levy such annual or
2555
interim assessments. Such assessments shall be prorated as
2556
provided in paragraph (b). The corporation shall take all
2557
reasonable and prudent steps necessary to collect the amount of
2558
assessment due from each assessable insurer, including, if
2559
prudent, filing suit to collect such assessment. If the
2560
corporation is unable to collect an assessment from any
2561
assessable insurer, the uncollected assessments shall be levied
2562
as an additional assessment against the assessable insurers and
2563
any assessable insurer required to pay an additional assessment
2564
as a result of such failure to pay shall have a cause of action
2565
against such nonpaying assessable insurer. Assessments shall be
2566
included as an appropriate factor in the making of rates. The
2567
failure of a surplus lines agent to collect and remit any regular
2568
or emergency assessment levied by the corporation is considered
2569
to be a violation of s. 626.936 and subjects the surplus lines
2570
agent to the penalties provided in that section.
2571
2. The governing body of any unit of local government, any
2572
residents of which are insured by the corporation, may issue
2574
fund an assistance program, in conjunction with the corporation,
2575
for the purpose of defraying deficits of the corporation. In
2576
order to avoid needless and indiscriminate proliferation,
2577
duplication, and fragmentation of such assistance programs, any
2578
unit of local government, any residents of which are insured by
2579
the corporation, may provide for the payment of losses,
2580
regardless of whether or not the losses occurred within or
2581
outside of the territorial jurisdiction of the local government.
2582
Revenue bonds under this subparagraph may not be issued until
2583
validated pursuant to chapter 75, unless a state of emergency is
2584
declared by executive order or proclamation of the Governor
2585
pursuant to s. 252.36 making such findings as are necessary to
2586
determine that it is in the best interests of, and necessary for,
2587
the protection of the public health, safety, and general welfare
2588
of residents of this state and declaring it an essential public
2589
purpose to permit certain municipalities or counties to issue
2590
such bonds as will permit relief to claimants and policyholders
2591
of the corporation. Any such unit of local government may enter
2592
into such contracts with the corporation and with any other
2593
entity created pursuant to this subsection as are necessary to
2594
carry out this paragraph. Any bonds issued under this
2595
subparagraph shall be payable from and secured by moneys received
2596
by the corporation from emergency assessments under sub-
2597
subparagraph (b)3.d., and assigned and pledged to or on behalf of
2598
the unit of local government for the benefit of the holders of
2599
such bonds. The funds, credit, property, and taxing power of the
2600
state or of the unit of local government shall not be pledged for
2601
the payment of such bonds. If any of the bonds remain unsold 60
2602
days after issuance, the office shall require all insurers
2603
subject to assessment to purchase the bonds, which shall be
2604
treated as admitted assets; each insurer shall be required to
2605
purchase that percentage of the unsold portion of the bond issue
2606
that equals the insurer's relative share of assessment liability
2607
under this subsection. An insurer shall not be required to
2608
purchase the bonds to the extent that the office determines that
2609
the purchase would endanger or impair the solvency of the
2610
insurer.
2611
3.a. The corporation shall adopt one or more programs
2612
subject to approval by the office for the reduction of both new
2613
and renewal writings in the corporation. Beginning January 1,
2614
2008, any program the corporation adopts for the payment of
2615
bonuses to an insurer for each risk the insurer removes from the
2616
corporation shall comply with s. 627.3511(2) and may not exceed
2617
the amount referenced in s. 627.3511(2) for each risk removed.
2618
The corporation may consider any prudent and not unfairly
2619
discriminatory approach to reducing corporation writings, and may
2620
adopt a credit against assessment liability or other liability
2621
that provides an incentive for insurers to take risks out of the
2622
corporation and to keep risks out of the corporation by
2623
maintaining or increasing voluntary writings in counties or areas
2624
in which corporation risks are highly concentrated and a program
2625
to provide a formula under which an insurer voluntarily taking
2626
risks out of the corporation by maintaining or increasing
2627
voluntary writings will be relieved wholly or partially from
2628
assessments under sub-subparagraphs (b)3.a. and b. However, any
2629
"take-out bonus" or payment to an insurer must be conditioned on
2630
the property being insured for at least 5 years by the insurer,
2631
unless canceled or nonrenewed by the policyholder. If the policy
2632
is canceled or nonrenewed by the policyholder before the end of
2633
the 5-year period, the amount of the take-out bonus must be
2634
prorated for the time period the policy was insured. When the
2635
corporation enters into a contractual agreement for a take-out
2636
plan, the producing agent of record of the corporation policy is
2637
entitled to retain any unearned commission on such policy, and
2638
the insurer shall either:
2639
(I) Pay to the producing agent of record of the policy, for
2640
the first year, an amount which is the greater of the insurer's
2641
usual and customary commission for the type of policy written or
2642
a policy fee equal to the usual and customary commission of the
2643
corporation; or
2644
(II) Offer to allow the producing agent of record of the
2645
policy to continue servicing the policy for a period of not less
2646
than 1 year and offer to pay the agent the insurer's usual and
2647
customary commission for the type of policy written. If the
2648
producing agent is unwilling or unable to accept appointment by
2649
the new insurer, the new insurer shall pay the agent in
2650
accordance with sub-sub-subparagraph (I).
2651
b. Any credit or exemption from regular assessments adopted
2652
under this subparagraph shall last no longer than the 3 years
2653
following the cancellation or expiration of the policy by the
2654
corporation. With the approval of the office, the board may
2655
extend such credits for an additional year if the insurer
2656
guarantees an additional year of renewability for all policies
2657
removed from the corporation, or for 2 additional years if the
2658
insurer guarantees 2 additional years of renewability for all
2659
policies so removed.
2660
c. There shall be no credit, limitation, exemption, or
2661
deferment from emergency assessments to be collected from
2662
policyholders pursuant to sub-subparagraph (b)3.d.
2663
4. The plan shall provide for the deferment, in whole or in
2664
part, of the assessment of an assessable insurer, other than an
2665
emergency assessment collected from policyholders pursuant to
2666
sub-subparagraph (b)3.d., if the office finds that payment of the
2667
assessment would endanger or impair the solvency of the insurer.
2668
In the event an assessment against an assessable insurer is
2669
deferred in whole or in part, the amount by which such assessment
2670
is deferred may be assessed against the other assessable insurers
2671
in a manner consistent with the basis for assessments set forth
2672
in paragraph (b).
2673
5. Effective July 1, 2007, in order to evaluate the costs
2674
and benefits of approved take-out plans, if the corporation pays
2675
a bonus or other payment to an insurer for an approved take-out
2676
plan, it shall maintain a record of the address or such other
2677
identifying information on the property or risk removed in order
2678
to track if and when the property or risk is later insured by the
2679
corporation.
2680
6. Any policy taken out, assumed, or removed from the
2681
corporation is, as of the effective date of the take-out,
2682
assumption, or removal, direct insurance issued by the insurer
2683
and not by the corporation, even if the corporation continues to
2684
service the policies. This subparagraph applies to policies of
2685
the corporation and not policies taken out, assumed, or removed
2686
from any other entity.
2687
(w)1. The following records of the corporation are
2688
confidential and exempt from the provisions of s. 119.07(1) and
2689
s. 24(a), Art. I of the State Constitution:
2690
a. Underwriting files, except that a policyholder or an
2691
applicant shall have access to his or her own underwriting files.
2692
Confidential and exempt underwriting file records may also be
2693
released to other governmental agencies upon written request and
2694
demonstration of need; such records held by the receiving agency
2695
remain confidential and exempt as provided herein.
2696
b. Claims files, until termination of all litigation and
2697
settlement of all claims arising out of the same incident,
2698
although portions of the claims files may remain exempt, as
2699
otherwise provided by law. Confidential and exempt claims file
2700
records may be released to other governmental agencies upon
2701
written request and demonstration of need; such records held by
2702
the receiving agency remain confidential and exempt as provided
2703
for herein.
2704
c. Records obtained or generated by an internal auditor
2705
pursuant to a routine audit, until the audit is completed, or if
2706
the audit is conducted as part of an investigation, until the
2707
investigation is closed or ceases to be active. An investigation
2708
is considered "active" while the investigation is being conducted
2709
with a reasonable, good faith belief that it could lead to the
2710
filing of administrative, civil, or criminal proceedings.
2711
d. Matters reasonably encompassed in privileged attorney-
2712
client communications.
2713
e. Proprietary information licensed to the corporation
2714
under contract and the contract provides for the confidentiality
2715
of such proprietary information.
2716
f. All information relating to the medical condition or
2717
medical status of a corporation employee which is not relevant to
2718
the employee's capacity to perform his or her duties, except as
2719
otherwise provided in this paragraph. Information that which is
2720
exempt shall include, but is not limited to, information relating
2721
to workers' compensation, insurance benefits, and retirement or
2722
disability benefits.
2723
g. Upon an employee's entrance into the employee assistance
2724
program, a program to assist any employee who has a behavioral or
2725
medical disorder, substance abuse problem, or emotional
2726
difficulty which affects the employee's job performance, all
2727
records relative to that participation shall be confidential and
2728
exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
2729
of the State Constitution, except as otherwise provided in s.
2730
112.0455(11).
2731
h. Information relating to negotiations for financing,
2732
reinsurance, depopulation, or contractual services, until the
2733
conclusion of the negotiations.
2734
i. Minutes of closed meetings regarding underwriting files,
2735
and minutes of closed meetings regarding an open claims file
2736
until termination of all litigation and settlement of all claims
2737
with regard to that claim, except that information otherwise
2738
confidential or exempt by law shall will be redacted.
2739
2. If When an authorized insurer is considering
2740
underwriting a risk insured by the corporation, relevant
2741
underwriting files and confidential claims files may be released
2742
to the insurer provided the insurer agrees in writing, notarized
2743
and under oath, to maintain the confidentiality of such files. If
2744
When a file is transferred to an insurer that file is no longer a
2745
public record because it is not held by an agency subject to the
2746
provisions of the public records law. Underwriting files and
2747
confidential claims files may also be released to staff of and
2748
the board of governors of the market assistance plan established
2749
pursuant to s. 627.3515, who must retain the confidentiality of
2750
such files, except such files may be released to authorized
2751
insurers that are considering assuming the risks to which the
2752
files apply, provided the insurer agrees in writing, notarized
2753
and under oath, to maintain the confidentiality of such files.
2754
Finally, the corporation or the board or staff of the market
2755
assistance plan may make the following information obtained from
2756
underwriting files and confidential claims files available to
2757
licensed general lines insurance agents: name, address, and
2758
telephone number of the residential property owner or insured;
2759
location of the risk; rating information; loss history; and
2760
policy type. The receiving licensed general lines insurance agent
2761
must retain the confidentiality of the information received.
2762
3. A policyholder who has filed suit against the
2763
corporation has the right to discover the contents of his or her
2764
own claims file to the same extent that discovery of such
2765
contents would be available from a private insurer in litigation
2766
as provided by the Florida Rules of Civil Procedure, the Florida
2767
Evidence Code, and other applicable law. Pursuant to subpoena, a
2768
third party has the right to discover the contents of an
2769
insured's or applicant's underwriting or claims file to the same
2770
extent that discovery of such contents would be available from a
2771
private insurer by subpoena as provided by the Florida Rules of
2772
Civil Procedure, the Florida Evidence Code, and other applicable
2773
law, and subject to any confidentiality protections requested by
2774
the corporation and agreed to by the seeking party or ordered by
2775
the court. The corporation may release confidential underwriting
2776
and claims file contents and information as it deems necessary
2777
and appropriate to underwrite or service insurance policies and
2778
claims, subject to any confidentiality protections deemed
2779
necessary and appropriate by the corporation.
2780
4.2. Portions of meetings of the corporation are exempt
2781
from the provisions of s. 286.011 and s. 24(b), Art. I of the
2782
State Constitution wherein confidential underwriting files or
2783
confidential open claims files are discussed. All portions of
2784
corporation meetings which are closed to the public shall be
2785
recorded by a court reporter. The court reporter shall record the
2786
times of commencement and termination of the meeting, all
2787
discussion and proceedings, the names of all persons present at
2788
any time, and the names of all persons speaking. No portion of
2789
any closed meeting shall be off the record. Subject to the
2790
provisions hereof and s. 119.07(1)(e)-(g), the court reporter's
2791
notes of any closed meeting shall be retained by the corporation
2792
for a minimum of 5 years. A copy of the transcript, less any
2793
exempt matters, of any closed meeting wherein claims are
2794
discussed shall become public as to individual claims after
2795
settlement of the claim.
2796
(dd)1. For policies subject to nonrenewal as a result of
2797
the risk being no longer eligible for coverage due to being
2798
valued at $1 million or more, the corporation shall, directly or
2799
through the market assistance plan, make information from
2800
confidential underwriting and claims files of policyholders
2801
available only to licensed general lines agents who register with
2802
the corporation to receive such information according to the
2803
following procedures:
2804
2. By August 1, 2006, the corporation shall provide such
2805
policyholders who are not eligible for renewal the opportunity to
2806
request in writing, within 30 days after the notification is
2807
sent, that information from their confidential underwriting and
2808
claims files not be released to licensed general lines agents
2809
registered pursuant to this paragraph.
2810
3. By August 1, 2006, the corporation shall make available
2811
to licensed general lines agents the registration procedures to
2812
be used to obtain confidential information from underwriting and
2813
claims files for such policies not eligible for renewal. As a
2814
condition of registration, the corporation shall require the
2815
licensed general lines agent to attest that the agent has the
2816
experience and relationships with authorized or surplus lines
2817
carriers to attempt to offer replacement coverage for such
2818
policies.
2819
4. By September 1, 2006, the corporation shall make
2820
available through a secured website to licensed general lines
2821
agents registered pursuant to this paragraph application, rating,
2822
loss history, mitigation, and policy type information relating to
2823
such policies not eligible for renewal and for which the
2824
policyholder has not requested the corporation withhold such
2825
information. The registered licensed general lines agent may use
2826
such information to contact and assist the policyholder in
2827
securing replacement policies, and the agent may disclose to the
2828
policyholder that such information was obtained from the
2829
corporation.
2830
(dd)(ee) The assets of the corporation may be invested and
2831
managed by the State Board of Administration.
2832
(ee)(ff) The office may establish a pilot program to offer
2833
optional sinkhole coverage in one or more counties or other
2834
territories of the corporation for the purpose of implementing s.
2835
627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.
2836
Under the pilot program, the corporation is not required to issue
2837
a notice of nonrenewal to exclude sinkhole coverage upon the
2838
renewal of existing policies, but may exclude such coverage using
2839
a notice of coverage change.
2840
Section 14. Paragraph (b) of subsection (2) of section
2841
627.4133, Florida Statutes, is amended to read:
2842
627.4133 Notice of cancellation, nonrenewal, or renewal
2843
premium.--
2844
(2) With respect to any personal lines or commercial
2845
residential property insurance policy, including, but not limited
2846
to, any homeowner's, mobile home owner's, farmowner's,
2847
condominium association, condominium unit owner's, apartment
2848
building, or other policy covering a residential structure or its
2849
contents:
2850
(b) The insurer shall give the named insured written notice
2851
of nonrenewal, cancellation, or termination at least 100 days
2852
prior to the effective date of the nonrenewal, cancellation, or
2853
termination. However, the insurer shall give at least 100 days'
2854
written notice, or written notice by June 1, whichever is
2855
earlier, for any nonrenewal, cancellation, or termination that
2856
would be effective between June 1 and November 30. The notice
2857
must include the reason or reasons for the nonrenewal,
2858
cancellation, or termination, except that:
2859
1. The insurer shall give the named insured written notice
2860
of nonrenewal, cancellation, or termination at least 180 days
2861
prior to the effective date of the nonrenewal, cancellation, or
2862
termination for a named insured whose residential structure has
2863
been insured by that insurer or an affiliated insurer for at
2864
least a 5-year period immediately prior to date of the written
2865
notice.
2866
2.1. When cancellation is for nonpayment of premium, at
2867
least 10 days' written notice of cancellation accompanied by the
2868
reason therefor shall be given. As used in this subparagraph, the
2869
term "nonpayment of premium" means failure of the named insured
2870
to discharge when due any of her or his obligations in connection
2871
with the payment of premiums on a policy or any installment of
2872
such premium, whether the premium is payable directly to the
2873
insurer or its agent or indirectly under any premium finance plan
2874
or extension of credit, or failure to maintain membership in an
2875
organization if such membership is a condition precedent to
2876
insurance coverage. "Nonpayment of premium" also means the
2877
failure of a financial institution to honor an insurance
2878
applicant's check after delivery to a licensed agent for payment
2879
of a premium, even if the agent has previously delivered or
2880
transferred the premium to the insurer. If a dishonored check
2881
represents the initial premium payment, the contract and all
2882
contractual obligations shall be void ab initio unless the
2883
nonpayment is cured within the earlier of 5 days after actual
2884
notice by certified mail is received by the applicant or 15 days
2885
after notice is sent to the applicant by certified mail or
2886
registered mail, and if the contract is void, any premium
2887
received by the insurer from a third party shall be refunded to
2888
that party in full.
2889
3.2. When such cancellation or termination occurs during
2890
the first 90 days during which the insurance is in force and the
2891
insurance is canceled or terminated for reasons other than
2892
nonpayment of premium, at least 20 days' written notice of
2893
cancellation or termination accompanied by the reason therefor
2894
shall be given except where there has been a material
2895
misstatement or misrepresentation or failure to comply with the
2896
underwriting requirements established by the insurer.
2897
4.3. The requirement for providing written notice of
2898
nonrenewal by June 1 of any nonrenewal that would be effective
2899
between June 1 and November 30 does not apply to the following
2900
situations, but the insurer remains subject to the requirement to
2901
provide such notice at least 100 days prior to the effective date
2902
of nonrenewal:
2903
a. A policy that is nonrenewed due to a revision in the
2904
coverage for sinkhole losses and catastrophic ground cover
2905
collapse pursuant to s. 627.730, as amended by s. 30, chapter
2906
2007-1, Laws of Florida.
2907
b. A policy that is nonrenewed by Citizens Property
2908
Insurance Corporation, pursuant to s. 627.351(6), for a policy
2909
that has been assumed by an authorized insurer offering
2910
replacement or renewal coverage to the policyholder.
2911
2912
After the policy has been in effect for 90 days, the policy shall
2913
not be canceled by the insurer except when there has been a
2914
material misstatement, a nonpayment of premium, a failure to
2915
comply with underwriting requirements established by the insurer
2916
within 90 days of the date of effectuation of coverage, or a
2917
substantial change in the risk covered by the policy or when the
2918
cancellation is for all insureds under such policies for a given
2919
class of insureds. This paragraph does not apply to individually
2920
rated risks having a policy term of less than 90 days.
2921
Section 15. Effective January 1, 2011, section 689.262,
2922
Florida Statutes, is created to read:
2923
689.262 Sale of residential property; disclosure of
2924
windstorm mitigation rating.--A purchaser of residential property
2925
that is located in the wind-borne debris region, as defined in s.
2926
1609.2 of the International Building Code(2006), must be
2927
informed of the windstorm mitigation rating of the structure,
2928
based on the uniform home grading scale adopted pursuant to s.
2929
215.55865. The rating must be included in the contract for sale
2930
or as a separate document attached to the contract for sale. The
2931
Financial Services Commission may adopt rules, consistent with
2932
other state laws, to administer this section, including the form
2933
of the disclosure and the requirements for the windstorm
2934
mitigation inspection or report that is required for purposes of
2935
determining the rating.
2936
Section 16. (1) By December 15, 2008, Citizens Property
2937
Insurance Corporation shall transfer $250 million to the General
2938
Revenue Fund, from the personal lines account and the commercial
2939
lines account only, if the combined surplus of the personal lines
2940
account and commercial lines account as defined in s. 627.351(6),
2941
Florida Statutes, exceeds $1 billion. The board of governors of
2942
Citizens Property Insurance Corporation must make a reasonable
2943
estimate of such surplus on or after December 1, 2008, and no
2944
later than December 14, 2008, using generally accepted actuarial
2945
and accounting practices, recognizing that audited financial
2946
statements will not yet be available.
2947
(2) Beginning July 1, 2009, the board shall make quarterly
2948
transfers of any interest earned prior to the issuance of any
2949
surplus notes, interest paid, and principal repaid to the state
2950
for any surplus notes issued by the program after December 1,
2951
2008, to Citizens Property Insurance Corporation, provided such
2952
surplus notes were funded exclusively by an appropriation to the
2953
program by the Legislature for the 2008-2009 fiscal year. The
2954
corporation shall credit each account as defined in s. 627.351(6)
2955
in a pro rata manner for the funds removed from each account to
2956
make the transfer required by subsection (1).
2957
(3) On July 1, 2009, the State Board of Administration
2958
shall transfer to Citizens Property Insurance Corporation any
2959
funds that have not been committed or reserved for insurers
2960
approved to receive such funds under the program from the funds
2961
that were appropriated from the corporation in 2008-2009 for such
2962
purposes.
2963
Section 17. Citizens Property Insurance Corporation may not
2964
use any amendments made to s. 215.5595, Florida Statutes, by this
2965
act or any transfer of funds authorized by this act as
2966
justification or cause in seeking any rate or assessment
2967
increase.
2968
Section 18. Subsection (3) is added to section 627.06281,
2969
Florida Statutes, to read:
2970
627.06281 Public hurricane loss projection model; reporting
2971
of data by insurers.--
2972
(3)(a) A residential property insurer may have access to
2973
and use the public hurricane loss projection model, including all
2974
assumptions and factors and all detailed loss results, for the
2975
purpose of calculating rate indications in a rate filing and for
2976
analytical purposes, including any analysis or evaluation of the
2977
model required under actuarial standards of practice.
2978
(b) By January 1, 2009, the office shall establish by rule
2979
a fee schedule for access to and the use of the model. The fee
2980
schedule must be reasonably calculated to cover only the actual
2981
costs of providing access to and the use of the model.
2982
Section 19. Section 627.0655, Florida Statutes, is amended
2983
to read:
2984
627.0655 Policyholder loss or expense-related premium
2985
discounts.--An insurer or person authorized to engage in the
2986
business of insurance in this state may include, in the premium
2987
charged an insured for any policy, contract, or certificate of
2988
insurance, a discount based on the fact that another policy,
2989
contract, or certificate of any type has been purchased by the
2990
insured from the same insurer or insurer group, the Citizens
2991
Property Insurance Corporation created under s. 627.351(6) if the
2992
same insurance agent is servicing both policies, or an insurer
2993
that has removed the policy from the Citizens Property Insurance
2994
Corporation if the same insurance agent is servicing both
2995
policies.
2996
Section 20. (1) The Citizens Property Insurance
2997
Corporation Mission Review Task Force is created to analyze and
2998
compile available data and to develop a report setting forth the
2999
statutory and operational changes needed to return Citizens
3000
Property Insurance Corporation to its former role as a state-
3001
created, noncompetitive residual market mechanism that provides
3002
property insurance coverage to risks that are otherwise entitled
3003
but unable to obtain such coverage in the private insurance
3004
market. The task force shall submit a report to the Governor, the
3005
President of the Senate, and the Speaker of the House of
3006
Representatives by January 31, 2009. At a minimum, the task force
3007
shall analyze and evaluate relevant and applicable information
3008
and data and develop recommendations concerning:
3009
(a) The nature of Citizens Property Insurance Corporation's
3010
role in providing property insurance coverage only if such
3011
coverage is not available from private insurers.
3012
(b) The ability of the admitted market to offer policies to
3013
those consumers formerly insured through Citizens Property
3014
Insurance Corporation. This consideration shall include, but not
3015
be limited to, the availability of private market reinsurance and
3016
coverage through the Florida Hurricane Catastrophe Fund and the
3017
capacity of the industry to offer policies to former Citizens
3018
Property Insurance Corporation policyholders within existing
3019
writing ratio limitations.
3020
(c) The relationship of rates charged by Citizens Property
3021
Insurance Corporation to rates charged by private insurers, with
3022
due consideration for the corporation's role as a noncompetitive
3023
residual market mechanism.
3024
(d) The relationships between the exposure of Citizens
3025
Property Insurance Corporation to catastrophic hurricane losses,
3026
the corporation's history of purchasing any reinsurance coverage,
3027
and the corporation's capital capacity to meet its potential
3028
claim obligations without incurring large deficits.
3029
(e) The projected assessments on all policies required to
3030
offset the lack of capitol to pay claims.
3031
(f) The projections under paragraph (e) shall be specific
3032
to losses of $3 billion, $12 billion, and $23 billion caused by a
3033
storm or a group of storms in any given year.
3034
(g) The operational implications of the variation in the
3035
number of policies in force over time in Citizens Property
3036
Insurance Corporation and the merits of outsourcing some or all
3037
of its operational responsibilities.
3038
(h) Changes in the mission and operations of Citizens
3039
Property Insurance Corporation to reduce or eliminate any adverse
3040
effect such mission and operations may be having on the promotion
3041
of sound and economic growth and development of the coastal areas
3042
of this state.
3043
(i) Appropriate and consistent geographic boundaries of the
3044
high-risk account.
3045
(j) The rankings, by county, of the average approved rates
3046
in Citizens Property Insurance Corporation and any savings
3047
associated with policyholder choice in selecting Citizens.
3048
(2) The task force shall be composed of 11 members as
3049
follows:
3050
(a) Two members appointed by the Speaker of the House of
3051
Representatives.
3052
1. One member representing a property and casualty
3053
residential insurer that provides at least 150,000 homeowner's
3054
insurance policies in this state at the time of the creation of
3055
the task force.
3056
2. One member representing a surplus lines insurance
3057
company.
3058
(b) Two members appointed by the President of the
3059
Senate.
3060
1. One member representing a property and casualty
3061
commercial non-residential insurer.
3062
2. One member representing a property and casualty
3063
residential insurer with fewer than 150,000 homeowner's policies
3064
in this state at the time of the creation of the task force.
3065
(c) Three members appointed by the Governor who are not
3066
employed by or professionally affiliated with an insurance
3067
company or a subsidiary of an insurance company, at least one of
3068
whom must be consumer advocates or members of a consumer advocacy
3069
organization or agency.
3070
(d) Two members appointed by the Chief Financial Officer
3071
representing insurance agents in this state.
3072
(e) One member representing Citizens Property Insurance
3073
Corporation selected by Citizens Chairman of the Board.
3074
(f) The Commissioner of Insurance Regulation or his or her
3075
designee.
3076
(3) The task force shall conduct research, hold public
3077
meetings, receive testimony, employ consultants and
3078
administrative staff, and undertake other activities determined
3079
by its members to be necessary to complete its responsibilities.
3080
Citizens Property Insurance Corporation shall have appropriate
3081
senior staff attend task force meetings, shall respond to
3082
requests for testimony and data by the task force, shall
3083
otherwise cooperate with the task force, and shall provide
3084
funding for the necessary costs of implementing the provisions of
3085
this section.
3086
(4) A member of the task force may not delegate his or her
3087
attendance or voting power to a designee.
3088
(5) Members of the task force shall serve without
3089
compensation but are entitled to receive reimbursement for travel
3090
and per diem as provided in s. 112.061, Florida Statutes.
3091
(6) The appointments to the task force must be completed
3092
within 30 calendar days after the effective date of this act, and
3093
the task force must hold its initial meeting within 1 month after
3094
appointment of all members. The task force shall expire no later
3095
than 60 calendar days after submission of the report required in
3096
subsection (1).
3097
Section 21. The Chief Financial Officer shall provide a
3098
report on the economic impact on the state of a 1-in-100-year
3099
hurricane to the Governor, the President of the Senate, and the
3100
Speaker of the House of Representatives by March 1 of each year.
3101
The report shall include an estimate of the short-term and long-
3102
term fiscal impacts of such a storm on Citizens Property
3103
Insurance Corporation, the Florida Hurricane Catastrophe Fund,
3104
the private insurance and reinsurance markets, the state economy,
3105
and the state debt. The report shall also include an analysis of
3106
the average premium increase to fund a 1-in-100-year hurricane
3107
event and list the average cost, in both a percentage and dollar
3108
amount, impact to consumers on a county-level basis. The report
3109
may also include recommendations by the Chief Financial Officer
3110
for preparing for such a hurricane and reducing the economic
3111
impact of such a hurricane on the state. In preparing the
3112
analysis, the Chief Financial Officer shall coordinate with and
3113
obtain data from the Office of Insurance Regulation, Citizens
3114
Property Insurance Corporation, the Florida Hurricane Catastrophe
3115
Fund, the Florida Commission on Hurricane Loss Projection
3116
Methodology, the State Board of Administration, the Office of
3117
Economic and Demographic Research, and other state agencies.
3118
Section 22. Section 627.0621, Florida Statutes, is created
3119
to read:
3120
627.0621 Transparency in rate regulation.--
3121
(1) DEFINITIONS.--As used in this section, the term:
3122
(a) "Rate filing" means any original or amended rate
3123
residential property insurance filing.
3124
(b) "Recommendation" means any proposed, preliminary, or
3125
final recommendation from an office actuary reviewing a rate
3126
filing with respect to the issue of approval or disapproval of
3127
the rate filing or with respect to rate indications that the
3128
office would consider acceptable.
3129
(2) WEBSITE FOR PUBLIC ACCESS TO RATE FILING
3130
INFORMATION.--With respect to any rate filing made on after July
3131
1, 2008, the office shall provide the following information on a
3132
publicly accessible Internet website:
3133
(a) The overall rate change requested by the insurer.
3134
(b) All assumptions made by the office's actuaries.
3135
(c) A statement describing any assumptions or methods that
3136
deviate from the actuarial standards of practice of the Casualty
3137
Actuarial Society or the American Academy of Actuaries, including
3138
an explanation of the nature, rationale, and effect of the
3139
deviation.
3140
(d) All recommendations made by any office actuary who
3141
reviewed the rate filing.
3142
(e) Certification by the office's actuary that, based on
3143
the actuary's knowledge, his or her recommendations are
3144
consistent with accepted actuarial principles.
3145
(f) The overall rate change approved by the office.
3146
(3) ATTORNEY-CLIENT PRIVILEGE; WORK PRODUCT.--It is the
3147
intent of the Legislature that the principles of the public
3148
records and open meetings laws apply to the assertion of
3149
attorney-client privilege and work product confidentiality by the
3150
office in connection with a challenge to its actions on a rate
3151
filing. Therefore, in any administrative or judicial proceeding
3152
relating to a rate filing, attorney-client privilege and work
3153
product exemptions from disclosure do not apply to communications
3154
with office attorneys or records prepared by or at the direction
3155
of an office attorney, except when the conditions of paragraphs
3156
(a) and (b) have been met:
3157
(a) The communication or record reflects a mental
3158
impression, conclusion, litigation strategy, or legal theory of
3159
the attorney or office that was prepared exclusively for civil or
3160
criminal litigation or adversarial administrative proceedings.
3161
(b) The communication occurred or the record was prepared
3162
after the initiation of an action in a court of competent
3163
jurisdiction, after the issuance of a notice of intent to deny a
3164
rate filing, or after the filing of a request for a proceeding
3166
Section 23. Paragraph (b) of subsection (4) of section
3167
215.555, Florida Statutes, is amended to read:
3168
215.555 Florida Hurricane Catastrophe Fund.--
3169
(4) REIMBURSEMENT CONTRACTS.--
3170
(b)1. The contract shall contain a promise by the board to
3171
reimburse the insurer for 45 percent, 75 percent, or 90 percent
3172
of its losses from each covered event in excess of the insurer's
3173
retention, plus 5 percent of the reimbursed losses to cover loss
3174
adjustment expenses.
3175
2. The insurer must elect one of the percentage coverage
3176
levels specified in this paragraph and may, upon renewal of a
3177
reimbursement contract, elect a lower percentage coverage level
3178
if no revenue bonds issued under subsection (6) after a covered
3179
event are outstanding, or elect a higher percentage coverage
3180
level, regardless of whether or not revenue bonds are
3181
outstanding. All members of an insurer group must elect the same
3182
percentage coverage level. Any joint underwriting association,
3183
risk apportionment plan, or other entity created under s. 627.351
3184
must elect the 90-percent coverage level.
3185
3. The contract shall provide that reimbursement amounts
3186
shall not be reduced by reinsurance paid or payable to the
3187
insurer from other sources.
3188
4. Notwithstanding any other provision contained in this
3189
section, the board shall make available to insurers that
3190
purchased coverage provided by this subparagraph in 2007 2006,
3191
insurers qualifying as limited apportionment companies under s.
3192
627.351(6)(c), and insurers that have been were approved to
3193
participate in 2006 or that are approved in 2007 for the
3194
Insurance Capital Build-Up Incentive Program pursuant to s.
3195
215.5595, a contract or contract addendum that provides an
3196
additional amount of reimbursement coverage of up to $10 million.
3197
The premium to be charged for this additional reimbursement
3198
coverage shall be 50 percent of the additional reimbursement
3199
coverage provided, which shall include one prepaid reinstatement.
3200
The minimum retention level that an eligible participating
3201
insurer must retain associated with this additional coverage
3202
layer is 30 percent of the insurer's surplus as of December 31,
3203
2007 2006. This coverage shall be in addition to all other
3204
coverage that may be provided under this section. The coverage
3205
provided by the fund under this subparagraph shall be in addition
3206
to the claims-paying capacity as defined in subparagraph (c)1.,
3207
but only with respect to those insurers that select the
3208
additional coverage option and meet the requirements of this
3209
subparagraph. The claims-paying capacity with respect to all
3210
other participating insurers and limited apportionment companies
3211
that do not select the additional coverage option shall be
3212
limited to their reimbursement premium's proportionate share of
3213
the actual claims-paying capacity otherwise defined in
3214
subparagraph (c)1. and as provided for under the terms of the
3215
reimbursement contract. Coverage provided in the reimbursement
3216
contract shall will not be affected by the additional premiums
3217
paid by participating insurers exercising the additional coverage
3218
option allowed in this subparagraph. This subparagraph expires on
3219
May 31, 2009 2008.
3220
Section 24. Subsection (1) of section 627.0613, Florida
3221
Statutes, is amended to read:
3222
627.0613 Consumer advocate.--The Chief Financial Officer
3223
must appoint a consumer advocate who must represent the general
3224
public of the state before the department and the office. The
3225
consumer advocate must report directly to the Chief Financial
3226
Officer, but is not otherwise under the authority of the
3227
department or of any employee of the department. The consumer
3228
advocate has such powers as are necessary to carry out the duties
3229
of the office of consumer advocate, including, but not limited
3230
to, the powers to:
3231
(1) Recommend to the department or office, by petition, the
3232
commencement of any proceeding or action; appear in any
3233
proceeding or action before the department or office; or appear
3234
in any proceeding before the Division of Administrative Hearings
3235
or arbitration panel specified in s. 627.062(6) relating to
3236
subject matter under the jurisdiction of the department or
3237
office.
3238
Section 25. Subsections (1) and (2) of section 627.712,
3239
Florida Statutes, are amended to read:
3240
627.712 Residential windstorm coverage required;
3241
availability of exclusions for windstorm or contents.--
3242
(1) An insurer issuing a residential property insurance
3243
policy must provide windstorm coverage. Except as provided in
3244
paragraph (2)(c), this section subsection does not apply with
3245
respect to risks that are eligible for wind-only coverage from
3246
Citizens Property Insurance Corporation under s. 627.351(6).
3247
(2) A property insurer must make available, at the option
3248
of the policyholder, an exclusion of windstorm coverage.
3249
(a) The coverage may be excluded only if:
3250
(a)1. When the policyholder is a natural person, the
3251
policyholder personally writes and provides to the insurer the
3252
following statement in his or her own handwriting and signs his
3253
or her name, which must also be signed by every other named
3254
insured on the policy, and dated: "I do not want the insurance on
3255
my (home/mobile home/condominium unit) to pay for damage from
3256
windstorms. I will pay those costs. My insurance will not."
3257
2. When the policyholder is other than a natural person,
3258
the policyholder provides to the insurer on the policyholder's
3259
letterhead the following statement that must be signed by the
3260
policyholder's authorized representative and dated: " (Name of
3261
entity) does not want the insurance on its (type of
3262
structure) to pay for damage from windstorms. (Name of
3263
entity) will be responsible for these costs. (Name of
3264
entity's) insurance will not."
3265
(b) If the structure insured by the policy is subject to a
3266
mortgage or lien, the policyholder must provide the insurer with
3267
a written statement from the mortgageholder or lienholder
3268
indicating that the mortgageholder or lienholder approves the
3269
policyholder electing to exclude windstorm coverage or hurricane
3270
coverage from his or her or its property insurance policy.
3271
(c) If the residential structure is eligible for wind-only
3272
coverage from Citizens Property Insurance Corporation, an insurer
3273
nonrenewing a policy and issuing a replacement policy, or issuing
3274
a new policy, that does not provide wind coverage shall provide a
3275
notice to the mortgageholder or lienholder indicating the
3276
policyholder has elected coverage that does not cover wind.
3277
Section 26. The provisions of this act shall supersede and
3278
control over any conflicting provisions adopted in House Bill
3279
5057, 2008 Regular Session, to the extent of such conflict, if
3280
that bill becomes a law.
3281
Section 27. Except as otherwise expressly provided in this
3282
act, this act shall take effect July 1, 2008.
CODING: Words stricken are deletions; words underlined are additions.