HB 1359

1	A bill to be entitled
2	An act relating to Citizens Property Insurance
3	Corporation; amending s. 627.351, F.S.; revising the
4	definition of the term "subject lines of business;"
5	prohibiting assessing assessable insurers and assessable
6	insureds for certain deficits under certain circumstances;
7	providing an exception; providing an effective date.
8
9	Be It Enacted by the Legislature of the State of Florida:
10
11	Section 1.  Paragraph (b) of subsection (6) of section
12	627.351, Florida Statutes, is amended to read:
13	627.351  Insurance risk apportionment plans.--
14	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
15	(b)1.  All insurers authorized to write one or more subject
16	lines of business in this state are subject to assessment by the
17	corporation and, for the purposes of this subsection, are
18	referred to collectively as "assessable insurers." Insurers
19	writing one or more subject lines of business in this state
20	pursuant to part VIII of chapter 626 are not assessable
21	insurers, but insureds who procure one or more subject lines of
22	business in this state pursuant to part VIII of chapter 626 are
23	subject to assessment by the corporation and are referred to
24	collectively as "assessable insureds." An authorized insurer's
25	assessment liability shall begin on the first day of the
26	calendar year following the year in which the insurer was issued
27	a certificate of authority to transact insurance for subject
28	lines of business in this state and shall terminate 1 year after
29	the end of the first calendar year during which the insurer no
30	longer holds a certificate of authority to transact insurance
31	for subject lines of business in this state.
32	2.a.  All revenues, assets, liabilities, losses, and
33	expenses of the corporation shall be divided into three separate
34	accounts as follows:
35	(I)  A personal lines account for personal residential
36	policies issued by the corporation or issued by the Residential
37	Property and Casualty Joint Underwriting Association and renewed
38	by the corporation that provide comprehensive, multiperil
39	coverage on risks that are not located in areas eligible for
40	coverage in the Florida Windstorm Underwriting Association as
41	those areas were defined on January 1, 2002, and for such
42	policies that do not provide coverage for the peril of wind on
43	risks that are located in such areas;
44	(II)  A commercial lines account for commercial residential
45	and commercial nonresidential policies issued by the corporation
46	or issued by the Residential Property and Casualty Joint
47	Underwriting Association and renewed by the corporation that
48	provide coverage for basic property perils on risks that are not
49	located in areas eligible for coverage in the Florida Windstorm
50	Underwriting Association as those areas were defined on January
51	1, 2002, and for such policies that do not provide coverage for
52	the peril of wind on risks that are located in such areas; and
53	(III)  A high-risk account for personal residential
54	policies and commercial residential and commercial
55	nonresidential property policies issued by the corporation or
56	transferred to the corporation that provide coverage for the
57	peril of wind on risks that are located in areas eligible for
58	coverage in the Florida Windstorm Underwriting Association as
59	those areas were defined on January 1, 2002. The corporation may
60	offer policies that provide multiperil coverage and the
61	corporation shall continue to offer policies that provide
62	coverage only for the peril of wind for risks located in areas
63	eligible for coverage in the high-risk account. In issuing
64	multiperil coverage, the corporation may use its approved policy
65	forms and rates for the personal lines account. An applicant or
66	insured who is eligible to purchase a multiperil policy from the
67	corporation may purchase a multiperil policy from an authorized
68	insurer without prejudice to the applicant's or insured's
69	eligibility to prospectively purchase a policy that provides
70	coverage only for the peril of wind from the corporation. An
71	applicant or insured who is eligible for a corporation policy
72	that provides coverage only for the peril of wind may elect to
73	purchase or retain such policy and also purchase or retain
74	coverage excluding wind from an authorized insurer without
75	prejudice to the applicant's or insured's eligibility to
76	prospectively purchase a policy that provides multiperil
77	coverage from the corporation. It is the goal of the Legislature
78	that there would be an overall average savings of 10 percent or
79	more for a policyholder who currently has a wind-only policy
80	with the corporation, and an ex-wind policy with a voluntary
81	insurer or the corporation, and who then obtains a multiperil
82	policy from the corporation. It is the intent of the Legislature
83	that the offer of multiperil coverage in the high-risk account
84	be made and implemented in a manner that does not adversely
85	affect the tax-exempt status of the corporation or
86	creditworthiness of or security for currently outstanding
87	financing obligations or credit facilities of the high-risk
88	account, the personal lines account, or the commercial lines
89	account. The high-risk account must also include quota share
90	primary insurance under subparagraph (c)2. The area eligible for
91	coverage under the high-risk account also includes the area
92	within Port Canaveral, which is bordered on the south by the
93	City of Cape Canaveral, bordered on the west by the Banana
94	River, and bordered on the north by Federal Government property.
95	b.  The three separate accounts must be maintained as long
96	as financing obligations entered into by the Florida Windstorm
97	Underwriting Association or Residential Property and Casualty
98	Joint Underwriting Association are outstanding, in accordance
99	with the terms of the corresponding financing documents. When
100	the financing obligations are no longer outstanding, in
101	accordance with the terms of the corresponding financing
102	documents, the corporation may use a single account for all
103	revenues, assets, liabilities, losses, and expenses of the
104	corporation. Consistent with the requirement of this
105	subparagraph and prudent investment policies that minimize the
106	cost of carrying debt, the board shall exercise its best efforts
107	to retire existing debt or to obtain approval of necessary
108	parties to amend the terms of existing debt, so as to structure
109	the most efficient plan to consolidate the three separate
110	accounts into a single account. By February 1, 2007, the board
111	shall submit a report to the Financial Services Commission, the
112	President of the Senate, and the Speaker of the House of
113	Representatives which includes an analysis of consolidating the
114	accounts, the actions the board has taken to minimize the cost
115	of carrying debt, and its recommendations for executing the most
116	efficient plan.
117	c.  Creditors of the Residential Property and Casualty
118	Joint Underwriting Association and of the accounts specified in
119	sub-sub-subparagraphs a.(I) and (II) may have a claim against,
120	and recourse to, the accounts referred to in sub-sub-
121	subparagraphs a.(I) and (II) and shall have no claim against, or
122	recourse to, the account referred to in sub-sub-subparagraph
123	a.(III). Creditors of the Florida Windstorm Underwriting
124	Association shall have a claim against, and recourse to, the
125	account referred to in sub-sub-subparagraph a.(III) and shall
126	have no claim against, or recourse to, the accounts referred to
127	in sub-sub-subparagraphs a.(I) and (II).
128	d.  Revenues, assets, liabilities, losses, and expenses not
129	attributable to particular accounts shall be prorated among the
130	accounts.
131	e.  The Legislature finds that the revenues of the
132	corporation are revenues that are necessary to meet the
133	requirements set forth in documents authorizing the issuance of
134	bonds under this subsection.
135	f.  No part of the income of the corporation may inure to
136	the benefit of any private person.
137	3.  With respect to a deficit in an account:
138	a.  After accounting for the Citizens policyholder
139	surcharge imposed under sub-subparagraph i., when the remaining
140	projected deficit incurred in a particular calendar year is not
141	greater than 6 percent of the aggregate statewide direct written
142	premium for the subject lines of business for the prior calendar
143	year, the entire deficit shall be recovered through regular
144	assessments of assessable insurers under paragraph (p) and
145	assessable insureds.
146	b.  After accounting for the Citizens policyholder
147	surcharge imposed under sub-subparagraph i., when the remaining
148	projected deficit incurred in a particular calendar year exceeds
149	6 percent of the aggregate statewide direct written premium for
150	the subject lines of business for the prior calendar year, the
151	corporation shall levy regular assessments on assessable
152	insurers under paragraph (p) and on assessable insureds in an
153	amount equal to the greater of 6 percent of the deficit or 6
154	percent of the aggregate statewide direct written premium for
155	the subject lines of business for the prior calendar year. Any
156	remaining deficit shall be recovered through emergency
157	assessments under sub-subparagraph d.
158	c.  Each assessable insurer's share of the amount being
159	assessed under sub-subparagraph a. or sub-subparagraph b. shall
160	be in the proportion that the assessable insurer's direct
161	written premium for the subject lines of business for the year
162	preceding the assessment bears to the aggregate statewide direct
163	written premium for the subject lines of business for that year.
164	The assessment percentage applicable to each assessable insured
165	is the ratio of the amount being assessed under sub-subparagraph
166	a. or sub-subparagraph b. to the aggregate statewide direct
167	written premium for the subject lines of business for the prior
168	year. Assessments levied by the corporation on assessable
169	insurers under sub-subparagraphs a. and b. shall be paid as
170	required by the corporation's plan of operation and paragraph
171	(p). Assessments levied by the corporation on assessable
172	insureds under sub-subparagraphs a. and b. shall be collected by
173	the surplus lines agent at the time the surplus lines agent
174	collects the surplus lines tax required by s. 626.932 and shall
175	be paid to the Florida Surplus Lines Service Office at the time
176	the surplus lines agent pays the surplus lines tax to the
177	Florida Surplus Lines Service Office. Upon receipt of regular
178	assessments from surplus lines agents, the Florida Surplus Lines
179	Service Office shall transfer the assessments directly to the
180	corporation as determined by the corporation.
181	d.  Upon a determination by the board of governors that a
182	deficit in an account exceeds the amount that will be recovered
183	through regular assessments under sub-subparagraph a. or sub-
184	subparagraph b., plus the amount that is expected to be
185	recovered through surcharges under sub-subparagraph i., as to
186	the remaining projected deficit the board shall levy, after
187	verification by the office, emergency assessments, for as many
188	years as necessary to cover the deficits, to be collected by
189	assessable insurers and the corporation and collected from
190	assessable insureds upon issuance or renewal of policies for
191	subject lines of business, excluding National Flood Insurance
192	policies. The amount of the emergency assessment collected in a
193	particular year shall be a uniform percentage of that year's
194	direct written premium for subject lines of business and all
195	accounts of the corporation, excluding National Flood Insurance
196	Program policy premiums, as annually determined by the board and
197	verified by the office. The office shall verify the arithmetic
198	calculations involved in the board's determination within 30
199	days after receipt of the information on which the determination
200	was based. Notwithstanding any other provision of law, the
201	corporation and each assessable insurer that writes subject
202	lines of business shall collect emergency assessments from its
203	policyholders without such obligation being affected by any
204	credit, limitation, exemption, or deferment. Emergency
205	assessments levied by the corporation on assessable insureds
206	shall be collected by the surplus lines agent at the time the
207	surplus lines agent collects the surplus lines tax required by
208	s. 626.932 and shall be paid to the Florida Surplus Lines
209	Service Office at the time the surplus lines agent pays the
210	surplus lines tax to the Florida Surplus Lines Service Office.
211	The emergency assessments so collected shall be transferred
212	directly to the corporation on a periodic basis as determined by
213	the corporation and shall be held by the corporation solely in
214	the applicable account. The aggregate amount of emergency
215	assessments levied for an account under this sub-subparagraph in
216	any calendar year may, at the discretion of the board of
217	governors, be less than but may not exceed the greater of 10
218	percent of the amount needed to cover the deficit, plus
219	interest, fees, commissions, required reserves, and other costs
220	associated with financing of the original deficit, or 10 percent
221	of the aggregate statewide direct written premium for subject
222	lines of business and for all accounts of the corporation for
223	the prior year, plus interest, fees, commissions, required
224	reserves, and other costs associated with financing the deficit.
225	e.  The corporation may pledge the proceeds of assessments,
226	projected recoveries from the Florida Hurricane Catastrophe
227	Fund, other insurance and reinsurance recoverables, policyholder
228	surcharges and other surcharges, and other funds available to
229	the corporation as the source of revenue for and to secure bonds
230	issued under paragraph (p), bonds or other indebtedness issued
231	under subparagraph (c)3., or lines of credit or other financing
232	mechanisms issued or created under this subsection, or to retire
233	any other debt incurred as a result of deficits or events giving
234	rise to deficits, or in any other way that the board determines
235	will efficiently recover such deficits. The purpose of the lines
236	of credit or other financing mechanisms is to provide additional
237	resources to assist the corporation in covering claims and
238	expenses attributable to a catastrophe. As used in this
239	subsection, the term "assessments" includes regular assessments
240	under sub-subparagraph a., sub-subparagraph b., or subparagraph
241	(p)1. and emergency assessments under sub-subparagraph d.
242	Emergency assessments collected under sub-subparagraph d. are
243	not part of an insurer's rates, are not premium, and are not
244	subject to premium tax, fees, or commissions; however, failure
245	to pay the emergency assessment shall be treated as failure to
246	pay premium. The emergency assessments under sub-subparagraph d.
247	shall continue as long as any bonds issued or other indebtedness
248	incurred with respect to a deficit for which the assessment was
249	imposed remain outstanding, unless adequate provision has been
250	made for the payment of such bonds or other indebtedness
251	pursuant to the documents governing such bonds or other
252	indebtedness.
253	f.  As used in this subsection for purposes of any deficit
254	incurred on or after January 25, 2007, the term "subject lines
255	of business" means insurance written by assessable insurers or
256	procured by assessable insureds on real or personal property as
257	property insurance as defined in s. 624.604, including insurance
258	for fire, industrial fire, allied lines, farm owner's
259	multiperil, homeowner's multiperil, commercial multiperil, and
260	mobile homes, and including liability coverage on all such
261	insurance, but excluding inland marine insurance as defined in
262	s. 624.607 and excluding vehicle insurance as defined in s.
263	624.605 other than insurance on mobile homes used as permanent
264	dwellings for all property and casualty lines of business in
265	this state, but not including workers' compensation or medical
266	malpractice. As used in the sub-subparagraph, the term "property
267	and casualty lines of business" includes all lines of business
268	identified on Form 2, Exhibit of Premiums and Losses, in the
269	annual statement required of authorized insurers by s. 624.424
270	and any rule adopted under this section, except for those lines
271	identified as accident and health insurance and except for
272	policies written under the National Flood Insurance Program or
273	the Federal Crop Insurance Program. For purposes of this sub-
274	subparagraph, the term "workers' compensation" includes both
275	workers' compensation insurance and excess workers' compensation
276	insurance.
277	g.  The Florida Surplus Lines Service Office shall
278	determine annually the aggregate statewide written premium in
279	subject lines of business procured by assessable insureds and
280	shall report that information to the corporation in a form and
281	at a time the corporation specifies to ensure that the
282	corporation can meet the requirements of this subsection and the
283	corporation's financing obligations.
284	h.  The Florida Surplus Lines Service Office shall verify
285	the proper application by surplus lines agents of assessment
286	percentages for regular assessments and emergency assessments
287	levied under this subparagraph on assessable insureds and shall
288	assist the corporation in ensuring the accurate, timely
289	collection and payment of assessments by surplus lines agents as
290	required by the corporation.
291	i.  If a deficit is incurred in any account in 2008 or
292	thereafter, the board of governors shall levy a Citizens
293	policyholder surcharge against all policyholders of the
294	corporation for a 12-month period, which shall be collected at
295	the time of issuance or renewal of a policy, as a uniform
296	percentage of the premium for the policy of up to 15 percent of
297	such premium, which funds shall be used to offset the deficit.
298	Citizens policyholder surcharges under this sub-subparagraph are
299	not considered premium and are not subject to commissions, fees,
300	or premium taxes. However, failure to pay such surcharges shall
301	be treated as failure to pay premium.
302	j.  If the amount of any assessments or surcharges
303	collected from corporation policyholders, assessable insurers or
304	their policyholders, or assessable insureds exceeds the amount
305	of the deficits, such excess amounts shall be remitted to and
306	retained by the corporation in a reserve to be used by the
307	corporation, as determined by the board of governors and
308	approved by the office, to pay claims or reduce any past,
309	present, or future plan-year deficits or to reduce outstanding
310	debt.
311	k.  An assessable insurer and any assessable insured may
312	not be assessed for any deficit under sub-subparagraph a., sub-
313	subparagraph b., or sub-subparagraph d., except for deficits in
314	those accounts specified in sub-subparagraph 2.a. in which the
315	assessable insurer has written one or more subject lines of
316	business or as an assessable insured has procured one or more
317	policies of the subject lines of business in the account.
318	Section 2.  This act shall take effect July 1, 2009.

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