Florida Senate - 2011 CS for SB 1714
By the Committee on Banking and Insurance; and Senator Hays
597-03336-11 20111714c1
1 A bill to be entitled
2 An act relating to the Citizens Property Insurance
3 Corporation; amending s. 627.0655, F.S.; discontinuing
4 policy discounts relating to the Citizens Property
5 Insurance Corporation after a certain date; amending
6 s. 627.351, F.S.; revising legislative intent;
7 deleting obsolete provisions relating to the
8 corporation’s plan of operation; directing the
9 corporation to provide coverage to certain excluded
10 residential structures but at rates deemed appropriate
11 by the corporation; providing that certain residential
12 structures are not eligible for coverage by the
13 corporation after a certain date; requiring policies
14 issued by the corporation to include a provision that
15 prohibits policyholders from engaging the services of
16 a public adjuster until after the corporation has
17 tendered an offer; limiting an adjuster’s fee for a
18 claim against the corporation; specifying the
19 percentage amount of emergency assessments; revising
20 provisions relating to policyholder surcharges;
21 prohibiting the corporation from levying certain
22 assessments with respect to a year’s deficit until the
23 corporation has first levied a specified surcharge;
24 requiring the corporation to commission a consultant
25 to prepare a report on outsourcing various functions
26 and submit such report to the Financial Services
27 Commission by a certain date; revising provisions
28 relating to wind coverage; prohibiting the corporation
29 from accepting applications for commercial
30 nonresidential risks; requiring the policyholders to
31 sign a statement acknowledging that they may be
32 assessed surcharges to cover corporate deficits;
33 providing that policies do not include coverage for
34 screen enclosures or any structure detached from the
35 house; providing that the corporation does not cover
36 specified personal property; limiting coverage for
37 damage from sinkholes after a certain date and
38 providing that the corporation must require repair of
39 the property as a condition of any payment; requiring
40 members of the board of governors to abstain from
41 voting on issues on which they have a personal
42 interest; requiring such members to disclose the
43 nature of their interest as a public record; providing
44 that the corporation operates as a residual market
45 mechanism; revising provisions relating to corporation
46 rates; providing that eligible surplus lines insurers
47 may participate in take-out programs under certain
48 conditions; clarifying that the corporation is immune
49 from certain liabilities; revising requirements
50 relating to confidential records released by an
51 insurer; deleting a requirement for an annual report
52 to the Legislature on losses attributable to wind-only
53 coverages; requiring owners of properties in Special
54 Flood Hazard Areas to maintain a separate flood
55 insurance policy after a certain date; providing
56 exceptions; amending s. 627.3511, F.S.; conforming a
57 cross-reference; providing an effective date.
58
59 Be It Enacted by the Legislature of the State of Florida:
60
61 Section 1. Section 627.0655, Florida Statutes, is amended
62 to read:
63 627.0655 Policyholder loss or expense-related premium
64 discounts.—An insurer or person authorized to engage in the
65 business of insurance in this state may include a discount, in
66 the premium charged an insured for any policy, contract, or
67 certificate of insurance if, a discount based on the fact that
68 another policy, contract, or certificate of any type has been
69 purchased by the insured:
70 (1) From the same insurer or insurer group;,
71 (2) For policies issued or renewed before January 1, 2013,
72 from the Citizens Property Insurance Corporation created under
73 s. 627.351(6) if the same insurance agent is servicing both
74 policies;, or
75 (3) For policies issued or renewed before January 1, 2013,
76 from an insurer that has removed the policy from the Citizens
77 Property Insurance Corporation if the same insurance agent is
78 servicing both policies.
79 Section 2. Paragraphs (a), (b), (c), (d), (n), (o), (q),
80 (s), (w), (x), (y), (aa), and (ee) of subsection (6) of section
81 627.351, Florida Statutes, are amended to read:
82 627.351 Insurance risk apportionment plans.—
83 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
84 (a)1. It is The public purpose of this subsection is to
85 ensure that there is the existence of an orderly market for
86 property insurance for residents Floridians and Florida
87 businesses of this state.
88 1. The Legislature finds that actual and threatened
89 catastrophic losses to property from hurricanes in this state
90 have caused insurers to be unwilling or unable to provide
91 property insurance coverage to the extent sought and needed. The
92 Legislature declares that it is in the public interest and
93 serves a public purpose that property in this state be
94 adequately insured in order to facilitate the remediation,
95 reconstruction, and replacement of damaged or destroyed
96 property. Such efforts are necessary in order to avoid or reduce
97 negative effects to the public health, safety, and welfare; the
98 economy of the state; and the revenues of state and local
99 governments. It is necessary, therefore, to provide property
100 insurance to applicants who are entitled to procure insurance
101 through the voluntary market but who, in good faith, are unable
102 to do so. The Legislature finds that private insurers are
103 unwilling or unable to provide affordable property insurance
104 coverage in this state to the extent sought and needed. The
105 absence of affordable property insurance threatens the public
106 health, safety, and welfare and likewise threatens the economic
107 health of the state. The state therefore has a compelling public
108 interest and a public purpose to assist in assuring that
109 property in the state is insured and that it is insured at
110 affordable rates so as to facilitate the remediation,
111 reconstruction, and replacement of damaged or destroyed property
112 in order to reduce or avoid the negative effects otherwise
113 resulting to the public health, safety, and welfare, to the
114 economy of the state, and to the revenues of the state and local
115 governments which are needed to provide for the public welfare.
116 It is necessary, therefore, to provide affordable property
117 insurance to applicants who are in good faith entitled to
118 procure insurance through the voluntary market but are unable to
119 do so. The Legislature intends, therefore, by this subsection
120 that affordable property insurance be provided and that it
121 continue to be provided, as long as necessary, through Citizens
122 Property Insurance Corporation, a government entity that is an
123 integral part of the state, and that is not a private insurance
124 company. To that end, Citizens Property Insurance Corporation
125 shall strive to increase the availability of affordable property
126 insurance in this state, while achieving efficiencies and
127 economies, and while providing service to policyholders,
128 applicants, and agents which is no less than the quality
129 generally provided in the voluntary market, for the achievement
130 of the foregoing public purposes. Because it is essential for
131 this government entity to have the maximum financial resources
132 to pay claims following a catastrophic hurricane, it is the
133 intent of the Legislature that Citizens Property Insurance
134 Corporation continue to be an integral part of the state and
135 that the income of the corporation be exempt from federal income
136 taxation and that interest on the debt obligations issued by the
137 corporation be exempt from federal income taxation.
138 a. It is also the intent of the Legislature that
139 policyholders, applicants, and agents of the corporation receive
140 service and treatment of the highest possible level and never
141 less than that generally provided in the voluntary market. The
142 corporation must be held to service standards no less than those
143 applied to insurers in the voluntary market by the office with
144 respect to responsiveness, timeliness, customer courtesy, and
145 overall dealings with policyholders, applicants, or agents of
146 the corporation. It is also the intent of the Legislature that
147 the corporation operate efficiently and economically.
148 b. Because it is essential that the corporation have the
149 maximum financial resources necessary to pay claims following a
150 catastrophic hurricane, the Legislature also intends that the
151 income of the corporation and interest on the debt obligations
152 issued by the corporation be exempt from federal income
153 taxation.
154 2. The Residential Property and Casualty Joint Underwriting
155 Association originally created by this statute shall be known,
156 as of July 1, 2002, as the Citizens Property Insurance
157 Corporation. The corporation shall provide insurance for
158 residential and commercial property, for applicants who are in
159 good faith entitled, but, in good faith, are unable, to procure
160 insurance through the voluntary market. The corporation shall
161 operate pursuant to a plan of operation approved by order of the
162 Financial Services Commission. The plan is subject to continuous
163 review by the commission. The commission may, by order, withdraw
164 approval of all or part of a plan if the commission determines
165 that conditions have changed since approval was granted and that
166 the purposes of the plan require changes in the plan. The
167 corporation shall continue to operate pursuant to the plan of
168 operation approved by the Office of Insurance Regulation until
169 October 1, 2006. For the purposes of this subsection,
170 residential coverage includes both personal lines residential
171 coverage, which consists of the type of coverage provided by
172 homeowner’s, mobile home owner’s, dwelling, tenant’s,
173 condominium unit owner’s, and similar policies;, and commercial
174 lines residential coverage, which consists of the type of
175 coverage provided by condominium association, apartment
176 building, and similar policies.
177 3. With respect to coverage for personal lines residential
178 structures:
179 a. Effective January 1, 2009, a personal lines residential
180 structure that has a dwelling replacement cost of $2 million or
181 more, or a single condominium unit that has a combined dwelling
182 and contents content replacement cost of $2 million or more is
183 not eligible for coverage by the corporation. Such dwellings
184 insured by the corporation on December 31, 2008, may continue to
185 be covered by the corporation until the end of the policy term.
186 However, such dwellings that are insured by the corporation and
187 become ineligible for coverage due to the provisions of this
188 subparagraph may reapply and obtain coverage if the property
189 owner provides the corporation with a sworn affidavit from one
190 or more insurance agents, on a form provided by the corporation,
191 stating that the agents have made their best efforts to obtain
192 coverage and that the property has been rejected for coverage by
193 at least one authorized insurer and at least three surplus lines
194 insurers. If such conditions are met, the dwelling may be
195 insured by the corporation for up to 3 years, after which time
196 the dwelling is ineligible for coverage. The office shall
197 approve the method used by the corporation for valuing the
198 dwelling replacement cost for the purposes of this subparagraph.
199 If a policyholder is insured by the corporation prior to being
200 determined to be ineligible pursuant to this subparagraph and
201 such policyholder files a lawsuit challenging the determination,
202 the policyholder may remain insured by the corporation until the
203 conclusion of the litigation.
204 b. Effective January 1, 2012, a structure that has a
205 dwelling replacement cost of $1 million or more, or a single
206 condominium unit that has a combined dwelling and contents
207 replacement cost of $1 million or more is not eligible for
208 coverage by the corporation. Such dwellings insured by the
209 corporation on December 31, 2011, may continue to be covered by
210 the corporation only until the end of the policy term.
211 c. Effective January 1, 2014, a structure insured in the
212 personal lines account of the corporation that has a dwelling
213 replacement cost of $750,000 or more, or a single condominium
214 unit that has a combined dwelling and contents replacement cost
215 of $750,000 or more is not eligible for coverage by the
216 corporation. Such dwellings insured by the corporation on
217 December 31, 2013, may continue to be covered by the corporation
218 until the end of the policy term.
219 d. Effective January 1, 2016, a structure insured in the
220 personal lines account of the corporation that has a dwelling
221 replacement cost of $500,000 or more, or a single condominium
222 unit that has a combined dwelling and contents replacement cost
223 of $500,000 or more is not eligible for coverage by the
224 corporation. Such dwellings insured by the corporation on
225 December 31, 2015, may continue to be covered by the corporation
226 until the end of the policy term.
227 4. Any structure for which a permit for construction is
228 obtained on or after June 1, 2011, seaward of the coastal
229 construction control line established pursuant to s. 161.053, is
230 not eligible for coverage by the corporation.
231 4. It is the intent of the Legislature that policyholders,
232 applicants, and agents of the corporation receive service and
233 treatment of the highest possible level but never less than that
234 generally provided in the voluntary market. It also is intended
235 that the corporation be held to service standards no less than
236 those applied to insurers in the voluntary market by the office
237 with respect to responsiveness, timeliness, customer courtesy,
238 and overall dealings with policyholders, applicants, or agents
239 of the corporation.
240 5. Effective October 1, 2011 January 1, 2009, a personal
241 lines residential structure that is located in the “wind-borne
242 debris region,” as defined in s. 1609.2, International Building
243 Code (2006), and that has an insured value on the structure of
244 $750,000 or more is not eligible for coverage by the
245 corporation. However, unless the structure has opening
246 protections as required under the Florida Building Code for a
247 newly constructed residential structure in that area, the
248 corporation may charge a surcharge that it deems appropriate for
249 such structures, notwithstanding any restrictions on rates
250 provided in this subsection or in s. 627.062. A residential
251 structure shall be deemed to comply with the requirements of
252 this subparagraph if it has shutters or opening protections on
253 all openings and if such opening protections complied with the
254 Florida Building Code at the time they were installed.
255 6. In recognition of the corporation’s status as a
256 government entity, policies issued by the corporation must
257 include a provision stating that as a condition of coverage with
258 the corporation, policyholders may not engage the services of a
259 public adjuster to represent the policyholder with respect to
260 any claim filed under a policy issued by the corporation until
261 after the corporation has tendered an offer with respect to such
262 claim. For any claim filed under any policy of the corporation,
263 a public adjuster may not request payment or be paid, on a
264 contingency basis or based in any way, directly or indirectly,
265 on a percentage of the claim amount, and may be paid only a
266 reasonable hourly fee based on the actual hours of work
267 performed, subject to a maximum of 5 percent of the additional
268 amount actually paid over the amount which was originally
269 offered by the corporation for any one claim.
270 (b)1. All insurers authorized to write one or more subject
271 lines of business in this state are subject to assessment by the
272 corporation and, for the purposes of this subsection, are
273 referred to collectively as “assessable insurers.” Insurers
274 writing one or more subject lines of business in this state
275 pursuant to part VIII of chapter 626 are not assessable
276 insurers, but insureds who procure one or more subject lines of
277 business in this state pursuant to part VIII of chapter 626 are
278 subject to assessment by the corporation and are referred to
279 collectively as “assessable insureds.” An authorized insurer’s
280 assessment liability begins shall begin on the first day of the
281 calendar year following the year in which the insurer was issued
282 a certificate of authority to transact insurance for subject
283 lines of business in this state and terminates shall terminate 1
284 year after the end of the first calendar year during which the
285 insurer no longer holds a certificate of authority to transact
286 insurance for subject lines of business in this state.
287 2.a. All revenues, assets, liabilities, losses, and
288 expenses of the corporation shall be divided into three separate
289 accounts as follows:
290 (I) A personal lines account for personal residential
291 policies issued by the corporation, or issued by the Residential
292 Property and Casualty Joint Underwriting Association and renewed
293 by the corporation, which provides basic that provide
294 comprehensive, multiperil coverage on risks that are not located
295 in areas eligible for coverage by in the Florida Windstorm
296 Underwriting Association as those areas were defined on January
297 1, 2002, and for such policies that do not provide coverage for
298 the peril of wind on risks that are located in such areas;
299 (II) A commercial lines account for commercial residential
300 and commercial nonresidential policies issued by the
301 corporation, or issued by the Residential Property and Casualty
302 Joint Underwriting Association and renewed by the corporation,
303 which provides that provide coverage for basic property perils
304 on risks that are not located in areas eligible for coverage by
305 in the Florida Windstorm Underwriting Association as those areas
306 were defined on January 1, 2002, and for such policies that do
307 not provide coverage for the peril of wind on risks that are
308 located in such areas; and
309 (III) A high-risk account for personal residential policies
310 and commercial residential and commercial nonresidential
311 property policies issued by the corporation or transferred to
312 the corporation, which provides that provide coverage for the
313 peril of wind on risks that are located in areas eligible for
314 coverage by in the Florida Windstorm Underwriting Association as
315 those areas were defined on January 1, 2002. The corporation may
316 offer policies that provide multiperil coverage and the
317 corporation shall continue to offer policies that provide
318 coverage only for the peril of wind for risks located in areas
319 eligible for coverage in the high-risk account. In issuing
320 multiperil coverage, the corporation may use its approved policy
321 forms and rates for the personal lines account. An applicant or
322 insured who is eligible to purchase a multiperil policy from the
323 corporation may purchase a multiperil policy from an authorized
324 insurer without prejudice to the applicant’s or insured’s
325 eligibility to prospectively purchase a policy that provides
326 coverage only for the peril of wind from the corporation. An
327 applicant or insured who is eligible for a corporation policy
328 that provides coverage only for the peril of wind may elect to
329 purchase or retain such policy and also purchase or retain
330 coverage excluding wind from an authorized insurer without
331 prejudice to the applicant’s or insured’s eligibility to
332 prospectively purchase a policy that provides multiperil
333 coverage from the corporation. It is the goal of the Legislature
334 that there would be an overall average savings of 10 percent or
335 more for a policyholder who currently has a wind-only policy
336 with the corporation, and an ex-wind policy with a voluntary
337 insurer or the corporation, and who then obtains a multiperil
338 policy from the corporation. It is the intent of the Legislature
339 that the offer of multiperil coverage in the high-risk account
340 be made and implemented in a manner that does not adversely
341 affect the tax-exempt status of the corporation or
342 creditworthiness of or security for currently outstanding
343 financing obligations or credit facilities of the high-risk
344 account, the personal lines account, or the commercial lines
345 account. The high-risk account must also include quota share
346 primary insurance under subparagraph (c)2. The area eligible for
347 coverage under the high-risk account also includes the area
348 within Port Canaveral, which is bordered on the south by the
349 City of Cape Canaveral, bordered on the west by the Banana
350 River, and bordered on the north by Federal Government property.
351 b. The three separate accounts must be maintained as long
352 as financing obligations entered into by the Florida Windstorm
353 Underwriting Association or Residential Property and Casualty
354 Joint Underwriting Association are outstanding, in accordance
355 with the terms of the corresponding financing documents. If When
356 the financing obligations are no longer outstanding, in
357 accordance with the terms of the corresponding financing
358 documents, the corporation may use a single account for all
359 revenues, assets, liabilities, losses, and expenses of the
360 corporation. Consistent with the requirement of this
361 subparagraph and prudent investment policies that minimize the
362 cost of carrying debt, the board shall exercise its best efforts
363 to retire existing debt or to obtain the approval of necessary
364 parties to amend the terms of existing debt, so as to structure
365 the most efficient plan to consolidate the three separate
366 accounts into a single account.
367 c. Creditors of the Residential Property and Casualty Joint
368 Underwriting Association and of the accounts specified in sub
369 sub-subparagraphs a.(I) and (II) may have a claim against, and
370 recourse to, those the accounts referred to in sub-sub
371 subparagraphs a.(I) and (II) and shall have no claim against, or
372 recourse to, the account referred to in sub-sub-subparagraph
373 a.(III). Creditors of the Florida Windstorm Underwriting
374 Association shall have a claim against, and recourse to, the
375 account referred to in sub-sub-subparagraph a.(III) and shall
376 have no claim against, or recourse to, the accounts referred to
377 in sub-sub-subparagraphs a.(I) and (II).
378 d. Revenues, assets, liabilities, losses, and expenses not
379 attributable to particular accounts shall be prorated among the
380 accounts.
381 e. The Legislature finds that the revenues of the
382 corporation are revenues that are necessary to meet the
383 requirements set forth in documents authorizing the issuance of
384 bonds under this subsection.
385 f. No part of the income of the corporation may inure to
386 the benefit of any private person.
387 3. With respect to a deficit in an account:
388 a. After accounting for the Citizens policyholder surcharge
389 imposed under sub-subparagraph i., if when the remaining
390 projected deficit incurred in a particular calendar year is not
391 greater than 6 percent of the aggregate statewide direct written
392 premium for the subject lines of business for the prior calendar
393 year, the entire deficit shall be recovered through regular
394 assessments of assessable insurers under paragraph (q) and
395 assessable insureds.
396 b. After accounting for the Citizens policyholder surcharge
397 imposed under sub-subparagraph i., when the remaining projected
398 deficit incurred in a particular calendar year exceeds 6 percent
399 of the aggregate statewide direct written premium for the
400 subject lines of business for the prior calendar year, the
401 corporation shall levy regular assessments on assessable
402 insurers under paragraph (q) and on assessable insureds in an
403 amount equal to the greater of 6 percent of the deficit or 6
404 percent of the aggregate statewide direct written premium for
405 the subject lines of business for the prior calendar year. Any
406 remaining deficit shall be recovered through emergency
407 assessments under sub-subparagraph d.
408 c. Each assessable insurer’s share of the amount being
409 assessed under sub-subparagraph a. or sub-subparagraph b. must
410 shall be in the proportion that the assessable insurer’s direct
411 written premium for the subject lines of business for the year
412 preceding the assessment bears to the aggregate statewide direct
413 written premium for the subject lines of business for that year.
414 The applicable assessment percentage applicable to each
415 assessable insured is the ratio of the amount being assessed
416 under sub-subparagraph a. or sub-subparagraph b. to the
417 aggregate statewide direct written premium for the subject lines
418 of business for the prior year. Assessments levied by the
419 corporation on assessable insurers under sub-subparagraphs a.
420 and b. must shall be paid as required by the corporation’s plan
421 of operation and paragraph (q). Assessments levied by the
422 corporation on assessable insureds under sub-subparagraphs a.
423 and b. shall be collected by the surplus lines agent at the time
424 the surplus lines agent collects the surplus lines tax required
425 by s. 626.932, and shall be paid to the Florida Surplus Lines
426 Service Office at the time the surplus lines agent pays the
427 surplus lines tax to that the Florida Surplus Lines Service
428 office. Upon receipt of regular assessments from surplus lines
429 agents, the Florida Surplus Lines Service Office shall transfer
430 the assessments directly to the corporation as determined by the
431 corporation.
432 d. Upon a determination by the board of governors that a
433 deficit in an account exceeds the amount that will be recovered
434 through regular assessments under sub-subparagraph a. or sub
435 subparagraph b., plus the amount that is expected to be
436 recovered through surcharges under sub-subparagraph i., as to
437 the remaining projected deficit the board shall levy, after
438 verification by the office, shall levy emergency assessments,
439 for as many years as necessary to cover the deficits, to be
440 collected by assessable insurers and the corporation and
441 collected from assessable insureds upon issuance or renewal of
442 policies for subject lines of business, excluding National Flood
443 Insurance policies. The amount of the emergency assessment
444 collected in a particular year must shall be a uniform
445 percentage of that year’s direct written premium for subject
446 lines of business and all accounts of the corporation, excluding
447 National Flood Insurance Program policy premiums, as annually
448 determined by the board and verified by the office. For all
449 accounts of the corporation, the amount of the emergency
450 assessment levied in a particular year must be a uniform
451 percentage equal to 1 1/2 times the uniform percentage emergency
452 assessment levied on subject lines of business. The office shall
453 verify the arithmetic calculations involved in the board’s
454 determination within 30 days after receipt of the information on
455 which the determination was based. Notwithstanding any other
456 provision of law, the corporation and each assessable insurer
457 that writes subject lines of business shall collect emergency
458 assessments from its policyholders without such obligation being
459 affected by any credit, limitation, exemption, or deferment.
460 Emergency assessments levied by the corporation on assessable
461 insureds shall be collected by the surplus lines agent at the
462 time the surplus lines agent collects the surplus lines tax
463 required by s. 626.932 and shall be paid to the Florida Surplus
464 Lines Service Office at the time the surplus lines agent pays
465 the surplus lines tax to that the Florida Surplus Lines Service
466 office. The emergency assessments so collected shall be
467 transferred directly to the corporation on a periodic basis as
468 determined by the corporation and shall be held by the
469 corporation solely in the applicable account. The aggregate
470 amount of emergency assessments levied for an account under this
471 sub-subparagraph in any calendar year may, at the discretion of
472 the board of governors, be less than but may not exceed the
473 greater of 10 percent of the amount needed to cover the deficit,
474 plus interest, fees, commissions, required reserves, and other
475 costs associated with financing of the original deficit, or 10
476 percent of the aggregate statewide direct written premium for
477 subject lines of business and 15 percent for all accounts of the
478 corporation for the prior year, plus interest, fees,
479 commissions, required reserves, and other costs associated with
480 financing the deficit.
481 e. The corporation may pledge the proceeds of assessments,
482 projected recoveries from the Florida Hurricane Catastrophe
483 Fund, other insurance and reinsurance recoverables, policyholder
484 surcharges and other surcharges, and other funds available to
485 the corporation as the source of revenue for and to secure bonds
486 issued under paragraph (q), bonds or other indebtedness issued
487 under subparagraph (c)2.3., or lines of credit or other
488 financing mechanisms issued or created under this subsection, or
489 to retire any other debt incurred as a result of deficits or
490 events giving rise to deficits, or in any other way that the
491 board determines will efficiently recover such deficits. The
492 purpose of the lines of credit or other financing mechanisms is
493 to provide additional resources to assist the corporation in
494 covering claims and expenses attributable to a catastrophe. As
495 used in this subsection, the term “assessments” includes regular
496 assessments under sub-subparagraph a., sub-subparagraph b., or
497 subparagraph (q)1. and emergency assessments under sub
498 subparagraph d. Emergency assessments collected under sub
499 subparagraph d. are not part of an insurer’s rates, are not
500 premium, and are not subject to premium tax, fees, or
501 commissions; however, failure to pay the emergency assessment
502 shall be treated as failure to pay premium. The emergency
503 assessments under sub-subparagraph d. shall continue as long as
504 any bonds issued or other indebtedness incurred with respect to
505 a deficit for which the assessment was imposed remain
506 outstanding, unless adequate provision has been made for the
507 payment of such bonds or other indebtedness pursuant to the
508 documents governing such bonds or other indebtedness.
509 f. As used in this subsection for purposes of any deficit
510 incurred on or after January 25, 2007, the term “subject lines
511 of business” means insurance written by assessable insurers or
512 procured by assessable insureds for all property and casualty
513 lines of business in this state, but not including workers’
514 compensation or medical malpractice. As used in this the sub
515 subparagraph, the term “property and casualty lines of business”
516 includes all lines of business identified on Form 2, Exhibit of
517 Premiums and Losses, in the annual statement required of
518 authorized insurers under by s. 624.424 and any rule adopted
519 under this section, except for those lines identified as
520 accident and health insurance and except for policies written
521 under the National Flood Insurance Program or the Federal Crop
522 Insurance Program. For purposes of this sub-subparagraph, the
523 term “workers’ compensation” includes both workers’ compensation
524 insurance and excess workers’ compensation insurance.
525 g. The Florida Surplus Lines Service Office shall determine
526 annually the aggregate statewide written premium in subject
527 lines of business procured by assessable insureds and shall
528 report that information to the corporation in a form and at a
529 time the corporation specifies to ensure that the corporation
530 can meet the requirements of this subsection and the
531 corporation’s financing obligations.
532 h. The Florida Surplus Lines Service Office shall verify
533 the proper application by surplus lines agents of assessment
534 percentages for regular assessments and emergency assessments
535 levied under this subparagraph on assessable insureds and shall
536 assist the corporation in ensuring the accurate, timely
537 collection and payment of assessments by surplus lines agents as
538 required by the corporation.
539 i. If a deficit is incurred in any account in 2011 2008 or
540 thereafter, the board of governors shall levy a Citizens
541 policyholder surcharge against all policyholders of the
542 corporation. for a 12-month period, which
543 (I) The surcharge shall be levied collected at the time of
544 issuance or renewal of a policy, as a uniform percentage of the
545 premium for the policy of up to 15 percent of such premium,
546 which funds shall be used to offset the deficit.
547 (II) It is the intent of the Legislature that the
548 policyholder’s liability for the surcharge attach on the date of
549 the order levying the surcharge. The surcharge is payable upon
550 cancellation or termination of the policy, upon renewal of the
551 policy, or upon issuance of a new policy by the corporation
552 within the first 12 months after the date of the levy or the
553 period of time necessary to fully collect the surcharge amount.
554 (III) The corporation may not levy any regular assessments
555 under paragraph (q) pursuant to sub-subparagraph a. or sub
556 subparagraph b. with respect to a particular year’s deficit
557 until the corporation has first levied a surcharge under this
558 sub-subparagraph in the full amount authorized by this sub
559 subparagraph.
560 (IV) The surcharge is Citizens policyholder surcharges
561 under this sub-subparagraph are not considered premium and is
562 are not subject to commissions, fees, or premium taxes. However,
563 failure to pay the surcharge such surcharges shall be treated as
564 failure to pay premium.
565 j. If the amount of any assessments or surcharges collected
566 from corporation policyholders, assessable insurers or their
567 policyholders, or assessable insureds exceeds the amount of the
568 deficits, such excess amounts shall be remitted to and retained
569 by the corporation in a reserve to be used by the corporation,
570 as determined by the board of governors and approved by the
571 office, to pay claims or reduce any past, present, or future
572 plan-year deficits or to reduce outstanding debt.
573 (c) The plan of operation of the corporation:
574 1. Must provide for adoption of residential property and
575 casualty insurance policy forms and commercial residential and
576 nonresidential property insurance forms, which forms must be
577 approved by the office before prior to use. The corporation
578 shall adopt and offer only the following policy forms:
579 a. Standard personal lines policy forms that are similar
580 comprehensive multiperil policies providing full coverage of a
581 residential property equivalent to the coverage provided in the
582 private insurance market under an HO-3, HO-4, or HO-6 policy.
583 The corporation shall cease to offer or renew HO-3 policy forms
584 on December 31, 2012.
585 b. Basic personal lines policy forms that are policies
586 similar to an HO-8 policy or a dwelling fire policy that provide
587 coverage meeting the requirements of the secondary mortgage
588 market, but which coverage is more limited than the coverage
589 under a standard policy.
590 c. Commercial lines residential and nonresidential policy
591 forms that are generally similar to the basic perils of full
592 coverage obtainable for commercial residential structures and
593 commercial nonresidential structures in the admitted voluntary
594 market.
595 d. Personal lines and commercial lines residential property
596 insurance forms that cover the peril of wind only. The forms are
597 applicable only to residential properties located in areas
598 eligible for coverage under the high-risk account referred to in
599 sub-subparagraph (b)2.a.
600 e. Commercial lines nonresidential property insurance forms
601 that cover the peril of wind only. The forms are applicable only
602 to nonresidential properties located in areas eligible for
603 coverage under the high-risk account referred to in sub
604 subparagraph (b)2.a.
605 f. The corporation may adopt variations of the policy forms
606 listed in sub-subparagraphs a.-e. which that contain more
607 restrictive coverage.
608 2.a. Must provide that the corporation adopt a program in
609 which the corporation and authorized insurers enter into quota
610 share primary insurance agreements for hurricane coverage, as
611 defined in s. 627.4025(2)(a), for eligible risks, and adopt
612 property insurance forms for eligible risks which cover the
613 peril of wind only. As used in this subsection, the term:
614 (I) “Quota share primary insurance” means an arrangement in
615 which the primary hurricane coverage of an eligible risk is
616 provided in specified percentages by the corporation and an
617 authorized insurer. The corporation and authorized insurer are
618 each solely responsible for a specified percentage of hurricane
619 coverage of an eligible risk as set forth in a quota share
620 primary insurance agreement between the corporation and an
621 authorized insurer and the insurance contract. The
622 responsibility of the corporation or authorized insurer to pay
623 its specified percentage of hurricane losses of an eligible
624 risk, as set forth in the quota share primary insurance
625 agreement, may not be altered by the inability of the other
626 party to the agreement to pay its specified percentage of
627 hurricane losses. Eligible risks that are provided hurricane
628 coverage through a quota share primary insurance arrangement
629 must be provided policy forms that set forth the obligations of
630 the corporation and authorized insurer under the arrangement,
631 clearly specify the percentages of quota share primary insurance
632 provided by the corporation and authorized insurer, and
633 conspicuously and clearly state that neither the authorized
634 insurer nor the corporation may be held responsible beyond its
635 specified percentage of coverage of hurricane losses.
636 (II) “Eligible risks” means personal lines residential and
637 commercial lines residential risks that meet the underwriting
638 criteria of the corporation and are located in areas that were
639 eligible for coverage by the Florida Windstorm Underwriting
640 Association on January 1, 2002.
641 b. The corporation may enter into quota share primary
642 insurance agreements with authorized insurers at corporation
643 coverage levels of 90 percent and 50 percent.
644 c. If the corporation determines that additional coverage
645 levels are necessary to maximize participation in quota share
646 primary insurance agreements by authorized insurers, the
647 corporation may establish additional coverage levels. However,
648 the corporation’s quota share primary insurance coverage level
649 may not exceed 90 percent.
650 d. Any quota share primary insurance agreement entered into
651 between an authorized insurer and the corporation must provide
652 for a uniform specified percentage of coverage of hurricane
653 losses, by county or territory as set forth by the corporation
654 board, for all eligible risks of the authorized insurer covered
655 under the quota share primary insurance agreement.
656 e. Any quota share primary insurance agreement entered into
657 between an authorized insurer and the corporation is subject to
658 review and approval by the office. However, such agreement shall
659 be authorized only as to insurance contracts entered into
660 between an authorized insurer and an insured who is already
661 insured by the corporation for wind coverage.
662 f. For all eligible risks covered under quota share primary
663 insurance agreements, the exposure and coverage levels for both
664 the corporation and authorized insurers shall be reported by the
665 corporation to the Florida Hurricane Catastrophe Fund. For all
666 policies of eligible risks covered under quota share primary
667 insurance agreements, the corporation and the authorized insurer
668 shall maintain complete and accurate records for the purpose of
669 exposure and loss reimbursement audits as required by Florida
670 Hurricane Catastrophe Fund rules. The corporation and the
671 authorized insurer shall each maintain duplicate copies of
672 policy declaration pages and supporting claims documents.
673 g. The corporation board shall establish in its plan of
674 operation standards for quota share agreements which ensure that
675 there is no discriminatory application among insurers as to the
676 terms of quota share agreements, pricing of quota share
677 agreements, incentive provisions if any, and consideration paid
678 for servicing policies or adjusting claims.
679 h. The quota share primary insurance agreement between the
680 corporation and an authorized insurer must set forth the
681 specific terms under which coverage is provided, including, but
682 not limited to, the sale and servicing of policies issued under
683 the agreement by the insurance agent of the authorized insurer
684 producing the business, the reporting of information concerning
685 eligible risks, the payment of premium to the corporation, and
686 arrangements for the adjustment and payment of hurricane claims
687 incurred on eligible risks by the claims adjuster and personnel
688 of the authorized insurer. Entering into a quota sharing
689 insurance agreement between the corporation and an authorized
690 insurer shall be voluntary and at the discretion of the
691 authorized insurer.
692 2.3. May provide that the corporation may employ or
693 otherwise contract with individuals or other entities to provide
694 administrative or professional services that may be appropriate
695 to effectuate the plan.
696 a. The corporation may shall have the power to borrow
697 funds, by issuing bonds or by incurring other indebtedness, and
698 shall have other powers reasonably necessary to effectuate the
699 requirements of this subsection, including, without limitation,
700 the power to issue bonds and incur other indebtedness in order
701 to refinance outstanding bonds or other indebtedness. The
702 corporation may, but is not required to, seek judicial
703 validation of its bonds or other indebtedness under chapter 75.
704 The corporation may issue bonds or incur other indebtedness, or
705 have bonds issued on its behalf by a unit of local government
706 pursuant to subparagraph (q)2., in the absence of a hurricane or
707 other weather-related event, upon a determination by the
708 corporation, subject to approval by the office, that such action
709 would enable it to efficiently meet the financial obligations of
710 the corporation and that such financings are reasonably
711 necessary to effectuate the requirements of this subsection. The
712 corporation may is authorized to take all actions needed to
713 facilitate tax-free status for any such bonds or indebtedness,
714 including formation of trusts or other affiliated entities. The
715 corporation may shall have the authority to pledge assessments,
716 projected recoveries from the Florida Hurricane Catastrophe
717 Fund, other reinsurance recoverables, market equalization and
718 other surcharges, and other funds available to the corporation
719 as security for bonds or other indebtedness. In recognition of
720 s. 10, Art. I of the State Constitution, prohibiting the
721 impairment of obligations of contracts, it is the intent of the
722 Legislature that no action be taken whose purpose is to impair
723 any bond indenture or financing agreement or any revenue source
724 committed by contract to such bond or other indebtedness.
725 b. To ensure that the corporation is operating in an
726 efficient and economic manner while providing quality service to
727 policyholders, applicants, and agents, the board shall
728 commission an independent third-party consultant having
729 expertise in insurance company management or insurance company
730 management consulting to prepare a report and make
731 recommendations on the relative costs and benefits of
732 outsourcing various policy issuance and service functions to
733 private servicing carriers or entities performing similar
734 functions in the private market for a fee, rather than
735 performing such functions in-house. In making such
736 recommendations, the consultant shall consider how other
737 residual markets, both in this state and around the country,
738 outsource appropriate functions or use servicing carriers to
739 better match expenses with revenues that fluctuate based on a
740 widely varying policy count. The report must be completed by
741 February 1, 2012. Upon receiving the report, the board shall
742 develop a plan to implement the report and submit the plan to
743 the Financial Services Commission. The commission has 30 days
744 after receiving the plan to review and make additions or
745 corrections, if any. Upon the commission’s approval of the plan,
746 the board shall begin implementing the plan by January 1, 2013.
747 3.4.a. Must require that the corporation operate subject to
748 the supervision and approval of a board of governors consisting
749 of eight individuals who are residents of this state, from
750 different geographical areas of this state.
751 a. The Governor, the Chief Financial Officer, the President
752 of the Senate, and the Speaker of the House of Representatives
753 shall each appoint two members of the board. At least one of the
754 two members appointed by each appointing officer must have
755 demonstrated expertise in insurance, and be within the scope of
756 the exemption provided in s. 112.313(7)(b). The Chief Financial
757 Officer shall designate one of the appointees as chair. All
758 board members serve at the pleasure of the appointing officer.
759 All members of the board of governors are subject to removal at
760 will by the officers who appointed them. All board members,
761 including the chair, must be appointed to serve for 3-year terms
762 beginning annually on a date designated by the plan. However,
763 for the first term beginning on or after July 1, 2009, each
764 appointing officer shall appoint one member of the board for a
765 2-year term and one member for a 3-year term. A Any board
766 vacancy shall be filled for the unexpired term by the appointing
767 officer. The Chief Financial Officer shall appoint a technical
768 advisory group to provide information and advice to the board of
769 governors in connection with the board’s duties under this
770 subsection. The executive director and senior managers of the
771 corporation shall be engaged by the board and serve at the
772 pleasure of the board. Any executive director appointed on or
773 after July 1, 2006, is subject to confirmation by the Senate.
774 The executive director is responsible for employing other staff
775 as the corporation may require, subject to review and
776 concurrence by the board.
777 b. The board shall create a Market Accountability Advisory
778 Committee to assist the corporation in developing awareness of
779 its rates and its customer and agent service levels in
780 relationship to the voluntary market insurers writing similar
781 coverage, and to provide advice on issues regarding agent
782 appointments and compensation.
783 (I) The members of the advisory committee shall consist of
784 the following 11 persons, one of whom must be elected chair by
785 the members of the committee: four representatives, one
786 appointed by the Florida Association of Insurance Agents, one by
787 the National Florida Association of Insurance and Financial
788 Advisors-Florida Advisors, one by the Professional Insurance
789 Agents of Florida, and one by the Latin American Association of
790 Insurance Agencies; three representatives appointed by the
791 insurers with the three highest voluntary market share of
792 residential property insurance business in the state; one
793 representative from the Office of Insurance Regulation; one
794 consumer appointed by the board who is insured by the
795 corporation at the time of appointment to the committee; one
796 representative appointed by the Florida Association of Realtors;
797 and one representative appointed by the Florida Bankers
798 Association. All members shall be appointed to must serve for 3
799 year terms and may serve for consecutive terms.
800 (II) The committee shall report to the corporation at each
801 board meeting on insurance market issues which may include rates
802 and rate competition with the voluntary market; service,
803 including policy issuance, claims processing, and general
804 responsiveness to policyholders, applicants, and agents; and
805 matters relating to depopulation, producer compensation, or
806 agency agreements.
807 4.5. Must provide a procedure for determining the
808 eligibility of a risk for coverage, as follows:
809 a. Subject to the provisions of s. 627.3517, with respect
810 to personal lines residential risks, if the risk is offered
811 coverage from an authorized insurer at the insurer’s approved
812 rate under either a standard policy including wind coverage or,
813 if consistent with the insurer’s underwriting rules as filed
814 with the office, a basic policy including wind coverage, for a
815 new application to the corporation for coverage, the risk is not
816 eligible for any policy issued by the corporation unless the
817 premium for coverage from the authorized insurer is more than 15
818 percent greater than the premium for comparable coverage from
819 the corporation. If the risk is not able to obtain any such
820 offer, the risk is eligible for either a standard policy
821 including wind coverage or a basic policy including wind
822 coverage issued by the corporation; however, if the risk could
823 not be insured under a standard policy including wind coverage
824 regardless of market conditions, the risk is shall be eligible
825 for a basic policy including wind coverage unless rejected under
826 subparagraph 9. 8. Notwithstanding these limitations, an
827 application for coverage having an effective date before January
828 1, 2015, is eligible for coverage by the corporation if the
829 premium for coverage from an authorized insurer exceeds the
830 premium from the corporation by more than 25 percent. However,
831 with regard to a policyholder of the corporation or a
832 policyholder removed from the corporation through an assumption
833 agreement until the end of the assumption period, the
834 policyholder remains eligible for coverage from the corporation
835 regardless of any offer of coverage from an authorized insurer
836 or surplus lines insurer. The corporation shall determine the
837 type of policy to be provided on the basis of objective
838 standards specified in the underwriting manual and based on
839 generally accepted underwriting practices.
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 to the corporation is
846 not 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 b. Subject to s. 627.3517, with respect to commercial lines
880 residential risks, for a new application to the corporation for
881 coverage, if the risk is offered coverage under a policy
882 including wind coverage from an authorized insurer at its
883 approved rate, the risk is not eligible for a any policy issued
884 by the corporation unless the premium for coverage from the
885 authorized insurer is more than 15 percent greater than the
886 premium for comparable coverage from the corporation. If the
887 risk is not able to obtain any such offer, the risk is eligible
888 for a policy including wind coverage issued by the corporation.
889 Notwithstanding these limitations, an application for coverage
890 having an effective date before January 1, 2015, is eligible for
891 coverage by the corporation if the premium for coverage from an
892 authorized insurer exceeds the premium from the corporation by
893 more than 25 percent. However, with regard to a policyholder of
894 the corporation or a policyholder removed from the corporation
895 through an assumption agreement until the end of the assumption
896 period, the policyholder remains eligible for coverage from the
897 corporation regardless of any offer of coverage from an
898 authorized insurer or surplus lines insurer.
899 (I) If the risk accepts an offer of coverage through the
900 market assistance plan or an offer of coverage through a
901 mechanism established by the corporation before a policy is
902 issued to the risk by the corporation or during the first 30
903 days of coverage by the corporation, and the producing agent who
904 submitted the application to the plan or the corporation is not
905 currently appointed by the insurer, the insurer shall:
906 (A) Pay to the producing agent of record of the policy, for
907 the first year, an amount that is the greater of the insurer’s
908 usual and customary commission for the type of policy written or
909 a fee equal to the usual and customary commission of the
910 corporation; or
911 (B) Offer to allow the producing agent of record of the
912 policy to continue servicing the policy for at least a period of
913 not less than 1 year and offer to pay the agent the greater of
914 the insurer’s or the corporation’s usual and customary
915 commission for the type of policy written.
916
917 If the producing agent is unwilling or unable to accept
918 appointment, the new insurer shall pay the agent in accordance
919 with sub-sub-sub-subparagraph (A).
920 (II) If When the corporation enters into a contractual
921 agreement for a take-out plan, the producing agent of record of
922 the corporation policy is entitled to retain any unearned
923 commission on the policy, and the insurer shall:
924 (A) Pay to the producing agent of record of the corporation
925 policy, for the first year, an amount that is the greater of the
926 insurer’s usual and customary commission for the type of policy
927 written or a fee equal to the usual and customary commission of
928 the corporation; or
929 (B) Offer to allow the producing agent of record of the
930 corporation policy to continue servicing the policy for at least
931 a period of not less than 1 year and offer to pay the agent the
932 greater of the insurer’s or the corporation’s usual and
933 customary commission for the type of policy written.
934
935 If the producing agent is unwilling or unable to accept
936 appointment, the new insurer shall pay the agent in accordance
937 with sub-sub-sub-subparagraph (A).
938 c. Effective upon this act becoming a law, the corporation
939 shall cease to accept applications for or issue new policies
940 covering commercial nonresidential risks. For purposes of
941 determining comparable coverage under sub-subparagraphs a. and
942 b., the comparison shall be based on those forms and coverages
943 that are reasonably comparable. The corporation may rely on a
944 determination of comparable coverage and premium made by the
945 producing agent who submits the application to the corporation,
946 made in the agent’s capacity as the corporation’s agent. A
947 comparison may be made solely of the premium with respect to the
948 main building or structure only on the following basis: the same
949 coverage A or other building limits; the same percentage
950 hurricane deductible that applies on an annual basis or that
951 applies to each hurricane for commercial residential property;
952 the same percentage of ordinance and law coverage, if the same
953 limit is offered by both the corporation and the authorized
954 insurer; the same mitigation credits, to the extent the same
955 types of credits are offered both by the corporation and the
956 authorized insurer; the same method for loss payment, such as
957 replacement cost or actual cash value, if the same method is
958 offered both by the corporation and the authorized insurer in
959 accordance with underwriting rules; and any other form or
960 coverage that is reasonably comparable as determined by the
961 board. If an application is submitted to the corporation for
962 wind-only coverage in the high-risk account, the premium for the
963 corporation’s wind-only policy plus the premium for the ex-wind
964 policy that is offered by an authorized insurer to the applicant
965 shall be compared to the premium for multiperil coverage offered
966 by an authorized insurer, subject to the standards for
967 comparison specified in this subparagraph. If the corporation or
968 the applicant requests from the authorized insurer a breakdown
969 of the premium of the offer by types of coverage so that a
970 comparison may be made by the corporation or its agent and the
971 authorized insurer refuses or is unable to provide such
972 information, the corporation may treat the offer as not being an
973 offer of coverage from an authorized insurer at the insurer’s
974 approved rate.
975 5.6. Must include rules for classifications of risks and
976 rates therefor.
977 6.7. Must provide that if premium and investment income for
978 an account attributable to a particular calendar year are in
979 excess of projected losses and expenses for the account
980 attributable to that year, such excess shall be held in surplus
981 in the account. Such surplus must shall be available to defray
982 deficits in that account as to future years and shall be used
983 for that purpose before prior to assessing assessable insurers
984 and assessable insureds as to any calendar year.
985 7.8. Must provide objective criteria and procedures to be
986 uniformly applied to for all applicants in determining whether
987 an individual risk is so hazardous as to be uninsurable. In
988 making this determination and in establishing the criteria and
989 procedures, the following must shall be considered:
990 a. Whether the likelihood of a loss for the individual risk
991 is substantially higher than for other risks of the same class;
992 and
993 b. Whether the uncertainty associated with the individual
994 risk is such that an appropriate premium cannot be determined.
995
996 The acceptance or rejection of a risk by the corporation shall
997 be construed as the private placement of insurance, and the
998 provisions of chapter 120 do shall not apply.
999 8.9. Must provide that the corporation Shall make its best
1000 efforts to procure catastrophe reinsurance at reasonable rates,
1001 to cover its projected 100-year probable maximum loss as
1002 determined by the board of governors.
1003 9.10. Must issue The policies that issued by the
1004 corporation must provide that, if the corporation or the market
1005 assistance plan obtains an offer from an authorized insurer to
1006 cover the risk at its approved rates or from a surplus lines
1007 insurer, the risk is no longer eligible for renewal through the
1008 corporation, except as otherwise provided in this subsection.
1009 10.11. Must Corporation Policies and applications must
1010 include a notice in the corporation policies and applications
1011 that the corporation policy could, under this section, be
1012 replaced with a policy issued by an authorized insurer which
1013 that does not provide coverage identical to the coverage
1014 provided by the corporation. The notice must shall also specify
1015 that acceptance of corporation coverage creates a conclusive
1016 presumption that the applicant or policyholder is aware of this
1017 potential.
1018 11.12. May establish, subject to approval by the office,
1019 different eligibility requirements and operational procedures
1020 for any line or type of coverage for any specified county or
1021 area if the board determines that such changes to the
1022 eligibility requirements and operational procedures are
1023 justified due to the voluntary market being sufficiently stable
1024 and competitive in such area or for such line or type of
1025 coverage and that consumers who, in good faith, are unable to
1026 obtain insurance through the voluntary market through ordinary
1027 methods would continue to have access to coverage from the
1028 corporation. If When coverage is sought in connection with a
1029 real property transfer, the such requirements and procedures may
1030 shall not provide for an effective date of coverage later than
1031 the date of the closing of the transfer as established by the
1032 transferor, the transferee, and, if applicable, the lender.
1033 12.13. Must provide that, with respect to the high-risk
1034 account, any assessable insurer with a surplus as to
1035 policyholders of $25 million or less writing 25 percent or more
1036 of its total countrywide property insurance premiums in this
1037 state may petition the office, within the first 90 days of each
1038 calendar year, to qualify as a limited apportionment company. A
1039 regular assessment levied by the corporation on a limited
1040 apportionment company for a deficit incurred by the corporation
1041 for the high-risk account in 2006 or thereafter may be paid to
1042 the corporation on a monthly basis as the assessments are
1043 collected by the limited apportionment company from its insureds
1044 pursuant to s. 627.3512, but the regular assessment must be paid
1045 in full within 12 months after being levied by the corporation.
1046 A limited apportionment company shall collect from its
1047 policyholders any emergency assessment imposed under sub
1048 subparagraph (b)3.d. The plan shall provide that, If the office
1049 determines that any regular assessment will result in an
1050 impairment of the surplus of a limited apportionment company,
1051 the office may direct that all or part of such assessment be
1052 deferred as provided in subparagraph (q)4. However, there shall
1053 be no limitation or deferment of an emergency assessment to be
1054 collected from policyholders under sub-subparagraph (b)3.d. may
1055 not be limited or deferred.
1056 13.14. Effective January 1, 2012, must provide that the
1057 corporation appoint as its licensed agents only those agents who
1058 also hold an appointment as defined in s. 626.015(3) with an
1059 insurer who at the time of the agent’s initial appointment by
1060 the corporation is authorized to write and is actually writing
1061 personal lines residential property coverage, commercial
1062 residential property coverage, or commercial nonresidential
1063 property coverage within the state.
1064 14.15. Must provide, by July 1, 2007, a premium payment
1065 plan option to its policyholders which, allows at a minimum,
1066 allows for quarterly and semiannual payment of premiums. A
1067 monthly payment plan may, but is not required to, be offered.
1068 15.16. Must limit coverage on mobile homes or manufactured
1069 homes built before prior to 1994 to actual cash value of the
1070 dwelling rather than replacement costs of the dwelling.
1071 16.17. May provide such limits of coverage as the board
1072 determines, consistent with the requirements of this subsection.
1073 17.18. May require commercial property to meet specified
1074 hurricane mitigation construction features as a condition of
1075 eligibility for coverage.
1076 18. As of January 1, 2012, must require that the agent
1077 obtain from an applicant for coverage from the corporation an
1078 acknowledgement signed by the applicant, which includes, at a
1079 minimum, the following statement:
1080
1081 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT
1082 LIABILITY:
1083
1084 1. AS A POLICYHOLDER OF CITIZENS PROPERTY
1085 INSURANCE CORPORATION, I UNDERSTAND THAT IF THE
1086 CORPORATION SUSTAINS A DEFICIT AS A RESULT OF
1087 HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY
1088 COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
1089 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF
1090 THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH
1091 AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS
1092 IMPOSED BY THE FLORIDA LEGISLATURE.
1093 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO
1094 EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS
1095 POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A
1096 DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
1097 LEGISLATURE.
1098 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY
1099 INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL
1100 FAITH AND CREDIT OF THE STATE OF FLORIDA.
1101
1102 a. The corporation shall maintain, in electronic format or
1103 otherwise, a copy of the applicant’s signed acknowledgement and
1104 provide a copy of the statement to the policyholder as part of
1105 the first renewal after the effective date of this sub
1106 subparagraph.
1107 b. The signed acknowledgement form creates a conclusive
1108 presumption that the policyholder understood and accepted his or
1109 her potential surcharge and assessment liability as a
1110 policyholder of the corporation.
1111 19. Upon notice and determination by the Department of
1112 Financial Services that an agent appointed by the corporation
1113 has violated s. 626.9541(1)(h), immediately terminate the
1114 agent’s appointment to represent the corporation.
1115 20. Must provide that new or renewal policies issued by the
1116 corporation on or after February 1, 2012, do not include
1117 coverage for attached or detached screen enclosures. The
1118 corporation shall exclude such coverage using a notice of
1119 coverage change, which may be included with the policy renewal,
1120 and not by issuance of a notice of nonrenewal of the excluded
1121 coverage upon renewal of the current policy.
1122 21. Must provide that new or renewal personal residential
1123 policies issued by the corporation on or after February 1, 2013,
1124 do not provide coverage for detached structures on the residence
1125 premises which are separated from the dwelling by clear space.
1126 Structures connected to the dwelling by only a fence, utility
1127 line, or similar connection are considered to be detached
1128 structures.
1129 22. Must provide that new or renewal personal residential
1130 policies issued by the corporation on or after February 1, 2013,
1131 do not provide coverage for watercraft, trailers, jewelry, furs,
1132 firearms, silverware, business property on premises, business
1133 property away from premises, or grave markers.
1134 23. Must offer sinkhole coverage. However, effective
1135 February 1, 2012, coverage is not included for losses to
1136 appurtenant structures, driveways, sidewalks, decks, or patios
1137 which are directly or indirectly caused by sinkhole activity.
1138 The corporation shall exclude such coverage using a notice of
1139 coverage change, which may be included with the policy renewal,
1140 and not by issuance of a notice of nonrenewal of the excluded
1141 coverage upon renewal of the current policy.
1142 24. As a condition for making payment for damage caused by
1143 the peril of sinkhole, regardless of whether such payment is
1144 made pursuant to the contract, mediation, neutral evaluation,
1145 appraisal, arbitration, settlement, or litigation, the payment
1146 must be dedicated entirely to the costs of repairing the
1147 structure or remediation of the land. Unless this condition is
1148 met, the corporation is prohibited from making payment.
1149 (d)1. All prospective employees for senior management
1150 positions, as defined by the plan of operation, are subject to
1151 background checks as a prerequisite for employment. The office
1152 shall conduct the background checks on such prospective
1153 employees pursuant to ss. 624.34, 624.404(3), and 628.261.
1154 2. On or before July 1 of each year, employees of the
1155 corporation must are required to sign and submit a statement
1156 attesting that they do not have a conflict of interest, as
1157 defined in part III of chapter 112. As a condition of
1158 employment, all prospective employees must are required to sign
1159 and submit to the corporation a conflict-of-interest statement.
1160 3. Senior managers and members of the board of governors
1161 are subject to the provisions of part III of chapter 112,
1162 including, but not limited to, the code of ethics and public
1163 disclosure and reporting of financial interests, pursuant to s.
1164 112.3145.
1165 a. Senior managers and board members are also required to
1166 file such disclosures with the Commission on Ethics and the
1167 Office of Insurance Regulation. The executive director of the
1168 corporation or his or her designee shall notify each existing
1169 and newly appointed and existing appointed member of the board
1170 of governors and senior managers of their duty to comply with
1171 the reporting requirements of part III of chapter 112. At least
1172 quarterly, the executive director or his or her designee shall
1173 submit to the Commission on Ethics a list of names of the senior
1174 managers and members of the board of governors who are subject
1175 to the public disclosure requirements under s. 112.3145.
1176 b. Notwithstanding s. 112.3143(2), a board member may not
1177 vote on any measure that would inure to his or her special
1178 private gain or loss; that he or she knows would inure to the
1179 special private gain or loss of any principal by whom he or she
1180 is retained or to the parent organization or subsidiary of a
1181 corporate principal by which he or she is retained, other than
1182 an agency as defined in s. 112.312; or that he or she knows
1183 would inure to the special private gain or loss of a relative or
1184 business associate of the public officer. Before the vote is
1185 taken, such member must publicly state to the assembly the
1186 nature of his or her interest in the matter from which he or she
1187 is abstaining and, within 15 days after the vote occurs,
1188 disclose the nature of his or her interest as a public record in
1189 a memorandum filed with the person responsible for recording the
1190 minutes of the meeting, who shall incorporate the memorandum in
1191 the minutes.
1192 4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
1193 provision of law, an employee or board member may not knowingly
1194 accept, directly or indirectly, any gift or expenditure from a
1195 person or entity, or an employee or representative of such
1196 person or entity, which that has a contractual relationship with
1197 the corporation or who is under consideration for a contract. An
1198 employee or board member who fails to comply with subparagraph
1199 3. or this subparagraph is subject to penalties provided under
1200 ss. 112.317 and 112.3173.
1201 5. Any senior manager of the corporation who is employed on
1202 or after January 1, 2007, regardless of the date of hire, who
1203 subsequently retires or terminates employment is prohibited from
1204 representing another person or entity before the corporation for
1205 2 years after retirement or termination of employment from the
1206 corporation.
1207 6. Any senior manager of the corporation who is employed on
1208 or after January 1, 2007, regardless of the date of hire, who
1209 subsequently retires or terminates employment is prohibited from
1210 having any employment or contractual relationship for 2 years
1211 with an insurer that has entered into a take-out bonus agreement
1212 with the corporation.
1213 (n)1. It is the intent of the Legislature that the rates
1214 for coverage provided by the corporation be actuarially
1215 determined and not be competitive with rates charged in the
1216 admitted voluntary market such that the corporation functions as
1217 a residual market mechanism that provides insurance only if such
1218 insurance cannot be procured in the voluntary market. To achieve
1219 this goal, for any rate filing made by the corporation on or
1220 after July 1, 2011: Rates for coverage provided by the
1221 corporation shall be actuarially sound and subject to the
1222 requirements of s. 627.062, except as otherwise provided in this
1223 paragraph. The corporation shall file its recommended rates with
1224 the office at least annually. The corporation shall provide any
1225 additional information regarding the rates which the office
1226 requires. The office shall consider the recommendations of the
1227 board and issue a final order establishing the rates for the
1228 corporation within 45 days after the recommended rates are
1229 filed. The corporation may not pursue an administrative
1230 challenge or judicial review of the final order of the office.
1231 1. The corporation shall file its recommended rates with
1232 the office at least annually. The office shall consider the
1233 recommended rates and issue a final order establishing the rates
1234 within 45 days after the recommended rates are filed. The
1235 corporation may not pursue an administrative challenge or
1236 judicial review of the office’s final order.
1237 2. In developing its rates, the corporation shall use an
1238 appropriate industry expense equalization factor to ensure that
1239 its rates include standard industry ratemaking expense
1240 provisions. The industry expense equalization factor must
1241 include a catastrophe risk load, a provision for taxes, a market
1242 provision for reinsurance costs, and an industry expense
1243 provision for general expenses, acquisition expenses, and
1244 commissions.
1245 3. The corporation shall implement a rate increase each
1246 year for each residential line of business it writes, which may
1247 not exceed 20 percent by territory and 25 percent for any single
1248 policy, excluding coverage changes and surcharges. This
1249 subparagraph expires January 1, 2015, and does not apply to
1250 rates for sinkhole coverage or costs for the purchase of private
1251 reinsurance, if any.
1252 4.2. In addition to the rates otherwise determined pursuant
1253 to this paragraph, the corporation shall impose and collect an
1254 amount equal to the premium tax provided for in s. 624.509 to
1255 augment the financial resources of the corporation.
1256 3. After the public hurricane loss-projection model under
1257 s. 627.06281 has been found to be accurate and reliable by the
1258 Florida Commission on Hurricane Loss Projection Methodology,
1259 that model shall serve as the minimum benchmark for determining
1260 the windstorm portion of the corporation’s rates. This
1261 subparagraph does not require or allow the corporation to adopt
1262 rates lower than the rates otherwise required or allowed by this
1263 paragraph.
1264 4. The rate filings for the corporation which were approved
1265 by the office and which took effect January 1, 2007, are
1266 rescinded, except for those rates that were lowered. As soon as
1267 possible, the corporation shall begin using the lower rates that
1268 were in effect on December 31, 2006, and shall provide refunds
1269 to policyholders who have paid higher rates as a result of that
1270 rate filing. The rates in effect on December 31, 2006, shall
1271 remain in effect for the 2007 and 2008 calendar years except for
1272 any rate change that results in a lower rate. The next rate
1273 change that may increase rates shall take effect pursuant to a
1274 new rate filing recommended by the corporation and established
1275 by the office, subject to the requirements of this paragraph.
1276 5. Beginning on July 15, 2009, and each year thereafter,
1277 the corporation must make a recommended actuarially sound rate
1278 filing for each personal and commercial line of business it
1279 writes, to be effective no earlier than January 1, 2010.
1280 6. Beginning on or after January 1, 2010, and
1281 notwithstanding the board’s recommended rates and the office’s
1282 final order regarding the corporation’s filed rates under
1283 subparagraph 1., the corporation shall implement a rate increase
1284 each year which does not exceed 10 percent for any single policy
1285 issued by the corporation, excluding coverage changes and
1286 surcharges.
1287 5.7. The corporation may also implement an increase to
1288 reflect the effect on the corporation of the cash buildup factor
1289 pursuant to s. 215.555(5)(b).
1290 6. This paragraph does not require or allow the corporation
1291 to reduce rates.
1292 8. The corporation’s implementation of rates as prescribed
1293 in subparagraph 6. shall cease for any line of business written
1294 by the corporation upon the corporation’s implementation of
1295 actuarially sound rates. Thereafter, the corporation shall
1296 annually make a recommended actuarially sound rate filing for
1297 each commercial and personal line of business the corporation
1298 writes.
1299 (o) If coverage in an account is deactivated pursuant to
1300 paragraph (p), coverage through the corporation shall be
1301 reactivated by order of the office only under one of the
1302 following circumstances:
1303 1. If the market assistance plan receives a minimum of 100
1304 applications for coverage within a 3-month period, or 200
1305 applications for coverage within a 1-year period or less for
1306 residential coverage, unless the market assistance plan provides
1307 a quotation from admitted carriers at their filed rates for at
1308 least 90 percent of such applicants. A Any market assistance
1309 plan application that is rejected because an individual risk is
1310 so hazardous as to be uninsurable using the criteria specified
1311 in subparagraph (c)7. may (c)8. shall not be included in the
1312 minimum percentage calculation provided herein. If In the event
1313 that there is a legal or administrative challenge to a
1314 determination by the office that the conditions of this
1315 subparagraph have been met for eligibility for coverage by in
1316 the corporation, an any eligible risk may obtain coverage during
1317 the pendency of such challenge.
1318 2. In response to a state of emergency declared by the
1319 Governor under s. 252.36, the office may activate coverage by
1320 order during for the period of the emergency upon a finding by
1321 the office that the emergency significantly affects the
1322 availability of residential property insurance.
1323 (q)1. The corporation shall certify to the office its needs
1324 for annual assessments as to a particular calendar year, and for
1325 any interim assessments that it deems to be necessary to sustain
1326 operations as to a particular year pending the receipt of annual
1327 assessments. Upon verification, the office shall approve such
1328 certification, and the corporation shall levy such annual or
1329 interim assessments. Such assessments must shall be prorated as
1330 provided in paragraph (b). The corporation shall take all
1331 reasonable and prudent steps necessary to collect the amount of
1332 assessment due from each assessable insurer, including, if
1333 prudent, filing suit to collect such assessment. If the
1334 corporation is unable to collect an assessment from any
1335 assessable insurer, the uncollected assessments shall be levied
1336 as an additional assessment against the assessable insurers and
1337 any assessable insurer required to pay an additional assessment
1338 as a result of such failure to pay shall have a cause of action
1339 against such nonpaying assessable insurer. Assessments shall be
1340 included as an appropriate factor in the making of rates. The
1341 failure of a surplus lines agent to collect and remit any
1342 regular or emergency assessment levied by the corporation is
1343 considered to be a violation of s. 626.936 and subjects the
1344 surplus lines agent to the penalties provided in that section.
1345 2. The governing body of any unit of local government, any
1346 residents of which are insured by the corporation, may issue
1347 bonds as defined in s. 125.013 or s. 166.101 from time to time
1348 to fund an assistance program, in conjunction with the
1349 corporation, for the purpose of defraying deficits of the
1350 corporation. In order to avoid needless and indiscriminate
1351 proliferation, duplication, and fragmentation of such assistance
1352 programs, any unit of local government, any residents of which
1353 are insured by the corporation, may provide for the payment of
1354 losses, regardless of whether or not the losses occurred within
1355 or outside of the territorial jurisdiction of the local
1356 government. Revenue bonds under this subparagraph may not be
1357 issued until validated pursuant to chapter 75, unless a state of
1358 emergency is declared by executive order or proclamation of the
1359 Governor pursuant to s. 252.36 making such findings as are
1360 necessary to determine that it is in the best interests of, and
1361 necessary for, the protection of the public health, safety, and
1362 general welfare of residents of this state and declaring it an
1363 essential public purpose to permit certain municipalities or
1364 counties to issue such bonds to as will permit relief to
1365 claimants and policyholders of the corporation. Any such unit of
1366 local government may enter into such contracts with the
1367 corporation and with any other entity created pursuant to this
1368 subsection as are necessary to carry out this paragraph. Any
1369 bonds issued under this subparagraph are shall be payable from
1370 and secured by moneys received by the corporation from emergency
1371 assessments under sub-subparagraph (b)3.d., and assigned and
1372 pledged to or on behalf of the unit of local government for the
1373 benefit of the holders of such bonds. The funds, credit,
1374 property, and taxing power of the state or of the unit of local
1375 government may shall not be pledged for the payment of such
1376 bonds.
1377 3.a. The corporation shall adopt one or more programs
1378 subject to approval by the office for the reduction of both new
1379 and renewal writings in the corporation. Beginning January 1,
1380 2008,
1381 a. Any program the corporation adopts for the payment of
1382 bonuses to an insurer for each risk the insurer removes from the
1383 corporation must shall comply with s. 627.3511(2) and may not
1384 exceed the amount referenced in s. 627.3511(2) for each risk
1385 removed. The corporation may consider any prudent and not
1386 unfairly discriminatory approach to reducing corporation
1387 writings, and may adopt a credit against assessment liability or
1388 other liability that provides an incentive for insurers to take
1389 risks out of the corporation and to keep risks out of the
1390 corporation by maintaining or increasing voluntary writings in
1391 counties or areas in which corporation risks are highly
1392 concentrated and a program to provide a formula under which an
1393 insurer voluntarily taking risks out of the corporation by
1394 maintaining or increasing voluntary writings will be relieved
1395 wholly or partially from assessments under sub-subparagraphs
1396 (b)3.a. and b. However, any “take-out bonus” or payment to an
1397 insurer must be conditioned on the property being insured for at
1398 least 5 years by the insurer, unless canceled or nonrenewed by
1399 the policyholder. If the policy is canceled or nonrenewed by the
1400 policyholder before the end of the 5-year period, the amount of
1401 the take-out bonus must be prorated for the time period the
1402 policy was insured. If When the corporation enters into a
1403 contractual agreement for a take-out plan, the producing agent
1404 of record of the corporation policy is entitled to retain any
1405 unearned commission on such policy, and the insurer shall
1406 either:
1407 (I) Pay to the producing agent of record of the policy, for
1408 the first year, an amount that which is the greater of the
1409 insurer’s usual and customary commission for the type of policy
1410 written or a policy fee equal to the usual and customary
1411 commission of the corporation; or
1412 (II) Offer to allow the producing agent of record of the
1413 policy to continue servicing the policy for at least a period of
1414 not less than 1 year and offer to pay the agent the insurer’s
1415 usual and customary commission for the type of policy written.
1416 If the producing agent is unwilling or unable to accept
1417 appointment by the new insurer, the new insurer shall pay the
1418 agent in accordance with sub-sub-subparagraph (I).
1419 b. Any credit or exemption from regular assessments adopted
1420 under this subparagraph shall last no longer than the 3 years
1421 following the cancellation or expiration of the policy by the
1422 corporation. With the approval of the office, the board may
1423 extend such credits for an additional year if the insurer
1424 guarantees an additional year of renewability for all policies
1425 removed from the corporation, or for 2 additional years if the
1426 insurer guarantees 2 additional years of renewability for all
1427 policies so removed.
1428 c. There shall be No credit, limitation, exemption, or
1429 deferment from emergency assessments may to be collected from
1430 policyholders pursuant to sub-subparagraph (b)3.d.
1431 4. The plan must shall provide for the deferment, in whole
1432 or in part, of the assessment of an assessable insurer, other
1433 than an emergency assessment collected from policyholders
1434 pursuant to sub-subparagraph (b)3.d., if the office finds that
1435 payment of the assessment would endanger or impair the solvency
1436 of the insurer. If In the event an assessment against an
1437 assessable insurer is deferred in whole or in part, the amount
1438 by which such assessment is deferred may be assessed against the
1439 other assessable insurers in a manner consistent with the basis
1440 for assessments set forth in paragraph (b).
1441 5. Effective July 1, 2007, In order to evaluate the costs
1442 and benefits of approved take-out plans, if the corporation pays
1443 a bonus or other payment to an insurer for an approved take-out
1444 plan, it shall maintain a record of the address or such other
1445 identifying information on the property or risk removed in order
1446 to track if and when the property or risk is later insured by
1447 the corporation.
1448 6. Any policy taken out, assumed, or removed from the
1449 corporation is, as of the effective date of the take-out,
1450 assumption, or removal, direct insurance issued by the insurer
1451 and not by the corporation, even if the corporation continues to
1452 service the policies. This subparagraph applies to policies of
1453 the corporation and not policies taken out, assumed, or removed
1454 from any other entity.
1455 d. Notwithstanding any other provision of law, for purposes
1456 of a depopulation, take-out, or keep-out program adopted by the
1457 corporation, including an initial or renewal offer of coverage
1458 made to a policyholder removed from the corporation pursuant to
1459 such program, an eligible surplus lines insurer may participate
1460 in the program in the same manner and on the same terms as an
1461 authorized insurer, except as provided under this subparagraph.
1462 To qualify for participation, the surplus lines insurer must
1463 first obtain approval from the office for its depopulation,
1464 take-out, or keep-out plan and then comply with all of the
1465 corporation’s requirements for such plan applicable to admitted
1466 insurers and with all statutory provisions applicable to the
1467 removal of policies from the corporation. In considering a
1468 surplus lines insurer’s request for approval for its plan, the
1469 office must determine that the surplus lines insurer meets the
1470 following requirements:
1471 (I) Maintains surplus of $50 million on a company or pooled
1472 basis;
1473 (II) Maintains an A.M. Best Financial Strength Rating of
1474 “A-” or better;
1475 (III) Maintains reserves, surplus, reinsurance, and
1476 reinsurance equivalents sufficient to cover the insurer’s 100
1477 year probable maximum hurricane loss at least twice in a single
1478 hurricane season, and submits such reinsurance to the office to
1479 review for purposes of the take-out;
1480 (IV) Provides prominent notice to the policyholder before
1481 the assumption of the policy that surplus lines policies are not
1482 provided coverage by the Florida Insurance Guaranty Association,
1483 and an outline of any substantial differences in coverage
1484 between the existing policy and the policy being offered to the
1485 insured; and
1486 (V) Provides similar policy coverage.
1487
1488 This sub-subparagraph does not subject any surplus lines insurer
1489 to requirements in addition to part VIII of chapter 626. Surplus
1490 lines brokers making an offer of coverage under this sub
1491 subparagraph are not required to comply with s. 626.916(1)(a),
1492 (b), (c), and (e).
1493 (s)1. There is shall be no liability on the part of, and no
1494 cause of action of any nature shall arise against, any
1495 assessable insurer or its agents or employees, the corporation
1496 or its agents or employees, members of the board of governors or
1497 their respective designees at a board meeting, corporation
1498 committee members, or the office or its representatives, for any
1499 action taken by them in the performance of their duties or
1500 responsibilities under this subsection.
1501 a. As part of the immunity, the corporation, as a
1502 governmental entity serving a public purpose, is not liable for
1503 any claim for bad faith whether or not brought pursuant to s.
1504 624.155, and this subsection or any other provision of law does
1505 not create liability or a cause of action for bad faith or a
1506 claim for extracontractual damages.
1507 b. Such immunity does not apply to:
1508 (I)a. Any of the foregoing persons or entities for any
1509 willful tort;
1510 (II)b. The corporation or its producing agents for breach
1511 of any contract or agreement pertaining to insurance coverage;
1512 (III)c. The corporation with respect to issuance or payment
1513 of debt;
1514 (IV)d. An Any assessable insurer with respect to any action
1515 to enforce an assessable insurer’s obligations to the
1516 corporation under this subsection; or
1517 (V)e. The corporation in any pending or future action for
1518 breach of contract or for benefits under a policy issued by the
1519 corporation.; In any such action, the corporation is not shall
1520 be liable to the policyholders and beneficiaries for attorney’s
1521 fees under s. 627.428.
1522 2. The corporation shall manage its claim employees,
1523 independent adjusters, and others who handle claims to ensure
1524 they carry out the corporation’s duty to its policyholders to
1525 handle claims carefully, timely, diligently, and in good faith,
1526 balanced against the corporation’s duty to the state to manage
1527 its assets responsibly in order to minimize its assessment
1528 potential.
1529 (w) Notwithstanding any other provision of law:
1530 1. The pledge or sale of, the lien upon, and the security
1531 interest in any rights, revenues, or other assets of the
1532 corporation created or purported to be created pursuant to any
1533 financing documents to secure any bonds or other indebtedness of
1534 the corporation shall be and remain valid and enforceable,
1535 notwithstanding the commencement of and during the continuation
1536 of, and after, any rehabilitation, insolvency, liquidation,
1537 bankruptcy, receivership, conservatorship, reorganization, or
1538 similar proceeding against the corporation under the laws of
1539 this state.
1540 2. No Such proceeding does not shall relieve the
1541 corporation of its obligation, or otherwise affect its ability
1542 to perform its obligation, to continue to collect, or levy and
1543 collect, assessments, market equalization or other surcharges
1544 under subparagraph (c)10., or any other rights, revenues, or
1545 other assets of the corporation pledged pursuant to any
1546 financing documents.
1547 3. Each such pledge or sale of, lien upon, and security
1548 interest in, including the priority of such pledge, lien, or
1549 security interest, any such assessments, market equalization or
1550 other surcharges, or other rights, revenues, or other assets
1551 which are collected, or levied and collected, after the
1552 commencement of and during the pendency of, or after, any such
1553 proceeding continues shall continue unaffected by such
1554 proceeding. As used in this subsection, the term “financing
1555 documents” means any agreement or agreements, instrument or
1556 instruments, or other document or documents now existing or
1557 hereafter created evidencing any bonds or other indebtedness of
1558 the corporation or pursuant to which any such bonds or other
1559 indebtedness has been or may be issued and pursuant to which any
1560 rights, revenues, or other assets of the corporation are pledged
1561 or sold to secure the repayment of such bonds or indebtedness,
1562 together with the payment of interest on such bonds or such
1563 indebtedness, or the payment of any other obligation or
1564 financial product, as defined in the plan of operation of the
1565 corporation related to such bonds or indebtedness.
1566 4. Any such pledge or sale of assessments, revenues,
1567 contract rights, or other rights or assets of the corporation
1568 constitutes shall constitute a lien and security interest, or
1569 sale, as the case may be, that is immediately effective and
1570 attaches to such assessments, revenues, or contract rights or
1571 other rights or assets, whether or not imposed or collected at
1572 the time the pledge or sale is made. Any Such pledge or sale is
1573 effective, valid, binding, and enforceable against the
1574 corporation or other entity making such pledge or sale, and
1575 valid and binding against and superior to any competing claims
1576 or obligations owed to any other person or entity, including
1577 policyholders in this state, asserting rights in any such
1578 assessments, revenues, or contract rights or other rights or
1579 assets to the extent set forth in and in accordance with the
1580 terms of the pledge or sale contained in the applicable
1581 financing documents, whether or not any such person or entity
1582 has notice of such pledge or sale and without the need for any
1583 physical delivery, recordation, filing, or other action.
1584 5. If As long as the corporation has any bonds outstanding,
1585 the corporation may not file a voluntary petition under chapter
1586 9 of the federal Bankruptcy Code or such corresponding chapter
1587 or sections as may be in effect, from time to time, and a public
1588 officer or any organization, entity, or other person may not
1589 authorize the corporation to be or become a debtor under chapter
1590 9 of the federal Bankruptcy Code or such corresponding chapter
1591 or sections as may be in effect, from time to time, during any
1592 such period.
1593 6. If ordered by a court of competent jurisdiction, the
1594 corporation may assume policies or otherwise provide coverage
1595 for policyholders of an insurer placed in liquidation under
1596 chapter 631, under such forms, rates, terms, and conditions as
1597 the corporation deems appropriate, subject to approval by the
1598 office.
1599 (x)1. The following records of the corporation are
1600 confidential and exempt from the provisions of s. 119.07(1) and
1601 s. 24(a), Art. I of the State Constitution:
1602 a. Underwriting files, except that a policyholder or an
1603 applicant shall have access to his or her own underwriting
1604 files. Confidential and exempt underwriting file records may
1605 also be released to other governmental agencies upon written
1606 request and demonstration of need; such records held by the
1607 receiving agency remain confidential and exempt as provided
1608 herein.
1609 b. Claims files, until termination of all litigation and
1610 settlement of all claims arising out of the same incident,
1611 although portions of the claims files may remain exempt, as
1612 otherwise provided by law. Confidential and exempt claims file
1613 records may be released to other governmental agencies upon
1614 written request and demonstration of need; such records held by
1615 the receiving agency remain confidential and exempt as provided
1616 herein.
1617 c. Records obtained or generated by an internal auditor
1618 pursuant to a routine audit, until the audit is completed, or if
1619 the audit is conducted as part of an investigation, until the
1620 investigation is closed or ceases to be active. An investigation
1621 is considered “active” while the investigation is being
1622 conducted with a reasonable, good faith belief that it could
1623 lead to the filing of administrative, civil, or criminal
1624 proceedings.
1625 d. Matters reasonably encompassed in privileged attorney
1626 client communications.
1627 e. Proprietary information licensed to the corporation
1628 under contract and the contract provides for the confidentiality
1629 of such proprietary information.
1630 f. All information relating to the medical condition or
1631 medical status of a corporation employee which is not relevant
1632 to the employee’s capacity to perform his or her duties, except
1633 as otherwise provided in this paragraph. Information that is
1634 exempt shall include, but is not limited to, information
1635 relating to workers’ compensation, insurance benefits, and
1636 retirement or disability benefits.
1637 g. Upon an employee’s entrance into the employee assistance
1638 program, a program to assist any employee who has a behavioral
1639 or medical disorder, substance abuse problem, or emotional
1640 difficulty which affects the employee’s job performance, all
1641 records relative to that participation shall be confidential and
1642 exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
1643 of the State Constitution, except as otherwise provided in s.
1644 112.0455(11).
1645 h. Information relating to negotiations for financing,
1646 reinsurance, depopulation, or contractual services, until the
1647 conclusion of the negotiations.
1648 i. Minutes of closed meetings regarding underwriting files,
1649 and minutes of closed meetings regarding an open claims file
1650 until termination of all litigation and settlement of all claims
1651 with regard to that claim, except that information otherwise
1652 confidential or exempt by law shall be redacted.
1653 2. If an authorized insurer is considering underwriting a
1654 risk insured by the corporation or has removed a risk from the
1655 corporation, relevant underwriting files and confidential claims
1656 files may be released to the insurer if provided the insurer
1657 agrees in writing, notarized and under oath, to maintain the
1658 confidentiality of such files. If a file is transferred to an
1659 insurer, that file is no longer a public record because it is
1660 not held by an agency subject to the provisions of the public
1661 records law. Underwriting files and confidential claims files
1662 may also be released to staff and the board of governors of the
1663 market assistance plan established pursuant to s. 627.3515, who
1664 must retain the confidentiality of such files, except such files
1665 may be released to authorized insurers that are considering
1666 assuming the risks to which the files apply if, provided the
1667 insurer agrees in writing, notarized and under oath, to maintain
1668 the confidentiality of such files. Finally, the corporation or
1669 the board or staff of the market assistance plan may make the
1670 following information obtained from underwriting files and
1671 confidential claims files available to licensed general lines
1672 insurance agents: name, address, and telephone number of the
1673 residential property owner or insured; location of the risk;
1674 rating information; loss history; and policy type. The receiving
1675 licensed general lines insurance agent must retain the
1676 confidentiality of the information received.
1677 3. A policyholder who has filed suit against the
1678 corporation has the right to discover the contents of his or her
1679 own claims file to the same extent that discovery of such
1680 contents would be available from a private insurer in litigation
1681 as provided by the Florida Rules of Civil Procedure, the Florida
1682 Evidence Code, and other applicable law. Pursuant to subpoena, a
1683 third party has the right to discover the contents of an
1684 insured’s or applicant’s underwriting or claims file to the same
1685 extent that discovery of such contents would be available from a
1686 private insurer by subpoena as provided by the Florida Rules of
1687 Civil Procedure, the Florida Evidence Code, and other applicable
1688 law, and subject to any confidentiality protections requested by
1689 the corporation and agreed to by the seeking party or ordered by
1690 the court. The corporation may release confidential underwriting
1691 and claims file contents and information as it deems necessary
1692 and appropriate to underwrite or service insurance policies and
1693 claims, subject to any confidentiality protections deemed
1694 necessary and appropriate by the corporation.
1695 4. Portions of meetings of the corporation are exempt from
1696 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1697 Constitution wherein confidential underwriting files or
1698 confidential open claims files are discussed. All portions of
1699 corporation meetings which are closed to the public shall be
1700 recorded by a court reporter. The court reporter shall record
1701 the times of commencement and termination of the meeting, all
1702 discussion and proceedings, the names of all persons present at
1703 any time, and the names of all persons speaking. No portion of
1704 any closed meeting shall be off the record. Subject to the
1705 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1706 notes of any closed meeting shall be retained by the corporation
1707 for a minimum of 5 years. A copy of the transcript, less any
1708 exempt matters, of any closed meeting wherein claims are
1709 discussed shall become public as to individual claims after
1710 settlement of the claim.
1711 (y) It is the intent of the Legislature that the amendments
1712 to this subsection enacted in 2002 should, over time, reduce the
1713 probable maximum windstorm losses in the residual markets and
1714 should reduce the potential assessments to be levied on property
1715 insurers and policyholders statewide. In furtherance of this
1716 intent:
1717 1. The board shall, on or before February 1 of each year,
1718 provide a report to the President of the Senate and the Speaker
1719 of the House of Representatives showing the reduction or
1720 increase in the 100-year probable maximum loss attributable to
1721 wind-only coverages and the quota share program under this
1722 subsection combined, as compared to the benchmark 100-year
1723 probable maximum loss of the Florida Windstorm Underwriting
1724 Association. For purposes of this paragraph, the benchmark 100
1725 year probable maximum loss of the Florida Windstorm Underwriting
1726 Association shall be the calculation dated February 2001 and
1727 based on November 30, 2000, exposures. In order to ensure
1728 comparability of data, the board shall use the same methods for
1729 calculating its probable maximum loss as were used to calculate
1730 the benchmark probable maximum loss.
1731 2. Beginning December 1, 2010, if the report under
1732 subparagraph 1. for any year indicates that the 100-year
1733 probable maximum loss attributable to wind-only coverages and
1734 the quota share program combined does not reflect a reduction of
1735 at least 25 percent from the benchmark, the board shall reduce
1736 the boundaries of the high-risk area eligible for wind-only
1737 coverages under this subsection in a manner calculated to reduce
1738 such probable maximum loss to an amount at least 25 percent
1739 below the benchmark.
1740 3. Beginning February 1, 2015, if the report under
1741 subparagraph 1. for any year indicates that the 100-year
1742 probable maximum loss attributable to wind-only coverages and
1743 the quota share program combined does not reflect a reduction of
1744 at least 50 percent from the benchmark, the boundaries of the
1745 high-risk area eligible for wind-only coverages under this
1746 subsection shall be reduced by the elimination of any area that
1747 is not seaward of a line 1,000 feet inland from the Intracoastal
1748 Waterway.
1749 (aa) As a condition of eligibility for coverage by the
1750 corporation, an applicant or insured of a property located in
1751 Special Flood Hazard Area, as defined by the National Flood
1752 Insurance Program, must maintain in effect a separate flood
1753 insurance policy having coverage limits for building and
1754 contents at least equal to those provided under the
1755 corporation’s policy, subject to the maximum limits available
1756 under the National Flood Insurance Program policy. This
1757 requirement does not apply to an insured who is a tenant or a
1758 condominium unit owner above the ground floor; a policy issued
1759 by the corporation which excludes wind and hail coverage; a risk
1760 that is not eligible for flood coverage under the National Flood
1761 Insurance Program; or a mobile home that is located more than 2
1762 miles from open water, including the ocean, the gulf, a bay, a
1763 river, or the intracoastal waterway. This paragraph applies to
1764 new policies issued by the corporation on or after January 1,
1765 2012, and to policies renewed by the corporation on or after
1766 January 1, 2013. The corporation shall not require the securing
1767 of flood insurance as a condition of coverage if the insured or
1768 applicant executes a form approved by the office affirming that
1769 flood insurance is not provided by the corporation and that if
1770 flood insurance is not secured by the applicant or insured in
1771 addition to coverage by the corporation, the risk will not be
1772 covered for flood damage. A corporation policyholder electing
1773 not to secure flood insurance and executing a form as provided
1774 herein making a claim for water damage against the corporation
1775 shall have the burden of proving the damage was not caused by
1776 flooding. Notwithstanding other provisions of this subsection,
1777 the corporation may deny coverage to an applicant or insured who
1778 refuses to execute the form described herein.
1779 (ee) The office may establish a pilot program to offer
1780 optional sinkhole coverage in one or more counties or other
1781 territories of the corporation for the purpose of implementing
1782 s. 627.706, as amended by s. 30, chapter 2007-1, Laws of
1783 Florida. Under the pilot program, the corporation is not
1784 required to issue a notice of nonrenewal to exclude sinkhole
1785 coverage upon the renewal of existing policies, but may exclude
1786 such coverage using a notice of coverage change.
1787 Section 3. Subsection (4) of section 627.3511, Florida
1788 Statutes, is amended to read:
1789 627.3511 Depopulation of Citizens Property Insurance
1790 Corporation.—
1791 (4) AGENT BONUS.—If When the corporation enters into a
1792 contractual agreement for a take-out plan that provides a bonus
1793 to the insurer, the producing agent of record of the corporation
1794 policy is entitled to retain any unearned commission on such
1795 policy, and the insurer shall either:
1796 (a) Pay to the producing agent of record of the association
1797 policy, for the first year, an amount that is the greater of the
1798 insurer’s usual and customary commission for the type of policy
1799 written or a fee equal to the usual and customary commission of
1800 the corporation; or
1801 (b) Offer to allow the producing agent of record of the
1802 corporation policy to continue servicing the policy for at least
1803 a period of not less than 1 year and offer to pay the agent the
1804 greater of the insurer’s or the corporation’s usual and
1805 customary commission for the type of policy written.
1806
1807 If the producing agent is unwilling or unable to accept
1808 appointment, the new insurer shall pay the agent in accordance
1809 with paragraph (a). The requirement of this subsection that the
1810 producing agent of record is entitled to retain the unearned
1811 commission on an association policy does not apply to a policy
1812 for which coverage has been provided in the association for 30
1813 days or less or for which a cancellation notice has been issued
1814 pursuant to s. 627.351(6)(c)10. during the first 30 days of
1815 coverage.
1816 Section 4. This act shall take effect upon becoming a law.