Florida Senate - 2011 COMMITTEE AMENDMENT
Bill No. SB 1714
Barcode 946762
LEGISLATIVE ACTION
Senate . House
Comm: RCS .
03/29/2011 .
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The Committee on Banking and Insurance (Hays) recommended the
following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Section 627.0655, Florida Statutes, is amended
6 to read:
7 627.0655 Policyholder loss or expense-related premium
8 discounts.—An insurer or person authorized to engage in the
9 business of insurance in this state may include a discount, in
10 the premium charged an insured for any policy, contract, or
11 certificate of insurance if, a discount based on the fact that
12 another policy, contract, or certificate of any type has been
13 purchased by the insured:
14 (1) From the same insurer or insurer group;,
15 (2) For policies issued or renewed before January 1, 2013,
16 from the Citizens Property Insurance Corporation created under
17 s. 627.351(6) if the same insurance agent is servicing both
18 policies;, or
19 (3) For policies issued or renewed before January 1, 2013,
20 from an insurer that has removed the policy from the Citizens
21 Property Insurance Corporation if the same insurance agent is
22 servicing both policies.
23 Section 2. Paragraphs (a), (b), (c), (d), (n), (o), (q),
24 (s), (w), (x), (y), (aa), and (ee) of subsection (6) of section
25 627.351, 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 is to
29 ensure that there is the existence of an orderly market for
30 property insurance for residents Floridians and Florida
31 businesses of this state.
32 1. The Legislature finds that actual and threatened
33 catastrophic losses to property from hurricanes in this state
34 have caused insurers to be unwilling or unable to provide
35 property insurance coverage to the extent sought and needed. The
36 Legislature declares that it is in the public interest and
37 serves a public purpose that property in this state be
38 adequately insured in order to facilitate the remediation,
39 reconstruction, and replacement of damaged or destroyed
40 property. Such efforts are necessary in order to avoid or reduce
41 negative effects to the public health, safety, and welfare; the
42 economy of the state; and the revenues of state and local
43 governments. It is necessary, therefore, to provide property
44 insurance to applicants who are entitled to procure insurance
45 through the voluntary market but who, in good faith, are unable
46 to do so. The Legislature finds that private insurers are
47 unwilling or unable to provide affordable property insurance
48 coverage in this state to the extent sought and needed. The
49 absence of affordable property insurance threatens the public
50 health, safety, and welfare and likewise threatens the economic
51 health of the state. The state therefore has a compelling public
52 interest and a public purpose to assist in assuring that
53 property in the state is insured and that it is insured at
54 affordable rates so as to facilitate the remediation,
55 reconstruction, and replacement of damaged or destroyed property
56 in order to reduce or avoid the negative effects otherwise
57 resulting to the public health, safety, and welfare, to the
58 economy of the state, and to the revenues of the state and local
59 governments which are needed to provide for the public welfare.
60 It is necessary, therefore, to provide affordable property
61 insurance to applicants who are in good faith entitled to
62 procure insurance through the voluntary market but are unable to
63 do so. The Legislature intends, therefore, by this subsection
64 that affordable property insurance be provided and that it
65 continue to be provided, as long as necessary, through Citizens
66 Property Insurance Corporation, a government entity that is an
67 integral part of the state, and that is not a private insurance
68 company. To that end, Citizens Property Insurance Corporation
69 shall strive to increase the availability of affordable property
70 insurance in this state, while achieving efficiencies and
71 economies, and while providing service to policyholders,
72 applicants, and agents which is no less than the quality
73 generally provided in the voluntary market, for the achievement
74 of the foregoing public purposes. Because it is essential for
75 this government entity to have the maximum financial resources
76 to pay claims following a catastrophic hurricane, it is the
77 intent of the Legislature that Citizens Property Insurance
78 Corporation continue to be an integral part of the state and
79 that the income of the corporation be exempt from federal income
80 taxation and that interest on the debt obligations issued by the
81 corporation be exempt from federal income taxation.
82 a. It is also the intent of the Legislature that
83 policyholders, applicants, and agents of the corporation receive
84 service and treatment of the highest possible level and never
85 less than that generally provided in the voluntary market. The
86 corporation must be held to service standards no less than those
87 applied to insurers in the voluntary market by the office with
88 respect to responsiveness, timeliness, customer courtesy, and
89 overall dealings with policyholders, applicants, or agents of
90 the corporation. It is also the intent of the Legislature that
91 the corporation operate efficiently and economically.
92 b. Because it is essential that the corporation have the
93 maximum financial resources necessary to pay claims following a
94 catastrophic hurricane, the Legislature also intends that the
95 income of the corporation and interest on the debt obligations
96 issued by the corporation be exempt from federal income
97 taxation.
98 2. The Residential Property and Casualty Joint Underwriting
99 Association originally created by this statute shall be known,
100 as of July 1, 2002, as the Citizens Property Insurance
101 Corporation. The corporation shall provide insurance for
102 residential and commercial property, for applicants who are in
103 good faith entitled, but, in good faith, are unable, to procure
104 insurance through the voluntary market. The corporation shall
105 operate pursuant to a plan of operation approved by order of the
106 Financial Services Commission. The plan is subject to continuous
107 review by the commission. The commission may, by order, withdraw
108 approval of all or part of a plan if the commission determines
109 that conditions have changed since approval was granted and that
110 the purposes of the plan require changes in the plan. The
111 corporation shall continue to operate pursuant to the plan of
112 operation approved by the Office of Insurance Regulation until
113 October 1, 2006. For the purposes of this subsection,
114 residential coverage includes both personal lines residential
115 coverage, which consists of the type of coverage provided by
116 homeowner’s, mobile home owner’s, dwelling, tenant’s,
117 condominium unit owner’s, and similar policies;, and commercial
118 lines residential coverage, which consists of the type of
119 coverage provided by condominium association, apartment
120 building, and similar policies.
121 3. With respect to coverage for personal lines residential
122 structures:
123 a. Effective January 1, 2009, a personal lines residential
124 structure that has a dwelling replacement cost of $2 million or
125 more, or a single condominium unit that has a combined dwelling
126 and contents content replacement cost of $2 million or more is
127 not eligible for coverage by the corporation. Such dwellings
128 insured by the corporation on December 31, 2008, may continue to
129 be covered by the corporation until the end of the policy term.
130 However, such dwellings that are insured by the corporation and
131 become ineligible for coverage due to the provisions of this
132 subparagraph may reapply and obtain coverage if the property
133 owner provides the corporation with a sworn affidavit from one
134 or more insurance agents, on a form provided by the corporation,
135 stating that the agents have made their best efforts to obtain
136 coverage and that the property has been rejected for coverage by
137 at least one authorized insurer and at least three surplus lines
138 insurers. If such conditions are met, the dwelling may be
139 insured by the corporation for up to 3 years, after which time
140 the dwelling is ineligible for coverage. The office shall
141 approve the method used by the corporation for valuing the
142 dwelling replacement cost for the purposes of this subparagraph.
143 If a policyholder is insured by the corporation prior to being
144 determined to be ineligible pursuant to this subparagraph and
145 such policyholder files a lawsuit challenging the determination,
146 the policyholder may remain insured by the corporation until the
147 conclusion of the litigation.
148 b. Effective January 1, 2012, a structure that has a
149 dwelling replacement cost of $1 million or more, or a single
150 condominium unit that has a combined dwelling and contents
151 replacement cost of $1 million or more is not eligible for
152 coverage by the corporation. Such dwellings insured by the
153 corporation on December 31, 2011, may continue to be covered by
154 the corporation only until the end of the policy term.
155 c. Effective January 1, 2014, a structure insured in the
156 personal lines account of the corporation that has a dwelling
157 replacement cost of $750,000 or more, or a single condominium
158 unit that has a combined dwelling and contents replacement cost
159 of $750,000 or more is not eligible for coverage by the
160 corporation. Such dwellings insured by the corporation on
161 December 31, 2013, may continue to be covered by the corporation
162 until the end of the policy term.
163 d. Effective January 1, 2016, a structure insured in the
164 personal lines account of the corporation that has a dwelling
165 replacement cost of $500,000 or more, or a single condominium
166 unit that has a combined dwelling and contents replacement cost
167 of $500,000 or more is not eligible for coverage by the
168 corporation. Such dwellings insured by the corporation on
169 December 31, 2015, may continue to be covered by the corporation
170 until the end of the policy term.
171 4. Any structure for which a permit for construction is
172 obtained on or after June 1, 2011, seaward of the coastal
173 construction control line established pursuant to s. 161.053, is
174 not eligible for coverage by the corporation.
175 4. It is the intent of the Legislature that policyholders,
176 applicants, and agents of the corporation receive service and
177 treatment of the highest possible level but never less than that
178 generally provided in the voluntary market. It also is intended
179 that the corporation be held to service standards no less than
180 those applied to insurers in the voluntary market by the office
181 with respect to responsiveness, timeliness, customer courtesy,
182 and overall dealings with policyholders, applicants, or agents
183 of the corporation.
184 5. Effective January 1, 2009, a personal lines residential
185 structure that is located in the “wind-borne debris region,” as
186 defined in s. 1609.2, International Building Code (2006), and
187 that has an insured value on the structure of $750,000 or more
188 is not eligible for coverage by the corporation unless the
189 structure has opening protections as required under the Florida
190 Building Code for a newly constructed residential structure in
191 that area. A residential structure shall be deemed to comply
192 with the requirements of this subparagraph if it has shutters or
193 opening protections on all openings and if such opening
194 protections complied with the Florida Building Code at the time
195 they were installed.
196 6. In recognition of the corporation’s status as a
197 government entity, policies issued by the corporation must
198 include a provision stating that as a condition of coverage with
199 the corporation, policyholders may not engage the services of a
200 public adjuster to represent the policyholder with respect to
201 any claim filed under a policy issued by the corporation until
202 after the corporation has tendered an offer with respect to such
203 claim. For any claim filed under any policy of the corporation,
204 a public adjuster may not request payment or be paid, on a
205 contingency basis or based in any way, directly or indirectly,
206 on a percentage of the claim amount, and may be paid only a
207 reasonable hourly fee based on the actual hours of work
208 performed, subject to a maximum of 5 percent of the additional
209 amount actually paid over the amount which was originally
210 offered by the corporation for any one claim.
211 (b)1. All insurers authorized to write one or more subject
212 lines of business in this state are subject to assessment by the
213 corporation and, for the purposes of this subsection, are
214 referred to collectively as “assessable insurers.” Insurers
215 writing one or more subject lines of business in this state
216 pursuant to part VIII of chapter 626 are not assessable
217 insurers, but insureds who procure one or more subject lines of
218 business in this state pursuant to part VIII of chapter 626 are
219 subject to assessment by the corporation and are referred to
220 collectively as “assessable insureds.” An authorized insurer’s
221 assessment liability begins shall begin on the first day of the
222 calendar year following the year in which the insurer was issued
223 a certificate of authority to transact insurance for subject
224 lines of business in this state and terminates shall terminate 1
225 year after the end of the first calendar year during which the
226 insurer no longer holds a certificate of authority to transact
227 insurance for subject lines of business in this state.
228 2.a. All revenues, assets, liabilities, losses, and
229 expenses of the corporation shall be divided into three separate
230 accounts as follows:
231 (I) A personal lines account for personal residential
232 policies issued by the corporation, or issued by the Residential
233 Property and Casualty Joint Underwriting Association and renewed
234 by the corporation, which provides basic that provide
235 comprehensive, multiperil coverage on risks that are not located
236 in areas eligible for coverage by in the Florida Windstorm
237 Underwriting Association as those areas were defined on January
238 1, 2002, and for such policies that do not provide coverage for
239 the peril of wind on risks that are located in such areas;
240 (II) A commercial lines account for commercial residential
241 and commercial nonresidential policies issued by the
242 corporation, or issued by the Residential Property and Casualty
243 Joint Underwriting Association and renewed by the corporation,
244 which provides that provide coverage for basic property perils
245 on risks that are not located in areas eligible for coverage by
246 in the Florida Windstorm Underwriting Association as those areas
247 were defined on January 1, 2002, and for such policies that do
248 not provide coverage for the peril of wind on risks that are
249 located in such areas; and
250 (III) A high-risk account for personal residential policies
251 and commercial residential and commercial nonresidential
252 property policies issued by the corporation or transferred to
253 the corporation, which provides that provide coverage for the
254 peril of wind on risks that are located in areas eligible for
255 coverage by in the Florida Windstorm Underwriting Association as
256 those areas were defined on January 1, 2002. The corporation may
257 offer policies that provide multiperil coverage and the
258 corporation shall continue to offer policies that provide
259 coverage only for the peril of wind for risks located in areas
260 eligible for coverage in the high-risk account. In issuing
261 multiperil coverage, the corporation may use its approved policy
262 forms and rates for the personal lines account. An applicant or
263 insured who is eligible to purchase a multiperil policy from the
264 corporation may purchase a multiperil policy from an authorized
265 insurer without prejudice to the applicant’s or insured’s
266 eligibility to prospectively purchase a policy that provides
267 coverage only for the peril of wind from the corporation. An
268 applicant or insured who is eligible for a corporation policy
269 that provides coverage only for the peril of wind may elect to
270 purchase or retain such policy and also purchase or retain
271 coverage excluding wind from an authorized insurer without
272 prejudice to the applicant’s or insured’s eligibility to
273 prospectively purchase a policy that provides multiperil
274 coverage from the corporation. It is the goal of the Legislature
275 that there would be an overall average savings of 10 percent or
276 more for a policyholder who currently has a wind-only policy
277 with the corporation, and an ex-wind policy with a voluntary
278 insurer or the corporation, and who then obtains a multiperil
279 policy from the corporation. It is the intent of the Legislature
280 that the offer of multiperil coverage in the high-risk account
281 be made and implemented in a manner that does not adversely
282 affect the tax-exempt status of the corporation or
283 creditworthiness of or security for currently outstanding
284 financing obligations or credit facilities of the high-risk
285 account, the personal lines account, or the commercial lines
286 account. The high-risk account must also include quota share
287 primary insurance under subparagraph (c)2. The area eligible for
288 coverage under the high-risk account also includes the area
289 within Port Canaveral, which is bordered on the south by the
290 City of Cape Canaveral, bordered on the west by the Banana
291 River, and bordered on the north by Federal Government property.
292 b. The three separate accounts must be maintained as long
293 as financing obligations entered into by the Florida Windstorm
294 Underwriting Association or Residential Property and Casualty
295 Joint Underwriting Association are outstanding, in accordance
296 with the terms of the corresponding financing documents. If When
297 the financing obligations are no longer outstanding, in
298 accordance with the terms of the corresponding financing
299 documents, the corporation may use a single account for all
300 revenues, assets, liabilities, losses, and expenses of the
301 corporation. Consistent with the requirement of this
302 subparagraph and prudent investment policies that minimize the
303 cost of carrying debt, the board shall exercise its best efforts
304 to retire existing debt or to obtain the approval of necessary
305 parties to amend the terms of existing debt, so as to structure
306 the most efficient plan to consolidate the three separate
307 accounts into a single account.
308 c. Creditors of the Residential Property and Casualty Joint
309 Underwriting Association and of the accounts specified in sub
310 sub-subparagraphs a.(I) and (II) may have a claim against, and
311 recourse to, those the accounts referred to in sub-sub
312 subparagraphs a.(I) and (II) and shall have no claim against, or
313 recourse to, the account referred to in sub-sub-subparagraph
314 a.(III). Creditors of the Florida Windstorm Underwriting
315 Association shall have a claim against, and recourse to, the
316 account referred to in sub-sub-subparagraph a.(III) and shall
317 have no claim against, or recourse to, the accounts referred to
318 in sub-sub-subparagraphs a.(I) and (II).
319 d. Revenues, assets, liabilities, losses, and expenses not
320 attributable to particular accounts shall be prorated among the
321 accounts.
322 e. The Legislature finds that the revenues of the
323 corporation are revenues that are necessary to meet the
324 requirements set forth in documents authorizing the issuance of
325 bonds under this subsection.
326 f. No part of the income of the corporation may inure to
327 the benefit of any private person.
328 3. With respect to a deficit in an account:
329 a. After accounting for the Citizens policyholder surcharge
330 imposed under sub-subparagraph i., if when the remaining
331 projected deficit incurred in a particular calendar year is not
332 greater than 6 percent of the aggregate statewide direct written
333 premium for the subject lines of business for the prior calendar
334 year, the entire deficit shall be recovered through regular
335 assessments of assessable insurers under paragraph (q) and
336 assessable insureds.
337 b. After accounting for the Citizens policyholder surcharge
338 imposed under sub-subparagraph i., when the remaining projected
339 deficit incurred in a particular calendar year exceeds 6 percent
340 of the aggregate statewide direct written premium for the
341 subject lines of business for the prior calendar year, the
342 corporation shall levy regular assessments on assessable
343 insurers under paragraph (q) and on assessable insureds in an
344 amount equal to the greater of 6 percent of the deficit or 6
345 percent of the aggregate statewide direct written premium for
346 the subject lines of business for the prior calendar year. Any
347 remaining deficit shall be recovered through emergency
348 assessments under sub-subparagraph d.
349 c. Each assessable insurer’s share of the amount being
350 assessed under sub-subparagraph a. or sub-subparagraph b. must
351 shall be in the proportion that the assessable insurer’s direct
352 written premium for the subject lines of business for the year
353 preceding the assessment bears to the aggregate statewide direct
354 written premium for the subject lines of business for that year.
355 The applicable assessment percentage applicable to each
356 assessable insured is the ratio of the amount being assessed
357 under sub-subparagraph a. or sub-subparagraph b. to the
358 aggregate statewide direct written premium for the subject lines
359 of business for the prior year. Assessments levied by the
360 corporation on assessable insurers under sub-subparagraphs a.
361 and b. must shall be paid as required by the corporation’s plan
362 of operation and paragraph (q). Assessments levied by the
363 corporation on assessable insureds under sub-subparagraphs a.
364 and b. shall be collected by the surplus lines agent at the time
365 the surplus lines agent collects the surplus lines tax required
366 by s. 626.932, and shall be paid to the Florida Surplus Lines
367 Service Office at the time the surplus lines agent pays the
368 surplus lines tax to that the Florida Surplus Lines Service
369 office. Upon receipt of regular assessments from surplus lines
370 agents, the Florida Surplus Lines Service Office shall transfer
371 the assessments directly to the corporation as determined by the
372 corporation.
373 d. Upon a determination by the board of governors that a
374 deficit in an account exceeds the amount that will be recovered
375 through regular assessments under sub-subparagraph a. or sub
376 subparagraph b., plus the amount that is expected to be
377 recovered through surcharges under sub-subparagraph i., as to
378 the remaining projected deficit the board shall levy, after
379 verification by the office, shall levy emergency assessments,
380 for as many years as necessary to cover the deficits, to be
381 collected by assessable insurers and the corporation and
382 collected from assessable insureds upon issuance or renewal of
383 policies for subject lines of business, excluding National Flood
384 Insurance policies. The amount of the emergency assessment
385 collected in a particular year must shall be a uniform
386 percentage of that year’s direct written premium for subject
387 lines of business and all accounts of the corporation, excluding
388 National Flood Insurance Program policy premiums, as annually
389 determined by the board and verified by the office. For all
390 accounts of the corporation, the amount of the emergency
391 assessment levied in a particular year must be a uniform
392 percentage equal to 1 1/2 times the uniform percentage emergency
393 assessment levied on subject lines of business. The office shall
394 verify the arithmetic calculations involved in the board’s
395 determination within 30 days after receipt of the information on
396 which the determination was based. Notwithstanding any other
397 provision of law, the corporation and each assessable insurer
398 that writes subject lines of business shall collect emergency
399 assessments from its policyholders without such obligation being
400 affected by any credit, limitation, exemption, or deferment.
401 Emergency assessments levied by the corporation on assessable
402 insureds shall be collected by the surplus lines agent at the
403 time the surplus lines agent collects the surplus lines tax
404 required by s. 626.932 and shall be paid to the Florida Surplus
405 Lines Service Office at the time the surplus lines agent pays
406 the surplus lines tax to that the Florida Surplus Lines Service
407 office. The emergency assessments so collected shall be
408 transferred directly to the corporation on a periodic basis as
409 determined by the corporation and shall be held by the
410 corporation solely in the applicable account. The aggregate
411 amount of emergency assessments levied for an account under this
412 sub-subparagraph in any calendar year may, at the discretion of
413 the board of governors, be less than but may not exceed the
414 greater of 10 percent of the amount needed to cover the deficit,
415 plus interest, fees, commissions, required reserves, and other
416 costs associated with financing of the original deficit, or 10
417 percent of the aggregate statewide direct written premium for
418 subject lines of business and 15 percent for all accounts of the
419 corporation for the prior year, plus interest, fees,
420 commissions, required reserves, and other costs associated with
421 financing the deficit.
422 e. The corporation may pledge the proceeds of assessments,
423 projected recoveries from the Florida Hurricane Catastrophe
424 Fund, other insurance and reinsurance recoverables, policyholder
425 surcharges and other surcharges, and other funds available to
426 the corporation as the source of revenue for and to secure bonds
427 issued under paragraph (q), bonds or other indebtedness issued
428 under subparagraph (c)2.3., or lines of credit or other
429 financing mechanisms issued or created under this subsection, or
430 to retire any other debt incurred as a result of deficits or
431 events giving rise to deficits, or in any other way that the
432 board determines will efficiently recover such deficits. The
433 purpose of the lines of credit or other financing mechanisms is
434 to provide additional resources to assist the corporation in
435 covering claims and expenses attributable to a catastrophe. As
436 used in this subsection, the term “assessments” includes regular
437 assessments under sub-subparagraph a., sub-subparagraph b., or
438 subparagraph (q)1. and emergency assessments under sub
439 subparagraph d. Emergency assessments collected under sub
440 subparagraph d. are not part of an insurer’s rates, are not
441 premium, and are not subject to premium tax, fees, or
442 commissions; however, failure to pay the emergency assessment
443 shall be treated as failure to pay premium. The emergency
444 assessments under sub-subparagraph d. shall continue as long as
445 any bonds issued or other indebtedness incurred with respect to
446 a deficit for which the assessment was imposed remain
447 outstanding, unless adequate provision has been made for the
448 payment of such bonds or other indebtedness pursuant to the
449 documents governing such bonds or other indebtedness.
450 f. As used in this subsection for purposes of any deficit
451 incurred on or after January 25, 2007, the term “subject lines
452 of business” means insurance written by assessable insurers or
453 procured by assessable insureds for all property and casualty
454 lines of business in this state, but not including workers’
455 compensation or medical malpractice. As used in this the sub
456 subparagraph, the term “property and casualty lines of business”
457 includes all lines of business identified on Form 2, Exhibit of
458 Premiums and Losses, in the annual statement required of
459 authorized insurers under by s. 624.424 and any rule adopted
460 under this section, except for those lines identified as
461 accident and health insurance and except for policies written
462 under the National Flood Insurance Program or the Federal Crop
463 Insurance Program. For purposes of this sub-subparagraph, the
464 term “workers’ compensation” includes both workers’ compensation
465 insurance and excess workers’ compensation insurance.
466 g. The Florida Surplus Lines Service Office shall determine
467 annually the aggregate statewide written premium in subject
468 lines of business procured by assessable insureds and shall
469 report that information to the corporation in a form and at a
470 time the corporation specifies to ensure that the corporation
471 can meet the requirements of this subsection and the
472 corporation’s financing obligations.
473 h. The Florida Surplus Lines Service Office shall verify
474 the proper application by surplus lines agents of assessment
475 percentages for regular assessments and emergency assessments
476 levied under this subparagraph on assessable insureds and shall
477 assist the corporation in ensuring the accurate, timely
478 collection and payment of assessments by surplus lines agents as
479 required by the corporation.
480 i. If a deficit is incurred in any account in 2011 2008 or
481 thereafter, the board of governors shall levy a Citizens
482 policyholder surcharge against all policyholders of the
483 corporation. for a 12-month period, which
484 (I) The surcharge shall be levied collected at the time of
485 issuance or renewal of a policy, as a uniform percentage of the
486 premium for the policy of up to 15 percent of such premium,
487 which funds shall be used to offset the deficit.
488 (II) It is the intent of the Legislature that the
489 policyholder’s liability for the surcharge attach on the date of
490 the order levying the surcharge. The surcharge is payable upon
491 cancellation or termination of the policy, upon renewal of the
492 policy, or upon issuance of a new policy by the corporation
493 within the first 12 months after the date of the levy or the
494 period of time necessary to fully collect the surcharge amount.
495 (III) The corporation may not levy any regular assessments
496 under paragraph (q) pursuant to sub-subparagraph a. or sub
497 subparagraph b. with respect to a particular year’s deficit
498 until the corporation has first levied a surcharge under this
499 sub-subparagraph in the full amount authorized by this sub
500 subparagraph.
501 (IV) The surcharge is Citizens policyholder surcharges
502 under this sub-subparagraph are not considered premium and is
503 are not subject to commissions, fees, or premium taxes. However,
504 failure to pay the surcharge such surcharges shall be treated as
505 failure to pay premium.
506 j. If the amount of any assessments or surcharges collected
507 from corporation policyholders, assessable insurers or their
508 policyholders, or assessable insureds exceeds the amount of the
509 deficits, such excess amounts shall be remitted to and retained
510 by the corporation in a reserve to be used by the corporation,
511 as determined by the board of governors and approved by the
512 office, to pay claims or reduce any past, present, or future
513 plan-year deficits or to reduce outstanding debt.
514 (c) The plan of operation of the corporation:
515 1. Must provide for adoption of residential property and
516 casualty insurance policy forms and commercial residential and
517 nonresidential property insurance forms, which forms must be
518 approved by the office before prior to use. The corporation
519 shall adopt and offer only the following policy forms:
520 a. Standard personal lines policy forms that are similar
521 comprehensive multiperil policies providing full coverage of a
522 residential property equivalent to the coverage provided in the
523 private insurance market under an HO-3, HO-4, or HO-6 policy.
524 The corporation shall cease to offer or renew HO-3 policy forms
525 on December 31, 2012.
526 b. Basic personal lines policy forms that are policies
527 similar to an HO-8 policy or a dwelling fire policy that provide
528 coverage meeting the requirements of the secondary mortgage
529 market, but which coverage is more limited than the coverage
530 under a standard policy.
531 c. Commercial lines residential and nonresidential policy
532 forms that are generally similar to the basic perils of full
533 coverage obtainable for commercial residential structures and
534 commercial nonresidential structures in the admitted voluntary
535 market.
536 d. Personal lines and commercial lines residential property
537 insurance forms that cover the peril of wind only. The forms are
538 applicable only to residential properties located in areas
539 eligible for coverage under the high-risk account referred to in
540 sub-subparagraph (b)2.a.
541 e. Commercial lines nonresidential property insurance forms
542 that cover the peril of wind only. The forms are applicable only
543 to nonresidential properties located in areas eligible for
544 coverage under the high-risk account referred to in sub
545 subparagraph (b)2.a.
546 f. The corporation may adopt variations of the policy forms
547 listed in sub-subparagraphs a.-e. which that contain more
548 restrictive coverage.
549 2.a. Must provide that the corporation adopt a program in
550 which the corporation and authorized insurers enter into quota
551 share primary insurance agreements for hurricane coverage, as
552 defined in s. 627.4025(2)(a), for eligible risks, and adopt
553 property insurance forms for eligible risks which cover the
554 peril of wind only. As used in this subsection, the term:
555 (I) “Quota share primary insurance” means an arrangement in
556 which the primary hurricane coverage of an eligible risk is
557 provided in specified percentages by the corporation and an
558 authorized insurer. The corporation and authorized insurer are
559 each solely responsible for a specified percentage of hurricane
560 coverage of an eligible risk as set forth in a quota share
561 primary insurance agreement between the corporation and an
562 authorized insurer and the insurance contract. The
563 responsibility of the corporation or authorized insurer to pay
564 its specified percentage of hurricane losses of an eligible
565 risk, as set forth in the quota share primary insurance
566 agreement, may not be altered by the inability of the other
567 party to the agreement to pay its specified percentage of
568 hurricane losses. Eligible risks that are provided hurricane
569 coverage through a quota share primary insurance arrangement
570 must be provided policy forms that set forth the obligations of
571 the corporation and authorized insurer under the arrangement,
572 clearly specify the percentages of quota share primary insurance
573 provided by the corporation and authorized insurer, and
574 conspicuously and clearly state that neither the authorized
575 insurer nor the corporation may be held responsible beyond its
576 specified percentage of coverage of hurricane losses.
577 (II) “Eligible risks” means personal lines residential and
578 commercial lines residential risks that meet the underwriting
579 criteria of the corporation and are located in areas that were
580 eligible for coverage by the Florida Windstorm Underwriting
581 Association on January 1, 2002.
582 b. The corporation may enter into quota share primary
583 insurance agreements with authorized insurers at corporation
584 coverage levels of 90 percent and 50 percent.
585 c. If the corporation determines that additional coverage
586 levels are necessary to maximize participation in quota share
587 primary insurance agreements by authorized insurers, the
588 corporation may establish additional coverage levels. However,
589 the corporation’s quota share primary insurance coverage level
590 may not exceed 90 percent.
591 d. Any quota share primary insurance agreement entered into
592 between an authorized insurer and the corporation must provide
593 for a uniform specified percentage of coverage of hurricane
594 losses, by county or territory as set forth by the corporation
595 board, for all eligible risks of the authorized insurer covered
596 under the quota share primary insurance agreement.
597 e. Any quota share primary insurance agreement entered into
598 between an authorized insurer and the corporation is subject to
599 review and approval by the office. However, such agreement shall
600 be authorized only as to insurance contracts entered into
601 between an authorized insurer and an insured who is already
602 insured by the corporation for wind coverage.
603 f. For all eligible risks covered under quota share primary
604 insurance agreements, the exposure and coverage levels for both
605 the corporation and authorized insurers shall be reported by the
606 corporation to the Florida Hurricane Catastrophe Fund. For all
607 policies of eligible risks covered under quota share primary
608 insurance agreements, the corporation and the authorized insurer
609 shall maintain complete and accurate records for the purpose of
610 exposure and loss reimbursement audits as required by Florida
611 Hurricane Catastrophe Fund rules. The corporation and the
612 authorized insurer shall each maintain duplicate copies of
613 policy declaration pages and supporting claims documents.
614 g. The corporation board shall establish in its plan of
615 operation standards for quota share agreements which ensure that
616 there is no discriminatory application among insurers as to the
617 terms of quota share agreements, pricing of quota share
618 agreements, incentive provisions if any, and consideration paid
619 for servicing policies or adjusting claims.
620 h. The quota share primary insurance agreement between the
621 corporation and an authorized insurer must set forth the
622 specific terms under which coverage is provided, including, but
623 not limited to, the sale and servicing of policies issued under
624 the agreement by the insurance agent of the authorized insurer
625 producing the business, the reporting of information concerning
626 eligible risks, the payment of premium to the corporation, and
627 arrangements for the adjustment and payment of hurricane claims
628 incurred on eligible risks by the claims adjuster and personnel
629 of the authorized insurer. Entering into a quota sharing
630 insurance agreement between the corporation and an authorized
631 insurer shall be voluntary and at the discretion of the
632 authorized insurer.
633 2.3. May provide that the corporation may employ or
634 otherwise contract with individuals or other entities to provide
635 administrative or professional services that may be appropriate
636 to effectuate the plan.
637 a. The corporation may shall have the power to borrow
638 funds, by issuing bonds or by incurring other indebtedness, and
639 shall have other powers reasonably necessary to effectuate the
640 requirements of this subsection, including, without limitation,
641 the power to issue bonds and incur other indebtedness in order
642 to refinance outstanding bonds or other indebtedness. The
643 corporation may, but is not required to, seek judicial
644 validation of its bonds or other indebtedness under chapter 75.
645 The corporation may issue bonds or incur other indebtedness, or
646 have bonds issued on its behalf by a unit of local government
647 pursuant to subparagraph (q)2., in the absence of a hurricane or
648 other weather-related event, upon a determination by the
649 corporation, subject to approval by the office, that such action
650 would enable it to efficiently meet the financial obligations of
651 the corporation and that such financings are reasonably
652 necessary to effectuate the requirements of this subsection. The
653 corporation may is authorized to take all actions needed to
654 facilitate tax-free status for any such bonds or indebtedness,
655 including formation of trusts or other affiliated entities. The
656 corporation may shall have the authority to pledge assessments,
657 projected recoveries from the Florida Hurricane Catastrophe
658 Fund, other reinsurance recoverables, market equalization and
659 other surcharges, and other funds available to the corporation
660 as security for bonds or other indebtedness. In recognition of
661 s. 10, Art. I of the State Constitution, prohibiting the
662 impairment of obligations of contracts, it is the intent of the
663 Legislature that no action be taken whose purpose is to impair
664 any bond indenture or financing agreement or any revenue source
665 committed by contract to such bond or other indebtedness.
666 b. To ensure that the corporation is operating in an
667 efficient and economic manner while providing quality service to
668 policyholders, applicants, and agents, the board shall
669 commission an independent third-party consultant having
670 expertise in insurance company management or insurance company
671 management consulting to prepare a report and make
672 recommendations on the relative costs and benefits of
673 outsourcing various policy issuance and service functions to
674 private servicing carriers or entities performing similar
675 functions in the private market for a fee, rather than
676 performing such functions in-house. In making such
677 recommendations, the consultant shall consider how other
678 residual markets, both in this state and around the country,
679 outsource appropriate functions or use servicing carriers to
680 better match expenses with revenues that fluctuate based on a
681 widely varying policy count. The report must be completed by
682 February 1, 2012. Upon receiving the report, the board shall
683 develop a plan to implement the report and submit the plan to
684 the Financial Services Commission. The commission has 30 days
685 after receiving the plan to review and make additions or
686 corrections, if any. Upon the commission’s approval of the plan,
687 the board shall begin implementing the plan by January 1, 2013.
688 3.4.a. Must require that the corporation operate subject to
689 the supervision and approval of a board of governors consisting
690 of eight individuals who are residents of this state, from
691 different geographical areas of this state.
692 a. The Governor, the Chief Financial Officer, the President
693 of the Senate, and the Speaker of the House of Representatives
694 shall each appoint two members of the board. At least one of the
695 two members appointed by each appointing officer must have
696 demonstrated expertise in insurance, and be within the scope of
697 the exemption provided in s. 112.313(7)(b). The Chief Financial
698 Officer shall designate one of the appointees as chair. All
699 board members serve at the pleasure of the appointing officer.
700 All members of the board of governors are subject to removal at
701 will by the officers who appointed them. All board members,
702 including the chair, must be appointed to serve for 3-year terms
703 beginning annually on a date designated by the plan. However,
704 for the first term beginning on or after July 1, 2009, each
705 appointing officer shall appoint one member of the board for a
706 2-year term and one member for a 3-year term. A Any board
707 vacancy shall be filled for the unexpired term by the appointing
708 officer. The Chief Financial Officer shall appoint a technical
709 advisory group to provide information and advice to the board of
710 governors in connection with the board’s duties under this
711 subsection. The executive director and senior managers of the
712 corporation shall be engaged by the board and serve at the
713 pleasure of the board. Any executive director appointed on or
714 after July 1, 2006, is subject to confirmation by the Senate.
715 The executive director is responsible for employing other staff
716 as the corporation may require, subject to review and
717 concurrence by the board.
718 b. The board shall create a Market Accountability Advisory
719 Committee to assist the corporation in developing awareness of
720 its rates and its customer and agent service levels in
721 relationship to the voluntary market insurers writing similar
722 coverage, and to provide advice on issues regarding agent
723 appointments and compensation.
724 (I) The members of the advisory committee shall consist of
725 the following 11 persons, one of whom must be elected chair by
726 the members of the committee: four representatives, one
727 appointed by the Florida Association of Insurance Agents, one by
728 the National Florida Association of Insurance and Financial
729 Advisors-Florida Advisors, one by the Professional Insurance
730 Agents of Florida, and one by the Latin American Association of
731 Insurance Agencies; three representatives appointed by the
732 insurers with the three highest voluntary market share of
733 residential property insurance business in the state; one
734 representative from the Office of Insurance Regulation; one
735 consumer appointed by the board who is insured by the
736 corporation at the time of appointment to the committee; one
737 representative appointed by the Florida Association of Realtors;
738 and one representative appointed by the Florida Bankers
739 Association. All members shall be appointed to must serve for 3
740 year terms and may serve for consecutive terms.
741 (II) The committee shall report to the corporation at each
742 board meeting on insurance market issues which may include rates
743 and rate competition with the voluntary market; service,
744 including policy issuance, claims processing, and general
745 responsiveness to policyholders, applicants, and agents; and
746 matters relating to depopulation, producer compensation, or
747 agency agreements.
748 4.5. Must provide a procedure for determining the
749 eligibility of a risk for coverage, as follows:
750 a. Subject to the provisions of s. 627.3517, with respect
751 to personal lines residential risks, if the risk is offered
752 coverage from an authorized insurer at the insurer’s approved
753 rate under either a standard policy including wind coverage or,
754 if consistent with the insurer’s underwriting rules as filed
755 with the office, a basic policy including wind coverage, for a
756 new application to the corporation for coverage, the risk is not
757 eligible for any policy issued by the corporation unless the
758 premium for coverage from the authorized insurer is more than 15
759 percent greater than the premium for comparable coverage from
760 the corporation. If the risk is not able to obtain any such
761 offer, the risk is eligible for either a standard policy
762 including wind coverage or a basic policy including wind
763 coverage issued by the corporation; however, if the risk could
764 not be insured under a standard policy including wind coverage
765 regardless of market conditions, the risk is shall be eligible
766 for a basic policy including wind coverage unless rejected under
767 subparagraph 9. 8. Notwithstanding these limitations, an
768 application for coverage having an effective date before January
769 1, 2015, is eligible for coverage by the corporation if the
770 premium for coverage from an authorized insurer exceeds the
771 premium from the corporation by more than 25 percent. However,
772 with regard to a policyholder of the corporation or a
773 policyholder removed from the corporation through an assumption
774 agreement until the end of the assumption period, the
775 policyholder remains eligible for coverage from the corporation
776 regardless of any offer of coverage from an authorized insurer
777 or surplus lines insurer. The corporation shall determine the
778 type of policy to be provided on the basis of objective
779 standards specified in the underwriting manual and based on
780 generally accepted underwriting practices.
781 (I) If the risk accepts an offer of coverage through the
782 market assistance plan or an offer of coverage through a
783 mechanism established by the corporation before a policy is
784 issued to the risk by the corporation or during the first 30
785 days of coverage by the corporation, and the producing agent who
786 submitted the application to the plan or to the corporation is
787 not currently appointed by the insurer, the insurer shall:
788 (A) Pay to the producing agent of record of the policy, for
789 the first year, an amount that is the greater of the insurer’s
790 usual and customary commission for the type of policy written or
791 a fee equal to the usual and customary commission of the
792 corporation; or
793 (B) Offer to allow the producing agent of record of the
794 policy to continue servicing the policy for at least a period of
795 not less than 1 year and offer to pay the agent the greater of
796 the insurer’s or the corporation’s usual and customary
797 commission for the type of policy written.
798
799 If the producing agent is unwilling or unable to accept
800 appointment, the new insurer shall pay the agent in accordance
801 with sub-sub-sub-subparagraph (A).
802 (II) If When the corporation enters into a contractual
803 agreement for a take-out plan, the producing agent of record of
804 the corporation policy is entitled to retain any unearned
805 commission on the policy, and the insurer shall:
806 (A) Pay to the producing agent of record of the corporation
807 policy, for the first year, an amount that is the greater of the
808 insurer’s usual and customary commission for the type of policy
809 written or a fee equal to the usual and customary commission of
810 the corporation; or
811 (B) Offer to allow the producing agent of record of the
812 corporation policy to continue servicing the policy for at least
813 a period of not less than 1 year and offer to pay the agent the
814 greater of the insurer’s or the corporation’s usual and
815 customary commission for the type of policy written.
816
817 If the producing agent is unwilling or unable to accept
818 appointment, the new insurer shall pay the agent in accordance
819 with sub-sub-sub-subparagraph (A).
820 b. Subject to s. 627.3517, with respect to commercial lines
821 residential risks, for a new application to the corporation for
822 coverage, if the risk is offered coverage under a policy
823 including wind coverage from an authorized insurer at its
824 approved rate, the risk is not eligible for a any policy issued
825 by the corporation unless the premium for coverage from the
826 authorized insurer is more than 15 percent greater than the
827 premium for comparable coverage from the corporation. If the
828 risk is not able to obtain any such offer, the risk is eligible
829 for a policy including wind coverage issued by the corporation.
830 Notwithstanding these limitations, an application for coverage
831 having an effective date before January 1, 2015, is eligible for
832 coverage by the corporation if the premium for coverage from an
833 authorized insurer exceeds the premium from the corporation by
834 more than 25 percent. However, with regard to a policyholder of
835 the corporation or a policyholder removed from the corporation
836 through an assumption agreement until the end of the assumption
837 period, the policyholder remains eligible for coverage from the
838 corporation regardless of any offer of coverage from an
839 authorized insurer or surplus lines insurer.
840 (I) If the risk accepts an offer of coverage through the
841 market assistance plan or an offer of coverage through a
842 mechanism established by the corporation before a policy is
843 issued to the risk by the corporation or during the first 30
844 days of coverage by the corporation, and the producing agent who
845 submitted the application to the plan or the corporation is not
846 currently appointed by the insurer, the insurer shall:
847 (A) Pay to the producing agent of record of the policy, for
848 the first year, an amount that is the greater of the insurer’s
849 usual and customary commission for the type of policy written or
850 a fee equal to the usual and customary commission of the
851 corporation; or
852 (B) Offer to allow the producing agent of record of the
853 policy to continue servicing the policy for at least a period of
854 not less than 1 year and offer to pay the agent the greater of
855 the insurer’s or the corporation’s usual and customary
856 commission for the type of policy written.
857
858 If the producing agent is unwilling or unable to accept
859 appointment, the new insurer shall pay the agent in accordance
860 with sub-sub-sub-subparagraph (A).
861 (II) If When the corporation enters into a contractual
862 agreement for a take-out plan, the producing agent of record of
863 the corporation policy is entitled to retain any unearned
864 commission on the policy, and the insurer shall:
865 (A) Pay to the producing agent of record of the corporation
866 policy, for the first year, an amount that is the greater of the
867 insurer’s usual and customary commission for the type of policy
868 written or a fee equal to the usual and customary commission of
869 the corporation; or
870 (B) Offer to allow the producing agent of record of the
871 corporation policy to continue servicing the policy for at least
872 a period of not less than 1 year and offer to pay the agent the
873 greater of the insurer’s or the corporation’s usual and
874 customary commission for the type of policy written.
875
876 If the producing agent is unwilling or unable to accept
877 appointment, the new insurer shall pay the agent in accordance
878 with sub-sub-sub-subparagraph (A).
879 c. Effective upon this act becoming a law, the corporation
880 shall cease to accept applications for or issue new policies
881 covering commercial nonresidential risks. For purposes of
882 determining comparable coverage under sub-subparagraphs a. and
883 b., the comparison shall be based on those forms and coverages
884 that are reasonably comparable. The corporation may rely on a
885 determination of comparable coverage and premium made by the
886 producing agent who submits the application to the corporation,
887 made in the agent’s capacity as the corporation’s agent. A
888 comparison may be made solely of the premium with respect to the
889 main building or structure only on the following basis: the same
890 coverage A or other building limits; the same percentage
891 hurricane deductible that applies on an annual basis or that
892 applies to each hurricane for commercial residential property;
893 the same percentage of ordinance and law coverage, if the same
894 limit is offered by both the corporation and the authorized
895 insurer; the same mitigation credits, to the extent the same
896 types of credits are offered both by the corporation and the
897 authorized insurer; the same method for loss payment, such as
898 replacement cost or actual cash value, if the same method is
899 offered both by the corporation and the authorized insurer in
900 accordance with underwriting rules; and any other form or
901 coverage that is reasonably comparable as determined by the
902 board. If an application is submitted to the corporation for
903 wind-only coverage in the high-risk account, the premium for the
904 corporation’s wind-only policy plus the premium for the ex-wind
905 policy that is offered by an authorized insurer to the applicant
906 shall be compared to the premium for multiperil coverage offered
907 by an authorized insurer, subject to the standards for
908 comparison specified in this subparagraph. If the corporation or
909 the applicant requests from the authorized insurer a breakdown
910 of the premium of the offer by types of coverage so that a
911 comparison may be made by the corporation or its agent and the
912 authorized insurer refuses or is unable to provide such
913 information, the corporation may treat the offer as not being an
914 offer of coverage from an authorized insurer at the insurer’s
915 approved rate.
916 5.6. Must include rules for classifications of risks and
917 rates therefor.
918 6.7. Must provide that if premium and investment income for
919 an account attributable to a particular calendar year are in
920 excess of projected losses and expenses for the account
921 attributable to that year, such excess shall be held in surplus
922 in the account. Such surplus must shall be available to defray
923 deficits in that account as to future years and shall be used
924 for that purpose before prior to assessing assessable insurers
925 and assessable insureds as to any calendar year.
926 7.8. Must provide objective criteria and procedures to be
927 uniformly applied to for all applicants in determining whether
928 an individual risk is so hazardous as to be uninsurable. In
929 making this determination and in establishing the criteria and
930 procedures, the following must shall be considered:
931 a. Whether the likelihood of a loss for the individual risk
932 is substantially higher than for other risks of the same class;
933 and
934 b. Whether the uncertainty associated with the individual
935 risk is such that an appropriate premium cannot be determined.
936
937 The acceptance or rejection of a risk by the corporation
938 shall be construed as the private placement of insurance, and
939 the provisions of chapter 120 do shall not apply.
940 8.9. Must provide that the corporation Shall make its best
941 efforts to procure catastrophe reinsurance at reasonable rates,
942 to cover its projected 100-year probable maximum loss as
943 determined by the board of governors.
944 9.10. Must issue The policies that issued by the
945 corporation must provide that, if the corporation or the market
946 assistance plan obtains an offer from an authorized insurer to
947 cover the risk at its approved rates or from a surplus lines
948 insurer, the risk is no longer eligible for renewal through the
949 corporation, except as otherwise provided in this subsection.
950 10.11. Must Corporation Policies and applications must
951 include a notice in the corporation policies and applications
952 that the corporation policy could, under this section, be
953 replaced with a policy issued by an authorized insurer which
954 that does not provide coverage identical to the coverage
955 provided by the corporation. The notice must shall also specify
956 that acceptance of corporation coverage creates a conclusive
957 presumption that the applicant or policyholder is aware of this
958 potential.
959 11.12. May establish, subject to approval by the office,
960 different eligibility requirements and operational procedures
961 for any line or type of coverage for any specified county or
962 area if the board determines that such changes to the
963 eligibility requirements and operational procedures are
964 justified due to the voluntary market being sufficiently stable
965 and competitive in such area or for such line or type of
966 coverage and that consumers who, in good faith, are unable to
967 obtain insurance through the voluntary market through ordinary
968 methods would continue to have access to coverage from the
969 corporation. If When coverage is sought in connection with a
970 real property transfer, the such requirements and procedures may
971 shall not provide for an effective date of coverage later than
972 the date of the closing of the transfer as established by the
973 transferor, the transferee, and, if applicable, the lender.
974 12.13. Must provide that, with respect to the high-risk
975 account, any assessable insurer with a surplus as to
976 policyholders of $25 million or less writing 25 percent or more
977 of its total countrywide property insurance premiums in this
978 state may petition the office, within the first 90 days of each
979 calendar year, to qualify as a limited apportionment company. A
980 regular assessment levied by the corporation on a limited
981 apportionment company for a deficit incurred by the corporation
982 for the high-risk account in 2006 or thereafter may be paid to
983 the corporation on a monthly basis as the assessments are
984 collected by the limited apportionment company from its insureds
985 pursuant to s. 627.3512, but the regular assessment must be paid
986 in full within 12 months after being levied by the corporation.
987 A limited apportionment company shall collect from its
988 policyholders any emergency assessment imposed under sub
989 subparagraph (b)3.d. The plan shall provide that, If the office
990 determines that any regular assessment will result in an
991 impairment of the surplus of a limited apportionment company,
992 the office may direct that all or part of such assessment be
993 deferred as provided in subparagraph (q)4. However, there shall
994 be no limitation or deferment of an emergency assessment to be
995 collected from policyholders under sub-subparagraph (b)3.d. may
996 not be limited or deferred.
997 13.14. Effective January 1, 2012, must provide that the
998 corporation appoint as its licensed agents only those agents who
999 also hold an appointment as defined in s. 626.015(3) with an
1000 insurer who at the time of the agent’s initial appointment by
1001 the corporation is authorized to write and is actually writing
1002 personal lines residential property coverage, commercial
1003 residential property coverage, or commercial nonresidential
1004 property coverage within the state.
1005 14.15. Must provide, by July 1, 2007, a premium payment
1006 plan option to its policyholders which, allows at a minimum,
1007 allows for quarterly and semiannual payment of premiums. A
1008 monthly payment plan may, but is not required to, be offered.
1009 15.16. Must limit coverage on mobile homes or manufactured
1010 homes built before prior to 1994 to actual cash value of the
1011 dwelling rather than replacement costs of the dwelling.
1012 16.17. May provide such limits of coverage as the board
1013 determines, consistent with the requirements of this subsection.
1014 17.18. May require commercial property to meet specified
1015 hurricane mitigation construction features as a condition of
1016 eligibility for coverage.
1017 18. As of January 1, 2012, must require that the agent
1018 obtain from an applicant for coverage from the corporation an
1019 acknowledgement signed by the applicant, which includes, at a
1020 minimum, the following statement:
1021
1022 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT
1023 LIABILITY:
1024
1025 1. AS A POLICYHOLDER OF CITIZENS PROPERTY
1026 INSURANCE CORPORATION, I UNDERSTAND THAT IF THE
1027 CORPORATION SUSTAINS A DEFICIT AS A RESULT OF
1028 HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY
1029 COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
1030 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF
1031 THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH
1032 AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS
1033 IMPOSED BY THE FLORIDA LEGISLATURE.
1034 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO
1035 EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS
1036 POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A
1037 DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
1038 LEGISLATURE.
1039 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY
1040 INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL
1041 FAITH AND CREDIT OF THE STATE OF FLORIDA.
1042
1043 a. The corporation shall maintain, in electronic format or
1044 otherwise, a copy of the applicant’s signed acknowledgement and
1045 provide a copy of the statement to the policyholder as part of
1046 the first renewal after the effective date of this sub
1047 subparagraph.
1048 b. The signed acknowledgement form creates a conclusive
1049 presumption that the policyholder understood and accepted his or
1050 her potential surcharge and assessment liability as a
1051 policyholder of the corporation.
1052 19. Upon notice and determination by the Department of
1053 Financial Services that an agent appointed by the corporation
1054 has violated s. 626.9541(1)(h), immediately terminate the
1055 agent’s appointment to represent the corporation.
1056 20. Must provide that new or renewal policies issued by the
1057 corporation on or after February 1, 2012, do not include
1058 coverage for attached or detached screen enclosures. The
1059 corporation shall exclude such coverage using a notice of
1060 coverage change, which may be included with the policy renewal,
1061 and not by issuance of a notice of nonrenewal of the excluded
1062 coverage upon renewal of the current policy.
1063 21. Must provide that new or renewal personal residential
1064 policies issued by the corporation on or after February 1, 2013,
1065 do not provide coverage for detached structures on the residence
1066 premises which are separated from the dwelling by clear space.
1067 Structures connected to the dwelling by only a fence, utility
1068 line, or similar connection are considered to be detached
1069 structures.
1070 22. Must provide that new or renewal personal residential
1071 policies issued by the corporation on or after February 1, 2013,
1072 do not provide coverage for watercraft, trailers, jewelry, furs,
1073 firearms, silverware, business property on premises, business
1074 property away from premises, or grave markers.
1075 23. Must offer sinkhole coverage. However, effective
1076 February 1, 2012, coverage is not included for losses to
1077 appurtenant structures, driveways, sidewalks, decks, or patios
1078 which are directly or indirectly caused by sinkhole activity.
1079 The corporation shall exclude such coverage using a notice of
1080 coverage change, which may be included with the policy renewal,
1081 and not by issuance of a notice of nonrenewal of the excluded
1082 coverage upon renewal of the current policy.
1083 24. As a condition for making payment for damage caused by
1084 the peril of sinkhole, regardless of whether such payment is
1085 made pursuant to the contract, mediation, neutral evaluation,
1086 appraisal, arbitration, settlement, or litigation, the payment
1087 must be dedicated entirely to the costs of repairing the
1088 structure or remediation of the land. Unless this condition is
1089 met, the corporation is prohibited from making payment.
1090 (d)1. All prospective employees for senior management
1091 positions, as defined by the plan of operation, are subject to
1092 background checks as a prerequisite for employment. The office
1093 shall conduct the background checks on such prospective
1094 employees pursuant to ss. 624.34, 624.404(3), and 628.261.
1095 2. On or before July 1 of each year, employees of the
1096 corporation must are required to sign and submit a statement
1097 attesting that they do not have a conflict of interest, as
1098 defined in part III of chapter 112. As a condition of
1099 employment, all prospective employees must are required to sign
1100 and submit to the corporation a conflict-of-interest statement.
1101 3. Senior managers and members of the board of governors
1102 are subject to the provisions of part III of chapter 112,
1103 including, but not limited to, the code of ethics and public
1104 disclosure and reporting of financial interests, pursuant to s.
1105 112.3145.
1106 a. Senior managers and board members are also required to
1107 file such disclosures with the Commission on Ethics and the
1108 Office of Insurance Regulation. The executive director of the
1109 corporation or his or her designee shall notify each existing
1110 and newly appointed and existing appointed member of the board
1111 of governors and senior managers of their duty to comply with
1112 the reporting requirements of part III of chapter 112. At least
1113 quarterly, the executive director or his or her designee shall
1114 submit to the Commission on Ethics a list of names of the senior
1115 managers and members of the board of governors who are subject
1116 to the public disclosure requirements under s. 112.3145.
1117 b. Notwithstanding s. 112.3143(2), a board member may not
1118 vote on any measure that would inure to his or her special
1119 private gain or loss; that he or she knows would inure to the
1120 special private gain or loss of any principal by whom he or she
1121 is retained or to the parent organization or subsidiary of a
1122 corporate principal by which he or she is retained, other than
1123 an agency as defined in s. 112.312; or that he or she knows
1124 would inure to the special private gain or loss of a relative or
1125 business associate of the public officer. Before the vote is
1126 taken, such member must publicly state to the assembly the
1127 nature of his or her interest in the matter from which he or she
1128 is abstaining and, within 15 days after the vote occurs,
1129 disclose the nature of his or her interest as a public record in
1130 a memorandum filed with the person responsible for recording the
1131 minutes of the meeting, who shall incorporate the memorandum in
1132 the minutes.
1133 4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
1134 provision of law, an employee or board member may not knowingly
1135 accept, directly or indirectly, any gift or expenditure from a
1136 person or entity, or an employee or representative of such
1137 person or entity, which that has a contractual relationship with
1138 the corporation or who is under consideration for a contract. An
1139 employee or board member who fails to comply with subparagraph
1140 3. or this subparagraph is subject to penalties provided under
1141 ss. 112.317 and 112.3173.
1142 5. Any senior manager of the corporation who is employed on
1143 or after January 1, 2007, regardless of the date of hire, who
1144 subsequently retires or terminates employment is prohibited from
1145 representing another person or entity before the corporation for
1146 2 years after retirement or termination of employment from the
1147 corporation.
1148 6. Any senior manager of the corporation who is employed on
1149 or after January 1, 2007, regardless of the date of hire, who
1150 subsequently retires or terminates employment is prohibited from
1151 having any employment or contractual relationship for 2 years
1152 with an insurer that has entered into a take-out bonus agreement
1153 with the corporation.
1154 (n)1. It is the intent of the Legislature that the rates
1155 for coverage provided by the corporation be actuarially
1156 determined and not be competitive with rates charged in the
1157 admitted voluntary market such that the corporation functions as
1158 a residual market mechanism that provides insurance only if such
1159 insurance cannot be procured in the voluntary market. To achieve
1160 this goal, for any rate filing made by the corporation on or
1161 after July 1, 2011: Rates for coverage provided by the
1162 corporation shall be actuarially sound and subject to the
1163 requirements of s. 627.062, except as otherwise provided in this
1164 paragraph. The corporation shall file its recommended rates with
1165 the office at least annually. The corporation shall provide any
1166 additional information regarding the rates which the office
1167 requires. The office shall consider the recommendations of the
1168 board and issue a final order establishing the rates for the
1169 corporation within 45 days after the recommended rates are
1170 filed. The corporation may not pursue an administrative
1171 challenge or judicial review of the final order of the office.
1172 1. The corporation shall file its recommended rates with
1173 the office at least annually. The office shall consider the
1174 recommended rates and issue a final order establishing the rates
1175 within 45 days after the recommended rates are filed. The
1176 corporation may not pursue an administrative challenge or
1177 judicial review of the office’s final order.
1178 2. In developing its rates, the corporation shall use an
1179 appropriate industry expense equalization factor to ensure that
1180 its rates include standard industry ratemaking expense
1181 provisions. The industry expense equalization factor must
1182 include a catastrophe risk load, a provision for taxes, a market
1183 provision for reinsurance costs, and an industry expense
1184 provision for general expenses, acquisition expenses, and
1185 commissions.
1186 3. The corporation shall implement a rate increase each
1187 year for each residential line of business it writes, which may
1188 not exceed 20 percent by territory and 25 percent for any single
1189 policy, excluding coverage changes and surcharges. This
1190 subparagraph expires January 1, 2015, and does not apply to
1191 rates for sinkhole coverage or costs for the purchase of private
1192 reinsurance, if any.
1193 4.2. In addition to the rates otherwise determined pursuant
1194 to this paragraph, the corporation shall impose and collect an
1195 amount equal to the premium tax provided for in s. 624.509 to
1196 augment the financial resources of the corporation.
1197 3. After the public hurricane loss-projection model under
1198 s. 627.06281 has been found to be accurate and reliable by the
1199 Florida Commission on Hurricane Loss Projection Methodology,
1200 that model shall serve as the minimum benchmark for determining
1201 the windstorm portion of the corporation’s rates. This
1202 subparagraph does not require or allow the corporation to adopt
1203 rates lower than the rates otherwise required or allowed by this
1204 paragraph.
1205 4. The rate filings for the corporation which were approved
1206 by the office and which took effect January 1, 2007, are
1207 rescinded, except for those rates that were lowered. As soon as
1208 possible, the corporation shall begin using the lower rates that
1209 were in effect on December 31, 2006, and shall provide refunds
1210 to policyholders who have paid higher rates as a result of that
1211 rate filing. The rates in effect on December 31, 2006, shall
1212 remain in effect for the 2007 and 2008 calendar years except for
1213 any rate change that results in a lower rate. The next rate
1214 change that may increase rates shall take effect pursuant to a
1215 new rate filing recommended by the corporation and established
1216 by the office, subject to the requirements of this paragraph.
1217 5. Beginning on July 15, 2009, and each year thereafter,
1218 the corporation must make a recommended actuarially sound rate
1219 filing for each personal and commercial line of business it
1220 writes, to be effective no earlier than January 1, 2010.
1221 6. Beginning on or after January 1, 2010, and
1222 notwithstanding the board’s recommended rates and the office’s
1223 final order regarding the corporation’s filed rates under
1224 subparagraph 1., the corporation shall implement a rate increase
1225 each year which does not exceed 10 percent for any single policy
1226 issued by the corporation, excluding coverage changes and
1227 surcharges.
1228 5.7. The corporation may also implement an increase to
1229 reflect the effect on the corporation of the cash buildup factor
1230 pursuant to s. 215.555(5)(b).
1231 6. This paragraph does not require or allow the corporation
1232 to reduce rates.
1233 8. The corporation’s implementation of rates as prescribed
1234 in subparagraph 6. shall cease for any line of business written
1235 by the corporation upon the corporation’s implementation of
1236 actuarially sound rates. Thereafter, the corporation shall
1237 annually make a recommended actuarially sound rate filing for
1238 each commercial and personal line of business the corporation
1239 writes.
1240 (o) If coverage in an account is deactivated pursuant to
1241 paragraph (p), coverage through the corporation shall be
1242 reactivated by order of the office only under one of the
1243 following circumstances:
1244 1. If the market assistance plan receives a minimum of 100
1245 applications for coverage within a 3-month period, or 200
1246 applications for coverage within a 1-year period or less for
1247 residential coverage, unless the market assistance plan provides
1248 a quotation from admitted carriers at their filed rates for at
1249 least 90 percent of such applicants. A Any market assistance
1250 plan application that is rejected because an individual risk is
1251 so hazardous as to be uninsurable using the criteria specified
1252 in subparagraph (c)7. may (c)8. shall not be included in the
1253 minimum percentage calculation provided herein. If In the event
1254 that there is a legal or administrative challenge to a
1255 determination by the office that the conditions of this
1256 subparagraph have been met for eligibility for coverage by in
1257 the corporation, an any eligible risk may obtain coverage during
1258 the pendency of such challenge.
1259 2. In response to a state of emergency declared by the
1260 Governor under s. 252.36, the office may activate coverage by
1261 order during for the period of the emergency upon a finding by
1262 the office that the emergency significantly affects the
1263 availability of residential property insurance.
1264 (q)1. The corporation shall certify to the office its needs
1265 for annual assessments as to a particular calendar year, and for
1266 any interim assessments that it deems to be necessary to sustain
1267 operations as to a particular year pending the receipt of annual
1268 assessments. Upon verification, the office shall approve such
1269 certification, and the corporation shall levy such annual or
1270 interim assessments. Such assessments must shall be prorated as
1271 provided in paragraph (b). The corporation shall take all
1272 reasonable and prudent steps necessary to collect the amount of
1273 assessment due from each assessable insurer, including, if
1274 prudent, filing suit to collect such assessment. If the
1275 corporation is unable to collect an assessment from any
1276 assessable insurer, the uncollected assessments shall be levied
1277 as an additional assessment against the assessable insurers and
1278 any assessable insurer required to pay an additional assessment
1279 as a result of such failure to pay shall have a cause of action
1280 against such nonpaying assessable insurer. Assessments shall be
1281 included as an appropriate factor in the making of rates. The
1282 failure of a surplus lines agent to collect and remit any
1283 regular or emergency assessment levied by the corporation is
1284 considered to be a violation of s. 626.936 and subjects the
1285 surplus lines agent to the penalties provided in that section.
1286 2. The governing body of any unit of local government, any
1287 residents of which are insured by the corporation, may issue
1288 bonds as defined in s. 125.013 or s. 166.101 from time to time
1289 to fund an assistance program, in conjunction with the
1290 corporation, for the purpose of defraying deficits of the
1291 corporation. In order to avoid needless and indiscriminate
1292 proliferation, duplication, and fragmentation of such assistance
1293 programs, any unit of local government, any residents of which
1294 are insured by the corporation, may provide for the payment of
1295 losses, regardless of whether or not the losses occurred within
1296 or outside of the territorial jurisdiction of the local
1297 government. Revenue bonds under this subparagraph may not be
1298 issued until validated pursuant to chapter 75, unless a state of
1299 emergency is declared by executive order or proclamation of the
1300 Governor pursuant to s. 252.36 making such findings as are
1301 necessary to determine that it is in the best interests of, and
1302 necessary for, the protection of the public health, safety, and
1303 general welfare of residents of this state and declaring it an
1304 essential public purpose to permit certain municipalities or
1305 counties to issue such bonds to as will permit relief to
1306 claimants and policyholders of the corporation. Any such unit of
1307 local government may enter into such contracts with the
1308 corporation and with any other entity created pursuant to this
1309 subsection as are necessary to carry out this paragraph. Any
1310 bonds issued under this subparagraph are shall be payable from
1311 and secured by moneys received by the corporation from emergency
1312 assessments under sub-subparagraph (b)3.d., and assigned and
1313 pledged to or on behalf of the unit of local government for the
1314 benefit of the holders of such bonds. The funds, credit,
1315 property, and taxing power of the state or of the unit of local
1316 government may shall not be pledged for the payment of such
1317 bonds.
1318 3.a. The corporation shall adopt one or more programs
1319 subject to approval by the office for the reduction of both new
1320 and renewal writings in the corporation. Beginning January 1,
1321 2008,
1322 a. Any program the corporation adopts for the payment of
1323 bonuses to an insurer for each risk the insurer removes from the
1324 corporation must shall comply with s. 627.3511(2) and may not
1325 exceed the amount referenced in s. 627.3511(2) for each risk
1326 removed. The corporation may consider any prudent and not
1327 unfairly discriminatory approach to reducing corporation
1328 writings, and may adopt a credit against assessment liability or
1329 other liability that provides an incentive for insurers to take
1330 risks out of the corporation and to keep risks out of the
1331 corporation by maintaining or increasing voluntary writings in
1332 counties or areas in which corporation risks are highly
1333 concentrated and a program to provide a formula under which an
1334 insurer voluntarily taking risks out of the corporation by
1335 maintaining or increasing voluntary writings will be relieved
1336 wholly or partially from assessments under sub-subparagraphs
1337 (b)3.a. and b. However, any “take-out bonus” or payment to an
1338 insurer must be conditioned on the property being insured for at
1339 least 5 years by the insurer, unless canceled or nonrenewed by
1340 the policyholder. If the policy is canceled or nonrenewed by the
1341 policyholder before the end of the 5-year period, the amount of
1342 the take-out bonus must be prorated for the time period the
1343 policy was insured. If When the corporation enters into a
1344 contractual agreement for a take-out plan, the producing agent
1345 of record of the corporation policy is entitled to retain any
1346 unearned commission on such policy, and the insurer shall
1347 either:
1348 (I) Pay to the producing agent of record of the policy, for
1349 the first year, an amount that which is the greater of the
1350 insurer’s usual and customary commission for the type of policy
1351 written or a policy fee equal to the usual and customary
1352 commission of the corporation; or
1353 (II) Offer to allow the producing agent of record of the
1354 policy to continue servicing the policy for at least a period of
1355 not less than 1 year and offer to pay the agent the insurer’s
1356 usual and customary commission for the type of policy written.
1357 If the producing agent is unwilling or unable to accept
1358 appointment by the new insurer, the new insurer shall pay the
1359 agent in accordance with sub-sub-subparagraph (I).
1360 b. Any credit or exemption from regular assessments adopted
1361 under this subparagraph shall last no longer than the 3 years
1362 following the cancellation or expiration of the policy by the
1363 corporation. With the approval of the office, the board may
1364 extend such credits for an additional year if the insurer
1365 guarantees an additional year of renewability for all policies
1366 removed from the corporation, or for 2 additional years if the
1367 insurer guarantees 2 additional years of renewability for all
1368 policies so removed.
1369 c. There shall be No credit, limitation, exemption, or
1370 deferment from emergency assessments may to be collected from
1371 policyholders pursuant to sub-subparagraph (b)3.d.
1372 4. The plan must shall provide for the deferment, in whole
1373 or in part, of the assessment of an assessable insurer, other
1374 than an emergency assessment collected from policyholders
1375 pursuant to sub-subparagraph (b)3.d., if the office finds that
1376 payment of the assessment would endanger or impair the solvency
1377 of the insurer. If In the event an assessment against an
1378 assessable insurer is deferred in whole or in part, the amount
1379 by which such assessment is deferred may be assessed against the
1380 other assessable insurers in a manner consistent with the basis
1381 for assessments set forth in paragraph (b).
1382 5. Effective July 1, 2007, In order to evaluate the costs
1383 and benefits of approved take-out plans, if the corporation pays
1384 a bonus or other payment to an insurer for an approved take-out
1385 plan, it shall maintain a record of the address or such other
1386 identifying information on the property or risk removed in order
1387 to track if and when the property or risk is later insured by
1388 the corporation.
1389 6. Any policy taken out, assumed, or removed from the
1390 corporation is, as of the effective date of the take-out,
1391 assumption, or removal, direct insurance issued by the insurer
1392 and not by the corporation, even if the corporation continues to
1393 service the policies. This subparagraph applies to policies of
1394 the corporation and not policies taken out, assumed, or removed
1395 from any other entity.
1396 d. Notwithstanding any other provision of law, for purposes
1397 of a depopulation, take-out, or keep-out program adopted by the
1398 corporation, including an initial or renewal offer of coverage
1399 made to a policyholder removed from the corporation pursuant to
1400 such program, an eligible surplus lines insurer may participate
1401 in the program in the same manner and on the same terms as an
1402 authorized insurer, except as provided under this subparagraph.
1403 To qualify for participation, the surplus lines insurer must
1404 first obtain approval from the office for its depopulation,
1405 take-out, or keep-out plan and then comply with all of the
1406 corporation’s requirements for such plan applicable to admitted
1407 insurers and with all statutory provisions applicable to the
1408 removal of policies from the corporation. In considering a
1409 surplus lines insurer’s request for approval for its plan, the
1410 office must determine that the surplus lines insurer meets the
1411 following requirements:
1412 (I) Maintains surplus of $50 million on a company or pooled
1413 basis;
1414 (II) Maintains an A.M. Best Financial Strength Rating of
1415 “A-” or better;
1416 (III) Maintains reserves, surplus, reinsurance, and
1417 reinsurance equivalents sufficient to cover the insurer’s 100
1418 year probable maximum hurricane loss at least twice in a single
1419 hurricane season, and submits such reinsurance to the office to
1420 review for purposes of the take-out;
1421 (IV) Provides prominent notice to the policyholder before
1422 the assumption of the policy that surplus lines policies are not
1423 provided coverage by the Florida Insurance Guaranty Association,
1424 and an outline of any substantial differences in coverage
1425 between the existing policy and the policy being offered to the
1426 insured; and
1427 (V) Provides similar policy coverage.
1428
1429 This sub-subparagraph does not subject any surplus lines insurer
1430 to requirements in addition to part VIII of chapter 626. Surplus
1431 lines brokers making an offer of coverage under this sub
1432 subparagraph are not required to comply with s. 626.916(1)(a),
1433 (b), (c), and (e).
1434 (s)1. There is shall be no liability on the part of, and no
1435 cause of action of any nature shall arise against, any
1436 assessable insurer or its agents or employees, the corporation
1437 or its agents or employees, members of the board of governors or
1438 their respective designees at a board meeting, corporation
1439 committee members, or the office or its representatives, for any
1440 action taken by them in the performance of their duties or
1441 responsibilities under this subsection.
1442 a. As part of the immunity, the corporation, as a
1443 governmental entity serving a public purpose, is not liable for
1444 any claim for bad faith whether or not brought pursuant to s.
1445 624.155, and this subsection or any other provision of law does
1446 not create liability or a cause of action for bad faith or a
1447 claim for extracontractual damages.
1448 b. Such immunity does not apply to:
1449 (I)a. Any of the foregoing persons or entities for any
1450 willful tort;
1451 (II)b. The corporation or its producing agents for breach
1452 of any contract or agreement pertaining to insurance coverage;
1453 (III)c. The corporation with respect to issuance or payment
1454 of debt;
1455 (IV)d. An Any assessable insurer with respect to any action
1456 to enforce an assessable insurer’s obligations to the
1457 corporation under this subsection; or
1458 (V)e. The corporation in any pending or future action for
1459 breach of contract or for benefits under a policy issued by the
1460 corporation.; In any such action, the corporation is not shall
1461 be liable to the policyholders and beneficiaries for attorney’s
1462 fees under s. 627.428.
1463 2. The corporation shall manage its claim employees,
1464 independent adjusters, and others who handle claims to ensure
1465 they carry out the corporation’s duty to its policyholders to
1466 handle claims carefully, timely, diligently, and in good faith,
1467 balanced against the corporation’s duty to the state to manage
1468 its assets responsibly in order to minimize its assessment
1469 potential.
1470 (w) Notwithstanding any other provision of law:
1471 1. The pledge or sale of, the lien upon, and the security
1472 interest in any rights, revenues, or other assets of the
1473 corporation created or purported to be created pursuant to any
1474 financing documents to secure any bonds or other indebtedness of
1475 the corporation shall be and remain valid and enforceable,
1476 notwithstanding the commencement of and during the continuation
1477 of, and after, any rehabilitation, insolvency, liquidation,
1478 bankruptcy, receivership, conservatorship, reorganization, or
1479 similar proceeding against the corporation under the laws of
1480 this state.
1481 2. No Such proceeding does not shall relieve the
1482 corporation of its obligation, or otherwise affect its ability
1483 to perform its obligation, to continue to collect, or levy and
1484 collect, assessments, market equalization or other surcharges
1485 under subparagraph (c)10., or any other rights, revenues, or
1486 other assets of the corporation pledged pursuant to any
1487 financing documents.
1488 3. Each such pledge or sale of, lien upon, and security
1489 interest in, including the priority of such pledge, lien, or
1490 security interest, any such assessments, market equalization or
1491 other surcharges, or other rights, revenues, or other assets
1492 which are collected, or levied and collected, after the
1493 commencement of and during the pendency of, or after, any such
1494 proceeding continues shall continue unaffected by such
1495 proceeding. As used in this subsection, the term “financing
1496 documents” means any agreement or agreements, instrument or
1497 instruments, or other document or documents now existing or
1498 hereafter created evidencing any bonds or other indebtedness of
1499 the corporation or pursuant to which any such bonds or other
1500 indebtedness has been or may be issued and pursuant to which any
1501 rights, revenues, or other assets of the corporation are pledged
1502 or sold to secure the repayment of such bonds or indebtedness,
1503 together with the payment of interest on such bonds or such
1504 indebtedness, or the payment of any other obligation or
1505 financial product, as defined in the plan of operation of the
1506 corporation related to such bonds or indebtedness.
1507 4. Any such pledge or sale of assessments, revenues,
1508 contract rights, or other rights or assets of the corporation
1509 constitutes shall constitute a lien and security interest, or
1510 sale, as the case may be, that is immediately effective and
1511 attaches to such assessments, revenues, or contract rights or
1512 other rights or assets, whether or not imposed or collected at
1513 the time the pledge or sale is made. Any Such pledge or sale is
1514 effective, valid, binding, and enforceable against the
1515 corporation or other entity making such pledge or sale, and
1516 valid and binding against and superior to any competing claims
1517 or obligations owed to any other person or entity, including
1518 policyholders in this state, asserting rights in any such
1519 assessments, revenues, or contract rights or other rights or
1520 assets to the extent set forth in and in accordance with the
1521 terms of the pledge or sale contained in the applicable
1522 financing documents, whether or not any such person or entity
1523 has notice of such pledge or sale and without the need for any
1524 physical delivery, recordation, filing, or other action.
1525 5. If As long as the corporation has any bonds outstanding,
1526 the corporation may not file a voluntary petition under chapter
1527 9 of the federal Bankruptcy Code or such corresponding chapter
1528 or sections as may be in effect, from time to time, and a public
1529 officer or any organization, entity, or other person may not
1530 authorize the corporation to be or become a debtor under chapter
1531 9 of the federal Bankruptcy Code or such corresponding chapter
1532 or sections as may be in effect, from time to time, during any
1533 such period.
1534 6. If ordered by a court of competent jurisdiction, the
1535 corporation may assume policies or otherwise provide coverage
1536 for policyholders of an insurer placed in liquidation under
1537 chapter 631, under such forms, rates, terms, and conditions as
1538 the corporation deems appropriate, subject to approval by the
1539 office.
1540 (x)1. The following records of the corporation are
1541 confidential and exempt from the provisions of s. 119.07(1) and
1542 s. 24(a), Art. I of the State Constitution:
1543 a. Underwriting files, except that a policyholder or an
1544 applicant shall have access to his or her own underwriting
1545 files. Confidential and exempt underwriting file records may
1546 also be released to other governmental agencies upon written
1547 request and demonstration of need; such records held by the
1548 receiving agency remain confidential and exempt as provided
1549 herein.
1550 b. Claims files, until termination of all litigation and
1551 settlement of all claims arising out of the same incident,
1552 although portions of the claims files may remain exempt, as
1553 otherwise provided by law. Confidential and exempt claims file
1554 records may be released to other governmental agencies upon
1555 written request and demonstration of need; such records held by
1556 the receiving agency remain confidential and exempt as provided
1557 herein.
1558 c. Records obtained or generated by an internal auditor
1559 pursuant to a routine audit, until the audit is completed, or if
1560 the audit is conducted as part of an investigation, until the
1561 investigation is closed or ceases to be active. An investigation
1562 is considered “active” while the investigation is being
1563 conducted with a reasonable, good faith belief that it could
1564 lead to the filing of administrative, civil, or criminal
1565 proceedings.
1566 d. Matters reasonably encompassed in privileged attorney
1567 client communications.
1568 e. Proprietary information licensed to the corporation
1569 under contract and the contract provides for the confidentiality
1570 of such proprietary information.
1571 f. All information relating to the medical condition or
1572 medical status of a corporation employee which is not relevant
1573 to the employee’s capacity to perform his or her duties, except
1574 as otherwise provided in this paragraph. Information that is
1575 exempt shall include, but is not limited to, information
1576 relating to workers’ compensation, insurance benefits, and
1577 retirement or disability benefits.
1578 g. Upon an employee’s entrance into the employee assistance
1579 program, a program to assist any employee who has a behavioral
1580 or medical disorder, substance abuse problem, or emotional
1581 difficulty which affects the employee’s job performance, all
1582 records relative to that participation shall be confidential and
1583 exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
1584 of the State Constitution, except as otherwise provided in s.
1585 112.0455(11).
1586 h. Information relating to negotiations for financing,
1587 reinsurance, depopulation, or contractual services, until the
1588 conclusion of the negotiations.
1589 i. Minutes of closed meetings regarding underwriting files,
1590 and minutes of closed meetings regarding an open claims file
1591 until termination of all litigation and settlement of all claims
1592 with regard to that claim, except that information otherwise
1593 confidential or exempt by law shall be redacted.
1594 2. If an authorized insurer is considering underwriting a
1595 risk insured by the corporation or has removed a risk from the
1596 corporation, relevant underwriting files and confidential claims
1597 files may be released to the insurer if provided the insurer
1598 agrees in writing, notarized and under oath, to maintain the
1599 confidentiality of such files. If a file is transferred to an
1600 insurer, that file is no longer a public record because it is
1601 not held by an agency subject to the provisions of the public
1602 records law. Underwriting files and confidential claims files
1603 may also be released to staff and the board of governors of the
1604 market assistance plan established pursuant to s. 627.3515, who
1605 must retain the confidentiality of such files, except such files
1606 may be released to authorized insurers that are considering
1607 assuming the risks to which the files apply if, provided the
1608 insurer agrees in writing, notarized and under oath, to maintain
1609 the confidentiality of such files. Finally, the corporation or
1610 the board or staff of the market assistance plan may make the
1611 following information obtained from underwriting files and
1612 confidential claims files available to licensed general lines
1613 insurance agents: name, address, and telephone number of the
1614 residential property owner or insured; location of the risk;
1615 rating information; loss history; and policy type. The receiving
1616 licensed general lines insurance agent must retain the
1617 confidentiality of the information received.
1618 3. A policyholder who has filed suit against the
1619 corporation has the right to discover the contents of his or her
1620 own claims file to the same extent that discovery of such
1621 contents would be available from a private insurer in litigation
1622 as provided by the Florida Rules of Civil Procedure, the Florida
1623 Evidence Code, and other applicable law. Pursuant to subpoena, a
1624 third party has the right to discover the contents of an
1625 insured’s or applicant’s underwriting or claims file to the same
1626 extent that discovery of such contents would be available from a
1627 private insurer by subpoena as provided by the Florida Rules of
1628 Civil Procedure, the Florida Evidence Code, and other applicable
1629 law, and subject to any confidentiality protections requested by
1630 the corporation and agreed to by the seeking party or ordered by
1631 the court. The corporation may release confidential underwriting
1632 and claims file contents and information as it deems necessary
1633 and appropriate to underwrite or service insurance policies and
1634 claims, subject to any confidentiality protections deemed
1635 necessary and appropriate by the corporation.
1636 4. Portions of meetings of the corporation are exempt from
1637 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1638 Constitution wherein confidential underwriting files or
1639 confidential open claims files are discussed. All portions of
1640 corporation meetings which are closed to the public shall be
1641 recorded by a court reporter. The court reporter shall record
1642 the times of commencement and termination of the meeting, all
1643 discussion and proceedings, the names of all persons present at
1644 any time, and the names of all persons speaking. No portion of
1645 any closed meeting shall be off the record. Subject to the
1646 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1647 notes of any closed meeting shall be retained by the corporation
1648 for a minimum of 5 years. A copy of the transcript, less any
1649 exempt matters, of any closed meeting wherein claims are
1650 discussed shall become public as to individual claims after
1651 settlement of the claim.
1652 (y) It is the intent of the Legislature that the amendments
1653 to this subsection enacted in 2002 should, over time, reduce the
1654 probable maximum windstorm losses in the residual markets and
1655 should reduce the potential assessments to be levied on property
1656 insurers and policyholders statewide. In furtherance of this
1657 intent:
1658 1. The board shall, on or before February 1 of each year,
1659 provide a report to the President of the Senate and the Speaker
1660 of the House of Representatives showing the reduction or
1661 increase in the 100-year probable maximum loss attributable to
1662 wind-only coverages and the quota share program under this
1663 subsection combined, as compared to the benchmark 100-year
1664 probable maximum loss of the Florida Windstorm Underwriting
1665 Association. For purposes of this paragraph, the benchmark 100
1666 year probable maximum loss of the Florida Windstorm Underwriting
1667 Association shall be the calculation dated February 2001 and
1668 based on November 30, 2000, exposures. In order to ensure
1669 comparability of data, the board shall use the same methods for
1670 calculating its probable maximum loss as were used to calculate
1671 the benchmark probable maximum loss.
1672 2. Beginning December 1, 2010, if the report under
1673 subparagraph 1. for any year indicates that the 100-year
1674 probable maximum loss attributable to wind-only coverages and
1675 the quota share program combined does not reflect a reduction of
1676 at least 25 percent from the benchmark, the board shall reduce
1677 the boundaries of the high-risk area eligible for wind-only
1678 coverages under this subsection in a manner calculated to reduce
1679 such probable maximum loss to an amount at least 25 percent
1680 below the benchmark.
1681 3. Beginning February 1, 2015, if the report under
1682 subparagraph 1. for any year indicates that the 100-year
1683 probable maximum loss attributable to wind-only coverages and
1684 the quota share program combined does not reflect a reduction of
1685 at least 50 percent from the benchmark, the boundaries of the
1686 high-risk area eligible for wind-only coverages under this
1687 subsection shall be reduced by the elimination of any area that
1688 is not seaward of a line 1,000 feet inland from the Intracoastal
1689 Waterway.
1690 (aa) As a condition of eligibility for coverage by the
1691 corporation, an applicant or insured of a property located in
1692 Special Flood Hazard Area, as defined by the National Flood
1693 Insurance Program, must maintain in effect a separate flood
1694 insurance policy having coverage limits for building and
1695 contents at least equal to those provided under the
1696 corporation’s policy, subject to the maximum limits available
1697 under the National Flood Insurance Program policy. This
1698 requirement does not apply to an insured who is a tenant or a
1699 condominium unit owner above the ground floor; a policy issued
1700 by the corporation which excludes wind and hail coverage; a risk
1701 that is not eligible for flood coverage under the National Flood
1702 Insurance Program; or a mobile home that is located more than 2
1703 miles from open water, including the ocean, the gulf, a bay, a
1704 river, or the intracoastal waterway. This paragraph applies to
1705 new policies issued by the corporation on or after January 1,
1706 2012, and to policies renewed by the corporation on or after
1707 January 1, 2013. The corporation shall not require the securing
1708 of flood insurance as a condition of coverage if the insured or
1709 applicant executes a form approved by the office affirming that
1710 flood insurance is not provided by the corporation and that if
1711 flood insurance is not secured by the applicant or insured in
1712 addition to coverage by the corporation, the risk will not be
1713 covered for flood damage. A corporation policyholder electing
1714 not to secure flood insurance and executing a form as provided
1715 herein making a claim for water damage against the corporation
1716 shall have the burden of proving the damage was not caused by
1717 flooding. Notwithstanding other provisions of this subsection,
1718 the corporation may deny coverage to an applicant or insured who
1719 refuses to execute the form described herein.
1720 (ee) The office may establish a pilot program to offer
1721 optional sinkhole coverage in one or more counties or other
1722 territories of the corporation for the purpose of implementing
1723 s. 627.706, as amended by s. 30, chapter 2007-1, Laws of
1724 Florida. Under the pilot program, the corporation is not
1725 required to issue a notice of nonrenewal to exclude sinkhole
1726 coverage upon the renewal of existing policies, but may exclude
1727 such coverage using a notice of coverage change.
1728 Section 3. Subsection (4) of section 627.3511, Florida
1729 Statutes, is amended to read:
1730 627.3511 Depopulation of Citizens Property Insurance
1731 Corporation.—
1732 (4) AGENT BONUS.—If When the corporation enters into a
1733 contractual agreement for a take-out plan that provides a bonus
1734 to the insurer, the producing agent of record of the corporation
1735 policy is entitled to retain any unearned commission on such
1736 policy, and the insurer shall either:
1737 (a) Pay to the producing agent of record of the association
1738 policy, for the first year, an amount that is the greater of the
1739 insurer’s usual and customary commission for the type of policy
1740 written or a fee equal to the usual and customary commission of
1741 the corporation; or
1742 (b) Offer to allow the producing agent of record of the
1743 corporation policy to continue servicing the policy for at least
1744 a period of not less than 1 year and offer to pay the agent the
1745 greater of the insurer’s or the corporation’s usual and
1746 customary commission for the type of policy written.
1747
1748 If the producing agent is unwilling or unable to accept
1749 appointment, the new insurer shall pay the agent in accordance
1750 with paragraph (a). The requirement of this subsection that the
1751 producing agent of record is entitled to retain the unearned
1752 commission on an association policy does not apply to a policy
1753 for which coverage has been provided in the association for 30
1754 days or less or for which a cancellation notice has been issued
1755 pursuant to s. 627.351(6)(c)10. during the first 30 days of
1756 coverage.
1757 Section 5. This act shall take effect upon becoming a law.
1758
1759 ================= T I T L E A M E N D M E N T ================
1760 And the title is amended as follows:
1761 Delete everything before the enacting clause
1762 and insert:
1763 A bill to be entitled
1764 An act relating to the Citizens Property Insurance
1765 Corporation; amending s. 627.0655, F.S.; discontinuing
1766 policy discounts relating to the Citizens Property
1767 Insurance Corporation after a certain date; amending
1768 s. 627.351, F.S.; revising legislative intent;
1769 deleting obsolete provisions relating to the
1770 corporation’s plan of operation; providing that
1771 certain residential structures are not eligible for
1772 coverage by the corporation after a certain date;
1773 requiring policies issued by the corporation to
1774 include a provision that prohibits policyholders from
1775 engaging the services of a public adjuster until after
1776 the corporation has tendered an offer; limiting an
1777 adjuster’s fee for a claim against the corporation;
1778 specifying the percentage amount of emergency
1779 assessments; revising provisions relating to
1780 policyholder surcharges; prohibiting the corporation
1781 from levying certain assessments with respect to a
1782 year’s deficit until the corporation has first levied
1783 a specified surcharge; requiring the corporation to
1784 commission a consultant to prepare a report on
1785 outsourcing various functions and submit such report
1786 to the Financial Services Commission by a certain
1787 date; revising provisions relating to wind coverage;
1788 prohibiting the corporation from accepting
1789 applications for commercial nonresidential risks;
1790 requiring the policyholders to sign a statement
1791 acknowledging that they may be assessed surcharges to
1792 cover corporate deficits; providing that policies do
1793 not include coverage for screen enclosures or any
1794 structure detached from the house; providing that the
1795 corporation does not cover specified personal
1796 property; limiting coverage for damage from sinkholes
1797 after a certain date and providing that the
1798 corporation must require repair of the property as a
1799 condition of any payment; requiring members of the
1800 board of governors to abstain from voting on issues on
1801 which they have a personal interest; requiring such
1802 members to disclose the nature of their interest as a
1803 public record; providing that the corporation operates
1804 as a residual market mechanism; revising provisions
1805 relating to corporation rates; providing that eligible
1806 surplus lines insurers may participate in take-out
1807 programs under certain conditions; clarifying that the
1808 corporation is immune from certain liabilities;
1809 revising requirements relating to confidential records
1810 released by an insurer; deleting a requirement for an
1811 annual report to the Legislature on losses
1812 attributable to wind-only coverages; requiring owners
1813 of properties in Special Flood Hazard Areas to
1814 maintain a separate flood insurance policy after a
1815 certain date; providing exceptions; amending s.
1816 627.3511, F.S.; conforming a cross-reference;
1817 providing an effective date.