CS/HB 1171

1	A bill to be entitled
2	An act relating to residential property insurance;
3	amending s. 627.062, F.S.; providing that nonassessable
4	residential property insurance is not subject to
5	determinations as excessive or unfairly discriminatory;
6	providing an exception; preserving the authority of the
7	Office of Insurance Regulation to disapprove rates or rate
8	filings; amending s. 627.351, F.S.; excluding
9	nonassessable residential property insurance policies from
10	aggregate direct written premium for subject lines of
11	business for purposes of calculating certain emergency
12	assessments; excluding nonassessable residential property
13	insurance from subject lines of business; amending s.
14	627.4025, F.S.; defining the terms "assessable residential
15	property insurance" and "nonassessable residential
16	property insurance" for purposes of personal lines
17	residential coverage; creating s. 627.7031, F.S.;
18	authorizing insurers to offer nonassessable residential
19	property insurance policies; providing requirements;
20	authorizing residential property owners to purchase
21	nonassessable residential property insurance policies;
22	requiring applications for a nonassessable residential
23	property insurance policy to contain a specified
24	disclaimer; requiring notices of nonrenewal premium for
25	such policies to contain a specified disclaimer; providing
26	an effective date.
27
28	Be It Enacted by the Legislature of the State of Florida:
29
30	Section 1.  Paragraph (k) is added to subsection (2) of
31	section 627.062, Florida Statutes, to read:
32	627.062  Rate standards.--
33	(2)  As to all such classes of insurance:
34	(k)1.  Notwithstanding any other provision of this section,
35	a rate filing for nonassessable residential property insurance
36	as defined in s. 627.4025(1)(b) is not subject to a
37	determination that the rate is excessive or unfairly
38	discriminatory, except as provided in subparagraph 3.
39	2.  This paragraph does not apply to filings for assessable
40	residential property insurance as defined in s. 627.4025(1)(a).
41	3.  This paragraph does not affect the power of the office
42	to disapprove rates as inadequate or to disapprove a rate filing
43	for the use of a rating factor that is unlawful pursuant to s.
44	626.9541(1).
45
46	The provisions of this subsection shall not apply to workers'
47	compensation and employer's liability insurance and to motor
48	vehicle insurance.
49	Section 2.  Paragraph (b) of subsection (6) of section
50	627.351, Florida Statutes, is amended to read:
51	627.351  Insurance risk apportionment plans.--
52	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
53	(b)1.  All insurers authorized to write one or more subject
54	lines of business in this state are subject to assessment by the
55	corporation and, for the purposes of this subsection, are
56	referred to collectively as "assessable insurers." Insurers
57	writing one or more subject lines of business in this state
58	pursuant to part VIII of chapter 626 are not assessable
59	insurers, but insureds who procure one or more subject lines of
60	business in this state pursuant to part VIII of chapter 626 are
61	subject to assessment by the corporation and are referred to
62	collectively as "assessable insureds." An authorized insurer's
63	assessment liability shall begin on the first day of the
64	calendar year following the year in which the insurer was issued
65	a certificate of authority to transact insurance for subject
66	lines of business in this state and shall terminate 1 year after
67	the end of the first calendar year during which the insurer no
68	longer holds a certificate of authority to transact insurance
69	for subject lines of business in this state.
70	2.a.  All revenues, assets, liabilities, losses, and
71	expenses of the corporation shall be divided into three separate
72	accounts as follows:
73	(I)  A personal lines account for personal residential
74	policies issued by the corporation or issued by the Residential
75	Property and Casualty Joint Underwriting Association and renewed
76	by the corporation that provide comprehensive, multiperil
77	coverage on risks that are not located in areas eligible for
78	coverage in the Florida Windstorm Underwriting Association as
79	those areas were defined on January 1, 2002, and for such
80	policies that do not provide coverage for the peril of wind on
81	risks that are located in such areas;
82	(II)  A commercial lines account for commercial residential
83	and commercial nonresidential policies issued by the corporation
84	or issued by the Residential Property and Casualty Joint
85	Underwriting Association and renewed by the corporation that
86	provide coverage for basic property perils on risks that are not
87	located in areas eligible for coverage in the Florida Windstorm
88	Underwriting Association as those areas were defined on January
89	1, 2002, and for such policies that do not provide coverage for
90	the peril of wind on risks that are located in such areas; and
91	(III)  A high-risk account for personal residential
92	policies and commercial residential and commercial
93	nonresidential property policies issued by the corporation or
94	transferred to the corporation that provide coverage for the
95	peril of wind on risks that are located in areas eligible for
96	coverage in the Florida Windstorm Underwriting Association as
97	those areas were defined on January 1, 2002. The corporation may
98	offer policies that provide multiperil coverage and the
99	corporation shall continue to offer policies that provide
100	coverage only for the peril of wind for risks located in areas
101	eligible for coverage in the high-risk account. In issuing
102	multiperil coverage, the corporation may use its approved policy
103	forms and rates for the personal lines account. An applicant or
104	insured who is eligible to purchase a multiperil policy from the
105	corporation may purchase a multiperil policy from an authorized
106	insurer without prejudice to the applicant's or insured's
107	eligibility to prospectively purchase a policy that provides
108	coverage only for the peril of wind from the corporation. An
109	applicant or insured who is eligible for a corporation policy
110	that provides coverage only for the peril of wind may elect to
111	purchase or retain such policy and also purchase or retain
112	coverage excluding wind from an authorized insurer without
113	prejudice to the applicant's or insured's eligibility to
114	prospectively purchase a policy that provides multiperil
115	coverage from the corporation. It is the goal of the Legislature
116	that there would be an overall average savings of 10 percent or
117	more for a policyholder who currently has a wind-only policy
118	with the corporation, and an ex-wind policy with a voluntary
119	insurer or the corporation, and who then obtains a multiperil
120	policy from the corporation. It is the intent of the Legislature
121	that the offer of multiperil coverage in the high-risk account
122	be made and implemented in a manner that does not adversely
123	affect the tax-exempt status of the corporation or
124	creditworthiness of or security for currently outstanding
125	financing obligations or credit facilities of the high-risk
126	account, the personal lines account, or the commercial lines
127	account. The high-risk account must also include quota share
128	primary insurance under subparagraph (c)2. The area eligible for
129	coverage under the high-risk account also includes the area
130	within Port Canaveral, which is bordered on the south by the
131	City of Cape Canaveral, bordered on the west by the Banana
132	River, and bordered on the north by Federal Government property.
133	b.  The three separate accounts must be maintained as long
134	as financing obligations entered into by the Florida Windstorm
135	Underwriting Association or Residential Property and Casualty
136	Joint Underwriting Association are outstanding, in accordance
137	with the terms of the corresponding financing documents. When
138	the financing obligations are no longer outstanding, in
139	accordance with the terms of the corresponding financing
140	documents, the corporation may use a single account for all
141	revenues, assets, liabilities, losses, and expenses of the
142	corporation. Consistent with the requirement of this
143	subparagraph and prudent investment policies that minimize the
144	cost of carrying debt, the board shall exercise its best efforts
145	to retire existing debt or to obtain approval of necessary
146	parties to amend the terms of existing debt, so as to structure
147	the most efficient plan to consolidate the three separate
148	accounts into a single account. By February 1, 2007, the board
149	shall submit a report to the Financial Services Commission, the
150	President of the Senate, and the Speaker of the House of
151	Representatives which includes an analysis of consolidating the
152	accounts, the actions the board has taken to minimize the cost
153	of carrying debt, and its recommendations for executing the most
154	efficient plan.
155	c.  Creditors of the Residential Property and Casualty
156	Joint Underwriting Association and of the accounts specified in
157	sub-sub-subparagraphs a.(I) and (II) may have a claim against,
158	and recourse to, the accounts referred to in sub-sub-
159	subparagraphs a.(I) and (II) and shall have no claim against, or
160	recourse to, the account referred to in sub-sub-subparagraph
161	a.(III). Creditors of the Florida Windstorm Underwriting
162	Association shall have a claim against, and recourse to, the
163	account referred to in sub-sub-subparagraph a.(III) and shall
164	have no claim against, or recourse to, the accounts referred to
165	in sub-sub-subparagraphs a.(I) and (II).
166	d.  Revenues, assets, liabilities, losses, and expenses not
167	attributable to particular accounts shall be prorated among the
168	accounts.
169	e.  The Legislature finds that the revenues of the
170	corporation are revenues that are necessary to meet the
171	requirements set forth in documents authorizing the issuance of
172	bonds under this subsection.
173	f.  No part of the income of the corporation may inure to
174	the benefit of any private person.
175	3.  With respect to a deficit in an account:
176	a.  After accounting for the Citizens policyholder
177	surcharge imposed under sub-subparagraph i., when the remaining
178	projected deficit incurred in a particular calendar year is not
179	greater than 6 percent of the aggregate statewide direct written
180	premium for the subject lines of business for the prior calendar
181	year, the entire deficit shall be recovered through regular
182	assessments of assessable insurers under paragraph (p) and
183	assessable insureds.
184	b.  After accounting for the Citizens policyholder
185	surcharge imposed under sub-subparagraph i., when the remaining
186	projected deficit incurred in a particular calendar year exceeds
187	6 percent of the aggregate statewide direct written premium for
188	the subject lines of business for the prior calendar year, the
189	corporation shall levy regular assessments on assessable
190	insurers under paragraph (p) and on assessable insureds in an
191	amount equal to the greater of 6 percent of the deficit or 6
192	percent of the aggregate statewide direct written premium for
193	the subject lines of business for the prior calendar year. Any
194	remaining deficit shall be recovered through emergency
195	assessments under sub-subparagraph d.
196	c.  Each assessable insurer's share of the amount being
197	assessed under sub-subparagraph a. or sub-subparagraph b. shall
198	be in the proportion that the assessable insurer's direct
199	written premium for the subject lines of business for the year
200	preceding the assessment bears to the aggregate statewide direct
201	written premium for the subject lines of business for that year.
202	The assessment percentage applicable to each assessable insured
203	is the ratio of the amount being assessed under sub-subparagraph
204	a. or sub-subparagraph b. to the aggregate statewide direct
205	written premium for the subject lines of business for the prior
206	year. For purposes of the calculation required by this sub-
207	subparagraph, the term "aggregate statewide direct written
208	premium for the subject lines of business" does not include
209	direct written premium for nonassessable residential property
210	insurance policies as defined in s. 627.4025(1)(b). Assessments
211	levied by the corporation on assessable insurers under sub-
212	subparagraphs a. and b. shall be paid as required by the
213	corporation's plan of operation and paragraph (p). Assessments
214	levied by the corporation on assessable insureds under sub-
215	subparagraphs a. and b. shall be collected by the surplus lines
216	agent at the time the surplus lines agent collects the surplus
217	lines tax required by s. 626.932 and shall be paid to the
218	Florida Surplus Lines Service Office at the time the surplus
219	lines agent pays the surplus lines tax to the Florida Surplus
220	Lines Service Office. Upon receipt of regular assessments from
221	surplus lines agents, the Florida Surplus Lines Service Office
222	shall transfer the assessments directly to the corporation as
223	determined by the corporation.
224	d.  Upon a determination by the board of governors that a
225	deficit in an account exceeds the amount that will be recovered
226	through regular assessments under sub-subparagraph a. or sub-
227	subparagraph b., plus the amount that is expected to be
228	recovered through surcharges under sub-subparagraph i., as to
229	the remaining projected deficit the board shall levy, after
230	verification by the office, emergency assessments, for as many
231	years as necessary to cover the deficits, to be collected by
232	assessable insurers and the corporation and collected from
233	assessable insureds upon issuance or renewal of policies for
234	subject lines of business, excluding National Flood Insurance
235	policies. The amount of the emergency assessment collected in a
236	particular year shall be a uniform percentage of that year's
237	direct written premium for subject lines of business and all
238	accounts of the corporation, excluding National Flood Insurance
239	Program policy premiums, as annually determined by the board and
240	verified by the office. For purposes of the calculation required
241	by this sub-subparagraph, the term "that year's direct written
242	premium for the subject lines of business" does not include
243	direct written premium for nonassessable residential property
244	insurance policies as defined in s. 627.4025(1)(b). The office
245	shall verify the arithmetic calculations involved in the board's
246	determination within 30 days after receipt of the information on
247	which the determination was based. Notwithstanding any other
248	provision of law, the corporation and each assessable insurer
249	that writes subject lines of business shall collect emergency
250	assessments from its policyholders without such obligation being
251	affected by any credit, limitation, exemption, or deferment.
252	Emergency assessments levied by the corporation on assessable
253	insureds shall be collected by the surplus lines agent at the
254	time the surplus lines agent collects the surplus lines tax
255	required by s. 626.932 and shall be paid to the Florida Surplus
256	Lines Service Office at the time the surplus lines agent pays
257	the surplus lines tax to the Florida Surplus Lines Service
258	Office. The emergency assessments so collected shall be
259	transferred directly to the corporation on a periodic basis as
260	determined by the corporation and shall be held by the
261	corporation solely in the applicable account. The aggregate
262	amount of emergency assessments levied for an account under this
263	sub-subparagraph in any calendar year may, at the discretion of
264	the board of governors, be less than but may not exceed the
265	greater of 10 percent of the amount needed to cover the deficit,
266	plus interest, fees, commissions, required reserves, and other
267	costs associated with financing of the original deficit, or 10
268	percent of the aggregate statewide direct written premium for
269	subject lines of business and for all accounts of the
270	corporation for the prior year, plus interest, fees,
271	commissions, required reserves, and other costs associated with
272	financing the deficit.
273	e.  The corporation may pledge the proceeds of assessments,
274	projected recoveries from the Florida Hurricane Catastrophe
275	Fund, other insurance and reinsurance recoverables, policyholder
276	surcharges and other surcharges, and other funds available to
277	the corporation as the source of revenue for and to secure bonds
278	issued under paragraph (p), bonds or other indebtedness issued
279	under subparagraph (c)3., or lines of credit or other financing
280	mechanisms issued or created under this subsection, or to retire
281	any other debt incurred as a result of deficits or events giving
282	rise to deficits, or in any other way that the board determines
283	will efficiently recover such deficits. The purpose of the lines
284	of credit or other financing mechanisms is to provide additional
285	resources to assist the corporation in covering claims and
286	expenses attributable to a catastrophe. As used in this
287	subsection, the term "assessments" includes regular assessments
288	under sub-subparagraph a., sub-subparagraph b., or subparagraph
289	(p)1. and emergency assessments under sub-subparagraph d.
290	Emergency assessments collected under sub-subparagraph d. are
291	not part of an insurer's rates, are not premium, and are not
292	subject to premium tax, fees, or commissions; however, failure
293	to pay the emergency assessment shall be treated as failure to
294	pay premium. The emergency assessments under sub-subparagraph d.
295	shall continue as long as any bonds issued or other indebtedness
296	incurred with respect to a deficit for which the assessment was
297	imposed remain outstanding, unless adequate provision has been
298	made for the payment of such bonds or other indebtedness
299	pursuant to the documents governing such bonds or other
300	indebtedness.
301	f.  As used in this subsection for purposes of any deficit
302	incurred on or after January 25, 2007, the term "subject lines
303	of business" means insurance written by assessable insurers or
304	procured by assessable insureds for all property and casualty
305	lines of business in this state, but not including workers'
306	compensation or medical malpractice and not including any
307	premiums for nonassessable residential property insurance as
308	defined in s. 627.4025(1)(b). As used in this the sub-
309	subparagraph, except as otherwise provided in this sub-
310	subparagraph, the term "property and casualty lines of business"
311	includes all lines of business identified on Form 2, Exhibit of
312	Premiums and Losses, in the annual statement required of
313	authorized insurers by s. 624.424 and any rule adopted under
314	this section, except for those lines identified as accident and
315	health insurance and except for policies written under the
316	National Flood Insurance Program or the Federal Crop Insurance
317	Program. For purposes of this sub-subparagraph, the term
318	"workers' compensation" includes both workers' compensation
319	insurance and excess workers' compensation insurance.
320	g.  The Florida Surplus Lines Service Office shall
321	determine annually the aggregate statewide written premium in
322	subject lines of business procured by assessable insureds and
323	shall report that information to the corporation in a form and
324	at a time the corporation specifies to ensure that the
325	corporation can meet the requirements of this subsection and the
326	corporation's financing obligations.
327	h.  The Florida Surplus Lines Service Office shall verify
328	the proper application by surplus lines agents of assessment
329	percentages for regular assessments and emergency assessments
330	levied under this subparagraph on assessable insureds and shall
331	assist the corporation in ensuring the accurate, timely
332	collection and payment of assessments by surplus lines agents as
333	required by the corporation.
334	i.  If a deficit is incurred in any account in 2008 or
335	thereafter, the board of governors shall levy a Citizens
336	policyholder surcharge against all policyholders of the
337	corporation for a 12-month period, which shall be collected at
338	the time of issuance or renewal of a policy, as a uniform
339	percentage of the premium for the policy of up to 15 percent of
340	such premium, which funds shall be used to offset the deficit.
341	Citizens policyholder surcharges under this sub-subparagraph are
342	not considered premium and are not subject to commissions, fees,
343	or premium taxes. However, failure to pay such surcharges shall
344	be treated as failure to pay premium.
345	j.  If the amount of any assessments or surcharges
346	collected from corporation policyholders, assessable insurers or
347	their policyholders, or assessable insureds exceeds the amount
348	of the deficits, such excess amounts shall be remitted to and
349	retained by the corporation in a reserve to be used by the
350	corporation, as determined by the board of governors and
351	approved by the office, to pay claims or reduce any past,
352	present, or future plan-year deficits or to reduce outstanding
353	debt.
354	Section 3.  Subsection (1) of section 627.4025, Florida
355	Statutes, is amended to read:
356	627.4025  Residential coverage and hurricane coverage
357	defined.--
358	(1)  Residential coverage includes both personal lines
359	residential coverage, which consists of the type of coverage
360	provided by homeowner's, mobile home owner's, dwelling,
361	tenant's, condominium unit owner's, cooperative unit owner's,
362	and similar policies, and commercial lines residential coverage,
363	which consists of the type of coverage provided by condominium
364	association, cooperative association, apartment building, and
365	similar policies, including policies covering the common
366	elements of a homeowners' association. Residential coverage for
367	personal lines and commercial lines as set forth in this section
368	includes policies that provide coverage for particular perils
369	such as windstorm and hurricane or coverage for insurer
370	insolvency or deductibles. Policies providing personal lines
371	residential property insurance coverage as described in this
372	subsection consist of two classes, assessable residential
373	property insurance and nonassessable residential property
374	insurance. For purposes of this subsection, the term:
375	(a)  "Assessable residential property insurance" means
376	personal lines residential property insurance that is subject to
377	deficit assessments by Citizens Property Insurance Corporation
378	under s. 627.351(6).
379	(b)  "Nonassessable residential property insurance" means
380	personal lines residential property insurance that is not
381	subject to deficit assessments by Citizens Property Insurance
382	Corporation under s. 627.351(6).
383	Section 4.  Section 627.7031, Florida Statutes, is created
384	to read:
385	627.7031  Residential property insurance.--
386	(1)  Any insurer may offer nonassessable residential
387	property insurance policies as defined in s. 627.4025(1)(b) if:
388	(a)  The insurer is authorized to write property insurance
389	in this state.
390	(b)  The insurer maintains surplus as to policyholders
391	equal to or greater than $500 million.
392	(2)  An owner of residential property may purchase a
393	nonassessable residential property insurance policy if such a
394	policy is offered by the insurer.
395	(3)(a)  The application for a nonassessable residential
396	property insurance policy shall contain the following disclaimer
397	printed in at least 12-point boldfaced type:
398
399	THIS APPLICATION IS FOR A RESIDENTIAL PROPERTY POLICY THAT IS
400	SUBJECT ONLY TO THE RATE REGULATION REQUIREMENTS UNDER FLORIDA
401	LAW THAT ENSURE THAT RATES ARE ADEQUATE TO PAY CLAIMS AND IS NOT
402	SUBJECT TO DEFICIT ASSESSMENTS BY CITIZENS PROPERTY INSURANCE
403	CORPORATION. PLEASE DISCUSS YOUR POLICY OPTIONS WITH YOUR
404	INSURANCE AGENT.
405	(b)  Each notice of renewal premium for a nonassessable
406	residential property insurance policy shall contain the
407	following disclaimer printed in at least 12-point boldfaced
408	type:
409
410	THIS POLICY IS SUBJECT ONLY TO THE RATE REQUIREMENTS UNDER
411	FLORIDA LAW THAT ENSURE THAT RATES ARE ADEQUATE TO PAY CLAIMS
412	AND IS NOT SUBJECT TO DEFICIT ASSESSMENTS BY CITIZENS PROPERTY
413	INSURANCE CORPORATION. PLEASE DISCUSS YOUR POLICY OPTIONS WITH
414	YOUR INSURANCE AGENT.
415	Section 5.  This act shall take effect July 1, 2009.

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