CS/HB 7021

1	A bill to be entitled
2	An act relating to the Florida Hurricane Catastrophe Fund;
3	amending s. 215.555, F.S.; revising legislative findings
4	and purpose; revising and providing definitions; creating
5	the Division of the Florida Hurricane Catastrophe Fund
6	within the State Board of Administration; transferring the
7	powers, duties, and responsibilities of administration of
8	the fund from the State Board of Administration to the
9	division; requiring the State Board of Administration to
10	appoint a director; extending for an additional year the
11	offer of reimbursement coverage for specified insurers;
12	reducing the amount of such coverage; revising the
13	qualifying criteria for such insurers; revising provisions
14	to conform; providing penalties and interest for failing
15	to collect and remit certain assessments; increasing the
16	membership of the board of directors of the Florida
17	Hurricane Catastrophe Fund Finance Corporation; revising
18	the methodology for calculating TICL coverage multiples
19	for purposes of reducing an insurer's fund coverage limit;
20	increasing the percentage of reimbursement of an insurer's
21	TICL coverage under the TICL options addendum; amending
22	ss. 215.557, 215.5586, and 215.5595, F.S.; revising
23	provisions to conform; amending s. 627.0628, F.S.;
24	assigning the Florida Commission on Hurricane Loss
25	Projection Methodology to the division; revising
26	provisions to conform; amending ss. 215.559, 624.424, and
27	627.351, F.S.; correcting cross-references; providing an
28	effective date.
29
30	Be It Enacted by the Legislature of the State of Florida:
31
32	Section 1.  Section 215.555, Florida Statutes, is amended
33	to read:
34	215.555  Florida Hurricane Catastrophe Fund.--
35	(1)  FINDINGS AND PURPOSE.--The Legislature finds and
36	declares as follows:
37	(a)  There is a compelling state interest in maintaining a
38	viable and orderly private sector market for property insurance
39	in this state. To the extent that the private sector is unable
40	to maintain a viable and orderly market for property insurance
41	in this state, state actions to maintain such a viable and
42	orderly market are valid and necessary exercises of the police
43	power.
44	(b)  As a result of unprecedented levels of catastrophic
45	insured losses in recent years, and especially as a result of
46	Hurricane Andrew, numerous insurers have determined that in
47	order to protect their solvency, it is necessary for them to
48	reduce their exposure to hurricane losses. Also as a result of
49	these events, world reinsurance capacity has significantly
50	contracted, increasing the pressure on insurers to reduce their
51	catastrophic exposures.
52	(c)  Mortgages require reliable property insurance, and the
53	unavailability of reliable property insurance would therefore
54	make most real estate transactions impossible. In addition, the
55	public health, safety, and welfare demand that structures
56	damaged or destroyed in a catastrophe be repaired or
57	reconstructed as soon as possible. Therefore, the inability of
58	the private sector insurance and reinsurance markets to maintain
59	sufficient capacity to enable residents of this state to obtain
60	property insurance coverage in the private sector endangers the
61	economy of the state and endangers the public health, safety,
62	and welfare. Accordingly, state action to correct for this
63	inability of the private sector constitutes a valid and
64	necessary public and governmental purpose.
65	(d)  The insolvencies and financial impairments resulting
66	from Hurricane Andrew demonstrate that many property insurers
67	are unable or unwilling to maintain reserves, surplus, and
68	reinsurance sufficient to enable the insurers to pay all claims
69	in full in the event of a catastrophe. State action is therefore
70	necessary to protect the public from an insurer's unwillingness
71	or inability to maintain sufficient reserves, surplus, and
72	reinsurance.
73	(e)  A state program to provide a stable and ongoing source
74	of reimbursement to insurers for a portion of their catastrophic
75	hurricane losses will create additional insurance capacity
76	sufficient to ameliorate the current dangers to the state's
77	economy and to the public health, safety, and welfare.
78	(f)  It is essential to the functioning of a state program
79	to increase insurance capacity that revenues received be exempt
80	from federal taxation. It is therefore the intent of the
81	Legislature that this program be structured as a state trust
82	fund under the direction and control of the Division of the
83	Florida Hurricane Catastrophe Fund within the State Board of
84	Administration and operate exclusively for the purpose of
85	protecting and advancing the state's interest in maintaining
86	insurance capacity in this state.
87	(g)  Hurricane Andrew, which caused insured and uninsured
88	losses in excess of $20 billion, will likely not be the last
89	major windstorm to strike Florida. Recognizing that a future
90	wind catastrophe could cause damages in excess of $60 billion,
91	especially if a major urban area or series of urban areas were
92	hit, it is the intent of the Legislature to balance equitably
93	its concerns about mitigation of hurricane impact, insurance
94	affordability and availability, and the risk of insurer and
95	joint underwriting association insolvency, as well as assessment
96	and bonding limitations.
97	(2)  DEFINITIONS.--As used in this section:
98	(a)(m)  "Actual claims-paying capacity" means the sum of
99	the balance of the fund as of December 31 of a contract year,
100	plus any reinsurance purchased by the fund, plus the amount the
101	board is able to raise through the issuance of revenue bonds
102	under subsection (7) (6).
103	(b)(a)  "Actuarially indicated" means, with respect to
104	premiums paid by insurers for reimbursement provided by the
105	fund, an amount determined according to principles of actuarial
106	science to be adequate, but not excessive, in the aggregate, to
107	pay current and future obligations and expenses of the fund,
108	including additional amounts if needed to pay debt service on
109	revenue bonds issued under this section and to provide required
110	debt service coverage in excess of the amounts required to pay
111	actual debt service on revenue bonds issued under subsection (7)
112	(6), and determined according to principles of actuarial science
113	to reflect each insurer's relative exposure to hurricane losses.
114	(c)  "Board" means the governing board of the division,
115	which shall be composed of the Governor and Cabinet. The
116	Governor shall be chair of the governing board of the division,
117	the Attorney General shall be the secretary of the board, and
118	the Chief Financial Officer shall be treasurer of the board.
119	(d)(g)  "Bond" means any bond, debenture, note, or other
120	evidence of financial indebtedness issued under this section.
121	(e)(n)  "Corporation" means the Florida Hurricane
122	Catastrophe Fund Finance Corporation created in paragraph
123	(7)(6)(d).
124	(f)(b)  "Covered event" means any one storm declared to be
125	a hurricane by the National Hurricane Center, which storm causes
126	insured losses in this state.
127	(g)(c)  "Covered policy" means any insurance policy
128	covering residential property in this state, including, but not
129	limited to, any homeowner's, mobile home owner's, farm owner's,
130	condominium association, condominium unit owner's, tenant's, or
131	apartment building policy, or any other policy covering a
132	residential structure or its contents issued by any authorized
133	insurer, including a commercial self-insurance fund holding a
134	certificate of authority issued by the Office of Insurance
135	Regulation under s. 624.462, the Citizens Property Insurance
136	Corporation, and any joint underwriting association or similar
137	entity created under law. The term "covered policy" includes any
138	collateral protection insurance policy covering personal
139	residences which protects both the borrower's and the lender's
140	financial interests, in an amount at least equal to the coverage
141	for the dwelling in place under the lapsed homeowner's policy,
142	if such policy can be accurately reported as required in
143	subsection (6) (5). Additionally, covered policies include
144	policies covering the peril of wind removed from the Florida
145	Residential Property and Casualty Joint Underwriting Association
146	or from the Citizens Property Insurance Corporation, created
147	under s. 627.351(6), or from the Florida Windstorm Underwriting
148	Association, created under s. 627.351(2), by an authorized
149	insurer under the terms and conditions of an executed assumption
150	agreement between the authorized insurer and such association or
151	Citizens Property Insurance Corporation. Each assumption
152	agreement between the association and such authorized insurer or
153	Citizens Property Insurance Corporation must be approved by the
154	Office of Insurance Regulation before the effective date of the
155	assumption, and the Office of Insurance Regulation must provide
156	written notification to the division board within 15 working
157	days after such approval. "Covered policy" does not include any
158	policy that excludes wind coverage or hurricane coverage or any
159	reinsurance agreement and does not include any policy otherwise
160	meeting this definition which is issued by a surplus lines
161	insurer or a reinsurer. All commercial residential excess
162	policies and all deductible buy-back policies that, based on
163	sound actuarial principles, require individual ratemaking shall
164	be excluded by rule if the actuarial soundness of the fund is
165	not jeopardized. For this purpose, the term "excess policy"
166	means a policy that provides insurance protection for large
167	commercial property risks and that provides a layer of coverage
168	above a primary layer insured by another insurer.
169	(h)  "Debt service" means the amount required in any fiscal
170	year to pay the principal of, redemption premium, if any, and
171	interest on revenue bonds and any amounts required by the terms
172	of documents authorizing, securing, or providing liquidity for
173	revenue bonds necessary to maintain in effect any such liquidity
174	or security arrangements.
175	(i)  "Debt service coverage" means the amount, if any,
176	required by the documents under which revenue bonds are issued,
177	which amount is to be received in any fiscal year in excess of
178	the amount required to pay debt service for such fiscal year.
179	(j)  "Director" means the chief administrator of the
180	division, who shall act on behalf of the division as authorized
181	by the board.
182	(k)  "Division" means the Division of the Florida Hurricane
183	Catastrophe Fund.
184	(l)  "Estimated claims-paying capacity" means the sum of
185	the projected year-end balance of the fund as of December 31 of
186	a contract year, plus any reinsurance purchased by the fund,
187	plus the division's board's estimate of the board's borrowing
188	capacity.
189	(m)  "Fund" or "FHCF" means the Florida Hurricane
190	Catastrophe Fund.
191	(n)(j)  "Local government" means a unit of general purpose
192	local government as defined in s. 218.31(2).
193	(o)(d)  "Losses" means direct incurred losses under covered
194	policies, which shall include losses for additional living
195	expenses not to exceed 40 percent of the insured value of a
196	residential structure or its contents and shall exclude loss
197	adjustment expenses. "Losses" does not include losses for fair
198	rental value, loss of rent or rental income, or business
199	interruption losses.
200	(p)(k)  "Pledged revenues" means all or any portion of
201	revenues to be derived from reimbursement premiums under
202	subsection (6) (5) or from emergency assessments under paragraph
203	(7)(6)(b), as determined by the board.
204	(q)(e)  "Retention" means the amount of losses below which
205	an insurer is not entitled to reimbursement from the fund. An
206	insurer's retention shall be calculated as follows:
207	1.  The division board shall calculate and report to each
208	insurer the retention multiples for that year. For the contract
209	year beginning June 1, 2005, the retention multiple shall be
210	equal to $4.5 billion divided by the total estimated
211	reimbursement premium for the contract year; for subsequent
212	years, the retention multiple shall be equal to $4.5 billion,
213	adjusted based upon the reported exposure from the prior
214	contract year to reflect the percentage growth in exposure to
215	the fund for covered policies since 2004, divided by the total
216	estimated reimbursement premium for the contract year. Total
217	reimbursement premium for purposes of the calculation under this
218	subparagraph shall be estimated using the assumption that all
219	insurers have selected the 90-percent coverage level.
220	2.  The retention multiple as determined under subparagraph
221	1. shall be adjusted to reflect the coverage level elected by
222	the insurer. For insurers electing the 90-percent coverage
223	level, the adjusted retention multiple is 100 percent of the
224	amount determined under subparagraph 1. For insurers electing
225	the 75-percent coverage level, the retention multiple is 120
226	percent of the amount determined under subparagraph 1. For
227	insurers electing the 45-percent coverage level, the adjusted
228	retention multiple is 200 percent of the amount determined under
229	subparagraph 1.
230	3.  An insurer shall determine its provisional retention by
231	multiplying its provisional reimbursement premium by the
232	applicable adjusted retention multiple and shall determine its
233	actual retention by multiplying its actual reimbursement premium
234	by the applicable adjusted retention multiple.
235	4.  For insurers who experience multiple covered events
236	causing loss during the contract year, beginning June 1, 2005,
237	each insurer's full retention shall be applied to each of the
238	covered events causing the two largest losses for that insurer.
239	For each other covered event resulting in losses, the insurer's
240	retention shall be reduced to one-third of the full retention.
241	The reimbursement contract shall provide for the reimbursement
242	of losses for each covered event based on the full retention
243	with adjustments made to reflect the reduced retentions after
244	January 1 of the contract year provided the insurer reports its
245	losses as specified in the reimbursement contract.
246	(r)(f)  "Workers' compensation" includes both workers'
247	compensation and excess workers' compensation insurance.
248	(3)  DIVISION OF THE FLORIDA HURRICANE CATASTROPHE FUND
249	CREATED.--The Division of the Florida Hurricane Catastrophe Fund
250	is created within the State Board of Administration for the
251	purpose of administering the Florida Hurricane Catastrophe Fund.
252	For purposes of this section, the board of the division shall
253	consist of the Governor and Cabinet.
254	(4)(3)  FLORIDA HURRICANE CATASTROPHE FUND CREATED.--There
255	is created the Florida Hurricane Catastrophe Fund within to be
256	administered by the State Board of Administration. Moneys in the
257	fund may not be expended, loaned, or appropriated except to pay
258	obligations of the fund arising out of reimbursement contracts
259	entered into under subsection (5) (4), payment of debt service
260	on revenue bonds issued under subsection (7) (6), costs of the
261	mitigation program under subsection (8) (7), costs of procuring
262	reinsurance, and costs of administration of the fund. The State
263	Board of Administration shall invest the moneys in the fund
264	pursuant to ss. 215.44-215.52. Except as otherwise provided in
265	this section, earnings from all investments shall be retained in
266	the fund. The State Board of Administration shall appoint a
267	director of the division who shall be responsible for the
268	administration of the fund. The appointment of the division
269	director shall be subject to approval by a majority vote of the
270	board. The division board may employ or contract with such staff
271	and professionals as the division board deems necessary for the
272	administration of the fund. The board may adopt such rules as
273	are reasonable and necessary to implement this section and shall
274	specify interest due on any delinquent remittances, which
275	interest may not exceed the fund's rate of return plus 5
276	percent. Such rules must conform to the Legislature's specific
277	intent in establishing the fund as expressed in subsection (1),
278	must enhance the fund's potential ability to respond to claims
279	for covered events, must contain general provisions so that the
280	rules can be applied with reasonable flexibility so as to
281	accommodate insurers in situations of an unusual nature or where
282	undue hardship may result, except that such flexibility may not
283	in any way impair, override, supersede, or constrain the public
284	purpose of the fund, and must be consistent with sound insurance
285	practices. The board may, by rule, provide for the exemption
286	from subsections (5) (4) and (6) (5) of insurers writing covered
287	policies with less than $10 million in aggregate exposure for
288	covered policies if the exemption does not affect the actuarial
289	soundness of the fund. The division may sue and be sued in the
290	name of the division.
291	(5)(4)  REIMBURSEMENT CONTRACTS.--
292	(a)  The division board shall enter into a contract with
293	each insurer writing covered policies in this state to provide
294	to the insurer the reimbursement described in paragraphs (b) and
295	(d), in exchange for the reimbursement premium paid into the
296	fund under subsection (6) (5). As a condition of doing business
297	in this state, each such insurer shall enter into such a
298	contract.
299	(b)1.  The contract shall contain a promise by the division
300	board to reimburse the insurer for 45 percent, 75 percent, or 90
301	percent of its losses from each covered event in excess of the
302	insurer's retention, plus 5 percent of the reimbursed losses to
303	cover loss adjustment expenses.
304	2.  The insurer must elect one of the percentage coverage
305	levels specified in this paragraph and may, upon renewal of a
306	reimbursement contract, elect a lower percentage coverage level
307	if no revenue bonds issued under subsection (7) (6) after a
308	covered event are outstanding, or elect a higher percentage
309	coverage level, regardless of whether or not revenue bonds are
310	outstanding. All members of an insurer group must elect the same
311	percentage coverage level. Any joint underwriting association,
312	risk apportionment plan, or other entity created under s.
313	627.351 must elect the 90-percent coverage level.
314	3.  The contract shall provide that reimbursement amounts
315	shall not be reduced by reinsurance paid or payable to the
316	insurer from other sources.
317	4.  Notwithstanding any other provision contained in this
318	section, the board shall make available to insurers that
319	purchased coverage provided by this subparagraph in 2007 2006,
320	insurers qualifying as limited apportionment companies under s.
321	627.351(6)(c), and insurers that have been were approved to
322	participate in 2006 or that are approved in 2007 for the
323	Insurance Capital Build-Up Incentive Program pursuant to s.
324	215.5595, a contract or contract addendum that provides an
325	additional amount of reimbursement coverage of up to $7 $10
326	million. The premium to be charged for this additional
327	reimbursement coverage shall be 50 percent of the additional
328	reimbursement coverage provided, which shall include one prepaid
329	reinstatement. The minimum retention level that an eligible
330	participating insurer must retain associated with this
331	additional coverage layer is 30 percent of the insurer's surplus
332	as of December 31, 2007 2006. This coverage shall be in addition
333	to all other coverage that may be provided under this section.
334	The coverage provided by the fund under this subparagraph shall
335	be in addition to the claims-paying capacity as defined in
336	subparagraph (c)1., but only with respect to those insurers that
337	select the additional coverage option and meet the requirements
338	of this subparagraph. The claims-paying capacity with respect to
339	all other participating insurers and limited apportionment
340	companies that do not select the additional coverage option
341	shall be limited to their reimbursement premium's proportionate
342	share of the actual claims-paying capacity otherwise defined in
343	subparagraph (c)1. and as provided for under the terms of the
344	reimbursement contract. Coverage provided in the reimbursement
345	contract shall will not be affected by the additional premiums
346	paid by participating insurers exercising the additional
347	coverage option allowed in this subparagraph. This subparagraph
348	expires on May 31, 2009 2008.
349	(c)1.  The contract shall also provide that the obligation
350	of the division board with respect to all contracts covering a
351	particular contract year shall not exceed the actual claims-
352	paying capacity of the fund up to a limit of $15 billion for
353	that contract year adjusted based upon the reported exposure
354	from the prior contract year to reflect the percentage growth in
355	exposure to the fund for covered policies since 2003, provided
356	the dollar growth in the limit may not increase in any year by
357	an amount greater than the dollar growth of the balance of the
358	fund as of December 31, less any premiums or interest
359	attributable to optional coverage, as defined by rule which
360	occurred over the prior calendar year.
361	2.  In May before the start of the upcoming contract year
362	and in October during the contract year, the division board
363	shall publish in the Florida Administrative Weekly a statement
364	of the fund's estimated borrowing capacity and the projected
365	balance of the fund as of December 31. After the end of each
366	calendar year, the division board shall notify insurers of the
367	estimated borrowing capacity and the balance of the fund as of
368	December 31 to provide insurers with data necessary to assist
369	them in determining their retention and projected payout from
370	the fund for loss reimbursement purposes. In conjunction with
371	the development of the premium formula, as provided for in
372	subsection (6) (5), the division board shall publish factors or
373	multiples that assist insurers in determining their retention
374	and projected payout for the next contract year. For all
375	regulatory and reinsurance purposes, an insurer may calculate
376	its projected payout from the fund as its share of the total
377	fund premium for the current contract year multiplied by the sum
378	of the projected balance of the fund as of December 31 and the
379	estimated borrowing capacity for that contract year as reported
380	under this subparagraph.
381	(d)1.  For purposes of determining potential liability and
382	to aid in the sound administration of the fund, the contract
383	shall require each insurer to report such insurer's losses from
384	each covered event on an interim basis, as directed by the
385	division board. The contract shall require the insurer to report
386	to the division board no later than December 31 of each year,
387	and quarterly thereafter, its reimbursable losses from covered
388	events for the year. The contract shall require the division
389	board to determine and pay, as soon as practicable after
390	receiving these reports of reimbursable losses, the initial
391	amount of reimbursement due and adjustments to this amount based
392	on later loss information. The adjustments to reimbursement
393	amounts shall require the division board to pay, or the insurer
394	to return, amounts reflecting the most recent calculation of
395	losses.
396	2.  In determining reimbursements pursuant to this
397	subsection, the contract shall provide that the division board
398	shall pay to each insurer such insurer's projected payout, which
399	is the amount of reimbursement it is owed, up to an amount equal
400	to the insurer's share of the actual premium paid for that
401	contract year, multiplied by the actual claims-paying capacity
402	available for that contract year.
403	(e)1.  Except as provided in subparagraphs 2. and 3., the
404	contract shall provide that if an insurer demonstrates to the
405	division board that it is likely to qualify for reimbursement
406	under the contract, and demonstrates to the division board that
407	the immediate receipt of moneys from the division board is
408	likely to prevent the insurer from becoming insolvent, the
409	division board shall advance the insurer, at market interest
410	rates, the amounts necessary to maintain the solvency of the
411	insurer, up to 50 percent of the division's board's estimate of
412	the reimbursement due the insurer. The insurer's reimbursement
413	shall be reduced by an amount equal to the amount of the advance
414	and interest thereon.
415	2.  With respect only to an entity created under s.
416	627.351, the contract shall also provide that the division board
417	may, upon application by such entity, advance to such entity, at
418	market interest rates, up to 90 percent of the lesser of:
419	a.  The division's board's estimate of the amount of
420	reimbursement due to such entity; or
421	b.  The entity's share of the actual reimbursement premium
422	paid for that contract year, multiplied by the currently
423	available liquid assets of the fund. In order for the entity to
424	qualify for an advance under this subparagraph, the entity must
425	demonstrate to the division board that the advance is essential
426	to allow the entity to pay claims for a covered event and the
427	division board must determine that the fund's assets are
428	sufficient and are sufficiently liquid to allow the division
429	board to make an advance to the entity and still fulfill the
430	division's board's reimbursement obligations to other insurers.
431	The entity's final reimbursement for any contract year in which
432	an advance has been made under this subparagraph must be reduced
433	by an amount equal to the amount of the advance and any interest
434	on such advance. In order to determine what amounts, if any, are
435	due the entity, the division board may require the entity to
436	report its exposure and its losses at any time to determine
437	retention levels and reimbursements payable.
438	3.  The contract shall also provide specifically and solely
439	with respect to any limited apportionment company under s.
440	627.351(2)(b)3. that the division board may, upon application by
441	such company, advance to such company the amount of the
442	estimated reimbursement payable to such company as calculated
443	pursuant to paragraph (d), at market interest rates, if the
444	division board determines that the fund's assets are sufficient
445	and are sufficiently liquid to permit the division board to make
446	an advance to such company and at the same time fulfill its
447	reimbursement obligations to the insurers that are participants
448	in the fund. Such company's final reimbursement for any contract
449	year in which an advance pursuant to this subparagraph has been
450	made shall be reduced by an amount equal to the amount of the
451	advance and interest thereon. In order to determine what
452	amounts, if any, are due to such company, the division board may
453	require such company to report its exposure and its losses at
454	such times as may be required to determine retention levels and
455	loss reimbursements payable.
456	(f)  In order to ensure that insurers have properly
457	reported the insured values on which the reimbursement premium
458	is based and to ensure that insurers have properly reported the
459	losses for which reimbursements have been made, the division
460	board shall inspect, examine, and verify the records of each
461	insurer's covered policies at such times as the division board
462	deems appropriate and according to standards established by rule
463	for the specific purpose of validating the accuracy of exposures
464	and losses required to be reported under the terms and
465	conditions of the reimbursement contract. The costs of the
466	examinations shall be borne by the division board. However, in
467	order to remove any incentive for an insurer to delay
468	preparations for an examination, the division board shall be
469	reimbursed by the insurer for any examination expenses incurred
470	in addition to the usual and customary costs of the examination,
471	which additional expenses were incurred as a result of an
472	insurer's failure, despite proper notice, to be prepared for the
473	examination or as a result of an insurer's failure to provide
474	requested information while the examination is in progress. If
475	the division board finds any insurer's records or other
476	necessary information to be inadequate or inadequately posted,
477	recorded, or maintained, the division board may employ experts
478	to reconstruct, rewrite, record, post, or maintain such records
479	or information, at the expense of the insurer being examined, if
480	such insurer has failed to maintain, complete, or correct such
481	records or deficiencies after the division board has given the
482	insurer notice and a reasonable opportunity to do so. Any
483	information contained in an examination report, which
484	information is described in s. 215.557, is confidential and
485	exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
486	of the State Constitution, as provided in s. 215.557. Nothing in
487	this paragraph expands the exemption in s. 215.557.
488	(g)  The contract shall provide that in the event of the
489	insolvency of an insurer, the fund shall pay directly to the
490	Florida Insurance Guaranty Association for the benefit of
491	Florida policyholders of the insurer the net amount of all
492	reimbursement moneys owed to the insurer. As used in this
493	paragraph, the term "net amount of all reimbursement moneys"
494	means that amount which remains after reimbursement for:
495	1.  Preliminary or duplicate payments owed to private
496	reinsurers or other inuring reinsurance payments to private
497	reinsurers that satisfy statutory or contractual obligations of
498	the insolvent insurer attributable to covered events to such
499	reinsurers; or
500	2.  Funds owed to a bank or other financial institution to
501	cover obligations of the insolvent insurer under a credit
502	agreement that assists the insolvent insurer in paying claims
503	attributable to covered events.
504
505	The private reinsurers, banks, or other financial institutions
506	shall be reimbursed or otherwise paid prior to payment to the
507	Florida Insurance Guaranty Association, notwithstanding any law
508	to the contrary. The guaranty association shall pay all claims
509	up to the maximum amount permitted by chapter 631; thereafter,
510	any remaining moneys shall be paid pro rata to claims not fully
511	satisfied. This paragraph does not apply to a joint underwriting
512	association, risk apportionment plan, or other entity created
513	under s. 627.351.
514	(6)(5)  REIMBURSEMENT PREMIUMS.--
515	(a)  Each reimbursement contract shall require the insurer
516	to annually pay to the fund an actuarially indicated premium for
517	the reimbursement.
518	(b)  The division State Board of Administration shall
519	select an independent consultant to develop a formula for
520	determining the actuarially indicated premium to be paid to the
521	fund. The formula shall specify, for each zip code or other
522	limited geographical area, the amount of premium to be paid by
523	an insurer for each $1,000 of insured value under covered
524	policies in that zip code or other area. In establishing
525	premiums, the division board shall consider the coverage elected
526	under paragraph (5)(4)(b) and any factors that tend to enhance
527	the actuarial sophistication of ratemaking for the fund,
528	including deductibles, type of construction, type of coverage
529	provided, relative concentration of risks, and other such
530	factors deemed by the division board to be appropriate. The
531	formula may provide for a procedure to determine the premiums to
532	be paid by new insurers that begin writing covered policies
533	after the beginning of a contract year, taking into
534	consideration when the insurer starts writing covered policies,
535	the potential exposure of the insurer, the potential exposure of
536	the fund, the administrative costs to the insurer and to the
537	fund, and any other factors deemed appropriate by the division
538	board. The formula must be approved by unanimous vote of the
539	board. The board may, at any time, revise the formula pursuant
540	to the procedure provided in this paragraph.
541	(c)  No later than September 1 of each year, each insurer
542	shall notify the division board of its insured values under
543	covered policies by zip code, as of June 30 of that year. On the
544	basis of these reports, the division board shall calculate the
545	premium due from the insurer, based on the formula adopted under
546	paragraph (b). The insurer shall pay the required annual premium
547	pursuant to a periodic payment plan specified in the contract.
548	The division board shall provide for payment of reimbursement
549	premium in periodic installments and for the adjustment of
550	provisional premium installments collected prior to submission
551	of the exposure report to reflect data in the exposure report.
552	The division board shall collect interest on late reimbursement
553	premium payments consistent with the assumptions made in
554	developing the premium formula in accordance with paragraph (b).
555	(d)  All premiums paid to the fund under reimbursement
556	contracts shall be treated as premium for approved reinsurance
557	for all accounting and regulatory purposes.
558	(e)  If Citizens Property Insurance Corporation assumes or
559	otherwise provides coverage for policies of an insurer placed in
560	liquidation under chapter 631 pursuant to s. 627.351(6), the
561	corporation may, pursuant to conditions mutually agreed to
562	between the corporation and the division State Board of
563	Administration, obtain coverage for such policies under its
564	contract with the division fund or accept an assignment of the
565	liquidated insurer's contract with the division fund. If
566	Citizens Property Insurance Corporation elects to cover these
567	policies under the corporation's contract with the division
568	fund, it shall notify the division board of its insured values
569	with respect to such policies within a specified time mutually
570	agreed to between the corporation and the division board, after
571	such assumption or other coverage transaction, and the division
572	fund shall treat such policies as having been in effect as of
573	June 30 of that year. In the event of an assignment, the
574	division fund shall apply that contract to such policies and
575	treat Citizens Property Insurance Corporation as if the
576	corporation were the liquidated insurer for the remaining term
577	of the contract, and the corporation shall have all rights and
578	duties of the liquidated insurer beginning on the date it
579	provides coverage for such policies, but the corporation is not
580	subject to any preexisting rights, liabilities, or duties of the
581	liquidated insurer. The assignment, including any unresolved
582	issues between the liquidated insurer and Citizens Property
583	Insurance Corporation under the contract, shall be provided for
584	in the liquidation order or otherwise determined by the court.
585	However, if a covered event occurs before the effective date of
586	the assignment, the corporation may not obtain coverage for such
587	policies under its contract with the division fund and shall
588	accept an assignment of the liquidated insurer's contract as
589	provided in this paragraph.
590	(7)(6)  REVENUE BONDS.--
591	(a)  General provisions.--
592	1.  Upon the occurrence of a hurricane and a determination
593	that the moneys in the fund are or will be insufficient to pay
594	reimbursement at the levels promised in the reimbursement
595	contracts, the board may take the necessary steps under
596	paragraph (c) or paragraph (d) for the issuance of revenue bonds
597	for the benefit of the fund. The proceeds of such revenue bonds
598	may be used to make reimbursement payments under reimbursement
599	contracts; to refinance or replace previously existing
600	borrowings or financial arrangements; to pay interest on bonds;
601	to fund reserves for the bonds; to pay expenses incident to the
602	issuance or sale of any bond issued under this section,
603	including costs of validating, printing, and delivering the
604	bonds, costs of printing the official statement, costs of
605	publishing notices of sale of the bonds, and related
606	administrative expenses; or for such other purposes related to
607	the financial obligations of the fund as the board may
608	determine. The term of the bonds may not exceed 30 years. The
609	board may pledge or authorize the corporation to pledge all or a
610	portion of all revenues under subsection (6) (5) and under
611	paragraph (b) to secure such revenue bonds, and the division
612	board may execute such agreements between the division board and
613	the issuer of any revenue bonds and providers of other financing
614	arrangements under paragraph (8)(7)(b) as the board deems
615	necessary to evidence, secure, preserve, and protect such
616	pledge. If reimbursement premiums received under subsection (6)
617	(5) or earnings on such premiums are used to pay debt service on
618	revenue bonds, such premiums and earnings shall be used only
619	after the use of the moneys derived from assessments under
620	paragraph (b). The funds, credit, property, or taxing power of
621	the state or political subdivisions of the state shall not be
622	pledged for the payment of such bonds. The division board may
623	also enter into agreements under paragraph (c) or paragraph (d)
624	for the purpose of issuing revenue bonds in the absence of a
625	hurricane upon a determination that such action would maximize
626	the ability of the fund to meet future obligations.
627	2.  The Legislature finds and declares that the issuance of
628	bonds under this subsection is for the public purpose of paying
629	the proceeds of the bonds to insurers, thereby enabling insurers
630	to pay the claims of policyholders to ensure assure that
631	policyholders are able to pay the cost of construction,
632	reconstruction, repair, restoration, and other costs associated
633	with damage to property of policyholders of covered policies
634	after the occurrence of a hurricane.
635	(b)  Emergency assessments.--
636	1.  If the board determines that the amount of revenue
637	produced under subsection (6) (5) is insufficient to fund the
638	obligations, costs, and expenses of the fund and the
639	corporation, including repayment of revenue bonds and that
640	portion of the debt service coverage not met by reimbursement
641	premiums, the board shall direct the Office of Insurance
642	Regulation to levy, by order, an emergency assessment on direct
643	premiums for all property and casualty lines of business in this
644	state, including property and casualty business of surplus lines
645	insurers regulated under part VIII of chapter 626, but not
646	including any workers' compensation premiums or medical
647	malpractice premiums. As used in this subsection, the term
648	"property and casualty business" includes all lines of business
649	identified on Form 2, Exhibit of Premiums and Losses, in the
650	annual statement required of authorized insurers by s. 624.424
651	and any rule adopted under this section, except for those lines
652	identified as accident and health insurance and except for
653	policies written under the National Flood Insurance Program. The
654	assessment shall be specified as a percentage of direct written
655	premium and is subject to annual adjustments by the board in
656	order to meet debt obligations. The same percentage shall apply
657	to all policies in lines of business subject to the assessment
658	issued or renewed during the 12-month period beginning on the
659	effective date of the assessment.
660	2.  A premium is not subject to an annual assessment under
661	this paragraph in excess of 6 percent of premium with respect to
662	obligations arising out of losses attributable to any one
663	contract year, and a premium is not subject to an aggregate
664	annual assessment under this paragraph in excess of 10 percent
665	of premium. An annual assessment under this paragraph shall
666	continue as long as the revenue bonds issued with respect to
667	which the assessment was imposed are outstanding, including any
668	bonds the proceeds of which were used to refund the revenue
669	bonds, unless adequate provision has been made for the payment
670	of the bonds under the documents authorizing issuance of the
671	bonds.
672	3.  Emergency assessments shall be collected from
673	policyholders. Emergency assessments shall be remitted by
674	insurers as a percentage of direct written premium for the
675	preceding calendar quarter as specified in the order from the
676	Office of Insurance Regulation. The office shall verify the
677	accurate and timely collection and remittance of emergency
678	assessments and shall report the information to the division
679	board in a form and at a time specified by the division board.
680	Each insurer collecting assessments shall provide the
681	information with respect to premiums and collections as may be
682	required by the office to enable the office to monitor and
683	verify compliance with this paragraph.
684	4.  With respect to assessments of surplus lines premiums,
685	each surplus lines agent shall collect the assessment at the
686	same time as the agent collects the surplus lines tax required
687	by s. 626.932, and the surplus lines agent shall remit the
688	assessment to the Florida Surplus Lines Service Office created
689	by s. 626.921 at the same time as the agent remits the surplus
690	lines tax to the Florida Surplus Lines Service Office. The
691	emergency assessment on each insured procuring coverage and
692	filing under s. 626.938 shall be remitted by the insured to the
693	Florida Surplus Lines Service Office at the time the insured
694	pays the surplus lines tax to the Florida Surplus Lines Service
695	Office. Failure to collect and remit the assessment as required
696	by this subparagraph is a violation of this subparagraph, and
697	the surplus lines agent and insureds procuring coverage shall
698	pay penalties and interest as provided by s. 626.936(2). The
699	Florida Surplus Lines Service Office shall remit the collected
700	assessments to the fund or corporation as provided in the order
701	levied by the Office of Insurance Regulation. The Florida
702	Surplus Lines Service Office shall verify the proper application
703	of such emergency assessments and shall assist the division
704	board in ensuring the accurate and timely collection and
705	remittance of assessments as required by the board. The Florida
706	Surplus Lines Service Office shall annually calculate the
707	aggregate written premium on property and casualty business,
708	other than workers' compensation and medical malpractice,
709	procured through surplus lines agents and insureds procuring
710	coverage and filing under s. 626.938 and shall report the
711	information to the division board in a form and at a time
712	specified by the division board.
713	5.  Any assessment authority not used for a particular
714	contract year may be used for a subsequent contract year. If,
715	for a subsequent contract year, the board determines that the
716	amount of revenue produced under subsection (6) (5) is
717	insufficient to fund the obligations, costs, and expenses of the
718	fund and the corporation, including repayment of revenue bonds
719	and that portion of the debt service coverage not met by
720	reimbursement premiums, the board shall direct the Office of
721	Insurance Regulation to levy an emergency assessment up to an
722	amount not exceeding the amount of unused assessment authority
723	from a previous contract year or years, plus an additional 4
724	percent provided that the assessments in the aggregate do not
725	exceed the limits specified in subparagraph 2.
726	6.  The assessments otherwise payable to the corporation
727	under this paragraph shall be paid to the fund unless and until
728	the Office of Insurance Regulation and the Florida Surplus Lines
729	Service Office have received from the corporation and the
730	division fund a notice, which shall be conclusive and upon which
731	they may rely without further inquiry, that the corporation has
732	issued bonds and the division fund has no agreements in effect
733	with local governments under paragraph (c). On or after the date
734	of the notice and until the date the corporation has no bonds
735	outstanding, the division fund shall have no right, title, or
736	interest in or to the assessments, except as provided in the
737	division's fund's agreement with the corporation.
738	7.  Emergency assessments are not premium and are not
739	subject to the premium tax, to the surplus lines tax, to any
740	fees, or to any commissions. An insurer is liable for all
741	assessments that it collects and must treat the failure of an
742	insured to pay an assessment as a failure to pay the premium. An
743	insurer is not liable for uncollectible assessments.
744	8.  When an insurer is required to return an unearned
745	premium, it shall also return any collected assessment
746	attributable to the unearned premium. A credit adjustment to the
747	collected assessment may be made by the insurer with regard to
748	future remittances that are payable to the fund or corporation,
749	but the insurer is not entitled to a refund.
750	9.  When a surplus lines insured or an insured who has
751	procured coverage and filed under s. 626.938 is entitled to the
752	return of an unearned premium, the Florida Surplus Lines Service
753	Office shall provide a credit or refund to the agent or such
754	insured for the collected assessment attributable to the
755	unearned premium prior to remitting the emergency assessment
756	collected to the fund or corporation.
757	10.  The exemption of medical malpractice insurance
758	premiums from emergency assessments under this paragraph is
759	repealed May 31, 2010, and medical malpractice insurance
760	premiums shall be subject to emergency assessments attributable
761	to loss events occurring in the contract years commencing on
762	June 1, 2010.
763	(c)  Revenue bond issuance through counties or
764	municipalities.--
765	1.  If the board elects to enter into agreements with local
766	governments for the issuance of revenue bonds for the benefit of
767	the fund, the division board shall enter into such contracts
768	with one or more local governments, including agreements
769	providing for the pledge of revenues, as are necessary to effect
770	such issuance. The governing body of a county or municipality is
771	authorized to issue bonds as defined in s. 125.013 or s. 166.101
772	from time to time to fund an assistance program, in conjunction
773	with the Florida Hurricane Catastrophe Fund, for the purposes
774	set forth in this section or for the purpose of paying the costs
775	of construction, reconstruction, repair, restoration, and other
776	costs associated with damage to properties of policyholders of
777	covered policies due to the occurrence of a hurricane by
778	assuring that policyholders located in this state are able to
779	recover claims under property insurance policies after a covered
780	event.
781	2.  In order to avoid needless and indiscriminate
782	proliferation, duplication, and fragmentation of such assistance
783	programs, any local government may provide for the payment of
784	fund reimbursements, regardless of whether or not the losses for
785	which reimbursement is made occurred within or outside of the
786	territorial jurisdiction of the local government.
787	3.  The state hereby covenants with holders of bonds issued
788	under this paragraph that the state will not repeal or abrogate
789	the power of the board to direct the Office of Insurance
790	Regulation to levy the assessments and to collect the proceeds
791	of the revenues pledged to the payment of such bonds as long as
792	any such bonds remain outstanding unless adequate provision has
793	been made for the payment of such bonds pursuant to the
794	documents authorizing the issuance of such bonds.
795	4.  There shall be no liability on the part of, and no
796	cause of action shall arise against, any members or employees of
797	the governing body of a local government for any actions taken
798	by them in the performance of their duties under this paragraph.
799	(d)  Florida Hurricane Catastrophe Fund Finance
800	Corporation.--
801	1.  In addition to the findings and declarations in
802	subsection (1), the Legislature also finds and declares that:
803	a.  The public benefits corporation created under this
804	paragraph will provide a mechanism necessary for the cost-
805	effective and efficient issuance of bonds. This mechanism will
806	eliminate unnecessary costs in the bond issuance process,
807	thereby increasing the amounts available to pay reimbursement
808	for losses to property sustained as a result of hurricane
809	damage.
810	b.  The purpose of such bonds is to fund reimbursements
811	through the Florida Hurricane Catastrophe Fund to pay for the
812	costs of construction, reconstruction, repair, restoration, and
813	other costs associated with damage to properties of
814	policyholders of covered policies due to the occurrence of a
815	hurricane.
816	c.  The efficacy of the financing mechanism will be
817	enhanced by the corporation's ownership of the assessments, by
818	the insulation of the assessments from possible bankruptcy
819	proceedings, and by covenants of the state with the
820	corporation's bondholders.
821	2.a.  There is created a public benefits corporation, which
822	is an instrumentality of the state, to be known as the Florida
823	Hurricane Catastrophe Fund Finance Corporation.
824	b.  The corporation shall operate under a six-member five-
825	member board of directors consisting of the Governor or a
826	designee, the Chief Financial Officer or a designee, the
827	Attorney General or a designee, the Commissioner of Agriculture
828	or a designee, the director of the Division of Bond Finance of
829	the State Board of Administration, and the director senior
830	employee of the Division State Board of Administration
831	responsible for operations of the Florida Hurricane Catastrophe
832	Fund.
833	c.  The corporation has all of the powers of corporations
834	under chapter 607 and under chapter 617, subject only to the
835	provisions of this subsection.
836	d.  The corporation may issue bonds and engage in such
837	other financial transactions as are necessary to provide
838	sufficient funds to achieve the purposes of this section.
839	e.  The corporation may invest in any of the investments
840	authorized under s. 215.47.
841	f.  There shall be no liability on the part of, and no
842	cause of action shall arise against, any board members or
843	employees of the corporation for any actions taken by them in
844	the performance of their duties under this paragraph.
845	3.a.  In actions under chapter 75 to validate any bonds
846	issued by the corporation, the notice required by s. 75.06 shall
847	be published only in Leon County and in two newspapers of
848	general circulation in the state, and the complaint and order of
849	the court shall be served only on the State Attorney of the
850	Second Judicial Circuit.
851	b.  The state hereby covenants with holders of bonds of the
852	corporation that the state will not repeal or abrogate the power
853	of the board to direct the Office of Insurance Regulation to
854	levy the assessments and to collect the proceeds of the revenues
855	pledged to the payment of such bonds as long as any such bonds
856	remain outstanding unless adequate provision has been made for
857	the payment of such bonds pursuant to the documents authorizing
858	the issuance of such bonds.
859	4.  The bonds of the corporation are not a debt of the
860	state or of any political subdivision, and neither the state nor
861	any political subdivision is liable on such bonds. The
862	corporation does not have the power to pledge the credit, the
863	revenues, or the taxing power of the state or of any political
864	subdivision. The credit, revenues, or taxing power of the state
865	or of any political subdivision shall not be deemed to be
866	pledged to the payment of any bonds of the corporation.
867	5.a.  The property, revenues, and other assets of the
868	corporation; the transactions and operations of the corporation
869	and the income from such transactions and operations; and all
870	bonds issued under this paragraph and interest on such bonds are
871	exempt from taxation by the state and any political subdivision,
872	including the intangibles tax under chapter 199 and the income
873	tax under chapter 220. This exemption does not apply to any tax
874	imposed by chapter 220 on interest, income, or profits on debt
875	obligations owned by corporations other than the Florida
876	Hurricane Catastrophe Fund Finance Corporation.
877	b.  All bonds of the corporation shall be and constitute
878	legal investments without limitation for all public bodies of
879	this state; for all banks, trust companies, savings banks,
880	savings associations, savings and loan associations, and
881	investment companies; for all administrators, executors,
882	trustees, and other fiduciaries; for all insurance companies and
883	associations and other persons carrying on an insurance
884	business; and for all other persons who are now or may hereafter
885	be authorized to invest in bonds or other obligations of the
886	state and shall be and constitute eligible securities to be
887	deposited as collateral for the security of any state, county,
888	municipal, or other public funds. This sub-subparagraph shall be
889	considered as additional and supplemental authority and shall
890	not be limited without specific reference to this sub-
891	subparagraph.
892	6.  The corporation and its corporate existence shall
893	continue until terminated by law; however, no such law shall
894	take effect as long as the corporation has bonds outstanding
895	unless adequate provision has been made for the payment of such
896	bonds pursuant to the documents authorizing the issuance of such
897	bonds. Upon termination of the existence of the corporation, all
898	of its rights and properties in excess of its obligations shall
899	pass to and be vested in the state.
900	(e)  Protection of bondholders.--
901	1.  As long as the corporation has any bonds outstanding,
902	neither the division fund nor the corporation shall have the
903	authority to file a voluntary petition under chapter 9 of the
904	federal Bankruptcy Code or such corresponding chapter or
905	sections as may be in effect, from time to time, and neither any
906	public officer nor any organization, entity, or other person
907	shall authorize the division fund or the corporation to be or
908	become a debtor under chapter 9 of the federal Bankruptcy Code
909	or such corresponding chapter or sections as may be in effect,
910	from time to time, during any such period.
911	2.  The state hereby covenants with holders of bonds of the
912	corporation that the state will not limit or alter the denial of
913	authority under this paragraph or the rights under this section
914	vested in the division fund or the corporation to fulfill the
915	terms of any agreements made with such bondholders or in any way
916	impair the rights and remedies of such bondholders as long as
917	any such bonds remain outstanding unless adequate provision has
918	been made for the payment of such bonds pursuant to the
919	documents authorizing the issuance of such bonds.
920	3.  Notwithstanding any other provision of law, any pledge
921	of or other security interest in revenue, money, accounts,
922	contract rights, general intangibles, or other personal property
923	made or created by the fund or the corporation shall be valid,
924	binding, and perfected from the time such pledge is made or
925	other security interest attaches without any physical delivery
926	of the collateral or further act and the lien of any such pledge
927	or other security interest shall be valid, binding, and
928	perfected against all parties having claims of any kind in tort,
929	contract, or otherwise against the division fund or the
930	corporation irrespective of whether or not such parties have
931	notice of such claims. No instrument by which such a pledge or
932	security interest is created nor any financing statement need be
933	recorded or filed.
934	(8)(7)  ADDITIONAL POWERS AND DUTIES.--
935	(a)  The board may authorize the division to procure
936	reinsurance from reinsurers acceptable to the Office of
937	Insurance Regulation for the purpose of maximizing the capacity
938	of the fund and may enter into capital market transactions,
939	including, but not limited to, industry loss warranties,
940	catastrophe bonds, side-car arrangements, or financial contracts
941	permissible for the State Board of Administration's board's
942	usage under s. 215.47(10) and (11), consistent with prudent
943	management of the fund.
944	(b)  In addition to borrowing under subsection (7) (6), the
945	board may also authorize the division to borrow from, or enter
946	into other financing arrangements with, any market sources at
947	prevailing interest rates.
948	(c)  Each fiscal year, the Legislature shall appropriate
949	from the investment income of the Florida Hurricane Catastrophe
950	Fund an amount no less than $10 million and no more than 35
951	percent of the investment income based upon the most recent
952	fiscal year-end audited financial statements for the purpose of
953	providing funding for local governments, state agencies, public
954	and private educational institutions, and nonprofit
955	organizations to support programs intended to improve hurricane
956	preparedness, reduce potential losses in the event of a
957	hurricane, provide research into means to reduce such losses,
958	educate or inform the public as to means to reduce hurricane
959	losses, assist the public in determining the appropriateness of
960	particular upgrades to structures or in the financing of such
961	upgrades, or protect local infrastructure from potential damage
962	from a hurricane. Moneys shall first be available for
963	appropriation under this paragraph in fiscal year 1997-1998.
964	Moneys in excess of the $10 million specified in this paragraph
965	shall not be available for appropriation under this paragraph if
966	the State board of Administration finds that an appropriation of
967	investment income from the fund would jeopardize the actuarial
968	soundness of the fund.
969	(d)  The division board may allow insurers to comply with
970	reporting requirements and reporting format requirements by
971	using alternative methods of reporting if the proper
972	administration of the fund is not thereby impaired and if the
973	alternative methods produce data which is consistent with the
974	purposes of this section.
975	(e)  In order to ensure assure the equitable operation of
976	the fund, the division board may impose a reasonable fee on an
977	insurer to recover costs involved in reprocessing inaccurate,
978	incomplete, or untimely exposure data submitted by the insurer.
979	(9)(8)  ADVISORY COUNCIL.--The State Board of
980	Administration shall appoint a nine-member advisory council that
981	consists of an actuary, a meteorologist, an engineer, a
982	representative of insurers, a representative of insurance
983	agents, a representative of reinsurers, and three consumers who
984	shall also be representatives of other affected professions and
985	industries, to provide the board with information and advice in
986	connection with its duties under this section. Members of the
987	advisory council shall serve at the pleasure of the board and
988	are eligible for per diem and travel expenses under s. 112.061.
989	(10)(9)  APPLICABILITY OF S. 19, ART. III OF THE STATE
990	CONSTITUTION.--The Legislature finds that the Florida Hurricane
991	Catastrophe Fund created by this section is a trust fund
992	established for bond covenants, indentures, or resolutions
993	within the meaning of s. 19(f)(3), Art. III of the State
994	Constitution.
995	(11)(10)  VIOLATIONS.--Any violation of this section or of
996	rules adopted under this section constitutes a violation of the
997	insurance code.
998	(12)(11)  LEGAL PROCEEDINGS.--The division may board is
999	authorized to take any action necessary to enforce the rules,
1000	and the provisions and requirements of the reimbursement
1001	contract, required by and adopted pursuant to this section.
1002	(13)(12)  FEDERAL OR MULTISTATE CATASTROPHIC FUNDS.--Upon
1003	the creation of a federal or multistate catastrophic insurance
1004	or reinsurance program intended to serve purposes similar to the
1005	purposes of the fund created by this section, the division, upon
1006	approval by the State board, of Administration shall promptly
1007	make recommendations to the Legislature for coordination with
1008	the federal or multistate program, for termination of the fund,
1009	or for such other actions as the division board finds
1010	appropriate in the circumstances.
1011	(14)(13)  REVERSION OF FUND ASSETS UPON TERMINATION.--The
1012	fund, the division, and the duties of the board under this
1013	section may be terminated only by law. Upon termination of the
1014	fund, all assets of the fund shall revert to the General Revenue
1015	Fund.
1016	(15)(14)  SEVERABILITY.--If any provision of this section
1017	or its application to any person or circumstance is held
1018	invalid, the invalidity does not affect other provisions or
1019	applications of the section which can be given effect without
1020	the invalid provision or application, and to this end the
1021	provisions of this section are declared severable.
1022	(16)(15)  COLLATERAL PROTECTION INSURANCE.--As used in this
1023	section and ss. 627.311 and 627.351, the term "collateral
1024	protection insurance" means commercial property insurance of
1025	which a creditor is the primary beneficiary and policyholder and
1026	which protects or covers an interest of the creditor arising out
1027	of a credit transaction secured by real or personal property.
1028	Initiation of such coverage is triggered by the mortgagor's
1029	failure to maintain insurance coverage as required by the
1030	mortgage or other lending document. Collateral protection
1031	insurance is not residential coverage.
1032	(17)(16)  TEMPORARY EMERGENCY ADDITIONAL COVERAGE OPTIONS
1033	FOR ADDITIONAL COVERAGE.--
1034	(a)  Findings and intent.--
1035	1.  The Legislature finds that:
1036	a.  Because of temporary disruptions in the market for
1037	catastrophic reinsurance, many property insurers were unable to
1038	procure reinsurance for the 2006 hurricane season with an
1039	attachment point below the insurers' respective Florida
1040	Hurricane Catastrophe Fund attachment points, were unable to
1041	procure sufficient amounts of such reinsurance, or were able to
1042	procure such reinsurance only by incurring substantially higher
1043	costs than in prior years.
1044	b.  The reinsurance market problems were responsible, at
1045	least in part, for substantial premium increases to many
1046	consumers and increases in the number of policies issued by the
1047	Citizens Property Insurance Corporation.
1048	c.  It is likely that the reinsurance market disruptions
1049	will not significantly abate prior to the 2007 hurricane season.
1050	2.  It is the intent of the Legislature to create a
1051	temporary emergency program, applicable to the 2007, 2008, and
1052	2009 hurricane seasons, to address these market disruptions and
1053	enable insurers, at their option, to procure additional coverage
1054	from the Florida Hurricane Catastrophe Fund.
1055	(b)  Applicability of other provisions of this
1056	section.--All provisions of this section and the rules adopted
1057	under this section apply to the program created by this
1058	subsection unless specifically superseded by this subsection.
1059	(c)  Optional coverage.--For the contract year commencing
1060	June 1, 2007, and ending May 31, 2008, the contract year
1061	commencing June 1, 2008, and ending May 31, 2009, and the
1062	contract year commencing June 1, 2009, and ending May 31, 2010,
1063	the board shall offer for each of such years the optional
1064	coverage as provided in this subsection.
1065	(d)  Additional definitions.--As used in this subsection,
1066	the term:
1067	1.  "TEACO options" means the temporary emergency
1068	additional coverage options created under this subsection.
1069	2.  "TEACO insurer" means an insurer that has opted to
1070	obtain coverage under the TEACO options in addition to the
1071	coverage provided to the insurer under its reimbursement
1072	contract.
1073	3.  "TEACO reimbursement premium" means the premium charged
1074	by the fund for coverage provided under the TEACO options.
1075	4.  "TEACO retention" means the amount of losses below
1076	which a TEACO insurer is not entitled to reimbursement from the
1077	fund under the TEACO option selected. A TEACO insurer's
1078	retention options shall be calculated as follows:
1079	a.  The division board shall calculate and report to each
1080	TEACO insurer the TEACO retention multiples. There shall be
1081	three TEACO retention multiples for defining coverage. Each
1082	multiple shall be calculated by dividing $3 billion, $4 billion,
1083	or $5 billion by the total estimated mandatory FHCF
1084	reimbursement premium assuming all insurers selected the 90-
1085	percent coverage level.
1086	b.  The TEACO retention multiples as determined under sub-
1087	subparagraph a. shall be adjusted to reflect the coverage level
1088	elected by the insurer. For insurers electing the 90-percent
1089	coverage level, the adjusted retention multiple is 100 percent
1090	of the amount determined under sub-subparagraph a. For insurers
1091	electing the 75-percent coverage level, the retention multiple
1092	is 120 percent of the amount determined under sub-subparagraph
1093	a. For insurers electing the 45-percent coverage level, the
1094	adjusted retention multiple is 200 percent of the amount
1095	determined under sub-subparagraph a.
1096	c.  An insurer shall determine its provisional TEACO
1097	retention by multiplying its estimated mandatory FHCF
1098	reimbursement premium by the applicable adjusted TEACO retention
1099	multiple and shall determine its actual TEACO retention by
1100	multiplying its actual mandatory FHCF reimbursement premium by
1101	the applicable adjusted TEACO retention multiple.
1102	d.  For TEACO insurers who experience multiple covered
1103	events causing loss during the contract year, the insurer's full
1104	TEACO retention shall be applied to each of the covered events
1105	causing the two largest losses for that insurer. For other
1106	covered events resulting in losses, the TEACO option does not
1107	apply and the insurer's retention shall be one-third of the full
1108	retention as calculated under paragraph (2)(q)(e).
1109	5.  "TEACO addendum" means an addendum to the reimbursement
1110	contract reflecting the obligations of the fund and TEACO
1111	insurers under the program created by this subsection.
1112	6.  "FHCF" means the Florida Hurricane Catastrophe Fund.
1113	(e)  TEACO addendum.--
1114	1.  The TEACO addendum shall provide for reimbursement of
1115	TEACO insurers for covered events occurring during the contract
1116	year, in exchange for the TEACO reimbursement premium paid into
1117	the fund under paragraph (f). Any insurer writing covered
1118	policies has the option of choosing to accept the TEACO addendum
1119	for any of the 3 contract years that the coverage is offered.
1120	2.  The TEACO addendum shall contain a promise by the
1121	division board to reimburse the TEACO insurer for 45 percent, 75
1122	percent, or 90 percent of its losses from each covered event in
1123	excess of the insurer's TEACO retention, plus 5 percent of the
1124	reimbursed losses to cover loss adjustment expenses. The
1125	percentage shall be the same as the coverage level selected by
1126	the insurer under paragraph (5)(4)(b).
1127	3.  The TEACO addendum shall provide that reimbursement
1128	amounts shall not be reduced by reinsurance paid or payable to
1129	the insurer from other sources.
1130	4.  The TEACO addendum shall also provide that the
1131	obligation of the division board with respect to all TEACO
1132	addenda shall not exceed an amount equal to two times the
1133	difference between the industry retention level calculated under
1134	paragraph (2)(q)(e) and the $3 billion, $4 billion, or $5
1135	billion industry TEACO retention level options actually
1136	selected, but in no event may the division's board's obligation
1137	exceed the actual claims-paying capacity of the fund plus the
1138	additional capacity created in paragraph (g). If the actual
1139	claims-paying capacity and the additional capacity created under
1140	paragraph (g) fall short of the division's board's obligations
1141	under the reimbursement contract, each insurer's share of the
1142	fund's capacity shall be prorated based on the premium an
1143	insurer pays for its mandatory reimbursement coverage and the
1144	premium paid for its optional TEACO coverage as each such
1145	premium bears to the total premiums paid to the fund times the
1146	available capacity.
1147	5.  The priorities, schedule, and method of reimbursements
1148	under the TEACO addendum shall be the same as provided under
1149	subsection (5) (4).
1150	6.  A TEACO insurer's maximum reimbursement for a single
1151	event shall be equal to the product of multiplying its mandatory
1152	FHCF premium by the difference between its FHCF retention
1153	multiple and its TEACO retention multiple under the TEACO option
1154	selected and by the coverage selected under paragraph (5)(4)(b),
1155	plus an additional 5 percent for loss adjustment expenses. A
1156	TEACO insurer's maximum reimbursement under the TEACO option
1157	selected for a TEACO insurer's two largest events shall be twice
1158	its maximum reimbursement for a single event.
1159	(f)  TEACO reimbursement premiums.--
1160	1.  Each TEACO insurer shall pay to the fund, in the manner
1161	and at the time provided in the reimbursement contract for
1162	payment of reimbursement premiums, a TEACO reimbursement premium
1163	calculated as specified in this paragraph.
1164	2.  The insurer's TEACO reimbursement premium associated
1165	with the $3 billion retention option shall be equal to 85
1166	percent of a TEACO insurer's maximum reimbursement for a single
1167	event as calculated under subparagraph (e)6. The TEACO
1168	reimbursement premium associated with the $4 billion retention
1169	option shall be equal to 80 percent of a TEACO insurer's maximum
1170	reimbursement for a single event as calculated under
1171	subparagraph (e)6. The TEACO premium associated with the $5
1172	billion retention option shall be equal to 75 percent of a TEACO
1173	insurer's maximum reimbursement for a single event as calculated
1174	under subparagraph (e)6.
1175	(g)  Effect on claims-paying capacity of the fund.--For the
1176	contract term commencing June 1, 2007, the contract year
1177	commencing June 1, 2008, and the contract term beginning June 1,
1178	2009, the program created by this subsection shall increase the
1179	claims-paying capacity of the fund as provided in subparagraph
1180	(5)(4)(c)1. by an amount equal to two times the difference
1181	between the industry retention level calculated under paragraph
1182	(2)(q)(e) and the $3 billion industry TEACO retention level
1183	specified in sub-subparagraph (d)4.a. The additional capacity
1184	shall apply only to the additional coverage provided by the
1185	TEACO option and shall not otherwise affect any insurer's
1186	reimbursement from the fund.
1187	(18)(17)  TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.--
1188	(a)  Findings and intent.--
1189	1.  The Legislature finds that:
1190	a.  Because of temporary disruptions in the market for
1191	catastrophic reinsurance, many property insurers were unable to
1192	procure sufficient amounts of reinsurance for the 2006 hurricane
1193	season or were able to procure such reinsurance only by
1194	incurring substantially higher costs than in prior years.
1195	b.  The reinsurance market problems were responsible, at
1196	least in part, for substantial premium increases to many
1197	consumers and increases in the number of policies issued by
1198	Citizens Property Insurance Corporation.
1199	c.  It is likely that the reinsurance market disruptions
1200	will not significantly abate prior to the 2008 2007 hurricane
1201	season.
1202	2.  It is the intent of the Legislature to create options
1203	for insurers to purchase a temporary increased coverage limit
1204	above the statutorily determined limit in subparagraph
1205	(5)(4)(c)1., applicable for the 2007, 2008, and 2009 hurricane
1206	seasons, to address market disruptions and enable insurers, at
1207	their option, to procure additional coverage from the Florida
1208	Hurricane Catastrophe Fund.
1209	(b)  Applicability of other provisions of this
1210	section.--All provisions of this section and the rules adopted
1211	under this section apply to the coverage created by this
1212	subsection unless specifically superseded by provisions in this
1213	subsection.
1214	(c)  Optional coverage.--For the contract year commencing
1215	June 1, 2007, and ending May 31, 2008, the contract year
1216	commencing June 1, 2008, and ending May 31, 2009, and the
1217	contract year commencing June 1, 2009, and ending May 31, 2010,
1218	the board shall offer, for each of such years, the optional
1219	coverage as provided in this subsection.
1220	(d)  Additional definitions.--As used in this subsection,
1221	the term:
1222	1.  "FHCF" means Florida Hurricane Catastrophe Fund.
1223	2.  "FHCF reimbursement premium" means the premium paid by
1224	an insurer for its coverage as a mandatory participant in the
1225	FHCF, but does not include additional premiums for optional
1226	coverages.
1227	3.  "Payout multiple" means the number or multiple created
1228	by dividing the statutorily defined claims-paying capacity as
1229	determined in subparagraph (5)(4)(c)1. by the aggregate
1230	reimbursement premiums paid by all insurers estimated or
1231	projected as of calendar year-end.
1232	4.  "TICL" means the temporary increase in coverage limit.
1233	5.  "TICL options" means the temporary increase in coverage
1234	options created under this subsection.
1235	6.  "TICL insurer" means an insurer that has opted to
1236	obtain coverage under the TICL options addendum in addition to
1237	the coverage provided to the insurer under its FHCF
1238	reimbursement contract.
1239	7.  "TICL reimbursement premium" means the premium charged
1240	by the fund for coverage provided under the TICL option.
1241	8.  "TICL coverage multiple" means the coverage multiple
1242	when multiplied by an insurer's FHCF reimbursement premium that
1243	defines the temporary increase in coverage limit.
1244	9.  "TICL coverage" means the coverage for an insurer's
1245	losses above the insurer's statutorily determined claims-paying
1246	capacity based on the claims-paying limit in subparagraph
1247	(5)(4)(c)1., which an insurer selects as its temporary increase
1248	in coverage from the fund under the TICL options selected. A
1249	TICL insurer's increased coverage limit options shall be
1250	calculated as follows:
1251	a.  The division board shall calculate and report to each
1252	TICL insurer the TICL coverage multiples based on 9 12 options
1253	for increasing the insurer's FHCF coverage limit. Each TICL
1254	coverage multiple shall be calculated by dividing $1 billion, $2
1255	billion, $3 billion, $4 billion, $5 billion, $6 billion, $7
1256	billion, $8 billion, and $9 billion, $10 billion, $11 billion,
1257	or $12 billion by the total estimated aggregate FHCF
1258	reimbursement premiums for the 2007-2008 contract year, the
1259	2008-2009 contract year, and the 2009-2010 contract year.
1260	b.  The TICL insurer's increased coverage shall be the FHCF
1261	reimbursement premium multiplied by the TICL coverage multiple
1262	for the TICL option selected. In order to determine an insurer's
1263	total limit of coverage, an insurer shall add its TICL coverage
1264	multiple to its payout multiple. The total shall represent a
1265	number that, when multiplied by an insurer's FHCF reimbursement
1266	premium for a given reimbursement contract year, defines an
1267	insurer's total limit of FHCF reimbursement coverage for that
1268	reimbursement contract year.
1269	10.  "TICL options addendum" means an addendum to the
1270	reimbursement contract reflecting the obligations of the fund
1271	and insurers selecting an option to increase an insurer's FHCF
1272	coverage limit.
1273	(e)  TICL options addendum.--
1274	1.  The TICL options addendum shall provide for
1275	reimbursement of TICL insurers for covered events occurring
1276	between June 1, 2007, and May 31, 2008, and between June 1,
1277	2008, and May 31, 2009, or between June 1, 2009, and May 31,
1278	2010, in exchange for the TICL reimbursement premium paid into
1279	the fund under paragraph (f). Any insurer writing covered
1280	policies has the option of selecting an increased limit of
1281	coverage under the TICL options addendum and shall select such
1282	coverage at the time that it executes the FHCF reimbursement
1283	contract.
1284	2.  The TICL addendum shall contain a promise by the board
1285	to reimburse the TICL insurer for 70 45 percent of the TICL
1286	coverage based on the TICL option selected for the insurer's, 75
1287	percent, or 90 percent of its losses from each covered event in
1288	excess of the insurer's retention, plus 5 percent of the
1289	reimbursed losses to cover loss adjustment expenses. The
1290	percentage shall be the same as the coverage level selected by
1291	the insurer under paragraph (4)(b).
1292	3.  The TICL addendum shall provide that reimbursement
1293	amounts shall not be reduced by reinsurance paid or payable to
1294	the insurer from other sources.
1295	4.  The priorities, schedule, and method of reimbursements
1296	under the TICL addendum shall be the same as provided under
1297	subsection (5) (4).
1298	(f)  TICL reimbursement premiums.--Each TICL insurer shall
1299	pay to the fund, in the manner and at the time provided in the
1300	reimbursement contract for payment of reimbursement premiums, a
1301	TICL reimbursement premium determined as specified in subsection
1302	(6) (5).
1303	(g)  Effect on claims-paying capacity of the fund.--For the
1304	contract terms commencing June 1, 2007, June 1, 2008, and June
1305	1, 2009, the program created by this subsection shall increase
1306	the claims-paying capacity of the fund as provided in
1307	subparagraph (5)(4)(c)1. by an amount not to exceed $9 $12
1308	billion and shall depend on the TICL coverage options selected
1309	and the number of insurers that select the TICL optional
1310	coverage. The additional capacity shall apply only to the
1311	additional coverage provided under the TICL options and shall
1312	not otherwise affect any insurer's reimbursement from the fund
1313	if the insurer chooses not to select the temporary option to
1314	increase its limit of coverage under the FHCF.
1315	(h)  Increasing the claims-paying capacity of the
1316	fund.--For the contract years commencing June 1, 2007, June 1,
1317	2008, and June 1, 2009, the board may increase the claims-paying
1318	capacity of the fund as provided in paragraph (g) by an amount
1319	not to exceed $4 billion in four $1 billion options and shall
1320	depend on the TICL coverage options selected and the number of
1321	insurers that select the TICL optional coverage. Each insurer's
1322	TICL premium shall be calculated based upon the additional limit
1323	of increased coverage that the insurer selects. Such limit is
1324	determined by multiplying the TICL multiple associated with one
1325	of the four options times the insurer's FHCF reimbursement
1326	premium. The reimbursement premium associated with the
1327	additional coverage provided in this paragraph shall be
1328	determined as specified in subsection (6) (5).
1329	Section 2.  Section 215.557, Florida Statutes, is amended
1330	to read:
1331	215.557  Reports of insured values.--The reports of insured
1332	values under covered policies by zip code submitted to the
1333	Division of the Florida Hurricane Catastrophe Fund State Board
1334	of Administration pursuant to s. 215.555, as created by s. 1,
1335	ch. 93-409, Laws of Florida, or similar legislation, are
1336	confidential and exempt from the provisions of s. 119.07(1) and
1337	s. 24(a), Art. I of the State Constitution.
1338	Section 3.  Paragraph (h) of subsection (4) of section
1339	215.5586, Florida Statutes, is amended to read:
1340	215.5586  My Safe Florida Home Program.--There is
1341	established within the Department of Financial Services the My
1342	Safe Florida Home Program. The department shall provide fiscal
1343	accountability, contract management, and strategic leadership
1344	for the program, consistent with this section. This section does
1345	not create an entitlement for property owners or obligate the
1346	state in any way to fund the inspection or retrofitting of
1347	residential property in this state. Implementation of this
1348	program is subject to annual legislative appropriations. It is
1349	the intent of the Legislature that the My Safe Florida Home
1350	Program provide inspections for at least 400,000 site-built,
1351	single-family, residential properties and provide grants to at
1352	least 35,000 applicants before June 30, 2009. The program shall
1353	develop and implement a comprehensive and coordinated approach
1354	for hurricane damage mitigation that shall include the
1355	following:
1356	(4)  ADVISORY COUNCIL.--There is created an advisory
1357	council to provide advice and assistance to the department
1358	regarding administration of the program. The advisory council
1359	shall consist of:
1360	(h)  The director senior officer of the Division of the
1361	Florida Hurricane Catastrophe Fund.
1362
1363	Members appointed under paragraphs (a)-(d) shall serve at the
1364	pleasure of the Financial Services Commission. Members appointed
1365	under paragraphs (e) and (f) shall serve at the pleasure of the
1366	appointing officer. All other members shall serve voting ex
1367	officio. Members of the advisory council shall serve without
1368	compensation but may receive reimbursement as provided in s.
1369	112.061 for per diem and travel expenses incurred in the
1370	performance of their official duties.
1371	Section 4.  Subsection (1) of section 215.559, Florida
1372	Statutes, is amended to read:
1373	215.559  Hurricane Loss Mitigation Program.--
1374	(1)  There is created a Hurricane Loss Mitigation Program.
1375	The Legislature shall annually appropriate $10 million of the
1376	moneys authorized for appropriation under s. 215.555(8)(7)(c)
1377	from the Florida Hurricane Catastrophe Fund to the Department of
1378	Community Affairs for the purposes set forth in this section.
1379	Section 5.  Subsections (2), (3), (6), and (7) of section
1380	215.5595, Florida Statutes, are amended to read:
1381	215.5595  Insurance Capital Build-Up Incentive Program.--
1382	(2)  The purpose of this section is to provide surplus
1383	notes to new or existing authorized residential property
1384	insurers under the Insurance Capital Build-Up Incentive Program
1385	administered by the division State Board of Administration,
1386	under the following conditions:
1387	(a)  The amount of the surplus note for any insurer or
1388	insurer group, other than an insurer writing only manufactured
1389	housing policies, may not exceed $25 million or 20 percent of
1390	the total amount of funds available under the program, whichever
1391	is greater. The amount of the surplus note for any insurer or
1392	insurer group writing residential property insurance covering
1393	only manufactured housing may not exceed $7 million.
1394	(b)  The insurer must contribute an amount of new capital
1395	to its surplus which is at least equal to the amount of the
1396	surplus note and must apply to the board by July 1, 2006. If an
1397	insurer applies after July 1, 2006, but before June 1, 2007, the
1398	amount of the surplus note is limited to one-half of the new
1399	capital that the insurer contributes to its surplus, except that
1400	an insurer writing only manufactured housing policies is
1401	eligible to receive a surplus note of up to $7 million. For
1402	purposes of this section, new capital must be in the form of
1403	cash or cash equivalents as specified in s. 625.012(1).
1404	(c)  The insurer's surplus, new capital, and the surplus
1405	note must total at least $50 million, except for insurers
1406	writing residential property insurance covering only
1407	manufactured housing. The insurer's surplus, new capital, and
1408	the surplus note must total at least $14 million for insurers
1409	writing only residential property insurance covering
1410	manufactured housing policies as provided in paragraph (a).
1411	(d)  The insurer must commit to meeting a minimum writing
1412	ratio of net written premium to surplus of at least 2:1 for the
1413	term of the surplus note, which shall be determined by the
1414	Office of Insurance Regulation and certified quarterly to the
1415	board. For this purpose, the term "net written premium" means
1416	net written premium for residential property insurance in this
1417	state Florida, including the peril of wind, and "surplus" refers
1418	to the entire surplus of the insurer. If the required ratio is
1419	not maintained during the term of the surplus note, the division
1420	board may increase the interest rate, accelerate the repayment
1421	of interest and principal, or shorten the term of the surplus
1422	note, subject to approval by the Commissioner of Insurance of
1423	payments by the insurer of principal and interest as provided in
1424	paragraph (f).
1425	(e)  If the requirements of this section are met, the
1426	division board may approve an application by an insurer for a
1427	surplus note, unless the division board determines that the
1428	financial condition of the insurer and its business plan for
1429	writing residential property insurance in this state Florida
1430	places an unreasonably high level of financial risk to the state
1431	of nonpayment in full of the interest and principal. The
1432	division board shall consult with the Office of Insurance
1433	Regulation and may contract with independent financial and
1434	insurance consultants in making this determination.
1435	(f)  The surplus note must be repayable to the state with a
1436	term of 20 years. The surplus note shall accrue interest on the
1437	unpaid principal balance at a rate equivalent to the 10-year
1438	U.S. Treasury Bond rate, require the payment only of interest
1439	during the first 3 years, and include such other terms as
1440	approved by the division board. Payment of principal or interest
1441	by the insurer on the surplus note must be approved by the
1442	Commissioner of Insurance, who shall approve such payment unless
1443	the commissioner determines that such payment will substantially
1444	impair the financial condition of the insurer. If such a
1445	determination is made, the commissioner shall approve such
1446	payment that will not substantially impair the financial
1447	condition of the insurer.
1448	(g)  The total amount of funds available for the program is
1449	limited to the amount appropriated by the Legislature for this
1450	purpose. If the amount of surplus notes requested by insurers
1451	exceeds the amount of funds available, the division board may
1452	prioritize insurers that are eligible and approved, with
1453	priority for funding given to insurers writing only manufactured
1454	housing policies, regardless of the date of application, based
1455	on the financial strength of the insurer, the viability of its
1456	proposed business plan for writing additional residential
1457	property insurance in the state, and the effect on competition
1458	in the residential property insurance market. Between insurers
1459	writing residential property insurance covering manufactured
1460	housing, priority shall be given to the insurer writing the
1461	highest percentage of its policies covering manufactured
1462	housing.
1463	(h)  The division board may allocate portions of the funds
1464	available for the program and establish dates for insurers to
1465	apply for surplus notes from such allocation which are earlier
1466	than the dates established in paragraph (b).
1467	(i)  Notwithstanding paragraph (d), a newly formed
1468	manufactured housing insurer that is eligible for a surplus note
1469	under this section shall meet the premium to surplus ratio
1470	provisions of s. 624.4095.
1471	(j)  As used in this section, "an insurer writing only
1472	manufactured housing policies" includes:
1473	1.  A Florida domiciled insurer that begins writing
1474	personal lines residential manufactured housing policies in
1475	Florida after March 1, 2007, and that removes a minimum of
1476	50,000 policies from Citizens Property Insurance Corporation
1477	without accepting a bonus, provided at least 25 percent of its
1478	policies cover manufactured housing. Such an insurer may count
1479	any funds above the minimum capital and surplus requirement that
1480	were contributed into the insurer after March 1, 2007, as new
1481	capital under this section.
1482	2.  A Florida domiciled insurer that writes at least 40
1483	percent of its policies covering manufactured housing in this
1484	state Florida.
1485	(3)  As used in this section, the term:
1486	(a)  "Division Board" means the Division of the Florida
1487	Hurricane Catastrophe Fund of the State Board of Administration
1488	established in s. 215.555.
1489	(b)  "Program" means the Insurance Capital Build-Up
1490	Incentive Program established by this section.
1491	(6)  The division board shall adopt rules prescribing the
1492	procedures, administration, and criteria for approving the
1493	issuance of surplus notes pursuant to this section, which may be
1494	adopted pursuant to the procedures for emergency rules of
1495	chapter 120. Otherwise, actions and determinations by the
1496	division board pursuant to this section are exempt from chapter
1497	120.
1498	(7)  The division board shall invest and reinvest the funds
1499	appropriated for the program in accordance with s. 215.47 and
1500	consistent with division board policy.
1501	Section 6.  Paragraph (c) of subsection (1), paragraphs
1502	(a), (b), (d), (f), and (g) of subsection (2), and paragraph (b)
1503	of subsection (3) of section 627.0628, Florida Statutes, are
1504	amended to read:
1505	627.0628  Florida Commission on Hurricane Loss Projection
1506	Methodology; public records exemption; public meetings
1507	exemption.--
1508	(1)  LEGISLATIVE FINDINGS AND INTENT.--
1509	(c)  It is the intent of the Legislature to create the
1510	Florida Commission on Hurricane Loss Projection Methodology as a
1511	panel of experts to provide the most actuarially sophisticated
1512	guidelines and standards for projection of hurricane losses
1513	possible, given the current state of actuarial science. It is
1514	the further intent of the Legislature that such standards and
1515	guidelines must be used by the Division of the Florida Hurricane
1516	Catastrophe Fund of the State Board of Administration in
1517	developing reimbursement premium rates for the Florida Hurricane
1518	Catastrophe Fund, and, subject to paragraph (3)(c), may be used
1519	by insurers in rate filings under s. 627.062 unless the way in
1520	which such standards and guidelines were applied by the insurer
1521	was erroneous, as shown by a preponderance of the evidence.
1522	(2)  COMMISSION CREATED.--
1523	(a)  There is created the Florida Commission on Hurricane
1524	Loss Projection Methodology, which is assigned to the Division
1525	of the Florida Hurricane Catastrophe Fund of the State Board of
1526	Administration. For the purposes of this section, the term
1527	"commission" means the Florida Commission on Hurricane Loss
1528	Projection Methodology. The commission shall be administratively
1529	housed within the State Board of Administration, but it shall
1530	independently exercise the powers and duties specified in this
1531	section.
1532	(b)  The commission shall consist of the following 11
1533	members:
1534	1.  The insurance consumer advocate.
1535	2.  The director of the Division of the Florida Hurricane
1536	Catastrophe Fund senior employee of the State Board of
1537	Administration responsible for operations of the Florida
1538	Hurricane Catastrophe Fund.
1539	3.  The Executive Director of the Citizens Property
1540	Insurance Corporation.
1541	4.  The Director of the Division of Emergency Management of
1542	the Department of Community Affairs.
1543	5.  The actuary member of the Florida Hurricane Catastrophe
1544	Fund Advisory Council.
1545	6.  An employee of the office who is an actuary responsible
1546	for property insurance rate filings and who is appointed by the
1547	director of the office.
1548	7.  Five members appointed by the Chief Financial Officer,
1549	as follows:
1550	a.  An actuary who is employed full time by a property and
1551	casualty insurer which was responsible for at least 1 percent of
1552	the aggregate statewide direct written premium for homeowner's
1553	insurance in the calendar year preceding the member's
1554	appointment to the commission.
1555	b.  An expert in insurance finance who is a full-time
1556	member of the faculty of the State University System and who has
1557	a background in actuarial science.
1558	c.  An expert in statistics who is a full-time member of
1559	the faculty of the State University System and who has a
1560	background in insurance.
1561	d.  An expert in computer system design who is a full-time
1562	member of the faculty of the State University System.
1563	e.  An expert in meteorology who is a full-time member of
1564	the faculty of the State University System and who specializes
1565	in hurricanes.
1566	(d)  The board of the Division of the Florida Hurricane
1567	Catastrophe Fund of the State Board of Administration shall
1568	annually appoint one of the members of the commission to serve
1569	as chair.
1570	(f)  The Division of the Florida Hurricane Catastrophe Fund
1571	of the State Board of Administration shall, as a cost of
1572	administration of the Florida Hurricane Catastrophe Fund,
1573	provide for travel, expenses, and staff support for the
1574	commission.
1575	(g)  There shall be no liability on the part of, and no
1576	cause of action of any nature shall arise against, any member of
1577	the commission, any member of the Division of the Florida
1578	Hurricane Catastrophe Fund State Board of Administration, or any
1579	employee of the Division of the Florida Hurricane Catastrophe
1580	Fund State Board of Administration for any action taken in the
1581	performance of their duties under this section. In addition, the
1582	commission may, in writing, waive any potential cause of action
1583	for negligence of a consultant, contractor, or contract employee
1584	engaged to assist the commission.
1585	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
1586	(b)  In establishing reimbursement premiums for the Florida
1587	Hurricane Catastrophe Fund, the Division of the Florida
1588	Hurricane Catastrophe Fund State Board of Administration must,
1589	to the extent feasible, employ actuarial methods, principles,
1590	standards, models, or output ranges found by the commission to
1591	be accurate or reliable.
1592	Section 7.  Subsection (10) of section 624.424, Florida
1593	Statutes, is amended to read:
1594	624.424  Annual statement and other information.--
1595	(10)  Each insurer or insurer group doing business in this
1596	state shall file on a quarterly basis in conjunction with
1597	financial reports required by paragraph (1)(a) a supplemental
1598	report on an individual and group basis on a form prescribed by
1599	the commission with information on personal lines and commercial
1600	lines residential property insurance policies in this state. The
1601	supplemental report shall include separate information for
1602	personal lines property policies and for commercial lines
1603	property policies and totals for each item specified, including
1604	premiums written for each of the property lines of business as
1605	described in ss. 215.555(2)(g)(c) and 627.351(6)(a). The report
1606	shall include the following information for each county on a
1607	monthly basis:
1608	(a)  Total number of policies in force at the end of each
1609	month.
1610	(b)  Total number of policies canceled.
1611	(c)  Total number of policies nonrenewed.
1612	(d)  Number of policies canceled due to hurricane risk.
1613	(e)  Number of policies nonrenewed due to hurricane risk.
1614	(f)  Number of new policies written.
1615	(g)  Total dollar value of structure exposure under
1616	policies that include wind coverage.
1617	(h)  Number of policies that exclude wind coverage.
1618	Section 8.  Paragraph (u) of subsection (6) of section
1619	627.351, Florida Statutes, is amended to read:
1620	627.351  Insurance risk apportionment plans.--
1621	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
1622	(u)1.  Effective July 1, 2002, policies of the Residential
1623	Property and Casualty Joint Underwriting Association shall
1624	become policies of the corporation. All obligations, rights,
1625	assets and liabilities of the Residential Property and Casualty
1626	Joint Underwriting Association, including bonds, note and debt
1627	obligations, and the financing documents pertaining to them
1628	become those of the corporation as of July 1, 2002. The
1629	corporation is not required to issue endorsements or
1630	certificates of assumption to insureds during the remaining term
1631	of in-force transferred policies.
1632	2.  Effective July 1, 2002, policies of the Florida
1633	Windstorm Underwriting Association are transferred to the
1634	corporation and shall become policies of the corporation. All
1635	obligations, rights, assets, and liabilities of the Florida
1636	Windstorm Underwriting Association, including bonds, note and
1637	debt obligations, and the financing documents pertaining to them
1638	are transferred to and assumed by the corporation on July 1,
1639	2002. The corporation is not required to issue endorsements or
1640	certificates of assumption to insureds during the remaining term
1641	of in-force transferred policies.
1642	3.  The Florida Windstorm Underwriting Association and the
1643	Residential Property and Casualty Joint Underwriting Association
1644	shall take all actions as may be proper to further evidence the
1645	transfers and shall provide the documents and instruments of
1646	further assurance as may reasonably be requested by the
1647	corporation for that purpose. The corporation shall execute
1648	assumptions and instruments as the trustees or other parties to
1649	the financing documents of the Florida Windstorm Underwriting
1650	Association or the Residential Property and Casualty Joint
1651	Underwriting Association may reasonably request to further
1652	evidence the transfers and assumptions, which transfers and
1653	assumptions, however, are effective on the date provided under
1654	this paragraph whether or not, and regardless of the date on
1655	which, the assumptions or instruments are executed by the
1656	corporation. Subject to the relevant financing documents
1657	pertaining to their outstanding bonds, notes, indebtedness, or
1658	other financing obligations, the moneys, investments,
1659	receivables, choses in action, and other intangibles of the
1660	Florida Windstorm Underwriting Association shall be credited to
1661	the high-risk account of the corporation, and those of the
1662	personal lines residential coverage account and the commercial
1663	lines residential coverage account of the Residential Property
1664	and Casualty Joint Underwriting Association shall be credited to
1665	the personal lines account and the commercial lines account,
1666	respectively, of the corporation.
1667	4.  Effective July 1, 2002, a new applicant for property
1668	insurance coverage who would otherwise have been eligible for
1669	coverage in the Florida Windstorm Underwriting Association is
1670	eligible for coverage from the corporation as provided in this
1671	subsection.
1672	5.  The transfer of all policies, obligations, rights,
1673	assets, and liabilities from the Florida Windstorm Underwriting
1674	Association to the corporation and the renaming of the
1675	Residential Property and Casualty Joint Underwriting Association
1676	as the corporation shall in no way affect the coverage with
1677	respect to covered policies as defined in s. 215.555(2)(g)(c)
1678	provided to these entities by the Florida Hurricane Catastrophe
1679	Fund. The coverage provided by the Florida Hurricane Catastrophe
1680	Fund to the Florida Windstorm Underwriting Association based on
1681	its exposures as of June 30, 2002, and each June 30 thereafter
1682	shall be redesignated as coverage for the high-risk account of
1683	the corporation. Notwithstanding any other provision of law, the
1684	coverage provided by the Florida Hurricane Catastrophe Fund to
1685	the Residential Property and Casualty Joint Underwriting
1686	Association based on its exposures as of June 30, 2002, and each
1687	June 30 thereafter shall be transferred to the personal lines
1688	account and the commercial lines account of the corporation.
1689	Notwithstanding any other provision of law, the high-risk
1690	account shall be treated, for all Florida Hurricane Catastrophe
1691	Fund purposes, as if it were a separate participating insurer
1692	with its own exposures, reimbursement premium, and loss
1693	reimbursement. Likewise, the personal lines and commercial lines
1694	accounts shall be viewed together, for all Florida Hurricane
1695	Catastrophe Fund purposes, as if the two accounts were one and
1696	represent a single, separate participating insurer with its own
1697	exposures, reimbursement premium, and loss reimbursement. The
1698	coverage provided by the Florida Hurricane Catastrophe Fund to
1699	the corporation shall constitute and operate as a full transfer
1700	of coverage from the Florida Windstorm Underwriting Association
1701	and Residential Property and Casualty Joint Underwriting to the
1702	corporation.
1703	Section 9.  This act shall take effect July 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.