HB 1081

1	A bill to be entitled
2	An act relating to Citizens Property Insurance
3	Corporation; amending s. 627.351, F.S.; revising
4	legislative intent; requiring that the corporation achieve
5	actuarially sound rates on or before a specified date;
6	requiring that the corporation take certain actions to
7	achieve actuarially sound rates; providing requirements
8	for the determination of actuarially sound rates;
9	requiring that the corporation file a plan of withdrawal
10	on or before a specified date if it does not achieve
11	actuarially sound rates by a specified deadline;
12	establishing criteria for actuarially sound rates;
13	prohibiting the Office of Insurance Regulation from having
14	authority with respect to the corporation's rates;
15	authorizing a policyholder to challenge his or her premium
16	in accordance with specified provisions of state law;
17	prohibiting a challenge to the rates of the corporation;
18	amending s. 624.430, F.S.; prohibiting the Office of
19	Insurance Regulation from denying the corporation's plan
20	of withdrawal; providing an effective date.
21
22	Be It Enacted by the Legislature of the State of Florida:
23
24	Section 1.  Paragraphs (a) and (n) of subsection (6) of
25	section 627.351, Florida Statutes, are amended to read:
26	627.351  Insurance risk apportionment plans.-
27	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
28	(a)1.  It is the public purpose of this subsection to
29	ensure the existence of an orderly market for property insurance
30	for Floridians and Florida businesses. The Legislature finds
31	that private insurers are unwilling or unable to provide
32	affordable property insurance coverage in this state to the
33	extent sought and needed. The absence of affordable property
34	insurance threatens the public health, safety, and welfare and
35	likewise threatens the economic health of the state. The state
36	therefore has a compelling public interest and a public purpose
37	to assist in assuring that property in the state is insured and
38	that it is insured at affordable rates so as to facilitate the
39	remediation, reconstruction, and replacement of damaged or
40	destroyed property in order to reduce or avoid the negative
41	effects otherwise resulting to the public health, safety, and
42	welfare, to the economy of the state, and to the revenues of the
43	state and local governments which are needed to provide for the
44	public welfare. It is necessary, therefore, to allow the
45	Citizens Property Insurance Corporation to be restored to its
46	prior status as an insurer of last resort and to allow the
47	corporation to develop actuarially sound rates over a period of
48	time so that it can pay claims promptly and fulfill its
49	statutory obligations. To that end, Citizens Property Insurance
50	Corporation shall achieve actuarially sound rates within the
51	time period specified in this subsection or must file a plan to
52	withdraw from the state pursuant to the requirements in s.
53	624.430 provide affordable property insurance to applicants who
54	are in good faith entitled to procure insurance through the
55	voluntary market but are unable to do so. The Legislature
56	intends by this subsection that affordable property insurance be
57	provided and that it continue to be provided, as long as
58	necessary, through Citizens Property Insurance Corporation, a
59	government entity that is an integral part of the state, and
60	that is not a private insurance company. To that end, Citizens
61	Property Insurance Corporation shall strive to increase the
62	availability of affordable property insurance in this state,
63	while achieving efficiencies and economies, and while providing
64	service to policyholders, applicants, and agents which is no
65	less than the quality generally provided in the voluntary
66	market, for the achievement of the foregoing public purposes.
67	Because it is essential for this government entity to have the
68	maximum financial resources to pay claims following a
69	catastrophic hurricane, it is the intent of the Legislature that
70	Citizens Property Insurance Corporation be allowed to achieve
71	actuarially sound rates so that it can continue to be an
72	integral part of the state and that the income of the
73	corporation be exempt from federal income taxation and that
74	interest on the debt obligations issued by the corporation be
75	exempt from federal income taxation.
76	2.  The Residential Property and Casualty Joint
77	Underwriting Association originally created by this statute
78	shall be known, as of July 1, 2002, as the Citizens Property
79	Insurance Corporation. The corporation shall provide insurance
80	for residential and commercial property, for applicants who are
81	in good faith entitled, but are unable, to procure insurance
82	through the voluntary market. The corporation shall operate
83	pursuant to a plan of operation approved by order of the
84	Financial Services Commission. The plan is subject to continuous
85	review by the commission. The commission may, by order, withdraw
86	approval of all or part of a plan if the commission determines
87	that conditions have changed since approval was granted and that
88	the purposes of the plan require changes in the plan. The
89	corporation shall continue to operate pursuant to the plan of
90	operation approved by the Office of Insurance Regulation until
91	October 1, 2006. For the purposes of this subsection,
92	residential coverage includes both personal lines residential
93	coverage, which consists of the type of coverage provided by
94	homeowner's, mobile home owner's, dwelling, tenant's,
95	condominium unit owner's, and similar policies, and commercial
96	lines residential coverage, which consists of the type of
97	coverage provided by condominium association, apartment
98	building, and similar policies.
99	3.  Effective January 1, 2009, a personal lines residential
100	structure that has a dwelling replacement cost of $2 million or
101	more, or a single condominium unit that has a combined dwelling
102	and content replacement cost of $2 million or more is not
103	eligible for coverage by the corporation. Such dwellings insured
104	by the corporation on December 31, 2008, may continue to be
105	covered by the corporation until the end of the policy term.
106	However, such dwellings that are insured by the corporation and
107	become ineligible for coverage due to the provisions of this
108	subparagraph may reapply and obtain coverage if the property
109	owner provides the corporation with a sworn affidavit from one
110	or more insurance agents, on a form provided by the corporation,
111	stating that the agents have made their best efforts to obtain
112	coverage and that the property has been rejected for coverage by
113	at least one authorized insurer and at least three surplus lines
114	insurers. If such conditions are met, the dwelling may be
115	insured by the corporation for up to 3 years, after which time
116	the dwelling is ineligible for coverage. The office shall
117	approve the method used by the corporation for valuing the
118	dwelling replacement cost for the purposes of this subparagraph.
119	If a policyholder is insured by the corporation prior to being
120	determined to be ineligible pursuant to this subparagraph and
121	such policyholder files a lawsuit challenging the determination,
122	the policyholder may remain insured by the corporation until the
123	conclusion of the litigation.
124	4.  It is the intent of the Legislature that policyholders,
125	applicants, and agents of the corporation receive service and
126	treatment of the highest possible level but never less than that
127	generally provided in the voluntary market. It also is intended
128	that the corporation be held to service standards no less than
129	those applied to insurers in the voluntary market by the office
130	with respect to responsiveness, timeliness, customer courtesy,
131	and overall dealings with policyholders, applicants, or agents
132	of the corporation.
133	5.  Effective January 1, 2009, a personal lines residential
134	structure that is located in the "wind-borne debris region," as
135	defined in s. 1609.2, International Building Code (2006), and
136	that has an insured value on the structure of $750,000 or more
137	is not eligible for coverage by the corporation unless the
138	structure has opening protections as required under the Florida
139	Building Code for a newly constructed residential structure in
140	that area. A residential structure shall be deemed to comply
141	with the requirements of this subparagraph if it has shutters or
142	opening protections on all openings and if such opening
143	protections complied with the Florida Building Code at the time
144	they were installed.
145	(n)1.  As of January 1, 2016, the rates of the corporation
146	shall be actuarially sound as provided in this paragraph. If the
147	corporation does not achieve actuarially sound rates on or
148	before January 1, 2016, it must file a plan of withdrawal
149	pursuant to s. 624.430 by July 1, 2016.
150	2.  In order to achieve actuarially sound rates by January
151	1, 2016, the corporation shall phase in rate changes over a 5-
152	year period beginning January 1, 2011, such that the gap between
153	the then-current rates and the rates required to achieve
154	actuarial soundness decreases by approximately 20 percent each
155	year over the 5-year period. During the 5-year period, rate
156	decreases are permitted to the extent that they are actuarially
157	sound and phased in during that period.
158	3.  In determining the actuarial soundness of its rates,
159	the corporation:
160	a.  May consider the applicable generally accepted and
161	reasonable actuarial techniques as enumerated in s.
162	627.062(2)(b)1., 2., 4., 5., 7., 9., 10., 11., 12., and 14.,
163	(e)1., 3., 4., 5., and 6., (j), and (5).
164	b.  Shall include in its rates the following factors for
165	the cost of reinsurance to cover its projected 100-year probable
166	maximum loss:
167	(I)  The actual cost of reinsurance purchased from the
168	Florida Hurricane Catastrophe Fund or in the private reinsurance
169	market; and
170	(II)  The presumed cost of reinsurance not purchased which
171	reflects the market value of future corporation assessments
172	against corporation and noncorporation policyholders.
173	c.  May use one or more models found to be accurate and
174	reliable by the Florida Commission on Hurricane Loss Projection
175	Methodology.
176	4.  The office shall have no authority with respect to the
177	rates of the corporation.
178	5.  A policyholder may challenge his or her premium as
179	provided in s. 627.371. The rates of the corporation may not be
180	challenged. Rates for coverage provided by the corporation shall
181	be actuarially sound and subject to the requirements of s.
182	627.062, except as otherwise provided in this paragraph. The
183	corporation shall file its recommended rates with the office at
184	least annually. The corporation shall provide any additional
185	information regarding the rates which the office requires. The
186	office shall consider the recommendations of the board and issue
187	a final order establishing the rates for the corporation within
188	45 days after the recommended rates are filed. The corporation
189	may not pursue an administrative challenge or judicial review of
190	the final order of the office.
191	6.2.  In addition to the rates otherwise determined
192	pursuant to this paragraph, the corporation shall impose and
193	collect an amount equal to the premium tax provided for in s.
194	624.509 to augment the financial resources of the corporation.
195	3.  After the public hurricane loss-projection model under
196	s. 627.06281 has been found to be accurate and reliable by the
197	Florida Commission on Hurricane Loss Projection Methodology,
198	that model shall serve as the minimum benchmark for determining
199	the windstorm portion of the corporation's rates. This
200	subparagraph does not require or allow the corporation to adopt
201	rates lower than the rates otherwise required or allowed by this
202	paragraph.
203	4.  The rate filings for the corporation which were
204	approved by the office and which took effect January 1, 2007,
205	are rescinded, except for those rates that were lowered. As soon
206	as possible, the corporation shall begin using the lower rates
207	that were in effect on December 31, 2006, and shall provide
208	refunds to policyholders who have paid higher rates as a result
209	of that rate filing. The rates in effect on December 31, 2006,
210	shall remain in effect for the 2007 and 2008 calendar years
211	except for any rate change that results in a lower rate. The
212	next rate change that may increase rates shall take effect
213	pursuant to a new rate filing recommended by the corporation and
214	established by the office, subject to the requirements of this
215	paragraph.
216	5.  Beginning on July 15, 2009, and each year thereafter,
217	the corporation must make a recommended actuarially sound rate
218	filing for each personal and commercial line of business it
219	writes, to be effective no earlier than January 1, 2010.
220	6.  Beginning on or after January 1, 2010, and
221	notwithstanding the board's recommended rates and the office's
222	final order regarding the corporation's filed rates under
223	subparagraph 1., the corporation shall implement a rate increase
224	each year which does not exceed 10 percent for any single policy
225	issued by the corporation, excluding coverage changes and
226	surcharges.
227	7.  The corporation may also implement an increase to
228	reflect the effect on the corporation of the cash buildup factor
229	pursuant to s. 215.555(5)(b).
230	8.  The corporation's implementation of rates as prescribed
231	in subparagraph 6. shall cease for any line of business written
232	by the corporation upon the corporation's implementation of
233	actuarially sound rates. Thereafter, the corporation shall
234	annually make a recommended actuarially sound rate filing for
235	each commercial and personal line of business the corporation
236	writes.
237	Section 2.  Present subsection (9) of section 624.430,
238	Florida Statutes, is renumbered as subsection (10), and a new
239	subsection (9) is added to that section, to read:
240	624.430  Withdrawal of insurer or discontinuance of writing
241	certain kinds or lines of insurance.-
242	(9)  The office may not deny Citizens Property Insurance
243	Corporation's plan of withdrawal as described in s.
244	627.351(6)(n).
245	Section 3.  This act shall take effect July 1, 2010.

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