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

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