HB 437

1	A bill to be entitled
2	An act relating to the Florida Hurricane Catastrophe Fund;
3	amending s. 215.555, F.S.; creating the Division of the
4	Florida Hurricane Catastrophe Fund as a division of the
5	State Board of Administration; providing for a board of
6	the division; revising legislative findings; revising
7	certain definitions; providing definitions; revising
8	provisions requiring the State Board of Administration to
9	invest certain funds; requiring the division board to
10	appoint a director; providing duties of the director;
11	providing that the appointment of a director is subject to
12	the approval of the board by a majority vote; authorizing
13	the division to employ or contract with such staff as the
14	division deems necessary to administer the fund; requiring
15	the division to enter into a contract with each insurer
16	writing covered policies in this state to provide to the
17	insurer reimbursement as prescribed by state law;
18	requiring that such contracts contain certain elements or
19	provisions and provide the division with certain
20	obligations; requiring the division to publish certain
21	information in the Florida Administrative Weekly at
22	specified times; authorizing the payment of advancements
23	of reimbursements or reimbursement premium to certain
24	entities under certain conditions; requiring the division
25	to inspect, examine, and verify the records of each
26	insurer's covered policies for certain reimbursement
27	contract purposes; providing for the payments of expenses
28	associated with such inspection, examination, or
29	verification; providing for the reimbursement of the
30	division for such expenses by an insurer under certain
31	circumstances; authorizing the division to take certain
32	action if it finds any insurer's records or other
33	necessary information to be inadequate or inadequately
34	posted, recorded, or maintained; requiring the division to
35	select an independent consultant to develop a formula for
36	determining the actuarially indicated premium to be paid
37	to the fund; requiring the division to consider certain
38	factors when a establishing reimbursement premium;
39	providing for the calculation of such premium by the
40	division; providing for the payment of reimbursement
41	premium; providing for the collection of interest on
42	certain late reimbursement premium payments; providing
43	responsibilities of the division if Citizens Property
44	Insurance Corporation assumes or otherwise provides
45	coverage for policies of an insurer placed in liquidation;
46	authorizing the division to execute agreements regarding
47	revenue bonds or other financing arrangements for the
48	purpose of evidencing, securing, preserving, or protecting
49	a pledge of revenue by the corporation; requiring the
50	Florida Surplus Lines Service Office to assist the
51	division in ensuring the accurate and timely collection
52	and remittance of assessments of surplus lines premiums;
53	requiring the office to report certain information to the
54	division at a time and in a manner prescribed by the
55	division; providing for the issuance of revenue bonds
56	through counties or municipalities; revising the
57	membership of the Florida Hurricane Catastrophe Fund
58	Finance Corporation; providing absence of liability on the
59	part of any member of the board of directors or employees
60	of the corporation for any actions taken by them in the
61	performance of their duties; providing additional powers
62	and duties of the division board and the division;
63	requiring the division board to appoint an advisory
64	council; providing for membership of the council;
65	providing duties of the council; authorizing the division
66	to take any action necessary to enforce certain rules and
67	provisions of a reimbursement contract; requiring the
68	division to make certain recommendations to the
69	Legislature upon the creation of a federal or multistate
70	catastrophic insurance or reinsurance program intended to
71	serve purposes similar to the purposes of the fund;
72	providing for the reversion of fund assets upon
73	termination of the fund; providing for optional coverages
74	of the fund; revising the temporary increases in coverage
75	limits (TICL); requiring a TICL addendum to contain a
76	promise by the division to make certain reimbursements to
77	the TICL insurer; including the level of TICL coverage
78	specified by the board among the factors that must be
79	considered when determining the amount of increase in the
80	claims-paying capacity of the fund; amending s. 215.557,
81	F.S.; conforming provisions to changes made by the act;
82	amending s. 215.5586, F.S.; requiring the division
83	director to serve on the advisory council of the My Safe
84	Florida Home Program; amending ss. 215.559 and 215.5595,
85	F.S.; conforming provisions to changes made by the act;
86	amending s. 627.0628, F.S.; revising legislative intent;
87	assigning the Florida Commission on Hurricane Loss
88	Projection Methodology to the division; requiring the fund
89	director to serve on the commission; requiring the
90	division board to annually appoint one of the members of
91	the commission to serve as chair; requiring the division
92	to provide for travel, expenses, and staff support for the
93	commission; indemnifying members and employees of the
94	division from liability for action taken with respect to
95	the commission or its activities; requiring the division
96	to employ certain methods, principles, standards, models,
97	or output ranges when establishing reimbursement premiums
98	for the fund; providing an effective date.
99
100	Be It Enacted by the Legislature of the State of Florida:
101
102	Section 1.  Section 215.555, Florida Statutes, is amended
103	to read:
104	215.555  Florida Hurricane Catastrophe Fund.--
105	(1)  FINDINGS AND PURPOSE.--The Legislature finds and
106	declares as follows:
107	(a)  There is a compelling state interest in maintaining a
108	viable and orderly private sector market for property insurance
109	in this state. To the extent that the private sector is unable
110	to maintain a viable and orderly market for property insurance
111	in this state, state actions to maintain such a viable and
112	orderly market are valid and necessary exercises of the police
113	power.
114	(b)  As a result of unprecedented levels of catastrophic
115	insured losses in recent years, and especially as a result of
116	Hurricane Andrew, numerous insurers have determined that in
117	order to protect their solvency, it is necessary for them to
118	reduce their exposure to hurricane losses. Also as a result of
119	these events, world reinsurance capacity has significantly
120	contracted, increasing the pressure on insurers to reduce their
121	catastrophic exposures.
122	(c)  Mortgages require reliable property insurance, and the
123	unavailability of reliable property insurance would therefore
124	make most real estate transactions impossible. In addition, the
125	public health, safety, and welfare demand that structures
126	damaged or destroyed in a catastrophe be repaired or
127	reconstructed as soon as possible. Therefore, the inability of
128	the private sector insurance and reinsurance markets to maintain
129	sufficient capacity to enable residents of this state to obtain
130	property insurance coverage in the private sector endangers the
131	economy of the state and endangers the public health, safety,
132	and welfare. Accordingly, state action to correct for this
133	inability of the private sector constitutes a valid and
134	necessary public and governmental purpose.
135	(d)  The insolvencies and financial impairments resulting
136	from Hurricane Andrew demonstrate that many property insurers
137	are unable or unwilling to maintain reserves, surplus, and
138	reinsurance sufficient to enable the insurers to pay all claims
139	in full in the event of a catastrophe. State action is therefore
140	necessary to protect the public from an insurer's unwillingness
141	or inability to maintain sufficient reserves, surplus, and
142	reinsurance.
143	(e)  A state program to provide a stable and ongoing source
144	of reimbursement to insurers for a portion of their catastrophic
145	hurricane losses will create additional insurance capacity
146	sufficient to ameliorate the current dangers to the state's
147	economy and to the public health, safety, and welfare.
148	(f)  It is essential to the functioning of a state program
149	to increase insurance capacity that revenues received be exempt
150	from federal taxation. It is therefore the intent of the
151	Legislature that this program be structured as a state trust
152	fund under the direction and control of the Division of the
153	Florida Hurricane Catastrophe Fund within the State Board of
154	Administration and operate exclusively for the purpose of
155	protecting and advancing the state's interest in maintaining
156	insurance capacity in this state.
157	(g)  Hurricane Andrew, which caused insured and uninsured
158	losses in excess of $20 billion, will likely not be the last
159	major windstorm to strike Florida. Recognizing that a future
160	wind catastrophe could cause damages in excess of $60 billion,
161	especially if a major urban area or series of urban areas were
162	hit, it is the intent of the Legislature to balance equitably
163	its concerns about mitigation of hurricane impact, insurance
164	affordability and availability, and the risk of insurer and
165	joint underwriting association insolvency, as well as assessment
166	and bonding limitations.
167	(2)  DEFINITIONS.--As used in this section:
168	(a)  "Actuarially indicated" means, with respect to
169	premiums paid by insurers for reimbursement provided by the
170	fund, an amount determined according to principles of actuarial
171	science to be adequate, but not excessive, in the aggregate, to
172	pay current and future obligations and expenses of the fund,
173	including additional amounts if needed to pay debt service on
174	revenue bonds issued under this section and to provide required
175	debt service coverage in excess of the amounts required to pay
176	actual debt service on revenue bonds issued under subsection (7)
177	(6), and determined according to principles of actuarial science
178	to reflect each insurer's relative exposure to hurricane losses.
179	(b)  "Covered event" means any one storm declared to be a
180	hurricane by the National Hurricane Center, which storm causes
181	insured losses in this state.
182	(c)  "Covered policy" means any insurance policy covering
183	residential property in this state, including, but not limited
184	to, any homeowner's, mobile home owner's, farm owner's,
185	condominium association, condominium unit owner's, tenant's, or
186	apartment building policy, or any other policy covering a
187	residential structure or its contents issued by any authorized
188	insurer, including a commercial self-insurance fund holding a
189	certificate of authority issued by the Office of Insurance
190	Regulation under s. 624.462, the Citizens Property Insurance
191	Corporation, and any joint underwriting association or similar
192	entity created under law. The term "covered policy" includes any
193	collateral protection insurance policy covering personal
194	residences which protects both the borrower's and the lender's
195	financial interests, in an amount at least equal to the coverage
196	for the dwelling in place under the lapsed homeowner's policy,
197	if such policy can be accurately reported as required in
198	subsection (6) (5). Additionally, covered policies include
199	policies covering the peril of wind removed from the Florida
200	Residential Property and Casualty Joint Underwriting Association
201	or from the Citizens Property Insurance Corporation, created
202	under s. 627.351(6), or from the Florida Windstorm Underwriting
203	Association, created under s. 627.351(2), by an authorized
204	insurer under the terms and conditions of an executed assumption
205	agreement between the authorized insurer and such association or
206	Citizens Property Insurance Corporation. Each assumption
207	agreement between the association and such authorized insurer or
208	Citizens Property Insurance Corporation must be approved by the
209	Office of Insurance Regulation before the effective date of the
210	assumption, and the Office of Insurance Regulation must provide
211	written notification to the division board within 15 working
212	days after such approval. "Covered policy" does not include any
213	policy that excludes wind coverage or hurricane coverage or any
214	reinsurance agreement and does not include any policy otherwise
215	meeting this definition which is issued by a surplus lines
216	insurer or a reinsurer. All commercial residential excess
217	policies and all deductible buy-back policies that, based on
218	sound actuarial principles, require individual ratemaking shall
219	be excluded by rule if the actuarial soundness of the fund is
220	not jeopardized. For this purpose, the term "excess policy"
221	means a policy that provides insurance protection for large
222	commercial property risks and that provides a layer of coverage
223	above a primary layer insured by another insurer.
224	(d)  "Losses" means direct incurred losses under covered
225	policies, which shall include losses for additional living
226	expenses not to exceed 40 percent of the insured value of a
227	residential structure or its contents and shall exclude loss
228	adjustment expenses. "Losses" does not include losses for fair
229	rental value, loss of rent or rental income, or business
230	interruption losses.
231	(e)  "Retention" means the amount of losses below which an
232	insurer is not entitled to reimbursement from the fund. An
233	insurer's retention shall be calculated as follows:
234	1.  The division board shall calculate and report to each
235	insurer the retention multiples for that year. For the contract
236	year beginning June 1, 2005, the retention multiple shall be
237	equal to $4.5 billion divided by the total estimated
238	reimbursement premium for the contract year; for subsequent
239	years, the retention multiple shall be equal to $4.5 billion,
240	adjusted based upon the reported exposure from the prior
241	contract year to reflect the percentage growth in exposure to
242	the fund for covered policies since 2004, divided by the total
243	estimated reimbursement premium for the contract year. Total
244	reimbursement premium for purposes of the calculation under this
245	subparagraph shall be estimated using the assumption that all
246	insurers have selected the 90-percent coverage level.
247	2.  The retention multiple as determined under subparagraph
248	1. shall be adjusted to reflect the coverage level elected by
249	the insurer. For insurers electing the 90-percent coverage
250	level, the adjusted retention multiple is 100 percent of the
251	amount determined under subparagraph 1. For insurers electing
252	the 75-percent coverage level, the retention multiple is 120
253	percent of the amount determined under subparagraph 1. For
254	insurers electing the 45-percent coverage level, the adjusted
255	retention multiple is 200 percent of the amount determined under
256	subparagraph 1.
257	3.  An insurer shall determine its provisional retention by
258	multiplying its provisional reimbursement premium by the
259	applicable adjusted retention multiple and shall determine its
260	actual retention by multiplying its actual reimbursement premium
261	by the applicable adjusted retention multiple.
262	4.  For insurers who experience multiple covered events
263	causing loss during the contract year, beginning June 1, 2005,
264	each insurer's full retention shall be applied to each of the
265	covered events causing the two largest losses for that insurer.
266	For each other covered event resulting in losses, the insurer's
267	retention shall be reduced to one-third of the full retention.
268	The reimbursement contract shall provide for the reimbursement
269	of losses for each covered event based on the full retention
270	with adjustments made to reflect the reduced retentions after
271	January 1 of the contract year provided the insurer reports its
272	losses as specified in the reimbursement contract.
273	(f)  "Workers' compensation" includes both workers'
274	compensation and excess workers' compensation insurance.
275	(g)  "Bond" means any bond, debenture, note, or other
276	evidence of financial indebtedness issued under this section.
277	(h)  "Debt service" means the amount required in any fiscal
278	year to pay the principal of, redemption premium, if any, and
279	interest on revenue bonds and any amounts required by the terms
280	of documents authorizing, securing, or providing liquidity for
281	revenue bonds necessary to maintain in effect any such liquidity
282	or security arrangements.
283	(i)  "Debt service coverage" means the amount, if any,
284	required by the documents under which revenue bonds are issued,
285	which amount is to be received in any fiscal year in excess of
286	the amount required to pay debt service for such fiscal year.
287	(j)  "Local government" means a unit of general purpose
288	local government as defined in s. 218.31(2).
289	(k)  "Pledged revenues" means all or any portion of
290	revenues to be derived from reimbursement premiums under
291	subsection (6) (5) or from emergency assessments under paragraph
292	(7)(b) (6)(b), as determined by the board.
293	(l)  "Estimated claims-paying capacity" means the sum of
294	the projected year-end balance of the fund as of December 31 of
295	a contract year, plus any reinsurance purchased by the fund,
296	plus the division's board's estimate of the board's borrowing
297	capacity.
298	(m)  "Actual claims-paying capacity" means the sum of the
299	balance of the fund as of December 31 of a contract year, plus
300	any reinsurance purchased by the fund, plus the amount the board
301	is able to raise through the issuance of revenue bonds under
302	subsection (7) (6).
303	(n)  "Corporation" means the Florida Hurricane Catastrophe
304	Fund Finance Corporation created in paragraph (7)(d) (6)(d).
305	(o)  "Division" means the Division of the Florida Hurricane
306	Catastrophe Fund.
307	(p)  "Director" means the chief administrator of the
308	division, who shall act on behalf of the division as authorized
309	by the board.
310	(q)  "FHCF" or "fund" means the Florida Hurricane
311	Catastrophe Fund.
312	(r)  "Board" means the governing board of the division,
313	which shall be composed of the Governor and the Cabinet.
314	(3)  DIVISION OF THE FLORIDA HURRICANE CATASTROPHE FUND
315	CREATED.--There is created a division of the State Board of
316	Administration known as the Division of the Florida Hurricane
317	Catastrophe Fund, which shall administer the Florida Hurricane
318	Catastrophe Fund. For purposes of this section, the board of the
319	division shall consist of the Governor and the Cabinet. The
320	Governor shall serve as chair of the board, the Attorney General
321	shall serve as secretary of the board, and the Chief Financial
322	Officer shall serve as treasurer of the board.
323	(4)(3)  FLORIDA HURRICANE CATASTROPHE FUND CREATED.--There
324	is created the Florida Hurricane Catastrophe Fund within to be
325	administered by the State Board of Administration. Moneys in the
326	fund may not be expended, loaned, or appropriated except to pay
327	obligations of the fund arising out of reimbursement contracts
328	entered into under subsection (5) (4), payment of debt service
329	on revenue bonds issued under subsection (7) (6), costs of the
330	mitigation program under subsection (8) (7), costs of procuring
331	reinsurance, and costs of administration of the fund. The State
332	Board of Administration board shall invest the moneys in the
333	fund pursuant to ss. 215.44-215.52. Except as otherwise provided
334	in this section, earnings from all investments shall be retained
335	in the fund. The board shall appoint a director, who shall be
336	responsible for the administration of the fund. The appointment
337	of the director of the Division of the Florida Hurricane
338	Catastrophe Fund shall be subject to the approval by a majority
339	vote of the board. The division board may employ or contract
340	with such staff and professionals as the division board deems
341	necessary for the administration of the fund. The board may
342	adopt such rules as are reasonable and necessary to implement
343	this section and shall specify interest due on any delinquent
344	remittances, which interest may not exceed the fund's rate of
345	return plus 5 percent. Such rules must conform to the
346	Legislature's specific intent in establishing the fund as
347	expressed in subsection (1), must enhance the fund's potential
348	ability to respond to claims for covered events, must contain
349	general provisions so that the rules can be applied with
350	reasonable flexibility so as to accommodate insurers in
351	situations of an unusual nature or where undue hardship may
352	result, except that such flexibility may not in any way impair,
353	override, supersede, or constrain the public purpose of the
354	fund, and must be consistent with sound insurance practices. The
355	board may, by rule, provide for the exemption from subsections
356	(5) (4) and (6) (5) of insurers writing covered policies with
357	less than $10 million in aggregate exposure for covered policies
358	if the exemption does not affect the actuarial soundness of the
359	fund. The division shall have the power to sue and be sued in
360	the name of the division.
361	(5)(4)  REIMBURSEMENT CONTRACTS.--
362	(a)  The division board shall enter into a contract with
363	each insurer writing covered policies in this state to provide
364	to the insurer the reimbursement described in paragraphs (b) and
365	(d), in exchange for the reimbursement premium paid into the
366	fund under subsection (6) (5). As a condition of doing business
367	in this state, each such insurer shall enter into such a
368	contract.
369	(b)1.  The contract shall contain a promise by the division
370	board to reimburse the insurer for 45 percent, 75 percent, or 90
371	percent of its losses from each covered event in excess of the
372	insurer's retention, plus 5 percent of the reimbursed losses to
373	cover loss adjustment expenses.
374	2.  The insurer must elect one of the percentage coverage
375	levels specified in this paragraph and may, upon renewal of a
376	reimbursement contract, elect a lower percentage coverage level
377	if no revenue bonds issued under subsection (7) (6) after a
378	covered event are outstanding, or elect a higher percentage
379	coverage level, regardless of whether or not revenue bonds are
380	outstanding. All members of an insurer group must elect the same
381	percentage coverage level. Any joint underwriting association,
382	risk apportionment plan, or other entity created under s.
383	627.351 must elect the 90-percent coverage level.
384	3.  The contract shall provide that reimbursement amounts
385	shall not be reduced by reinsurance paid or payable to the
386	insurer from other sources.
387	4.  Notwithstanding any other provision contained in this
388	section, the board shall make available to insurers that
389	purchased coverage provided by this subparagraph in 2007,
390	insurers qualifying as limited apportionment companies under s.
391	627.351(6)(c), and insurers that have been approved to
392	participate in the Insurance Capital Build-Up Incentive Program
393	pursuant to s. 215.5595 a contract or contract addendum that
394	provides an additional amount of reimbursement coverage of up to
395	$10 million. The premium to be charged for this additional
396	reimbursement coverage shall be 50 percent of the additional
397	reimbursement coverage provided, which shall include one prepaid
398	reinstatement. The minimum retention level that an eligible
399	participating insurer must retain associated with this
400	additional coverage layer is 30 percent of the insurer's surplus
401	as of December 31, 2007. This coverage shall be in addition to
402	all other coverage that may be provided under this section. The
403	coverage provided by the fund under this subparagraph shall be
404	in addition to the claims-paying capacity as defined in
405	subparagraph (c)1., but only with respect to those insurers that
406	select the additional coverage option and meet the requirements
407	of this subparagraph. The claims-paying capacity with respect to
408	all other participating insurers and limited apportionment
409	companies that do not select the additional coverage option
410	shall be limited to their reimbursement premium's proportionate
411	share of the actual claims-paying capacity otherwise defined in
412	subparagraph (c)1. and as provided for under the terms of the
413	reimbursement contract. Coverage provided in the reimbursement
414	contract shall not be affected by the additional premiums paid
415	by participating insurers exercising the additional coverage
416	option allowed in this subparagraph. This subparagraph expires
417	on May 31, 2009.
418	(c)1.  The contract shall also provide that the obligation
419	of the division board with respect to all contracts covering a
420	particular contract year shall not exceed the actual claims-
421	paying capacity of the fund up to a limit of $15 billion for
422	that contract year adjusted based upon the reported exposure
423	from the prior contract year to reflect the percentage growth in
424	exposure to the fund for covered policies since 2003, provided
425	the dollar growth in the limit may not increase in any year by
426	an amount greater than the dollar growth of the balance of the
427	fund as of December 31, less any premiums or interest
428	attributable to optional coverage, as defined by rule which
429	occurred over the prior calendar year.
430	2.  In May before the start of the upcoming contract year
431	and in October during the contract year, the division board
432	shall publish in the Florida Administrative Weekly a statement
433	of the fund's estimated borrowing capacity and the projected
434	balance of the fund as of December 31. After the end of each
435	calendar year, the division board shall notify insurers of the
436	estimated borrowing capacity and the balance of the fund as of
437	December 31 to provide insurers with data necessary to assist
438	them in determining their retention and projected payout from
439	the fund for loss reimbursement purposes. In conjunction with
440	the development of the premium formula, as provided for in
441	subsection (6) (5), the division board shall publish factors or
442	multiples that assist insurers in determining their retention
443	and projected payout for the next contract year. For all
444	regulatory and reinsurance purposes, an insurer may calculate
445	its projected payout from the fund as its share of the total
446	fund premium for the current contract year multiplied by the sum
447	of the projected balance of the fund as of December 31 and the
448	estimated borrowing capacity for that contract year as reported
449	under this subparagraph.
450	(d)1.  For purposes of determining potential liability and
451	to aid in the sound administration of the fund, the contract
452	shall require each insurer to report such insurer's losses from
453	each covered event on an interim basis, as directed by the
454	division board. The contract shall require the insurer to report
455	to the division board no later than December 31 of each year,
456	and quarterly thereafter, its reimbursable losses from covered
457	events for the year. The contract shall require the division
458	board to determine and pay, as soon as practicable after
459	receiving these reports of reimbursable losses, the initial
460	amount of reimbursement due and adjustments to this amount based
461	on later loss information. The adjustments to reimbursement
462	amounts shall require the division board to pay, or the insurer
463	to return, amounts reflecting the most recent calculation of
464	losses.
465	2.  In determining reimbursements pursuant to this
466	subsection, the contract shall provide that the division board
467	shall pay to each insurer such insurer's projected payout, which
468	is the amount of reimbursement it is owed, up to an amount equal
469	to the insurer's share of the actual premium paid for that
470	contract year, multiplied by the actual claims-paying capacity
471	available for that contract year.
472	(e)1.  Except as provided in subparagraphs 2. and 3., the
473	contract shall provide that if an insurer demonstrates to the
474	division board that it is likely to qualify for reimbursement
475	under the contract, and demonstrates to the division board that
476	the immediate receipt of moneys from the division board is
477	likely to prevent the insurer from becoming insolvent, the
478	division board shall advance the insurer, at market interest
479	rates, the amounts necessary to maintain the solvency of the
480	insurer, up to 50 percent of the division's board's estimate of
481	the reimbursement due the insurer. The insurer's reimbursement
482	shall be reduced by an amount equal to the amount of the advance
483	and interest thereon.
484	2.  With respect only to an entity created under s.
485	627.351, the contract shall also provide that the division board
486	may, upon application by such entity, advance to such entity, at
487	market interest rates, up to 90 percent of the lesser of:
488	a.  The division's board's estimate of the amount of
489	reimbursement due to such entity; or
490	b.  The entity's share of the actual reimbursement premium
491	paid for that contract year, multiplied by the currently
492	available liquid assets of the fund. In order for the entity to
493	qualify for an advance under this subparagraph, the entity must
494	demonstrate to the division board that the advance is essential
495	to allow the entity to pay claims for a covered event and the
496	division board must determine that the fund's assets are
497	sufficient and are sufficiently liquid to allow the division
498	board to make an advance to the entity and still fulfill the
499	board's reimbursement obligations to other insurers. The
500	entity's final reimbursement for any contract year in which an
501	advance has been made under this subparagraph must be reduced by
502	an amount equal to the amount of the advance and any interest on
503	such advance. In order to determine what amounts, if any, are
504	due the entity, the division board may require the entity to
505	report its exposure and its losses at any time to determine
506	retention levels and reimbursements payable.
507	3.  The contract shall also provide specifically and solely
508	with respect to any limited apportionment company under s.
509	627.351(2)(b)3. that the division board may, upon application by
510	such company, advance to such company the amount of the
511	estimated reimbursement payable to such company as calculated
512	pursuant to paragraph (d), at market interest rates, if the
513	division board determines that the fund's assets are sufficient
514	and are sufficiently liquid to permit the division board to make
515	an advance to such company and at the same time fulfill its
516	reimbursement obligations to the insurers that are participants
517	in the fund. Such company's final reimbursement for any contract
518	year in which an advance pursuant to this subparagraph has been
519	made shall be reduced by an amount equal to the amount of the
520	advance and interest thereon. In order to determine what
521	amounts, if any, are due to such company, the division board may
522	require such company to report its exposure and its losses at
523	such times as may be required to determine retention levels and
524	loss reimbursements payable.
525	(f)  In order to ensure that insurers have properly
526	reported the insured values on which the reimbursement premium
527	is based and to ensure that insurers have properly reported the
528	losses for which reimbursements have been made, the division
529	board shall inspect, examine, and verify the records of each
530	insurer's covered policies at such times as the division board
531	deems appropriate and according to standards established by rule
532	for the specific purpose of validating the accuracy of exposures
533	and losses required to be reported under the terms and
534	conditions of the reimbursement contract. The costs of the
535	examinations shall be borne by the division board. However, in
536	order to remove any incentive for an insurer to delay
537	preparations for an examination, the division board shall be
538	reimbursed by the insurer for any examination expenses incurred
539	in addition to the usual and customary costs of the examination,
540	which additional expenses were incurred as a result of an
541	insurer's failure, despite proper notice, to be prepared for the
542	examination or as a result of an insurer's failure to provide
543	requested information while the examination is in progress. If
544	the division board finds any insurer's records or other
545	necessary information to be inadequate or inadequately posted,
546	recorded, or maintained, the division board may employ experts
547	to reconstruct, rewrite, record, post, or maintain such records
548	or information, at the expense of the insurer being examined, if
549	such insurer has failed to maintain, complete, or correct such
550	records or deficiencies after the division board has given the
551	insurer notice and a reasonable opportunity to do so. Any
552	information contained in an examination report, which
553	information is described in s. 215.557, is confidential and
554	exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
555	of the State Constitution, as provided in s. 215.557. Nothing in
556	this paragraph expands the exemption in s. 215.557.
557	(g)  The contract shall provide that in the event of the
558	insolvency of an insurer, the fund shall pay directly to the
559	Florida Insurance Guaranty Association for the benefit of
560	Florida policyholders of the insurer the net amount of all
561	reimbursement moneys owed to the insurer. As used in this
562	paragraph, the term "net amount of all reimbursement moneys"
563	means that amount which remains after reimbursement for:
564	1.  Preliminary or duplicate payments owed to private
565	reinsurers or other inuring reinsurance payments to private
566	reinsurers that satisfy statutory or contractual obligations of
567	the insolvent insurer attributable to covered events to such
568	reinsurers; or
569	2.  Funds owed to a bank or other financial institution to
570	cover obligations of the insolvent insurer under a credit
571	agreement that assists the insolvent insurer in paying claims
572	attributable to covered events.
573
574	The private reinsurers, banks, or other financial institutions
575	shall be reimbursed or otherwise paid prior to payment to the
576	Florida Insurance Guaranty Association, notwithstanding any law
577	to the contrary. The guaranty association shall pay all claims
578	up to the maximum amount permitted by chapter 631; thereafter,
579	any remaining moneys shall be paid pro rata to claims not fully
580	satisfied. This paragraph does not apply to a joint underwriting
581	association, risk apportionment plan, or other entity created
582	under s. 627.351.
583	(6)(5)  REIMBURSEMENT PREMIUMS.--
584	(a)  Each reimbursement contract shall require the insurer
585	to annually pay to the fund an actuarially indicated premium for
586	the reimbursement.
587	(b)  The division State Board of Administration shall
588	select an independent consultant to develop a formula for
589	determining the actuarially indicated premium to be paid to the
590	fund. The formula shall specify, for each zip code or other
591	limited geographical area, the amount of premium to be paid by
592	an insurer for each $1,000 of insured value under covered
593	policies in that zip code or other area. In establishing
594	premiums, the division board shall consider the coverage elected
595	under paragraph (5)(b) (4)(b) and any factors that tend to
596	enhance the actuarial sophistication of ratemaking for the fund,
597	including deductibles, type of construction, type of coverage
598	provided, relative concentration of risks, and other such
599	factors deemed by the division board to be appropriate. The
600	formula may provide for a procedure to determine the premiums to
601	be paid by new insurers that begin writing covered policies
602	after the beginning of a contract year, taking into
603	consideration when the insurer starts writing covered policies,
604	the potential exposure of the insurer, the potential exposure of
605	the fund, the administrative costs to the insurer and to the
606	fund, and any other factors deemed appropriate by the board. The
607	formula must be approved by unanimous vote of the board. The
608	board may, at any time, revise the formula pursuant to the
609	procedure provided in this paragraph.
610	(c)  No later than September 1 of each year, each insurer
611	shall notify the division board of its insured values under
612	covered policies by zip code, as of June 30 of that year. On the
613	basis of these reports, the division board shall calculate the
614	premium due from the insurer, based on the formula adopted under
615	paragraph (b). The insurer shall pay the required annual premium
616	pursuant to a periodic payment plan specified in the contract.
617	The division board shall provide for payment of reimbursement
618	premium in periodic installments and for the adjustment of
619	provisional premium installments collected prior to submission
620	of the exposure report to reflect data in the exposure report.
621	The division board shall collect interest on late reimbursement
622	premium payments consistent with the assumptions made in
623	developing the premium formula in accordance with paragraph (b).
624	(d)  All premiums paid to the fund under reimbursement
625	contracts shall be treated as premium for approved reinsurance
626	for all accounting and regulatory purposes.
627	(e)  If Citizens Property Insurance Corporation assumes or
628	otherwise provides coverage for policies of an insurer placed in
629	liquidation under chapter 631 pursuant to s. 627.351(6), the
630	corporation may, pursuant to conditions mutually agreed to
631	between the corporation and the division State Board of
632	Administration, obtain coverage for such policies under its
633	contract with the fund or accept an assignment of the liquidated
634	insurer's contract with the fund. If Citizens Property Insurance
635	Corporation elects to cover these policies under the
636	corporation's contract with the division fund, it shall notify
637	the division board of its insured values with respect to such
638	policies within a specified time mutually agreed to between the
639	corporation and the division board, after such assumption or
640	other coverage transaction, and the division fund shall treat
641	such policies as having been in effect as of June 30 of that
642	year. In the event of an assignment, the fund shall apply that
643	contract to such policies and treat Citizens Property Insurance
644	Corporation as if the corporation were the liquidated insurer
645	for the remaining term of the contract, and the corporation
646	shall have all rights and duties of the liquidated insurer
647	beginning on the date it provides coverage for such policies,
648	but the corporation is not subject to any preexisting rights,
649	liabilities, or duties of the liquidated insurer. The
650	assignment, including any unresolved issues between the
651	liquidated insurer and Citizens Property Insurance Corporation
652	under the contract, shall be provided for in the liquidation
653	order or otherwise determined by the court. However, if a
654	covered event occurs before the effective date of the
655	assignment, the corporation may not obtain coverage for such
656	policies under its contract with the fund and shall accept an
657	assignment of the liquidated insurer's contract as provided in
658	this paragraph.
659	(7)(6)  REVENUE BONDS.--
660	(a)  General provisions.--
661	1.  Upon the occurrence of a hurricane and a determination
662	that the moneys in the fund are or will be insufficient to pay
663	reimbursement at the levels promised in the reimbursement
664	contracts, the board may take the necessary steps under
665	paragraph (c) or paragraph (d) for the issuance of revenue bonds
666	for the benefit of the fund. The proceeds of such revenue bonds
667	may be used to make reimbursement payments under reimbursement
668	contracts; to refinance or replace previously existing
669	borrowings or financial arrangements; to pay interest on bonds;
670	to fund reserves for the bonds; to pay expenses incident to the
671	issuance or sale of any bond issued under this section,
672	including costs of validating, printing, and delivering the
673	bonds, costs of printing the official statement, costs of
674	publishing notices of sale of the bonds, and related
675	administrative expenses; or for such other purposes related to
676	the financial obligations of the fund as the board may
677	determine. The term of the bonds may not exceed 30 years. The
678	board may pledge or authorize the corporation to pledge all or a
679	portion of all revenues under subsection (6) (5) and under
680	paragraph (b) to secure such revenue bonds and the division
681	board may execute such agreements between the division board and
682	the issuer of any revenue bonds and providers of other financing
683	arrangements under paragraph (8)(b) (7)(b) as the division board
684	deems necessary to evidence, secure, preserve, and protect such
685	pledge. If reimbursement premiums received under subsection (6)
686	(5) or earnings on such premiums are used to pay debt service on
687	revenue bonds, such premiums and earnings shall be used only
688	after the use of the moneys derived from assessments under
689	paragraph (b). The funds, credit, property, or taxing power of
690	the state or political subdivisions of the state shall not be
691	pledged for the payment of such bonds. The division board may
692	also enter into agreements under paragraph (c) or paragraph (d)
693	for the purpose of issuing revenue bonds in the absence of a
694	hurricane upon a determination that such action would maximize
695	the ability of the fund to meet future obligations.
696	2.  The Legislature finds and declares that the issuance of
697	bonds under this subsection is for the public purpose of paying
698	the proceeds of the bonds to insurers, thereby enabling insurers
699	to pay the claims of policyholders to assure that policyholders
700	are able to pay the cost of construction, reconstruction,
701	repair, restoration, and other costs associated with damage to
702	property of policyholders of covered policies after the
703	occurrence of a hurricane.
704	(b)  Emergency assessments.--
705	1.  If the board determines that the amount of revenue
706	produced under subsection (6) (5) is insufficient to fund the
707	obligations, costs, and expenses of the fund and the
708	corporation, including repayment of revenue bonds and that
709	portion of the debt service coverage not met by reimbursement
710	premiums, the board shall direct the Office of Insurance
711	Regulation to levy, by order, an emergency assessment on direct
712	premiums for all property and casualty lines of business in this
713	state, including property and casualty business of surplus lines
714	insurers regulated under part VIII of chapter 626, but not
715	including any workers' compensation premiums or medical
716	malpractice premiums. As used in this subsection, the term
717	"property and casualty business" includes all lines of business
718	identified on Form 2, Exhibit of Premiums and Losses, in the
719	annual statement required of authorized insurers by s. 624.424
720	and any rule adopted under this section, except for those lines
721	identified as accident and health insurance and except for
722	policies written under the National Flood Insurance Program. The
723	assessment shall be specified as a percentage of direct written
724	premium and is subject to annual adjustments by the board in
725	order to meet debt obligations. The same percentage shall apply
726	to all policies in lines of business subject to the assessment
727	issued or renewed during the 12-month period beginning on the
728	effective date of the assessment.
729	2.  A premium is not subject to an annual assessment under
730	this paragraph in excess of 6 percent of premium with respect to
731	obligations arising out of losses attributable to any one
732	contract year, and a premium is not subject to an aggregate
733	annual assessment under this paragraph in excess of 10 percent
734	of premium. An annual assessment under this paragraph shall
735	continue as long as the revenue bonds issued with respect to
736	which the assessment was imposed are outstanding, including any
737	bonds the proceeds of which were used to refund the revenue
738	bonds, unless adequate provision has been made for the payment
739	of the bonds under the documents authorizing issuance of the
740	bonds.
741	3.  Emergency assessments shall be collected from
742	policyholders. Emergency assessments shall be remitted by
743	insurers as a percentage of direct written premium for the
744	preceding calendar quarter as specified in the order from the
745	Office of Insurance Regulation. The office shall verify the
746	accurate and timely collection and remittance of emergency
747	assessments and shall report the information to the division
748	board in a form and at a time specified by the division board.
749	Each insurer collecting assessments shall provide the
750	information with respect to premiums and collections as may be
751	required by the office to enable the office to monitor and
752	verify compliance with this paragraph.
753	4.  With respect to assessments of surplus lines premiums,
754	each surplus lines agent shall collect the assessment at the
755	same time as the agent collects the surplus lines tax required
756	by s. 626.932, and the surplus lines agent shall remit the
757	assessment to the Florida Surplus Lines Service Office created
758	by s. 626.921 at the same time as the agent remits the surplus
759	lines tax to the Florida Surplus Lines Service Office. The
760	emergency assessment on each insured procuring coverage and
761	filing under s. 626.938 shall be remitted by the insured to the
762	Florida Surplus Lines Service Office at the time the insured
763	pays the surplus lines tax to the Florida Surplus Lines Service
764	Office. The Florida Surplus Lines Service Office shall remit the
765	collected assessments to the fund or corporation as provided in
766	the order levied by the Office of Insurance Regulation. The
767	Florida Surplus Lines Service Office shall verify the proper
768	application of such emergency assessments and shall assist the
769	division board in ensuring the accurate and timely collection
770	and remittance of assessments as required by the board. The
771	Florida Surplus Lines Service Office shall annually calculate
772	the aggregate written premium on property and casualty business,
773	other than workers' compensation and medical malpractice,
774	procured through surplus lines agents and insureds procuring
775	coverage and filing under s. 626.938 and shall report the
776	information to the division board in a form and at a time
777	specified by the division board.
778	5.  Any assessment authority not used for a particular
779	contract year may be used for a subsequent contract year. If,
780	for a subsequent contract year, the board determines that the
781	amount of revenue produced under subsection (6) (5) is
782	insufficient to fund the obligations, costs, and expenses of the
783	fund and the corporation, including repayment of revenue bonds
784	and that portion of the debt service coverage not met by
785	reimbursement premiums, the board shall direct the Office of
786	Insurance Regulation to levy an emergency assessment up to an
787	amount not exceeding the amount of unused assessment authority
788	from a previous contract year or years, plus an additional 4
789	percent provided that the assessments in the aggregate do not
790	exceed the limits specified in subparagraph 2.
791	6.  The assessments otherwise payable to the corporation
792	under this paragraph shall be paid to the fund unless and until
793	the Office of Insurance Regulation and the Florida Surplus Lines
794	Service Office have received from the corporation and the fund a
795	notice, which shall be conclusive and upon which they may rely
796	without further inquiry, that the corporation has issued bonds
797	and the fund has no agreements in effect with local governments
798	under paragraph (c). On or after the date of the notice and
799	until the date the corporation has no bonds outstanding, the
800	fund shall have no right, title, or interest in or to the
801	assessments, except as provided in the fund's agreement with the
802	corporation.
803	7.  Emergency assessments are not premium and are not
804	subject to the premium tax, to the surplus lines tax, to any
805	fees, or to any commissions. An insurer is liable for all
806	assessments that it collects and must treat the failure of an
807	insured to pay an assessment as a failure to pay the premium. An
808	insurer is not liable for uncollectible assessments.
809	8.  When an insurer is required to return an unearned
810	premium, it shall also return any collected assessment
811	attributable to the unearned premium. A credit adjustment to the
812	collected assessment may be made by the insurer with regard to
813	future remittances that are payable to the fund or corporation,
814	but the insurer is not entitled to a refund.
815	9.  When a surplus lines insured or an insured who has
816	procured coverage and filed under s. 626.938 is entitled to the
817	return of an unearned premium, the Florida Surplus Lines Service
818	Office shall provide a credit or refund to the agent or such
819	insured for the collected assessment attributable to the
820	unearned premium prior to remitting the emergency assessment
821	collected to the fund or corporation.
822	10.  The exemption of medical malpractice insurance
823	premiums from emergency assessments under this paragraph is
824	repealed May 31, 2010, and medical malpractice insurance
825	premiums shall be subject to emergency assessments attributable
826	to loss events occurring in the contract years commencing on
827	June 1, 2010.
828	(c)  Revenue bond issuance through counties or
829	municipalities.--
830	1.  If the board elects to enter into agreements with local
831	governments for the issuance of revenue bonds for the benefit of
832	the fund, the division board shall enter into such contracts
833	with one or more local governments, including agreements
834	providing for the pledge of revenues, as are necessary to effect
835	such issuance. The governing body of a county or municipality is
836	authorized to issue bonds as defined in s. 125.013 or s. 166.101
837	from time to time to fund an assistance program, in conjunction
838	with the Florida Hurricane Catastrophe Fund, for the purposes
839	set forth in this section or for the purpose of paying the costs
840	of construction, reconstruction, repair, restoration, and other
841	costs associated with damage to properties of policyholders of
842	covered policies due to the occurrence of a hurricane by
843	assuring that policyholders located in this state are able to
844	recover claims under property insurance policies after a covered
845	event.
846	2.  In order to avoid needless and indiscriminate
847	proliferation, duplication, and fragmentation of such assistance
848	programs, any local government may provide for the payment of
849	fund reimbursements, regardless of whether or not the losses for
850	which reimbursement is made occurred within or outside of the
851	territorial jurisdiction of the local government.
852	3.  The state hereby covenants with holders of bonds issued
853	under this paragraph that the state will not repeal or abrogate
854	the power of the board to direct the Office of Insurance
855	Regulation to levy the assessments and to collect the proceeds
856	of the revenues pledged to the payment of such bonds as long as
857	any such bonds remain outstanding unless adequate provision has
858	been made for the payment of such bonds pursuant to the
859	documents authorizing the issuance of such bonds.
860	4.  There shall be no liability on the part of, and no
861	cause of action shall arise against any members or employees of
862	the governing body of a local government for any actions taken
863	by them in the performance of their duties under this paragraph.
864	(d)  Florida Hurricane Catastrophe Fund Finance
865	Corporation.--
866	1.  In addition to the findings and declarations in
867	subsection (1), the Legislature also finds and declares that:
868	a.  The public benefits corporation created under this
869	paragraph will provide a mechanism necessary for the cost-
870	effective and efficient issuance of bonds. This mechanism will
871	eliminate unnecessary costs in the bond issuance process,
872	thereby increasing the amounts available to pay reimbursement
873	for losses to property sustained as a result of hurricane
874	damage.
875	b.  The purpose of such bonds is to fund reimbursements
876	through the Florida Hurricane Catastrophe Fund to pay for the
877	costs of construction, reconstruction, repair, restoration, and
878	other costs associated with damage to properties of
879	policyholders of covered policies due to the occurrence of a
880	hurricane.
881	c.  The efficacy of the financing mechanism will be
882	enhanced by the corporation's ownership of the assessments, by
883	the insulation of the assessments from possible bankruptcy
884	proceedings, and by covenants of the state with the
885	corporation's bondholders.
886	2.a.  There is created a public benefits corporation, which
887	is an instrumentality of the state, to be known as the Florida
888	Hurricane Catastrophe Fund Finance Corporation.
889	b.  The corporation shall operate under a six-member five-
890	member board of directors consisting of the Governor or a
891	designee, the Chief Financial Officer or a designee, the
892	Attorney General or a designee, the Commissioner of the
893	Department of Agriculture and Consumer Services or a designee,
894	the director of the Division of Bond Finance of the State Board
895	of Administration, and the director of the Division senior
896	employee of the State Board of Administration responsible for
897	operations of the Florida Hurricane Catastrophe Fund of the
898	State Board of Administration.
899	c.  The corporation has all of the powers of corporations
900	under chapter 607 and under chapter 617, subject only to the
901	provisions of this subsection.
902	d.  The corporation may issue bonds and engage in such
903	other financial transactions as are necessary to provide
904	sufficient funds to achieve the purposes of this section.
905	e.  The corporation may invest in any of the investments
906	authorized under s. 215.47.
907	f.  There shall be no liability on the part of, and no
908	cause of action shall arise against, any member of the board of
909	directors members or employees of the corporation for any
910	actions taken by them in the performance of their duties under
911	this paragraph.
912	3.a.  In actions under chapter 75 to validate any bonds
913	issued by the corporation, the notice required by s. 75.06 shall
914	be published only in Leon County and in two newspapers of
915	general circulation in the state, and the complaint and order of
916	the court shall be served only on the State Attorney of the
917	Second Judicial Circuit.
918	b.  The state hereby covenants with holders of bonds of the
919	corporation that the state will not repeal or abrogate the power
920	of the board to direct the Office of Insurance Regulation to
921	levy the assessments and to collect the proceeds of the revenues
922	pledged to the payment of such bonds as long as any such bonds
923	remain outstanding unless adequate provision has been made for
924	the payment of such bonds pursuant to the documents authorizing
925	the issuance of such bonds.
926	4.  The bonds of the corporation are not a debt of the
927	state or of any political subdivision, and neither the state nor
928	any political subdivision is liable on such bonds. The
929	corporation does not have the power to pledge the credit, the
930	revenues, or the taxing power of the state or of any political
931	subdivision. The credit, revenues, or taxing power of the state
932	or of any political subdivision shall not be deemed to be
933	pledged to the payment of any bonds of the corporation.
934	5.a.  The property, revenues, and other assets of the
935	corporation; the transactions and operations of the corporation
936	and the income from such transactions and operations; and all
937	bonds issued under this paragraph and interest on such bonds are
938	exempt from taxation by the state and any political subdivision,
939	including the intangibles tax under chapter 199 and the income
940	tax under chapter 220. This exemption does not apply to any tax
941	imposed by chapter 220 on interest, income, or profits on debt
942	obligations owned by corporations other than the Florida
943	Hurricane Catastrophe Fund Finance Corporation.
944	b.  All bonds of the corporation shall be and constitute
945	legal investments without limitation for all public bodies of
946	this state; for all banks, trust companies, savings banks,
947	savings associations, savings and loan associations, and
948	investment companies; for all administrators, executors,
949	trustees, and other fiduciaries; for all insurance companies and
950	associations and other persons carrying on an insurance
951	business; and for all other persons who are now or may hereafter
952	be authorized to invest in bonds or other obligations of the
953	state and shall be and constitute eligible securities to be
954	deposited as collateral for the security of any state, county,
955	municipal, or other public funds. This sub-subparagraph shall be
956	considered as additional and supplemental authority and shall
957	not be limited without specific reference to this sub-
958	subparagraph.
959	6.  The corporation and its corporate existence shall
960	continue until terminated by law; however, no such law shall
961	take effect as long as the corporation has bonds outstanding
962	unless adequate provision has been made for the payment of such
963	bonds pursuant to the documents authorizing the issuance of such
964	bonds. Upon termination of the existence of the corporation, all
965	of its rights and properties in excess of its obligations shall
966	pass to and be vested in the state.
967	(e)  Protection of bondholders.--
968	1.  As long as the corporation has any bonds outstanding,
969	neither the fund nor the corporation shall have the authority to
970	file a voluntary petition under chapter 9 of the federal
971	Bankruptcy Code or such corresponding chapter or sections as may
972	be in effect, from time to time, and neither any public officer
973	nor any organization, entity, or other person shall authorize
974	the fund or the corporation to be or become a debtor under
975	chapter 9 of the federal Bankruptcy Code or such corresponding
976	chapter or sections as may be in effect, from time to time,
977	during any such period.
978	2.  The state hereby covenants with holders of bonds of the
979	corporation that the state will not limit or alter the denial of
980	authority under this paragraph or the rights under this section
981	vested in the fund or the corporation to fulfill the terms of
982	any agreements made with such bondholders or in any way impair
983	the rights and remedies of such bondholders as long as any such
984	bonds remain outstanding unless adequate provision has been made
985	for the payment of such bonds pursuant to the documents
986	authorizing the issuance of such bonds.
987	3.  Notwithstanding any other provision of law, any pledge
988	of or other security interest in revenue, money, accounts,
989	contract rights, general intangibles, or other personal property
990	made or created by the fund or the corporation shall be valid,
991	binding, and perfected from the time such pledge is made or
992	other security interest attaches without any physical delivery
993	of the collateral or further act and the lien of any such pledge
994	or other security interest shall be valid, binding, and
995	perfected against all parties having claims of any kind in tort,
996	contract, or otherwise against the fund or the corporation
997	irrespective of whether or not such parties have notice of such
998	claims. No instrument by which such a pledge or security
999	interest is created nor any financing statement need be recorded
1000	or filed.
1001	(8)(7)  ADDITIONAL POWERS AND DUTIES.--
1002	(a)  The board may authorize the division's procurement of
1003	procure reinsurance from reinsurers acceptable to the Office of
1004	Insurance Regulation for the purpose of maximizing the capacity
1005	of the fund and may enter into capital market transactions,
1006	including, but not limited to, industry loss warranties,
1007	catastrophe bonds, side-car arrangements, or financial contracts
1008	permissible for the State Board of Administration's board's
1009	usage under s. 215.47(10) and (11), consistent with prudent
1010	management of the fund.
1011	(b)  In addition to borrowing under subsection (7) (6), the
1012	board may also authorize the division to borrow from, or enter
1013	into other financing arrangements with, any market sources at
1014	prevailing interest rates.
1015	(c)  Each fiscal year, the Legislature shall appropriate
1016	from the investment income of the Florida Hurricane Catastrophe
1017	Fund an amount no less than $10 million and no more than 35
1018	percent of the investment income based upon the most recent
1019	fiscal year-end audited financial statements for the purpose of
1020	providing funding for local governments, state agencies, public
1021	and private educational institutions, and nonprofit
1022	organizations to support programs intended to improve hurricane
1023	preparedness, reduce potential losses in the event of a
1024	hurricane, provide research into means to reduce such losses,
1025	educate or inform the public as to means to reduce hurricane
1026	losses, assist the public in determining the appropriateness of
1027	particular upgrades to structures or in the financing of such
1028	upgrades, or protect local infrastructure from potential damage
1029	from a hurricane. Moneys shall first be available for
1030	appropriation under this paragraph in fiscal year 1997-1998.
1031	Moneys in excess of the $10 million specified in this paragraph
1032	shall not be available for appropriation under this paragraph if
1033	the board State Board of Administration finds that an
1034	appropriation of investment income from the fund would
1035	jeopardize the actuarial soundness of the fund.
1036	(d)  The division board may allow insurers to comply with
1037	reporting requirements and reporting format requirements by
1038	using alternative methods of reporting if the proper
1039	administration of the fund is not thereby impaired and if the
1040	alternative methods produce data which is consistent with the
1041	purposes of this section.
1042	(e)  In order to assure the equitable operation of the
1043	fund, the division board may impose a reasonable fee on an
1044	insurer to recover costs involved in reprocessing inaccurate,
1045	incomplete, or untimely exposure data submitted by the insurer.
1046	(9)(8)  ADVISORY COUNCIL.--The division State Board of
1047	Administration shall appoint a nine-member advisory council that
1048	consists of an actuary, a meteorologist, an engineer, a
1049	representative of insurers, a representative of insurance
1050	agents, a representative of reinsurers, and three consumers who
1051	shall also be representatives of other affected professions and
1052	industries, to provide the division board with information and
1053	advice in connection with its duties under this section. Members
1054	of the advisory council shall serve at the pleasure of the board
1055	and are eligible for per diem and travel expenses under s.
1056	112.061.
1057	(10)(9)  APPLICABILITY OF S. 19, ART. III OF THE STATE
1058	CONSTITUTION.--The Legislature finds that the Florida Hurricane
1059	Catastrophe Fund created by this section is a trust fund
1060	established for bond covenants, indentures, or resolutions
1061	within the meaning of s. 19(f)(3), Art. III of the State
1062	Constitution.
1063	(11)(10)  VIOLATIONS.--Any violation of this section or of
1064	rules adopted under this section constitutes a violation of the
1065	insurance code.
1066	(12)(11)  LEGAL PROCEEDINGS.--The division board is
1067	authorized to take any action necessary to enforce the rules,
1068	and the provisions and requirements of the reimbursement
1069	contract, required by and adopted pursuant to this section.
1070	(13)(12)  FEDERAL OR MULTISTATE CATASTROPHIC FUNDS.--Upon
1071	the creation of a federal or multistate catastrophic insurance
1072	or reinsurance program intended to serve purposes similar to the
1073	purposes of the fund created by this section, the division, upon
1074	approval by the board, State Board of Administration shall
1075	promptly make recommendations to the Legislature for
1076	coordination with the federal or multistate program, for
1077	termination of the fund, or for such other actions as the board
1078	finds appropriate in the circumstances.
1079	(14)(13)  REVERSION OF FUND ASSETS UPON TERMINATION.--The
1080	fund, the division, and the duties of the board under this
1081	section may be terminated only by law. Upon termination of the
1082	fund, all assets of the fund shall revert to the General Revenue
1083	Fund.
1084	(15)(14)  SEVERABILITY.--If any provision of this section
1085	or its application to any person or circumstance is held
1086	invalid, the invalidity does not affect other provisions or
1087	applications of the section which can be given effect without
1088	the invalid provision or application, and to this end the
1089	provisions of this section are declared severable.
1090	(16)(15)  COLLATERAL PROTECTION INSURANCE.--As used in this
1091	section and ss. 627.311 and 627.351, the term "collateral
1092	protection insurance" means commercial property insurance of
1093	which a creditor is the primary beneficiary and policyholder and
1094	which protects or covers an interest of the creditor arising out
1095	of a credit transaction secured by real or personal property.
1096	Initiation of such coverage is triggered by the mortgagor's
1097	failure to maintain insurance coverage as required by the
1098	mortgage or other lending document. Collateral protection
1099	insurance is not residential coverage.
1100	(17)(16)  TEMPORARY EMERGENCY OPTIONS FOR ADDITIONAL
1101	COVERAGE OPTIONS.--
1102	(a)  Findings and intent.--
1103	1.  The Legislature finds that:
1104	a.  Because of temporary disruptions in the market for
1105	catastrophic reinsurance, many property insurers were unable to
1106	procure reinsurance for the 2006 hurricane season with an
1107	attachment point below the insurers' respective Florida
1108	Hurricane Catastrophe Fund attachment points, were unable to
1109	procure sufficient amounts of such reinsurance, or were able to
1110	procure such reinsurance only by incurring substantially higher
1111	costs than in prior years.
1112	b.  The reinsurance market problems were responsible, at
1113	least in part, for substantial premium increases to many
1114	consumers and increases in the number of policies issued by the
1115	Citizens Property Insurance Corporation.
1116	c.  It is likely that the reinsurance market disruptions
1117	will not significantly abate prior to the 2007 hurricane season.
1118	2.  It is the intent of the Legislature to create a
1119	temporary emergency program, applicable to the 2007, 2008, and
1120	2009 hurricane seasons, to address these market disruptions and
1121	enable insurers, at their option, to procure additional coverage
1122	from the Florida Hurricane Catastrophe Fund.
1123	(b)  Applicability of other provisions of this
1124	section.--All provisions of this section and the rules adopted
1125	under this section apply to the program created by this
1126	subsection unless specifically superseded by this subsection.
1127	(c)  Optional coverage.--For the contract year commencing
1128	June 1, 2007, and ending May 31, 2008, the contract year
1129	commencing June 1, 2008, and ending May 31, 2009, and the
1130	contract year commencing June 1, 2009, and ending May 31, 2010,
1131	the board shall offer for each of such years the optional
1132	coverage as provided in this subsection.
1133	(d)  Additional definitions.--As used in this subsection,
1134	the term:
1135	1.  "TEACO options" means the temporary emergency
1136	additional coverage options created under this subsection.
1137	2.  "TEACO insurer" means an insurer that has opted to
1138	obtain coverage under the TEACO options in addition to the
1139	coverage provided to the insurer under its reimbursement
1140	contract.
1141	3.  "TEACO reimbursement premium" means the premium charged
1142	by the fund for coverage provided under the TEACO options.
1143	4.  "TEACO retention" means the amount of losses below
1144	which a TEACO insurer is not entitled to reimbursement from the
1145	fund under the TEACO option selected. A TEACO insurer's
1146	retention options shall be calculated as follows:
1147	a.  The division board shall calculate and report to each
1148	TEACO insurer the TEACO retention multiples. There shall be
1149	three TEACO retention multiples for defining coverage. Each
1150	multiple shall be calculated by dividing $3 billion, $4 billion,
1151	or $5 billion by the total estimated mandatory FHCF
1152	reimbursement premium assuming all insurers selected the 90-
1153	percent coverage level.
1154	b.  The TEACO retention multiples as determined under sub-
1155	subparagraph a. shall be adjusted to reflect the coverage level
1156	elected by the insurer. For insurers electing the 90-percent
1157	coverage level, the adjusted retention multiple is 100 percent
1158	of the amount determined under sub-subparagraph a. For insurers
1159	electing the 75-percent coverage level, the retention multiple
1160	is 120 percent of the amount determined under sub-subparagraph
1161	a. For insurers electing the 45-percent coverage level, the
1162	adjusted retention multiple is 200 percent of the amount
1163	determined under sub-subparagraph a.
1164	c.  An insurer shall determine its provisional TEACO
1165	retention by multiplying its estimated mandatory FHCF
1166	reimbursement premium by the applicable adjusted TEACO retention
1167	multiple and shall determine its actual TEACO retention by
1168	multiplying its actual mandatory FHCF reimbursement premium by
1169	the applicable adjusted TEACO retention multiple.
1170	d.  For TEACO insurers who experience multiple covered
1171	events causing loss during the contract year, the insurer's full
1172	TEACO retention shall be applied to each of the covered events
1173	causing the two largest losses for that insurer. For other
1174	covered events resulting in losses, the TEACO option does not
1175	apply and the insurer's retention shall be one-third of the full
1176	retention as calculated under paragraph (2)(e).
1177	5.  "TEACO addendum" means an addendum to the reimbursement
1178	contract reflecting the obligations of the fund and TEACO
1179	insurers under the program created by this subsection.
1180	6.  "FHCF" means the Florida Hurricane Catastrophe Fund.
1181	(e)  TEACO addendum.--
1182	1.  The TEACO addendum shall provide for reimbursement of
1183	TEACO insurers for covered events occurring during the contract
1184	year, in exchange for the TEACO reimbursement premium paid into
1185	the fund under paragraph (f). Any insurer writing covered
1186	policies has the option of choosing to accept the TEACO addendum
1187	for any of the 3 contract years that the coverage is offered.
1188	2.  The TEACO addendum shall contain a promise by the
1189	division board to reimburse the TEACO insurer for 45 percent, 75
1190	percent, or 90 percent of its losses from each covered event in
1191	excess of the insurer's TEACO retention, plus 5 percent of the
1192	reimbursed losses to cover loss adjustment expenses. The
1193	percentage shall be the same as the coverage level selected by
1194	the insurer under paragraph (5)(b) (4)(b).
1195	3.  The TEACO addendum shall provide that reimbursement
1196	amounts shall not be reduced by reinsurance paid or payable to
1197	the insurer from other sources.
1198	4.  The TEACO addendum shall also provide that the
1199	obligation of the division board with respect to all TEACO
1200	addenda shall not exceed an amount equal to two times the
1201	difference between the industry retention level calculated under
1202	paragraph (2)(e) and the $3 billion, $4 billion, or $5 billion
1203	industry TEACO retention level options actually selected, but in
1204	no event may the division's board's obligation exceed the actual
1205	claims-paying capacity of the fund plus the additional capacity
1206	created in paragraph (g). If the actual claims-paying capacity
1207	and the additional capacity created under paragraph (g) fall
1208	short of the division's board's obligations under the
1209	reimbursement contract, each insurer's share of the fund's
1210	capacity shall be prorated based on the premium an insurer pays
1211	for its mandatory reimbursement coverage and the premium paid
1212	for its optional TEACO coverage as each such premium bears to
1213	the total premiums paid to the fund times the available
1214	capacity.
1215	5.  The priorities, schedule, and method of reimbursements
1216	under the TEACO addendum shall be the same as provided under
1217	subsection (5) (4).
1218	6.  A TEACO insurer's maximum reimbursement for a single
1219	event shall be equal to the product of multiplying its mandatory
1220	FHCF premium by the difference between its FHCF retention
1221	multiple and its TEACO retention multiple under the TEACO option
1222	selected and by the coverage selected under paragraph (5)(b)
1223	(4)(b), plus an additional 5 percent for loss adjustment
1224	expenses. A TEACO insurer's maximum reimbursement under the
1225	TEACO option selected for a TEACO insurer's two largest events
1226	shall be twice its maximum reimbursement for a single event.
1227	(f)  TEACO reimbursement premiums.--
1228	1.  Each TEACO insurer shall pay to the fund, in the manner
1229	and at the time provided in the reimbursement contract for
1230	payment of reimbursement premiums, a TEACO reimbursement premium
1231	calculated as specified in this paragraph.
1232	2.  The insurer's TEACO reimbursement premium associated
1233	with the $3 billion retention option shall be equal to 85
1234	percent of a TEACO insurer's maximum reimbursement for a single
1235	event as calculated under subparagraph (e)6. The TEACO
1236	reimbursement premium associated with the $4 billion retention
1237	option shall be equal to 80 percent of a TEACO insurer's maximum
1238	reimbursement for a single event as calculated under
1239	subparagraph (e)6. The TEACO premium associated with the $5
1240	billion retention option shall be equal to 75 percent of a TEACO
1241	insurer's maximum reimbursement for a single event as calculated
1242	under subparagraph (e)6.
1243	(g)  Effect on claims-paying capacity of the fund.--For the
1244	contract term commencing June 1, 2007, the contract year
1245	commencing June 1, 2008, and the contract term beginning June 1,
1246	2009, the program created by this subsection shall increase the
1247	claims-paying capacity of the fund as provided in subparagraph
1248	(5)(c)1. (4)(c)1. by an amount equal to two times the difference
1249	between the industry retention level calculated under paragraph
1250	(2)(e) and the $3 billion industry TEACO retention level
1251	specified in sub-subparagraph (d)4.a. The additional capacity
1252	shall apply only to the additional coverage provided by the
1253	TEACO option and shall not otherwise affect any insurer's
1254	reimbursement from the fund.
1255	(18)(17)  TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.--
1256	(a)  Findings and intent.--
1257	1.  The Legislature finds that:
1258	a.  Because of temporary disruptions in the market for
1259	catastrophic reinsurance, many property insurers were unable to
1260	procure sufficient amounts of reinsurance for the 2006 hurricane
1261	season or were able to procure such reinsurance only by
1262	incurring substantially higher costs than in prior years.
1263	b.  The reinsurance market problems were responsible, at
1264	least in part, for substantial premium increases to many
1265	consumers and increases in the number of policies issued by
1266	Citizens Property Insurance Corporation.
1267	c.  It is likely that the reinsurance market disruptions
1268	will not significantly abate prior to the 2008 2007 hurricane
1269	season.
1270	2.  It is the intent of the Legislature to create options
1271	for insurers to purchase a temporary increased coverage limit
1272	above the statutorily determined limit in subparagraph (5)(c)1.
1273	(4)(c)1., applicable for the 2007, 2008, and 2009 hurricane
1274	seasons, to address market disruptions and enable insurers, at
1275	their option, to procure additional coverage from the Florida
1276	Hurricane Catastrophe Fund.
1277	(b)  Applicability of other provisions of this
1278	section.--All provisions of this section and the rules adopted
1279	under this section apply to the coverage created by this
1280	subsection unless specifically superseded by provisions in this
1281	subsection.
1282	(c)  Optional coverage.--For the contract year commencing
1283	June 1, 2007, and ending May 31, 2008, the contract year
1284	commencing June 1, 2008, and ending May 31, 2009, and the
1285	contract year commencing June 1, 2009, and ending May 31, 2010,
1286	the board shall offer, for each of such years, the optional
1287	coverage as provided in this subsection.
1288	(d)  Additional definitions.--As used in this subsection,
1289	the term:
1290	1.  "FHCF" means Florida Hurricane Catastrophe Fund.
1291	2.  "FHCF reimbursement premium" means the premium paid by
1292	an insurer for its coverage as a mandatory participant in the
1293	FHCF, but does not include additional premiums for optional
1294	coverages.
1295	3.  "Payout multiple" means the number or multiple created
1296	by dividing the statutorily defined claims-paying capacity as
1297	determined in subparagraph (5)(c)1. (4)(c)1. by the aggregate
1298	reimbursement premiums paid by all insurers estimated or
1299	projected as of calendar year-end.
1300	4.  "TICL" means the temporary increase in coverage limit.
1301	5.  "TICL options" means the temporary increase in coverage
1302	options created under this subsection.
1303	6.  "TICL insurer" means an insurer that has opted to
1304	obtain coverage under the TICL options addendum in addition to
1305	the coverage provided to the insurer under its FHCF
1306	reimbursement contract.
1307	7.  "TICL reimbursement premium" means the premium charged
1308	by the fund for coverage provided under the TICL option.
1309	8.  "TICL coverage multiple" means the coverage multiple
1310	when multiplied by an insurer's FHCF reimbursement premium that
1311	defines the temporary increase in coverage limit.
1312	9.  "TICL coverage" means the coverage for an insurer's
1313	losses above the insurer's statutorily determined claims-paying
1314	capacity based on the claims-paying limit in subparagraph
1315	(5)(c)1. (4)(c)1., which an insurer selects as its temporary
1316	increase in coverage from the fund under the TICL options
1317	selected. A TICL insurer's increased coverage limit options
1318	shall be calculated as follows:
1319	a.  The division board shall calculate and report to each
1320	TICL insurer the TICL coverage multiples based on nine 12
1321	options for increasing the insurer's FHCF coverage limit. Each
1322	TICL coverage multiple shall be calculated by dividing $1
1323	billion, $2 billion, $3 billion, $4 billion, $5 billion, $6
1324	billion, $7 billion, $8 billion, and $9 billion, $10 billion,
1325	$11 billion, or $12 billion by the total estimated aggregate
1326	FHCF reimbursement premiums for the 2007-2008 contract year, the
1327	2008-2009 contract year, and the 2009-2010 contract year.
1328	b.  The TICL insurer's increased coverage shall be the FHCF
1329	reimbursement premium multiplied by the TICL coverage multiple
1330	for the TICL option selected. In order to determine an insurer's
1331	total limit of coverage, an insurer shall add its TICL coverage
1332	multiple to its payout multiple. The total shall represent a
1333	number that, when multiplied by an insurer's FHCF reimbursement
1334	premium for a given reimbursement contract year, defines an
1335	insurer's total limit of FHCF reimbursement coverage for that
1336	reimbursement contract year.
1337	10.  "TICL options addendum" means an addendum to the
1338	reimbursement contract reflecting the obligations of the fund
1339	and insurers selecting an option to increase an insurer's FHCF
1340	coverage limit.
1341	(e)  TICL options addendum.--
1342	1.  The TICL options addendum shall provide for
1343	reimbursement of TICL insurers for covered events occurring
1344	between June 1, 2007, and May 31, 2008, and between June 1,
1345	2008, and May 31, 2009, or between June 1, 2009, and May 31,
1346	2010, in exchange for the TICL reimbursement premium paid into
1347	the fund under paragraph (f). Any insurer writing covered
1348	policies has the option of selecting an increased limit of
1349	coverage under the TICL options addendum and shall select such
1350	coverage at the time that it executes the FHCF reimbursement
1351	contract.
1352	2.  The TICL addendum shall contain a promise by the board
1353	to reimburse the TICL insurer for 70 percent of the TICL
1354	coverage for the TICL option selected for the insurer's 45
1355	percent, 75 percent, or 90 percent of its losses from each
1356	covered event in excess of the insurer's retention, plus 5
1357	percent of the reimbursed losses to cover loss adjustment
1358	expenses. The percentage shall be the same as the coverage level
1359	selected by the insurer under paragraph (4)(b).
1360	3.  The TICL addendum shall provide that reimbursement
1361	amounts shall not be reduced by reinsurance paid or payable to
1362	the insurer from other sources.
1363	4.  The priorities, schedule, and method of reimbursements
1364	under the TICL addendum shall be the same as provided under
1365	subsection (5) (4).
1366	(f)  TICL reimbursement premiums.--Each TICL insurer shall
1367	pay to the fund, in the manner and at the time provided in the
1368	reimbursement contract for payment of reimbursement premiums, a
1369	TICL reimbursement premium determined as specified in subsection
1370	(5).
1371	(g)  Effect on claims-paying capacity of the fund.--For the
1372	contract terms commencing June 1, 2007, June 1, 2008, and June
1373	1, 2009, the program created by this subsection shall increase
1374	the claims-paying capacity of the fund as provided in
1375	subparagraph (5)(c)1. (4)(c)1. by an amount not to exceed $6 $12
1376	billion and shall depend on the TICL coverage options selected
1377	and the number of insurers that select the TICL optional
1378	coverage. The additional capacity shall apply only to the
1379	additional coverage provided under the TICL options and shall
1380	not otherwise affect any insurer's reimbursement from the fund
1381	if the insurer chooses not to select the temporary option to
1382	increase its limit of coverage under the FHCF.
1383	(h)  Increasing the claims-paying capacity of the
1384	fund.--For the contract years commencing June 1, 2007, June 1,
1385	2008, and June 1, 2009, the board may increase the claims-paying
1386	capacity of the fund as provided in paragraph (g) by an amount
1387	not to exceed $4 billion in four $1 billion options and shall
1388	depend on the TICL coverage options selected and the number of
1389	insurers that select the TICL optional coverage. Each insurer's
1390	TICL premium shall be calculated based upon the additional limit
1391	of increased coverage that the insurer selects. Such limit is
1392	determined by multiplying the TICL multiple associated with one
1393	of the four options times the insurer's FHCF reimbursement
1394	premium. The reimbursement premium associated with the
1395	additional coverage provided in this paragraph shall be
1396	determined as specified in subsection (6) (5).
1397	Section 2.  Section 215.557, Florida Statutes, is amended
1398	to read:
1399	215.557  Reports of insured values.--The reports of insured
1400	values under covered policies by zip code submitted to the
1401	Division of the Florida Hurricane Catastrophe Fund State Board
1402	of Administration pursuant to s. 215.555, as created by s. 1,
1403	ch. 93-409, Laws of Florida, or similar legislation, are
1404	confidential and exempt from the provisions of s. 119.07(1) and
1405	s. 24(a), Art. I of the State Constitution.
1406	Section 3.  Paragraph (h) of subsection (4) of section
1407	215.5586, Florida Statutes, is amended to read:
1408	215.5586  My Safe Florida Home Program.--There is
1409	established within the Department of Financial Services the My
1410	Safe Florida Home Program. The department shall provide fiscal
1411	accountability, contract management, and strategic leadership
1412	for the program, consistent with this section. This section does
1413	not create an entitlement for property owners or obligate the
1414	state in any way to fund the inspection or retrofitting of
1415	residential property in this state. Implementation of this
1416	program is subject to annual legislative appropriations. It is
1417	the intent of the Legislature that the My Safe Florida Home
1418	Program provide inspections for at least 400,000 site-built,
1419	single-family, residential properties and provide grants to at
1420	least 35,000 applicants before June 30, 2009. The program shall
1421	develop and implement a comprehensive and coordinated approach
1422	for hurricane damage mitigation that shall include the
1423	following:
1424	(4)  ADVISORY COUNCIL.--There is created an advisory
1425	council to provide advice and assistance to the department
1426	regarding administration of the program. The advisory council
1427	shall consist of:
1428	(h)  The director senior officer of the Division of the
1429	Florida Hurricane Catastrophe Fund.
1430
1431	Members appointed under paragraphs (a)-(d) shall serve at the
1432	pleasure of the Financial Services Commission. Members appointed
1433	under paragraphs (e) and (f) shall serve at the pleasure of the
1434	appointing officer. All other members shall serve voting ex
1435	officio. Members of the advisory council shall serve without
1436	compensation but may receive reimbursement as provided in s.
1437	112.061 for per diem and travel expenses incurred in the
1438	performance of their official duties.
1439	Section 4.  Subsection (1) of section 215.559, Florida
1440	Statutes, is amended to read:
1441	215.559  Hurricane Loss Mitigation Program.--
1442	(1)  There is created a Hurricane Loss Mitigation Program.
1443	The Legislature shall annually appropriate $10 million of the
1444	moneys authorized for appropriation under s. 215.555(8)(c) s.
1445	215.555(7)(c) from the Florida Hurricane Catastrophe Fund to the
1446	Department of Community Affairs for the purposes set forth in
1447	this section.
1448	Section 5.  Subsection (2) and paragraph (a) of subsection
1449	(3) of section 215.5595, Florida Statutes, are amended to read:
1450	215.5595  Insurance Capital Build-Up Incentive Program.--
1451	(2)  The purpose of this section is to provide funds in
1452	exchange for surplus notes to be issued by new or existing
1453	authorized residential property insurers under the Insurance
1454	Capital Build-Up Incentive Program administered by the Division
1455	of the Florida Hurricane Catastrophe Fund of the State Board of
1456	Administration, under the following conditions:
1457	(a)  The amount of state funds provided in exchange for a
1458	surplus note to any insurer, other than an insurer writing only
1459	manufactured housing policies, may not exceed $25 million or 20
1460	percent of the total amount of funds appropriated for the
1461	program, whichever is greater. The amount of the surplus note
1462	for any insurer or insurer group writing residential property
1463	insurance covering only manufactured housing may not exceed $7
1464	million.
1465	(b)  On or after April 1, 2008, the insurer must contribute
1466	an amount of new capital to its surplus which is at least equal
1467	to the amount of the surplus note and must apply to the board by
1468	September 1, 2008. If an insurer applies after September 1,
1469	2008, but before June 1, 2009, the amount of the surplus note is
1470	limited to one-half of the new capital that the insurer
1471	contributes to its surplus, except that an insurer writing only
1472	manufactured housing policies is eligible to receive a surplus
1473	note of up to $7 million. For purposes of this section, new
1474	capital must be in the form of cash or cash equivalents as
1475	specified in s. 625.012(1).
1476	(c)  The insurer's surplus, new capital, and the surplus
1477	note must total at least $50 million, except for insurers
1478	writing residential property insurance covering only
1479	manufactured housing. The insurer's surplus, new capital, and
1480	the surplus note must total at least $14 million for insurers
1481	writing only residential property insurance covering
1482	manufactured housing policies as provided in paragraph (a).
1483	(d)  The insurer must commit to increase its writings of
1484	residential property insurance, including the peril of wind, and
1485	to meet a minimum writing ratio of net written premium to
1486	surplus of at least 1:1 for the first calendar year after
1487	receiving the state funds or renegotiation of the surplus note,
1488	1.5:1 for the second calendar year, and 2:1 for the remaining
1489	term of the surplus note. Alternatively, the insurer must meet a
1490	minimum writing ratio of gross written premium to surplus of at
1491	least 3:1 for the first calendar year after receiving the state
1492	funds or renegotiation of the surplus note, 4.5:1 for the second
1493	calendar year, and 6:1 for the remaining term of the surplus
1494	note. The writing ratios shall be determined by the Office of
1495	Insurance Regulation and certified quarterly to the board. For
1496	this purpose, the term "premium" means premium for residential
1497	property insurance in this state, including the peril of wind,
1498	and "surplus" means the new capital and surplus note of the
1499	insurer. An insurer that makes an initial application after July
1500	1, 2008, must also commit to writing at least 15 percent of its
1501	net or gross written premium for new policies, not including
1502	renewal premiums, for policies taken out of Citizens Property
1503	Insurance Corporation, during each of the first 3 years after
1504	receiving the state funds in exchange for the surplus note,
1505	which shall be determined by the Office of Insurance Regulation
1506	and certified annually to the board. The insurer must also
1507	commit to maintaining a level of surplus and reinsurance
1508	sufficient to cover in excess of its 1-in-100 year probable
1509	maximum loss, as determined by a hurricane loss model accepted
1510	by the Florida Commission on Hurricane Loss Projection
1511	Methodology, which shall be determined by the Office of
1512	Insurance Regulation and certified annually to the board. If the
1513	board determines that the insurer has failed to meet any of the
1514	requirements of this paragraph during the term of the surplus
1515	note, the board may increase the interest rate, accelerate the
1516	repayment of interest and principal, or shorten the term of the
1517	surplus note, subject to approval by the Commissioner of
1518	Insurance of payments by the insurer of principal and interest
1519	as provided in paragraph (f).
1520	(e)  If the requirements of this section are met, the board
1521	may approve an application by an insurer for funds in exchange
1522	for issuance of a surplus note, unless the board determines that
1523	the financial condition of the insurer and its business plan for
1524	writing residential property insurance in Florida places an
1525	unreasonably high level of financial risk to the state of
1526	nonpayment in full of the interest and principal. The board
1527	shall consult with the Office of Insurance Regulation and may
1528	contract with independent financial and insurance consultants in
1529	making this determination.
1530	(f)  The surplus note must be repayable to the state with a
1531	term of 20 years. The surplus note shall accrue interest on the
1532	unpaid principal balance at a rate equivalent to the 10-year
1533	U.S. Treasury Bond rate, require the payment only of interest
1534	during the first 3 years, and include such other terms as
1535	approved by the board. The board may charge late fees up to 5
1536	percent for late payments or other late remittances. Payment of
1537	principal, interest, or late fees by the insurer on the surplus
1538	note must be approved by the Commissioner of Insurance, who
1539	shall approve such payment unless the commissioner determines
1540	that such payment will substantially impair the financial
1541	condition of the insurer. If such a determination is made, the
1542	commissioner shall approve such payment that will not
1543	substantially impair the financial condition of the insurer.
1544	(g)  The total amount of funds available for the program is
1545	limited to the amount appropriated by the Legislature for this
1546	purpose. If the amount of surplus notes requested by insurers
1547	exceeds the amount of funds available, the board may prioritize
1548	insurers that are eligible and approved, with priority for
1549	funding given to insurers writing only manufactured housing
1550	policies, regardless of the date of application, based on the
1551	financial strength of the insurer, the viability of its proposed
1552	business plan for writing additional residential property
1553	insurance in the state, and the effect on competition in the
1554	residential property insurance market. Between insurers writing
1555	residential property insurance covering manufactured housing,
1556	priority shall be given to the insurer writing the highest
1557	percentage of its policies covering manufactured housing.
1558	(h)  Notwithstanding paragraph (d), a newly formed
1559	manufactured housing insurer that is eligible for a surplus note
1560	under this section shall meet the premium to surplus ratio
1561	provisions of s. 624.4095.
1562	(i)  As used in this section, "an insurer writing only
1563	manufactured housing policies" includes:
1564	1.  A Florida domiciled insurer that begins writing
1565	personal lines residential manufactured housing policies in
1566	Florida after March 1, 2007, and that removes a minimum of
1567	50,000 policies from Citizens Property Insurance Corporation
1568	without accepting a bonus, provided at least 25 percent of its
1569	policies cover manufactured housing. Such an insurer may count
1570	any funds above the minimum capital and surplus requirement that
1571	were contributed into the insurer after March 1, 2007, as new
1572	capital under this section.
1573	2.  A Florida domiciled insurer that writes at least 40
1574	percent of its policies covering manufactured housing in
1575	Florida.
1576	(3)  As used in this section, the term:
1577	(a)  "Board" means the Division of the Florida Hurricane
1578	Catastrophe Fund of the State Board of Administration.
1579	Section 6.  Paragraph (c) of subsection (1), paragraphs
1580	(a), (b), (d), (f), and (g) of subsection (2), and paragraph (c)
1581	of subsection (3) of section 627.0628, Florida Statutes, are
1582	amended to read:
1583	627.0628  Florida Commission on Hurricane Loss Projection
1584	Methodology; public records exemption; public meetings
1585	exemption.--
1586	(1)  LEGISLATIVE FINDINGS AND INTENT.--
1587	(c)  It is the intent of the Legislature to create the
1588	Florida Commission on Hurricane Loss Projection Methodology as a
1589	panel of experts to provide the most actuarially sophisticated
1590	guidelines and standards for projection of hurricane losses
1591	possible, given the current state of actuarial science. It is
1592	the further intent of the Legislature that such standards and
1593	guidelines must be used by the Division of the Florida Hurricane
1594	Catastrophe Fund of the State Board of Administration in
1595	developing reimbursement premium rates for the Florida Hurricane
1596	Catastrophe Fund, and, subject to paragraph (3)(d) (3)(c), must
1597	be used by insurers in rate filings under s. 627.062 unless the
1598	way in which such standards and guidelines were applied by the
1599	insurer was erroneous, as shown by a preponderance of the
1600	evidence.
1601	(2)  COMMISSION CREATED.--
1602	(a)  There is created the Florida Commission on Hurricane
1603	Loss Projection Methodology, which is assigned to the Division
1604	of the Florida Hurricane Catastrophe Fund of the State Board of
1605	Administration. For the purposes of this section, the term
1606	"commission" means the Florida Commission on Hurricane Loss
1607	Projection Methodology. The commission shall be administratively
1608	housed within the State Board of Administration, but it shall
1609	independently exercise the powers and duties specified in this
1610	section.
1611	(b)  The commission shall consist of the following 11
1612	members:
1613	1.  The insurance consumer advocate.
1614	2.  The director of the Division of the Florida Hurricane
1615	Catastrophe Fund senior employee of the State Board of
1616	Administration responsible for operations of the Florida
1617	Hurricane Catastrophe Fund.
1618	3.  The Executive Director of the Citizens Property
1619	Insurance Corporation.
1620	4.  The Director of the Division of Emergency Management of
1621	the Department of Community Affairs.
1622	5.  The actuary member of the Florida Hurricane Catastrophe
1623	Fund Advisory Council.
1624	6.  An employee of the office who is an actuary responsible
1625	for property insurance rate filings and who is appointed by the
1626	director of the office.
1627	7.  Five members appointed by the Chief Financial Officer,
1628	as follows:
1629	a.  An actuary who is employed full time by a property and
1630	casualty insurer which was responsible for at least 1 percent of
1631	the aggregate statewide direct written premium for homeowner's
1632	insurance in the calendar year preceding the member's
1633	appointment to the commission.
1634	b.  An expert in insurance finance who is a full-time
1635	member of the faculty of the State University System and who has
1636	a background in actuarial science.
1637	c.  An expert in statistics who is a full-time member of
1638	the faculty of the State University System and who has a
1639	background in insurance.
1640	d.  An expert in computer system design who is a full-time
1641	member of the faculty of the State University System.
1642	e.  An expert in meteorology who is a full-time member of
1643	the faculty of the State University System and who specializes
1644	in hurricanes.
1645	(d)  The board of the Division of the Florida Hurricane
1646	Catastrophe Fund of the State Board of Administration shall
1647	annually appoint one of the members of the commission to serve
1648	as chair.
1649	(f)  The Division of the Florida Hurricane Catastrophe Fund
1650	of the State Board of Administration shall, as a cost of
1651	administration of the Florida Hurricane Catastrophe Fund,
1652	provide for travel, expenses, and staff support for the
1653	commission.
1654	(g)  There shall be no liability on the part of, and no
1655	cause of action of any nature shall arise against, any member of
1656	the commission, any member of the State Board of Administration,
1657	or any employee of the Division of the Florida Hurricane
1658	Catastrophe Fund of the State Board of Administration for any
1659	action taken in the performance of their duties under this
1660	section. In addition, the commission may, in writing, waive any
1661	potential cause of action for negligence of a consultant,
1662	contractor, or contract employee engaged to assist the
1663	commission.
1664	(3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
1665	(c)  In establishing reimbursement premiums for the Florida
1666	Hurricane Catastrophe Fund, the Division of the Florida
1667	Hurricane Catastrophe Fund State Board of Administration must,
1668	to the extent feasible, employ actuarial methods, principles,
1669	standards, models, or output ranges found by the commission to
1670	be accurate or reliable.
1671	Section 7.  This act shall take effect July 1, 2009.

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