CS for CS for CS for SB 408                      First Engrossed
       
       
       
       
       
       
       
       
       2011408e1
       
    1                        A bill to be entitled                      
    2         An act relating to property and casualty insurance;
    3         amending s. 215.555, F.S.; revising the definition of
    4         “losses,” relating to the Florida Hurricane
    5         Catastrophe Fund, to exclude certain losses; providing
    6         applicability; amending s. 215.5595, F.S.; authorizing
    7         an insurer to renegotiate the terms a surplus note
    8         issued before a certain date; providing limitations;
    9         amending s. 624.407, F.S.; revising the amount of
   10         surplus funds required for domestic insurers applying
   11         for a certificate of authority after a certain date;
   12         amending s. 624.408, F.S.; revising the minimum
   13         surplus that must be maintained by certain insurers;
   14         authorizing the Office of Insurance Regulation to
   15         reduce the surplus requirement under specified
   16         circumstances; amending s. 624.4095, F.S.; excluding
   17         certain premiums for federal multiple-peril crop
   18         insurance from calculations for an insurer’s gross
   19         writing ratio; requiring insurers to disclose the
   20         gross written premiums for federal multiple-peril crop
   21         insurance in a financial statement; amending s.
   22         624.424, F.S.; revising the frequency that an insurer
   23         may use the same accountant or partner to prepare an
   24         annual audited financial report; amending s. 626.7452,
   25         F.S.; deleting an exception relating to the
   26         examination of managing general agents; amending s.
   27         626.852, F.S.; providing an exemption from licensure
   28         as an adjuster to persons who provide mortgage-related
   29         claims adjusting services to certain institutions;
   30         providing an exception to the exemption; amending s.
   31         626.854, F.S.; providing limitations on the amount of
   32         compensation that may be received by a public adjuster
   33         for a reopened or supplemental claim; providing
   34         statements that may be considered deceptive or
   35         misleading if made in any public adjuster’s
   36         advertisement or solicitation; providing a definition
   37         for the term “written advertisement”; requiring that a
   38         disclaimer be included in any public adjuster’s
   39         written advertisement; providing requirements for such
   40         disclaimer; requiring certain persons who act on
   41         behalf of an insurer to provide notice to the insurer,
   42         claimant, public adjuster, or legal representative for
   43         an onsite inspection of the insured property;
   44         authorizing the insured or claimant to deny access to
   45         the property if notice is not provided; requiring the
   46         public adjuster to ensure prompt notice of certain
   47         property loss claims; providing that an insurer be
   48         allowed to interview the insured directly about the
   49         loss claim; prohibiting the insurer from obstructing
   50         or preventing the public adjuster from communicating
   51         with the insured; requiring that the insurer
   52         communicate with the public adjuster in an effort to
   53         reach an agreement as to the scope of the covered loss
   54         under the insurance policy; prohibiting a public
   55         adjuster from restricting or preventing persons acting
   56         on behalf of the insured from having reasonable access
   57         to the insured or the insured’s property; prohibiting
   58         a public adjuster from restricting or preventing the
   59         insured’s adjuster from having reasonable access to or
   60         inspecting the insured’s property; authorizing the
   61         insured’s adjuster to be present for the inspection;
   62         prohibiting a licensed contractor or subcontractor
   63         from adjusting a claim on behalf of an insured if such
   64         contractor or subcontractor is not a licensed public
   65         adjuster; providing an exception; amending s.
   66         626.8651, F.S.; requiring that a public adjuster
   67         apprentice complete a minimum number of hours of
   68         continuing education to qualify for licensure;
   69         amending s. 626.8796, F.S.; providing requirements for
   70         a public adjuster contract; creating s. 626.70132,
   71         F.S.; requiring that notice of a claim, supplemental
   72         claim, or reopened claim be given to the insurer
   73         within a specified period after a windstorm or
   74         hurricane occurs; providing a definition for the terms
   75         “supplemental claim” or “reopened claim”; providing
   76         applicability; repealing s. 627.0613(4), F.S.,
   77         relating to the requirement that the consumer advocate
   78         for the Chief Financial Officer prepare an annual
   79         report card for each personal residential property
   80         insurer; amending s. 627.062, F.S.; requiring that the
   81         office issue an approval rather than a notice of
   82         intent to approve following its approval of a file and
   83         use filing; authorizing the office to disapprove a
   84         rate filing because the coverage is inadequate or the
   85         insurer charges a higher premium due to certain
   86         discriminatory factors; extending the expiration date
   87         for making a “file and use” filing; prohibiting the
   88         Office of Insurance Regulation from, directly or
   89         indirectly, impeding the right of an insurer to
   90         acquire policyholders, advertise or appoint agents, or
   91         regulate agent commissions; revising the information
   92         that must be included in a rate filing relating to
   93         certain reinsurance or financing products; deleting a
   94         provision that prohibited an insurer from making
   95         certain rate filings within a certain period of time
   96         after a rate increase; deleting a provision
   97         prohibiting an insurer from filing for a rate increase
   98         within 6 months after it makes certain rate filings;
   99         deleting obsolete provisions relating to legislation
  100         enacted during the 2003 Special Session D of the
  101         Legislature; providing for the submission of
  102         additional or supplementary information pursuant to a
  103         rate filing; amending s. 627.06281, F.S.; providing
  104         limitations on fees charged for use of the public
  105         hurricane model; amending s. 627.0629, F.S.; deleting
  106         obsolete provisions; deleting a requirement that the
  107         Office of Insurance Regulation propose a method for
  108         establishing discounts, debits, credits, and other
  109         rate differentials for hurricane mitigation by a
  110         certain date; requiring the Financial Services
  111         Commission to adopt rules relating to such debits by a
  112         certain date; deleting a provision that prohibits an
  113         insurer from including an expense or profit load in
  114         the cost of reinsurance to replace the Temporary
  115         Increase in Coverage Limits; conforming provisions to
  116         changes made by the act; amending s. 627.351, F.S.;
  117         requiring the Citizens Property Insurance
  118         Corporation’s logo to include certain language;
  119         requiring policies issued by the corporation to
  120         include a provision that prohibits policyholders from
  121         engaging the services of a public adjuster until after
  122         the corporation has tendered an offer; limiting an
  123         adjuster’s fee for a claim against the corporation;
  124         renaming the “high-risk account” as the “coastal
  125         account”; revising the conditions under which the
  126         Citizens policyholder surcharge may be imposed;
  127         providing that members of the Citizens Property
  128         Insurance Corporation Board of Governors are not
  129         prohibited from practicing in a certain profession if
  130         not prohibited by law or ordinance; limiting coverage
  131         for damage from sinkholes after a certain date and
  132         providing that the corporation must require repair of
  133         the property as a condition of any payment;
  134         prohibiting board members from voting on certain
  135         measures; exempting sinkhole coverage from the
  136         corporation’s annual rate increase requirements;
  137         deleting a requirement that the board reduce the
  138         boundaries of certain high-risk areas eligible for
  139         wind-only coverages under certain circumstances;
  140         amending s. 627.3511, F.S.; conforming provisions to
  141         changes made by the act; amending s. 627.4133, F.S.;
  142         revising the requirements for providing an insured
  143         with notice of nonrenewal, cancellation, or
  144         termination of personal lines or commercial
  145         residential property insurance; authorizing an insurer
  146         to cancel policies after 45 days’ notice if the Office
  147         of Insurance Regulation determines that the
  148         cancellation of policies is necessary to protect the
  149         interests of the public or policyholders; authorizing
  150         the Office of Insurance Regulation to place an insurer
  151         under administrative supervision or appoint a receiver
  152         upon the consent of the insurer under certain
  153         circumstances; creating s. 627.43141, F.S.; providing
  154         definitions; requiring the delivery of a “Notice of
  155         Change in Policy Terms” under certain circumstances;
  156         specifying requirements for such notice; specifying
  157         actions constituting proof of notice; authorizing
  158         policy renewals to contain a change in policy terms;
  159         providing that receipt of payment by an insurer is
  160         deemed acceptance of new policy terms by an insured;
  161         providing that the original policy remains in effect
  162         until the occurrence of specified events if an insurer
  163         fails to provide notice; providing intent; amending s.
  164         627.7011, F.S.; requiring the insurer to pay the
  165         actual cash value of an insured loss for a dwelling,
  166         less any applicable deductible; requiring a
  167         policyholder to enter into a contract for the
  168         performance of building and structural repairs unless
  169         waived by the insurer; restricting insurers and
  170         contractors from requiring advance payments for
  171         repairs and expenses; requiring the insurer to offer
  172         coverage under which the insurer is obligated to pay
  173         replacement costs; authorizing the insurer to offer
  174         coverage that limits the initial payment for personal
  175         property to the actual cash value of the property to
  176         be replaced and to require the insured to provide
  177         receipts for purchases; requiring the insurer to
  178         provide notice of this process in the insurance
  179         contract; prohibiting an insurer from requiring the
  180         insured to advance payment; amending s. 627.70131,
  181         F.S.; specifying application of certain time periods
  182         to initial or supplemental property insurance claim
  183         notices and payments; providing legislative findings
  184         with respect to 2005 statutory changes relating to
  185         sinkhole insurance coverage and statutory changes in
  186         this act; amending s. 627.706, F.S.; authorizing an
  187         insurer to limit coverage for catastrophic ground
  188         cover collapse to the principal building and to have
  189         discretion to provide additional coverage; allowing
  190         the deductible to include costs relating to an
  191         investigation of whether sinkhole activity is present;
  192         revising definitions; defining the term “structural
  193         damage”; providing an insurer with discretion to
  194         provide a policyholder with an opportunity to purchase
  195         an endorsement to sinkhole coverage; placing a 2-year
  196         statute of repose on claims for sinkhole coverage;
  197         amending s. 627.7061, F.S.; conforming provisions to
  198         changes made by the act; repealing s. 627.7065, F.S.,
  199         relating to the establishment of a sinkhole database;
  200         amending s. 627.707, F.S.; revising provisions
  201         relating to the investigation of sinkholes by
  202         insurers; deleting a requirement that the insurer
  203         provide a policyholder with a statement regarding
  204         testing for sinkhole activity; providing a time
  205         limitation for demanding sinkhole testing by a
  206         policyholder and entering into a contract for repairs;
  207         requiring all repairs to be completed within a certain
  208         time; providing exceptions; providing a criminal
  209         penalty on a policyholder for accepting rebates from
  210         persons performing repairs; amending s. 627.7073,
  211         F.S.; revising provisions relating to inspection
  212         reports; providing that the presumption that the
  213         report is correct shifts the burden of proof; revising
  214         the reports that an insurer must file with the clerk
  215         of the court; requiring the policyholder to file
  216         certain reports as a precondition to accepting
  217         payment; requiring the professional engineer
  218         responsible for monitoring sinkhole repairs to issue a
  219         report and certification to the property owner and
  220         file such report with the court; providing that the
  221         act does not create liability for an insurer based on
  222         a representation or certification by the engineer;
  223         amending s. 627.7074, F.S.; revising provisions
  224         relating to neutral evaluation; requiring evaluation
  225         in order to make certain determinations; requiring
  226         that the neutral evaluator be allowed access to
  227         structures being evaluated; providing grounds for
  228         disqualifying an evaluator; allowing the Department of
  229         Financial Services to appoint an evaluator if the
  230         parties cannot come to agreement; revising the
  231         timeframes for scheduling a neutral evaluation
  232         conference; authorizing an evaluator to enlist another
  233         evaluator or other professionals; providing a time
  234         certain for issuing a report; providing that certain
  235         information is confidential; revising provisions
  236         relating to compliance with the evaluator’s
  237         recommendations; providing that the evaluator is an
  238         agent of the department for the purposes of immunity
  239         from suit; requiring the department to adopt rules;
  240         amending s. 627.711, F.S.; deleting the requirement
  241         that the insurer pay for verification of a uniform
  242         mitigation verification form that the insurer
  243         requires; amending s. 627.712, F.S.; conforming
  244         provisions to changes made by the act; providing for
  245         applicability; providing effective dates.
  246  
  247  Be It Enacted by the Legislature of the State of Florida:
  248  
  249         Section 1. Effective June 1, 2011, paragraph (d) of
  250  subsection (2) of section 215.555, Florida Statutes, is amended
  251  to read:
  252         215.555 Florida Hurricane Catastrophe Fund.—
  253         (2) DEFINITIONS.—As used in this section:
  254         (d) “Losses” means all direct incurred losses under covered
  255  policies, including which shall include losses for additional
  256  living expenses not to exceed 40 percent of the insured value of
  257  a residential structure or its contents and amounts paid as fees
  258  on behalf of or inuring to the benefit of a policyholder shall
  259  exclude loss adjustment expenses. The term “Losses” does not
  260  include:
  261         1. Losses for fair rental value, loss of rent or rental
  262  income, or business interruption losses;
  263         2. Losses under liability coverages;
  264         3. Property losses that are proximately caused by any peril
  265  other than a covered event, including, but not limited to, fire,
  266  theft, flood or rising water, or windstorm that does not
  267  constitute a covered event;
  268         4. Amounts paid as the result of a voluntary expansion of
  269  coverage by the insurer, including, but not limited to, a waiver
  270  of an applicable deductible;
  271         5. Amounts paid to reimburse a policyholder for condominium
  272  association or homeowners’ association loss assessments or under
  273  similar coverages for contractual liabilities;
  274         6. Amounts paid as bad faith awards, punitive damage
  275  awards, or other court-imposed fines, sanctions, or penalties;
  276         7. Amounts in excess of the coverage limits under the
  277  covered policy; or
  278         8. Allocated or unallocated loss adjustment expenses.
  279         Section 2. The amendment to s. 215.555, Florida Statutes,
  280  made by this act applies first to the Florida Hurricane
  281  Catastrophe Fund reimbursement contract that takes effect June
  282  1, 2011.
  283         Section 3. Subsection (12) is added to section 215.5595,
  284  Florida Statutes, to read:
  285         215.5595 Insurance Capital Build-Up Incentive Program.—
  286         (12) The insurer may request that the board renegotiate the
  287  terms of any surplus note issued under this section before
  288  January 1, 2011. The request must be submitted to the board by
  289  January 1, 2012. If the insurer agrees to accelerate the payment
  290  period of the note by at least 5 years, the board must agree to
  291  exempt the insurer from the premium-to-surplus ratios required
  292  under paragraph (2)(d). If the insurer agrees to an acceleration
  293  of the payment period for less than 5 years, the board may,
  294  after consultation with the Office of Insurance Regulation,
  295  agree to an appropriate revision of the premium-to-surplus
  296  ratios required under paragraph (2)(d) for the remaining term of
  297  the note if the revised ratios are not lower than a minimum
  298  writing ratio of net premium to surplus of at least 1 to 1 and,
  299  alternatively, a minimum writing ratio of gross premium to
  300  surplus of at least 3 to 1.
  301         Section 4. Section 624.407, Florida Statutes, is amended to
  302  read:
  303         624.407 Surplus Capital funds required; new insurers.—
  304         (1) To receive authority to transact any one kind or
  305  combinations of kinds of insurance, as defined in part V of this
  306  chapter, an insurer applying for its original certificate of
  307  authority in this state after November 10, 1993, the effective
  308  date of this section shall possess surplus funds as to
  309  policyholders at least not less than the greater of:
  310         (a) Five million dollars For a property and casualty
  311  insurer, $5 million, or $2.5 million for any other insurer;
  312         (b) For life insurers, 4 percent of the insurer’s total
  313  liabilities;
  314         (c) For life and health insurers, 4 percent of the
  315  insurer’s total liabilities, plus 6 percent of the insurer’s
  316  liabilities relative to health insurance; or
  317         (d) For all insurers other than life insurers and life and
  318  health insurers, 10 percent of the insurer’s total liabilities;
  319  or
  320         (e) Notwithstanding paragraph (a) or paragraph (d), for a
  321  domestic insurer that transacts residential property insurance
  322  and is:
  323         1. Not a wholly owned subsidiary of an insurer domiciled in
  324  any other state, $15 million.
  325         2.however, a domestic insurer that transacts residential
  326  property insurance and is A wholly owned subsidiary of an
  327  insurer domiciled in any other state, shall possess surplus as
  328  to policyholders of at least $50 million.
  329         (2) Notwithstanding subsection (1), a new insurer may not
  330  be required, but no insurer shall be required under this
  331  subsection to have surplus as to policyholders greater than $100
  332  million.
  333         (3)(2) The requirements of this section shall be based upon
  334  all the kinds of insurance actually transacted or to be
  335  transacted by the insurer in any and all areas in which it
  336  operates, whether or not only a portion of such kinds of
  337  insurance are to be transacted in this state.
  338         (4)(3) As to surplus funds as to policyholders required for
  339  qualification to transact one or more kinds of insurance,
  340  domestic mutual insurers are governed by chapter 628, and
  341  domestic reciprocal insurers are governed by chapter 629.
  342         (5)(4) For the purposes of this section, liabilities do
  343  shall not include liabilities required under s. 625.041(4). For
  344  purposes of computing minimum surplus funds as to policyholders
  345  pursuant to s. 625.305(1), liabilities shall include liabilities
  346  required under s. 625.041(4).
  347         (6)(5) The provisions of this section, as amended by
  348  chapter 89-360, Laws of Florida this act, shall apply only to
  349  insurers applying for a certificate of authority on or after
  350  October 1, 1989 the effective date of this act.
  351         Section 5. Section 624.408, Florida Statutes, is amended to
  352  read:
  353         624.408 Surplus funds as to policyholders required; current
  354  new and existing insurers.—
  355         (1)(a) To maintain a certificate of authority to transact
  356  any one kind or combinations of kinds of insurance, as defined
  357  in part V of this chapter, an insurer in this state must shall
  358  at all times maintain surplus funds as to policyholders at least
  359  not less than the greater of:
  360         (a)1. Except as provided in paragraphs (e),(f), and (g)
  361  subparagraph 5. and paragraph (b), $1.5 million.;
  362         (b)2. For life insurers, 4 percent of the insurer’s total
  363  liabilities.;
  364         (c)3. For life and health insurers, 4 percent of the
  365  insurer’s total liabilities plus 6 percent of the insurer’s
  366  liabilities relative to health insurance.; or
  367         (d)4. For all insurers other than mortgage guaranty
  368  insurers, life insurers, and life and health insurers, 10
  369  percent of the insurer’s total liabilities.
  370         (e)5. For property and casualty insurers, $4 million,
  371  except for property and casualty insurers authorized to
  372  underwrite any line of residential property insurance.
  373         (f)(b) For residential any property insurers not and
  374  casualty insurer holding a certificate of authority before July
  375  1, 2011 on December 1, 1993, $15 million. the
  376         (g) For residential property insurers holding a certificate
  377  of authority before July 1, 2011, and until June 30, 2016, $5
  378  million; on or after July 1, 2016, and until June 30, 2021, $10
  379  million; on or after July 1, 2021, $15 million. The office may
  380  reduce this surplus requirement if the insurer is not writing
  381  new business, has premiums in force of less than $1 million per
  382  year in residential property insurance, or is a mutual insurance
  383  company. following amounts apply instead of the $4 million
  384  required by subparagraph (a)5.:
  385         1.On December 31, 2001, and until December 30, 2002, $3
  386  million.
  387         2.On December 31, 2002, and until December 30, 2003, $3.25
  388  million.
  389         3.On December 31, 2003, and until December 30, 2004, $3.6
  390  million.
  391         4.On December 31, 2004, and thereafter, $4 million.
  392         (2) For purposes of this section, liabilities do shall not
  393  include liabilities required under s. 625.041(4). For purposes
  394  of computing minimum surplus as to policyholders pursuant to s.
  395  625.305(1), liabilities shall include liabilities required under
  396  s. 625.041(4).
  397         (3) This section does not require an No insurer shall be
  398  required under this section to have surplus as to policyholders
  399  greater than $100 million.
  400         (4) A mortgage guaranty insurer shall maintain a minimum
  401  surplus as required by s. 635.042.
  402         Section 6. Subsection (7) is added to section 624.4095,
  403  Florida Statutes, to read:
  404         624.4095 Premiums written; restrictions.—
  405         (7)For the purposes of this section and ss. 624.407 and
  406  624.408, with respect to capital and surplus requirements, gross
  407  written premiums for federal multiple-peril crop insurance which
  408  are ceded to the Federal Crop Insurance Corporation or
  409  authorized reinsurers may not be included in the calculation of
  410  an insurer’s gross writing ratio. The liabilities for ceded
  411  reinsurance premiums payable for federal multiple-peril crop
  412  insurance ceded to the Federal Crop Insurance Corporation and
  413  authorized reinsurers shall be netted against the asset for
  414  amounts recoverable from reinsurers. Each insurer that writes
  415  other insurance products together with federal multiple-peril
  416  crop insurance must disclose in the notes to its annual and
  417  quarterly financial statements, or in a supplement to those
  418  statements, the gross written premiums for federal multiple
  419  peril crop insurance.
  420         Section 7. Paragraph (d) of subsection (8) of section
  421  624.424, Florida Statutes, is amended to read:
  422         624.424 Annual statement and other information.—
  423         (8)
  424         (d) An insurer may not use the same accountant or partner
  425  of an accounting firm responsible for preparing the report
  426  required by this subsection for more than 5 7 consecutive years.
  427  Following this period, the insurer may not use such accountant
  428  or partner for a period of 5 2 years, but may use another
  429  accountant or partner of the same firm. An insurer may request
  430  the office to waive this prohibition based upon an unusual
  431  hardship to the insurer and a determination that the accountant
  432  is exercising independent judgment that is not unduly influenced
  433  by the insurer considering such factors as the number of
  434  partners, expertise of the partners or the number of insurance
  435  clients of the accounting firm; the premium volume of the
  436  insurer; and the number of jurisdictions in which the insurer
  437  transacts business.
  438         Section 8. Section 626.7452, Florida Statutes, is amended
  439  to read:
  440         626.7452 Managing general agents; examination authority.
  441  The acts of the managing general agent are considered to be the
  442  acts of the insurer on whose behalf it is acting. A managing
  443  general agent may be examined as if it were the insurer except
  444  in the case where the managing general agent solely represents a
  445  single domestic insurer.
  446         Section 9. Subsection (7) is added to section 626.852,
  447  Florida Statutes, to read:
  448         626.852 Scope of this part.—
  449         (7) Notwithstanding any other provision of law, a person
  450  who provides claims adjusting services solely to institutions
  451  that service or guarantee mortgages with regard to policies
  452  covering the mortgaged properties is exempt from licensure as an
  453  adjuster. This exemption does not apply to any person who
  454  provides insurance, property repair, or preservation services or
  455  to any affiliate of such persons.
  456         Section 10. Effective June 1, 2011, subsection (11) of
  457  section 626.854, Florida Statutes, is amended to read:
  458         626.854 “Public adjuster” defined; prohibitions.—The
  459  Legislature finds that it is necessary for the protection of the
  460  public to regulate public insurance adjusters and to prevent the
  461  unauthorized practice of law.
  462         (11)(a) If a public adjuster enters into a contract with an
  463  insured or claimant to reopen a claim or to file a supplemental
  464  claim that seeks additional payments for a claim that has been
  465  previously paid in part or in full or settled by the insurer,
  466  the public adjuster may not charge, agree to, or accept any
  467  compensation, payment, commission, fee, or other thing of value
  468  based on a previous settlement or previous claim payments by the
  469  insurer for the same cause of loss. The charge, compensation,
  470  payment, commission, fee, or other thing of value must may be
  471  based only on the claim payments or settlement obtained through
  472  the work of the public adjuster after entering into the contract
  473  with the insured or claimant. Compensation for the reopened or
  474  supplemental claim may not exceed 20 percent of the reopened or
  475  supplemental claim payment. The contracts described in this
  476  paragraph are not subject to the limitations in paragraph (b).
  477         (b) A public adjuster may not charge, agree to, or accept
  478  any compensation, payment, commission, fee, or other thing of
  479  value in excess of:
  480         1. Ten percent of the amount of insurance claim payments
  481  made by the insurer for claims based on events that are the
  482  subject of a declaration of a state of emergency by the
  483  Governor. This provision applies to claims made during the
  484  period of 1 year after the declaration of emergency. After that
  485  year, the limitations in subparagraph 2. apply.
  486         2. Twenty percent of the amount of all other insurance
  487  claim payments made by the insurer for claims that are not based
  488  on events that are the subject of a declaration of a state of
  489  emergency by the Governor.
  490  
  491  The provisions of subsections (5)-(13) apply only to residential
  492  property insurance policies and condominium association policies
  493  as defined in s. 718.111(11).
  494         Section 11. Effective January 1, 2012, section 626.854,
  495  Florida Statutes, as amended by this act, is amended to read:
  496         626.854 “Public adjuster” defined; prohibitions.—The
  497  Legislature finds that it is necessary for the protection of the
  498  public to regulate public insurance adjusters and to prevent the
  499  unauthorized practice of law.
  500         (1) A “public adjuster” is any person, except a duly
  501  licensed attorney at law as exempted under hereinafter in s.
  502  626.860 provided, who, for money, commission, or any other thing
  503  of value, prepares, completes, or files an insurance claim form
  504  for an insured or third-party claimant or who, for money,
  505  commission, or any other thing of value, acts or aids in any
  506  manner on behalf of, or aids an insured or third-party claimant
  507  in negotiating for or effecting the settlement of a claim or
  508  claims for loss or damage covered by an insurance contract or
  509  who advertises for employment as an adjuster of such claims. The
  510  term, and also includes any person who, for money, commission,
  511  or any other thing of value, solicits, investigates, or adjusts
  512  such claims on behalf of a any such public adjuster.
  513         (2) This definition does not apply to:
  514         (a) A licensed health care provider or employee thereof who
  515  prepares or files a health insurance claim form on behalf of a
  516  patient.
  517         (b) A person who files a health claim on behalf of another
  518  and does so without compensation.
  519         (3) A public adjuster may not give legal advice or. A
  520  public adjuster may not act on behalf of or aid any person in
  521  negotiating or settling a claim relating to bodily injury,
  522  death, or noneconomic damages.
  523         (4) For purposes of this section, the term “insured”
  524  includes only the policyholder and any beneficiaries named or
  525  similarly identified in the policy.
  526         (5) A public adjuster may not directly or indirectly
  527  through any other person or entity solicit an insured or
  528  claimant by any means except on Monday through Saturday of each
  529  week and only between the hours of 8 a.m. and 8 p.m. on those
  530  days.
  531         (6) A public adjuster may not directly or indirectly
  532  through any other person or entity initiate contact or engage in
  533  face-to-face or telephonic solicitation or enter into a contract
  534  with any insured or claimant under an insurance policy until at
  535  least 48 hours after the occurrence of an event that may be the
  536  subject of a claim under the insurance policy unless contact is
  537  initiated by the insured or claimant.
  538         (7) An insured or claimant may cancel a public adjuster’s
  539  contract to adjust a claim without penalty or obligation within
  540  3 business days after the date on which the contract is executed
  541  or within 3 business days after the date on which the insured or
  542  claimant has notified the insurer of the claim, by phone or in
  543  writing, whichever is later. The public adjuster’s contract must
  544  shall disclose to the insured or claimant his or her right to
  545  cancel the contract and advise the insured or claimant that
  546  notice of cancellation must be submitted in writing and sent by
  547  certified mail, return receipt requested, or other form of
  548  mailing that which provides proof thereof, to the public
  549  adjuster at the address specified in the contract; provided,
  550  during any state of emergency as declared by the Governor and
  551  for a period of 1 year after the date of loss, the insured or
  552  claimant has shall have 5 business days after the date on which
  553  the contract is executed to cancel a public adjuster’s contract.
  554         (8) It is an unfair and deceptive insurance trade practice
  555  pursuant to s. 626.9541 for a public adjuster or any other
  556  person to circulate or disseminate any advertisement,
  557  announcement, or statement containing any assertion,
  558  representation, or statement with respect to the business of
  559  insurance which is untrue, deceptive, or misleading.
  560         (a) The following statements, made in any public adjuster’s
  561  advertisement or solicitation, are considered deceptive or
  562  misleading:
  563         1. A statement or representation that invites an insured
  564  policyholder to submit a claim when the policyholder does not
  565  have covered damage to insured property.
  566         2. A statement or representation that invites an insured
  567  policyholder to submit a claim by offering monetary or other
  568  valuable inducement.
  569         3. A statement or representation that invites an insured
  570  policyholder to submit a claim by stating that there is “no
  571  risk” to the policyholder by submitting such claim.
  572         4. A statement or representation, or use of a logo or
  573  shield, that implies or could mistakenly be construed to imply
  574  that the solicitation was issued or distributed by a
  575  governmental agency or is sanctioned or endorsed by a
  576  governmental agency.
  577         (b) For purposes of this paragraph, the term “written
  578  advertisement” includes only newspapers, magazines, flyers, and
  579  bulk mailers. The following disclaimer, which is not required to
  580  be printed on standard size business cards, must be added in
  581  bold print and capital letters in typeface no smaller than the
  582  typeface of the body of the text to all written advertisements
  583  by a public adjuster:
  584         “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD
  585         A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU
  586         ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU
  587         MAY DISREGARD THIS ADVERTISEMENT.”
  588  
  589         (9) A public adjuster, a public adjuster apprentice, or any
  590  person or entity acting on behalf of a public adjuster or public
  591  adjuster apprentice may not give or offer to give a monetary
  592  loan or advance to a client or prospective client.
  593         (10) A public adjuster, public adjuster apprentice, or any
  594  individual or entity acting on behalf of a public adjuster or
  595  public adjuster apprentice may not give or offer to give,
  596  directly or indirectly, any article of merchandise having a
  597  value in excess of $25 to any individual for the purpose of
  598  advertising or as an inducement to entering into a contract with
  599  a public adjuster.
  600         (11)(a) If a public adjuster enters into a contract with an
  601  insured or claimant to reopen a claim or file a supplemental
  602  claim that seeks additional payments for a claim that has been
  603  previously paid in part or in full or settled by the insurer,
  604  the public adjuster may not charge, agree to, or accept any
  605  compensation, payment, commission, fee, or other thing of value
  606  based on a previous settlement or previous claim payments by the
  607  insurer for the same cause of loss. The charge, compensation,
  608  payment, commission, fee, or other thing of value must be based
  609  only on the claim payments or settlement obtained through the
  610  work of the public adjuster after entering into the contract
  611  with the insured or claimant. Compensation for the reopened or
  612  supplemental claim may not exceed 20 percent of the reopened or
  613  supplemental claim payment. The contracts described in this
  614  paragraph are not subject to the limitations in paragraph (b).
  615         (b) A public adjuster may not charge, agree to, or accept
  616  any compensation, payment, commission, fee, or other thing of
  617  value in excess of:
  618         1. Ten percent of the amount of insurance claim payments
  619  made by the insurer for claims based on events that are the
  620  subject of a declaration of a state of emergency by the
  621  Governor. This provision applies to claims made during the year
  622  after the declaration of emergency. After that year, the
  623  limitations in subparagraph 2. apply.
  624         2. Twenty percent of the amount of insurance claim payments
  625  made by the insurer for claims that are not based on events that
  626  are the subject of a declaration of a state of emergency by the
  627  Governor.
  628         (12) Each public adjuster must shall provide to the
  629  claimant or insured a written estimate of the loss to assist in
  630  the submission of a proof of loss or any other claim for payment
  631  of insurance proceeds. The public adjuster shall retain such
  632  written estimate for at least 5 years and shall make the such
  633  estimate available to the claimant or insured, the insurer, and
  634  the department upon request.
  635         (13) A public adjuster, public adjuster apprentice, or any
  636  person acting on behalf of a public adjuster or apprentice may
  637  not accept referrals of business from any person with whom the
  638  public adjuster conducts business if there is any form or manner
  639  of agreement to compensate the person, whether directly or
  640  indirectly, for referring business to the public adjuster. A
  641  public adjuster may not compensate any person, except for
  642  another public adjuster, whether directly or indirectly, for the
  643  principal purpose of referring business to the public adjuster.
  644         (14) A company employee adjuster, independent adjuster,
  645  attorney, investigator, or other persons acting on behalf of an
  646  insurer that needs access to an insured or claimant or to the
  647  insured property that is the subject of a claim must provide at
  648  least 48 hours’ notice to the insured or claimant, public
  649  adjuster, or legal representative before scheduling a meeting
  650  with the claimant or an onsite inspection of the insured
  651  property. The insured or claimant may deny access to the
  652  property if the notice has not been provided. The insured or
  653  claimant may waive the 48-hour notice.
  654         (15) A public adjuster must ensure prompt notice of
  655  property loss claims submitted to an insurer by or through a
  656  public adjuster or on which a public adjuster represents the
  657  insured at the time the claim or notice of loss is submitted to
  658  the insurer. The public adjuster must ensure that notice is
  659  given to the insurer, the public adjuster’s contract is provided
  660  to the insurer, the property is available for inspection of the
  661  loss or damage by the insurer, and the insurer is given an
  662  opportunity to interview the insured directly about the loss and
  663  claim. The insurer must be allowed to obtain necessary
  664  information to investigate and respond to the claim.
  665         (a) The insurer may not exclude the public adjuster from
  666  its in-person meetings with the insured. The insurer shall meet
  667  or communicate with the public adjuster in an effort to reach
  668  agreement as to the scope of the covered loss under the
  669  insurance policy. This section does not impair the terms and
  670  conditions of the insurance policy in effect at the time the
  671  claim is filed.
  672         (b) A public adjuster may not restrict or prevent an
  673  insurer, company employee adjuster, independent adjuster,
  674  attorney, investigator, or other person acting on behalf of the
  675  insurer from having reasonable access at reasonable times to an
  676  insured or claimant or to the insured property that is the
  677  subject of a claim.
  678         (c) A public adjuster may not act or fail to reasonably act
  679  in any manner that obstructs or prevents an insurer or insurer’s
  680  adjuster from timely conducting an inspection of any part of the
  681  insured property for which there is a claim for loss or damage.
  682  The public adjuster representing the insured may be present for
  683  the insurer’s inspection, but if the unavailability of the
  684  public adjuster otherwise delays the insurer’s timely inspection
  685  of the property, the public adjuster or the insured must allow
  686  the insurer to have access to the property without the
  687  participation or presence of the public adjuster or insured in
  688  order to facilitate the insurer’s prompt inspection of the loss
  689  or damage.
  690         (16) A licensed contractor under part I of chapter 489, or
  691  a subcontractor, may not adjust a claim on behalf of an insured
  692  unless licensed and compliant as a public adjuster under this
  693  chapter. However, the contractor may discuss or explain a bid
  694  for construction or repair of covered property with the
  695  residential property owner who has suffered loss or damage
  696  covered by a property insurance policy, or the insurer of such
  697  property, if the contractor is doing so for the usual and
  698  customary fees applicable to the work to be performed as stated
  699  in the contract between the contractor and the insured.
  700         (17) The provisions of subsections (5)-(16) (5)-(13) apply
  701  only to residential property insurance policies and condominium
  702  unit owner association policies as defined in s. 718.111(11).
  703         Section 12. Effective January 1, 2012, subsection (6) of
  704  section 626.8651, Florida Statutes, is amended to read:
  705         626.8651 Public adjuster apprentice license;
  706  qualifications.—
  707         (6) To qualify for licensure as a public adjuster, a public
  708  adjuster apprentice must shall complete: at
  709         (a) A minimum of 100 hours of employment per month for 12
  710  months of employment under the supervision of a licensed and
  711  appointed all-lines public adjuster in order to qualify for
  712  licensure as a public adjuster. The department may adopt rules
  713  that establish standards for such employment requirements.
  714         (b) A minimum of 8 hours of continuing education specific
  715  to the practice of a public adjuster, 2 hours of which must
  716  relate to ethics. The continuing education must be designed to
  717  inform the licensee about the current insurance laws of this
  718  state for the purpose of enabling him or her to engage in
  719  business as an insurance adjuster fairly and without injury to
  720  the public and to adjust all claims in accordance with the
  721  insurance contract and the laws of this state.
  722         Section 13. Effective January 1, 2012, section 626.8796,
  723  Florida Statutes, is amended to read:
  724         626.8796 Public adjuster contracts; fraud statement.—
  725         (1) All contracts for public adjuster services must be in
  726  writing and must prominently display the following statement on
  727  the contract: “Pursuant to s. 817.234, Florida Statutes, any
  728  person who, with the intent to injure, defraud, or deceive an
  729  any insurer or insured, prepares, presents, or causes to be
  730  presented a proof of loss or estimate of cost or repair of
  731  damaged property in support of a claim under an insurance policy
  732  knowing that the proof of loss or estimate of claim or repairs
  733  contains any false, incomplete, or misleading information
  734  concerning any fact or thing material to the claim commits a
  735  felony of the third degree, punishable as provided in s.
  736  775.082, s. 775.083, or s. 775.084, Florida Statutes.”
  737         (2) A public adjuster contract must contain the full name,
  738  permanent business address, and license number of the public
  739  adjuster; the full name of the public adjusting firm; and the
  740  insured’s full name and street address, together with a brief
  741  description of the loss. The contract must state the percentage
  742  of compensation for the public adjuster’s services; the type of
  743  claim, including an emergency claim, nonemergency claim, or
  744  supplemental claim; the signatures of the public adjuster and
  745  all named insureds; and the signature date. If all of the named
  746  insureds signatures are not available, the public adjuster must
  747  submit an affidavit signed by the available named insureds
  748  attesting that they have authority to enter into the contract
  749  and settle all claim issues on behalf of the named insureds. An
  750  unaltered copy of the executed contract must be remitted to the
  751  insurer within 30 days after execution.
  752         Section 14. Effective June 1, 2011, section 626.70132,
  753  Florida Statutes, is created to read:
  754         626.70132Notice of windstorm or hurricane claim.—A claim,
  755  supplemental claim, or reopened claim under an insurance policy
  756  that provides property insurance, as defined in s. 624.604, for
  757  loss or damage caused by the peril of windstorm or hurricane is
  758  barred unless notice of the claim, supplemental claim, or
  759  reopened claim was given to the insurer in accordance with the
  760  terms of the policy within 3 years after the hurricane first
  761  made landfall or the windstorm caused the covered damage. For
  762  purposes of this section, the term “supplemental claim” or
  763  “reopened claim” means any additional claim for recovery from
  764  the insurer for losses from the same hurricane or windstorm
  765  which the insurer has previously adjusted pursuant to the
  766  initial claim. This section does not affect any applicable
  767  limitation on civil actions provided in s. 95.11 for claims,
  768  supplemental claims, or reopened claims timely filed under this
  769  section.
  770         Section 15. Subsection (4) of section 627.0613, Florida
  771  Statutes, is repealed.
  772         Section 16. Section 627.062, Florida Statutes, is amended
  773  to read:
  774         627.062 Rate standards.—
  775         (1) The rates for all classes of insurance to which the
  776  provisions of this part are applicable may shall not be
  777  excessive, inadequate, or unfairly discriminatory.
  778         (2) As to all such classes of insurance:
  779         (a) Insurers or rating organizations shall establish and
  780  use rates, rating schedules, or rating manuals that to allow the
  781  insurer a reasonable rate of return on the such classes of
  782  insurance written in this state. A copy of rates, rating
  783  schedules, rating manuals, premium credits or discount
  784  schedules, and surcharge schedules, and changes thereto, must
  785  shall be filed with the office under one of the following
  786  procedures except as provided in subparagraph 3.:
  787         1. If the filing is made at least 90 days before the
  788  proposed effective date and the filing is not implemented during
  789  the office’s review of the filing and any proceeding and
  790  judicial review, then such filing is shall be considered a “file
  791  and use” filing. In such case, the office shall finalize its
  792  review by issuance of an approval a notice of intent to approve
  793  or a notice of intent to disapprove within 90 days after receipt
  794  of the filing. The approval notice of intent to approve and the
  795  notice of intent to disapprove constitute agency action for
  796  purposes of the Administrative Procedure Act. Requests for
  797  supporting information, requests for mathematical or mechanical
  798  corrections, or notification to the insurer by the office of its
  799  preliminary findings does shall not toll the 90-day period
  800  during any such proceedings and subsequent judicial review. The
  801  rate shall be deemed approved if the office does not issue an
  802  approval a notice of intent to approve or a notice of intent to
  803  disapprove within 90 days after receipt of the filing.
  804         2. If the filing is not made in accordance with the
  805  provisions of subparagraph 1., such filing must shall be made as
  806  soon as practicable, but within no later than 30 days after the
  807  effective date, and is shall be considered a “use and file”
  808  filing. An insurer making a “use and file” filing is potentially
  809  subject to an order by the office to return to policyholders
  810  those portions of rates found to be excessive, as provided in
  811  paragraph (h).
  812         3. For all property insurance filings made or submitted
  813  after January 25, 2007, but before May 1, 2012 December 31,
  814  2010, an insurer seeking a rate that is greater than the rate
  815  most recently approved by the office shall make a “file and use”
  816  filing. For purposes of this subparagraph, motor vehicle
  817  collision and comprehensive coverages are not considered to be
  818  property coverages.
  819         (b) Upon receiving a rate filing, the office shall review
  820  the rate filing to determine if a rate is excessive, inadequate,
  821  or unfairly discriminatory. In making that determination, the
  822  office shall, in accordance with generally accepted and
  823  reasonable actuarial techniques, consider the following factors:
  824         1. Past and prospective loss experience within and without
  825  this state.
  826         2. Past and prospective expenses.
  827         3. The degree of competition among insurers for the risk
  828  insured.
  829         4. Investment income reasonably expected by the insurer,
  830  consistent with the insurer’s investment practices, from
  831  investable premiums anticipated in the filing, plus any other
  832  expected income from currently invested assets representing the
  833  amount expected on unearned premium reserves and loss reserves.
  834  The commission may adopt rules using reasonable techniques of
  835  actuarial science and economics to specify the manner in which
  836  insurers shall calculate investment income attributable to such
  837  classes of insurance written in this state and the manner in
  838  which such investment income is shall be used to calculate
  839  insurance rates. Such manner must shall contemplate allowances
  840  for an underwriting profit factor and full consideration of
  841  investment income which produce a reasonable rate of return;
  842  however, investment income from invested surplus may not be
  843  considered.
  844         5. The reasonableness of the judgment reflected in the
  845  filing.
  846         6. Dividends, savings, or unabsorbed premium deposits
  847  allowed or returned to Florida policyholders, members, or
  848  subscribers.
  849         7. The adequacy of loss reserves.
  850         8. The cost of reinsurance. The office may shall not
  851  disapprove a rate as excessive solely due to the insurer having
  852  obtained catastrophic reinsurance to cover the insurer’s
  853  estimated 250-year probable maximum loss or any lower level of
  854  loss.
  855         9. Trend factors, including trends in actual losses per
  856  insured unit for the insurer making the filing.
  857         10. Conflagration and catastrophe hazards, if applicable.
  858         11. Projected hurricane losses, if applicable, which must
  859  be estimated using a model or method found to be acceptable or
  860  reliable by the Florida Commission on Hurricane Loss Projection
  861  Methodology, and as further provided in s. 627.0628.
  862         12. A reasonable margin for underwriting profit and
  863  contingencies.
  864         13. The cost of medical services, if applicable.
  865         14. Other relevant factors that affect which impact upon
  866  the frequency or severity of claims or upon expenses.
  867         (c) In the case of fire insurance rates, consideration must
  868  shall be given to the availability of water supplies and the
  869  experience of the fire insurance business during a period of not
  870  less than the most recent 5-year period for which such
  871  experience is available.
  872         (d) If conflagration or catastrophe hazards are considered
  873  given consideration by an insurer in its rates or rating plan,
  874  including surcharges and discounts, the insurer shall establish
  875  a reserve for that portion of the premium allocated to such
  876  hazard and shall maintain the premium in a catastrophe reserve.
  877  Any Removal of such premiums from the reserve for purposes other
  878  than paying claims associated with a catastrophe or purchasing
  879  reinsurance for catastrophes must be approved by shall be
  880  subject to approval of the office. Any ceding commission
  881  received by an insurer purchasing reinsurance for catastrophes
  882  must shall be placed in the catastrophe reserve.
  883         (e) After consideration of the rate factors provided in
  884  paragraphs (b), (c), and (d), the office may find a rate may be
  885  found by the office to be excessive, inadequate, or unfairly
  886  discriminatory based upon the following standards:
  887         1. Rates shall be deemed excessive if they are likely to
  888  produce a profit from Florida business which that is
  889  unreasonably high in relation to the risk involved in the class
  890  of business or if expenses are unreasonably high in relation to
  891  services rendered.
  892         2. Rates shall be deemed excessive if, among other things,
  893  the rate structure established by a stock insurance company
  894  provides for replenishment of surpluses from premiums, if when
  895  the replenishment is attributable to investment losses.
  896         3. Rates shall be deemed inadequate if they are clearly
  897  insufficient, together with the investment income attributable
  898  to them, to sustain projected losses and expenses in the class
  899  of business to which they apply.
  900         4. A rating plan, including discounts, credits, or
  901  surcharges, shall be deemed unfairly discriminatory if it fails
  902  to clearly and equitably reflect consideration of the
  903  policyholder’s participation in a risk management program
  904  adopted pursuant to s. 627.0625.
  905         5. A rate shall be deemed inadequate as to the premium
  906  charged to a risk or group of risks if discounts or credits are
  907  allowed which exceed a reasonable reflection of expense savings
  908  and reasonably expected loss experience from the risk or group
  909  of risks.
  910         6. A rate shall be deemed unfairly discriminatory as to a
  911  risk or group of risks if the application of premium discounts,
  912  credits, or surcharges among such risks does not bear a
  913  reasonable relationship to the expected loss and expense
  914  experience among the various risks.
  915         (f) In reviewing a rate filing, the office may require the
  916  insurer to provide, at the insurer’s expense, all information
  917  necessary to evaluate the condition of the company and the
  918  reasonableness of the filing according to the criteria
  919  enumerated in this section.
  920         (g) The office may at any time review a rate, rating
  921  schedule, rating manual, or rate change; the pertinent records
  922  of the insurer; and market conditions. If the office finds on a
  923  preliminary basis that a rate may be excessive, inadequate, or
  924  unfairly discriminatory, the office shall initiate proceedings
  925  to disapprove the rate and shall so notify the insurer. However,
  926  the office may not disapprove as excessive any rate for which it
  927  has given final approval or which has been deemed approved for a
  928  period of 1 year after the effective date of the filing unless
  929  the office finds that a material misrepresentation or material
  930  error was made by the insurer or was contained in the filing.
  931  Upon being so notified, the insurer or rating organization
  932  shall, within 60 days, file with the office all information that
  933  which, in the belief of the insurer or organization, proves the
  934  reasonableness, adequacy, and fairness of the rate or rate
  935  change. The office shall issue an approval a notice of intent to
  936  approve or a notice of intent to disapprove pursuant to the
  937  procedures of paragraph (a) within 90 days after receipt of the
  938  insurer’s initial response. In such instances and in any
  939  administrative proceeding relating to the legality of the rate,
  940  the insurer or rating organization shall carry the burden of
  941  proof by a preponderance of the evidence to show that the rate
  942  is not excessive, inadequate, or unfairly discriminatory. After
  943  the office notifies an insurer that a rate may be excessive,
  944  inadequate, or unfairly discriminatory, unless the office
  945  withdraws the notification, the insurer may shall not alter the
  946  rate except to conform to with the office’s notice until the
  947  earlier of 120 days after the date the notification was provided
  948  or 180 days after the date of implementing the implementation of
  949  the rate. The office may, subject to chapter 120, may disapprove
  950  without the 60-day notification any rate increase filed by an
  951  insurer within the prohibited time period or during the time
  952  that the legality of the increased rate is being contested.
  953         (h) If In the event the office finds that a rate or rate
  954  change is excessive, inadequate, or unfairly discriminatory, the
  955  office shall issue an order of disapproval specifying that a new
  956  rate or rate schedule, which responds to the findings of the
  957  office, be filed by the insurer. The office shall further order,
  958  for any “use and file” filing made in accordance with
  959  subparagraph (a)2., that premiums charged each policyholder
  960  constituting the portion of the rate above that which was
  961  actuarially justified be returned to the such policyholder in
  962  the form of a credit or refund. If the office finds that an
  963  insurer’s rate or rate change is inadequate, the new rate or
  964  rate schedule filed with the office in response to such a
  965  finding is shall be applicable only to new or renewal business
  966  of the insurer written on or after the effective date of the
  967  responsive filing.
  968         (i) Except as otherwise specifically provided in this
  969  chapter, the office may shall not, directly or indirectly:
  970         1. Prohibit any insurer, including any residual market plan
  971  or joint underwriting association, from paying acquisition costs
  972  based on the full amount of premium, as defined in s. 627.403,
  973  applicable to any policy, or prohibit any such insurer from
  974  including the full amount of acquisition costs in a rate filing;
  975  or.
  976         2. Impede, abridge, or otherwise compromise an insurer’s
  977  right to acquire policyholders, advertise, or appoint agents,
  978  including the calculation, manner, or amount of such agent
  979  commissions, if any.
  980         (j) With respect to residential property insurance rate
  981  filings, the rate filing must account for mitigation measures
  982  undertaken by policyholders to reduce hurricane losses.
  983         (k)1. An insurer may make a separate filing limited solely
  984  to an adjustment of its rates for reinsurance or financing costs
  985  incurred in the purchase of reinsurance or financing products to
  986  replace or finance the payment of the amount covered by the
  987  Temporary Increase in Coverage Limits (TICL) portion of the
  988  Florida Hurricane Catastrophe Fund including replacement
  989  reinsurance for the TICL reductions made pursuant to s.
  990  215.555(17)(e); the actual cost paid due to the application of
  991  the TICL premium factor pursuant to s. 215.555(17)(f); and the
  992  actual cost paid due to the application of the cash build-up
  993  factor pursuant to s. 215.555(5)(b) if the insurer:
  994         a. Elects to purchase financing products such as a
  995  liquidity instrument or line of credit, in which case the cost
  996  included in the filing for the liquidity instrument or line of
  997  credit may not result in a premium increase exceeding 3 percent
  998  for any individual policyholder. All costs contained in the
  999  filing may not result in an overall premium increase of more
 1000  than 10 percent for any individual policyholder.
 1001         b. An insurer that makes a separate filing relating to
 1002  reinsurance or financing products must include Includes in the
 1003  filing a copy of all of its reinsurance, liquidity instrument,
 1004  or line of credit contracts; proof of the billing or payment for
 1005  the contracts; and the calculation upon which the proposed rate
 1006  change is based demonstrating demonstrates that the costs meet
 1007  the criteria of this section and are not loaded for expenses or
 1008  profit for the insurer making the filing.
 1009         c.Includes no other changes to its rates in the filing.
 1010         d.Has not implemented a rate increase within the 6 months
 1011  immediately preceding the filing.
 1012         e.Does not file for a rate increase under any other
 1013  paragraph within 6 months after making a filing under this
 1014  paragraph.
 1015         c.f.An insurer that purchases reinsurance or financing
 1016  products from an affiliated company may make a separate filing
 1017  in compliance with this paragraph does so only if the costs for
 1018  such reinsurance or financing products are charged at or below
 1019  charges made for comparable coverage by nonaffiliated reinsurers
 1020  or financial entities making such coverage or financing products
 1021  available in this state.
 1022         2. An insurer may only make only one filing per in any 12
 1023  month period under this paragraph.
 1024         3. An insurer that elects to implement a rate change under
 1025  this paragraph must file its rate filing with the office at
 1026  least 45 days before the effective date of the rate change.
 1027  After an insurer submits a complete filing that meets all of the
 1028  requirements of this paragraph, the office has 45 days after the
 1029  date of the filing to review the rate filing and determine if
 1030  the rate is excessive, inadequate, or unfairly discriminatory.
 1031         (l)The office may disapprove a rate for sinkhole coverage
 1032  only if the rate is inadequate or the insurer charges an
 1033  applicant or an insured a higher premium solely because of the
 1034  applicant’s or the insured’s race, religion, sex, national
 1035  origin, or marital status. Policies subject to this paragraph
 1036  may not be counted in the calculation under s. 627.171(2).
 1037  
 1038  The provisions of this subsection do shall not apply to workers’
 1039  compensation, and employer’s liability insurance, and to motor
 1040  vehicle insurance.
 1041         (3)(a) For individual risks that are not rated in
 1042  accordance with the insurer’s rates, rating schedules, rating
 1043  manuals, and underwriting rules filed with the office and that
 1044  which have been submitted to the insurer for individual rating,
 1045  the insurer must maintain documentation on each risk subject to
 1046  individual risk rating. The documentation must identify the
 1047  named insured and specify the characteristics and classification
 1048  of the risk supporting the reason for the risk being
 1049  individually risk rated, including any modifications to existing
 1050  approved forms to be used on the risk. The insurer must maintain
 1051  these records for a period of at least 5 years after the
 1052  effective date of the policy.
 1053         (b) Individual risk rates and modifications to existing
 1054  approved forms are not subject to this part or part II, except
 1055  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
 1056  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
 1057  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
 1058  627.4265, 627.427, and 627.428, but are subject to all other
 1059  applicable provisions of this code and rules adopted thereunder.
 1060         (c) This subsection does not apply to private passenger
 1061  motor vehicle insurance.
 1062         (d)1. The following categories or kinds of insurance and
 1063  types of commercial lines risks are not subject to paragraph
 1064  (2)(a) or paragraph (2)(f):
 1065         a. Excess or umbrella.
 1066         b. Surety and fidelity.
 1067         c. Boiler and machinery and leakage and fire extinguishing
 1068  equipment.
 1069         d. Errors and omissions.
 1070         e. Directors and officers, employment practices, and
 1071  management liability.
 1072         f. Intellectual property and patent infringement liability.
 1073         g. Advertising injury and Internet liability insurance.
 1074         h. Property risks rated under a highly protected risks
 1075  rating plan.
 1076         i. Any other commercial lines categories or kinds of
 1077  insurance or types of commercial lines risks that the office
 1078  determines should not be subject to paragraph (2)(a) or
 1079  paragraph (2)(f) because of the existence of a competitive
 1080  market for such insurance, similarity of such insurance to other
 1081  categories or kinds of insurance not subject to paragraph (2)(a)
 1082  or paragraph (2)(f), or to improve the general operational
 1083  efficiency of the office.
 1084         2. Insurers or rating organizations shall establish and use
 1085  rates, rating schedules, or rating manuals to allow the insurer
 1086  a reasonable rate of return on insurance and risks described in
 1087  subparagraph 1. which are written in this state.
 1088         3. An insurer must notify the office of any changes to
 1089  rates for insurance and risks described in subparagraph 1.
 1090  within no later than 30 days after the effective date of the
 1091  change. The notice must include the name of the insurer, the
 1092  type or kind of insurance subject to rate change, total premium
 1093  written during the immediately preceding year by the insurer for
 1094  the type or kind of insurance subject to the rate change, and
 1095  the average statewide percentage change in rates. Underwriting
 1096  files, premiums, losses, and expense statistics with regard to
 1097  such insurance and risks described in subparagraph 1. written by
 1098  an insurer must shall be maintained by the insurer and subject
 1099  to examination by the office. Upon examination, the office
 1100  shall, in accordance with generally accepted and reasonable
 1101  actuarial techniques, shall consider the rate factors in
 1102  paragraphs (2)(b), (c), and (d) and the standards in paragraph
 1103  (2)(e) to determine if the rate is excessive, inadequate, or
 1104  unfairly discriminatory.
 1105         4. A rating organization must notify the office of any
 1106  changes to loss cost for insurance and risks described in
 1107  subparagraph 1. within no later than 30 days after the effective
 1108  date of the change. The notice must include the name of the
 1109  rating organization, the type or kind of insurance subject to a
 1110  loss cost change, loss costs during the immediately preceding
 1111  year for the type or kind of insurance subject to the loss cost
 1112  change, and the average statewide percentage change in loss
 1113  cost. Loss and exposure statistics with regard to risks
 1114  applicable to loss costs for a rating organization not subject
 1115  to paragraph (2)(a) or paragraph (2)(f) must shall be maintained
 1116  by the rating organization and are subject to examination by the
 1117  office. Upon examination, the office shall, in accordance with
 1118  generally accepted and reasonable actuarial techniques, shall
 1119  consider the rate factors in paragraphs (2)(b)-(d) and the
 1120  standards in paragraph (2)(e) to determine if the rate is
 1121  excessive, inadequate, or unfairly discriminatory.
 1122         5. In reviewing a rate, the office may require the insurer
 1123  to provide, at the insurer’s expense, all information necessary
 1124  to evaluate the condition of the company and the reasonableness
 1125  of the rate according to the applicable criteria described in
 1126  this section.
 1127         (4) The establishment of any rate, rating classification,
 1128  rating plan or schedule, or variation thereof in violation of
 1129  part IX of chapter 626 is also in violation of this section. In
 1130  order to enhance the ability of consumers to compare premiums
 1131  and to increase the accuracy and usefulness of rate-comparison
 1132  information provided by the office to the public, the office
 1133  shall develop a proposed standard rating territory plan to be
 1134  used by all authorized property and casualty insurers for
 1135  residential property insurance. In adopting the proposed plan,
 1136  the office may consider geographical characteristics relevant to
 1137  risk, county lines, major roadways, existing rating territories
 1138  used by a significant segment of the market, and other relevant
 1139  factors. Such plan shall be submitted to the President of the
 1140  Senate and the Speaker of the House of Representatives by
 1141  January 15, 2006. The plan may not be implemented unless
 1142  authorized by further act of the Legislature.
 1143         (5) With respect to a rate filing involving coverage of the
 1144  type for which the insurer is required to pay a reimbursement
 1145  premium to the Florida Hurricane Catastrophe Fund, the insurer
 1146  may fully recoup in its property insurance premiums any
 1147  reimbursement premiums paid to the Florida Hurricane Catastrophe
 1148  fund, together with reasonable costs of other reinsurance;
 1149  however, but except as otherwise provided in this section, the
 1150  insurer may not recoup reinsurance costs that duplicate coverage
 1151  provided by the Florida Hurricane Catastrophe fund. An insurer
 1152  may not recoup more than 1 year of reimbursement premium at a
 1153  time. Any under-recoupment from the prior year may be added to
 1154  the following year’s reimbursement premium, and any over
 1155  recoupment must shall be subtracted from the following year’s
 1156  reimbursement premium.
 1157         (6)(a) If an insurer requests an administrative hearing
 1158  pursuant to s. 120.57 related to a rate filing under this
 1159  section, the director of the Division of Administrative Hearings
 1160  shall expedite the hearing and assign an administrative law
 1161  judge who shall commence the hearing within 30 days after the
 1162  receipt of the formal request and shall enter a recommended
 1163  order within 30 days after the hearing or within 30 days after
 1164  receipt of the hearing transcript by the administrative law
 1165  judge, whichever is later. Each party shall have be allowed 10
 1166  days in which to submit written exceptions to the recommended
 1167  order. The office shall enter a final order within 30 days after
 1168  the entry of the recommended order. The provisions of this
 1169  paragraph may be waived upon stipulation of all parties.
 1170         (b) Upon entry of a final order, the insurer may request a
 1171  expedited appellate review pursuant to the Florida Rules of
 1172  Appellate Procedure. It is the intent of the Legislature that
 1173  the First District Court of Appeal grant an insurer’s request
 1174  for an expedited appellate review.
 1175         (7)(a) The provisions of this subsection apply only with
 1176  respect to rates for medical malpractice insurance and shall
 1177  control to the extent of any conflict with other provisions of
 1178  this section.
 1179         (a)(b) Any portion of a judgment entered or settlement paid
 1180  as a result of a statutory or common-law bad faith action and
 1181  any portion of a judgment entered which awards punitive damages
 1182  against an insurer may not be included in the insurer’s rate
 1183  base, and shall not be used to justify a rate or rate change.
 1184  Any common-law bad faith action identified as such, any portion
 1185  of a settlement entered as a result of a statutory or common-law
 1186  action, or any portion of a settlement wherein an insurer agrees
 1187  to pay specific punitive damages may not be used to justify a
 1188  rate or rate change. The portion of the taxable costs and
 1189  attorney’s fees which is identified as being related to the bad
 1190  faith and punitive damages in these judgments and settlements
 1191  may not be included in the insurer’s rate base and used may not
 1192  be utilized to justify a rate or rate change.
 1193         (b)(c) Upon reviewing a rate filing and determining whether
 1194  the rate is excessive, inadequate, or unfairly discriminatory,
 1195  the office shall consider, in accordance with generally accepted
 1196  and reasonable actuarial techniques, past and present
 1197  prospective loss experience, either using loss experience solely
 1198  for this state or giving greater credibility to this state’s
 1199  loss data after applying actuarially sound methods of assigning
 1200  credibility to such data.
 1201         (c)(d) Rates shall be deemed excessive if, among other
 1202  standards established by this section, the rate structure
 1203  provides for replenishment of reserves or surpluses from
 1204  premiums when the replenishment is attributable to investment
 1205  losses.
 1206         (d)(e) The insurer must apply a discount or surcharge based
 1207  on the health care provider’s loss experience or shall establish
 1208  an alternative method giving due consideration to the provider’s
 1209  loss experience. The insurer must include in the filing a copy
 1210  of the surcharge or discount schedule or a description of the
 1211  alternative method used, and must provide a copy of such
 1212  schedule or description, as approved by the office, to
 1213  policyholders at the time of renewal and to prospective
 1214  policyholders at the time of application for coverage.
 1215         (e)(f) Each medical malpractice insurer must make a rate
 1216  filing under this section, sworn to by at least two executive
 1217  officers of the insurer, at least once each calendar year.
 1218         (8)(a)1.No later than 60 days after the effective date of
 1219  medical malpractice legislation enacted during the 2003 Special
 1220  Session D of the Florida Legislature, the office shall calculate
 1221  a presumed factor that reflects the impact that the changes
 1222  contained in such legislation will have on rates for medical
 1223  malpractice insurance and shall issue a notice informing all
 1224  insurers writing medical malpractice coverage of such presumed
 1225  factor. In determining the presumed factor, the office shall use
 1226  generally accepted actuarial techniques and standards provided
 1227  in this section in determining the expected impact on losses,
 1228  expenses, and investment income of the insurer. To the extent
 1229  that the operation of a provision of medical malpractice
 1230  legislation enacted during the 2003 Special Session D of the
 1231  Florida Legislature is stayed pending a constitutional
 1232  challenge, the impact of that provision shall not be included in
 1233  the calculation of a presumed factor under this subparagraph.
 1234         2.No later than 60 days after the office issues its notice
 1235  of the presumed rate change factor under subparagraph 1., each
 1236  insurer writing medical malpractice coverage in this state shall
 1237  submit to the office a rate filing for medical malpractice
 1238  insurance, which will take effect no later than January 1, 2004,
 1239  and apply retroactively to policies issued or renewed on or
 1240  after the effective date of medical malpractice legislation
 1241  enacted during the 2003 Special Session D of the Florida
 1242  Legislature. Except as authorized under paragraph (b), the
 1243  filing shall reflect an overall rate reduction at least as great
 1244  as the presumed factor determined under subparagraph 1. With
 1245  respect to policies issued on or after the effective date of
 1246  such legislation and prior to the effective date of the rate
 1247  filing required by this subsection, the office shall order the
 1248  insurer to make a refund of the amount that was charged in
 1249  excess of the rate that is approved.
 1250         (b)Any insurer or rating organization that contends that
 1251  the rate provided for in paragraph (a) is excessive, inadequate,
 1252  or unfairly discriminatory shall separately state in its filing
 1253  the rate it contends is appropriate and shall state with
 1254  specificity the factors or data that it contends should be
 1255  considered in order to produce such appropriate rate. The
 1256  insurer or rating organization shall be permitted to use all of
 1257  the generally accepted actuarial techniques provided in this
 1258  section in making any filing pursuant to this subsection. The
 1259  office shall review each such exception and approve or
 1260  disapprove it prior to use. It shall be the insurer’s burden to
 1261  actuarially justify any deviations from the rates required to be
 1262  filed under paragraph (a). The insurer making a filing under
 1263  this paragraph shall include in the filing the expected impact
 1264  of medical malpractice legislation enacted during the 2003
 1265  Special Session D of the Florida Legislature on losses,
 1266  expenses, and rates.
 1267         (c)If any provision of medical malpractice legislation
 1268  enacted during the 2003 Special Session D of the Florida
 1269  Legislature is held invalid by a court of competent
 1270  jurisdiction, the office shall permit an adjustment of all
 1271  medical malpractice rates filed under this section to reflect
 1272  the impact of such holding on such rates so as to ensure that
 1273  the rates are not excessive, inadequate, or unfairly
 1274  discriminatory.
 1275         (d)Rates approved on or before July 1, 2003, for medical
 1276  malpractice insurance shall remain in effect until the effective
 1277  date of a new rate filing approved under this subsection.
 1278         (e)The calculation and notice by the office of the
 1279  presumed factor pursuant to paragraph (a) is not an order or
 1280  rule that is subject to chapter 120. If the office enters into a
 1281  contract with an independent consultant to assist the office in
 1282  calculating the presumed factor, such contract shall not be
 1283  subject to the competitive solicitation requirements of s.
 1284  287.057.
 1285         (8)(9)(a) The chief executive officer or chief financial
 1286  officer of a property insurer and the chief actuary of a
 1287  property insurer must certify under oath and subject to the
 1288  penalty of perjury, on a form approved by the commission, the
 1289  following information, which must accompany a rate filing:
 1290         1. The signing officer and actuary have reviewed the rate
 1291  filing;
 1292         2. Based on the signing officer’s and actuary’s knowledge,
 1293  the rate filing does not contain any untrue statement of a
 1294  material fact or omit to state a material fact necessary in
 1295  order to make the statements made, in light of the circumstances
 1296  under which such statements were made, not misleading;
 1297         3. Based on the signing officer’s and actuary’s knowledge,
 1298  the information and other factors described in paragraph (2)(b),
 1299  including, but not limited to, investment income, fairly present
 1300  in all material respects the basis of the rate filing for the
 1301  periods presented in the filing; and
 1302         4. Based on the signing officer’s and actuary’s knowledge,
 1303  the rate filing reflects all premium savings that are reasonably
 1304  expected to result from legislative enactments and are in
 1305  accordance with generally accepted and reasonable actuarial
 1306  techniques.
 1307         (b) A signing officer or actuary who knowingly makes making
 1308  a false certification under this subsection commits a violation
 1309  of s. 626.9541(1)(e) and is subject to the penalties under s.
 1310  626.9521.
 1311         (c) Failure to provide such certification by the officer
 1312  and actuary shall result in the rate filing being disapproved
 1313  without prejudice to be refiled.
 1314         (d)The certification made pursuant to paragraph (a) is not
 1315  rendered false if, after making the subject rate filing, the
 1316  insurer provides the office with additional or supplementary
 1317  information pursuant to a formal or informal request from the
 1318  office. However, the actuary who is primarily responsible for
 1319  preparing and submitting such information must certify the
 1320  information in accordance with the certification required under
 1321  paragraph (a) and the penalties in paragraph (b), except that
 1322  the chief executive officer, chief financial officer, or chief
 1323  actuary need not certify the additional or supplementary
 1324  information.
 1325         (e)(d) The commission may adopt rules and forms pursuant to
 1326  ss. 120.536(1) and 120.54 to administer this subsection.
 1327         (9)(10) The burden is on the office to establish that rates
 1328  are excessive for personal lines residential coverage with a
 1329  dwelling replacement cost of $1 million or more or for a single
 1330  condominium unit with a combined dwelling and contents
 1331  replacement cost of $1 million or more. Upon request of the
 1332  office, the insurer shall provide to the office such loss and
 1333  expense information as the office reasonably needs to meet this
 1334  burden.
 1335         (10)(11) Any interest paid pursuant to s. 627.70131(5) may
 1336  not be included in the insurer’s rate base and may not be used
 1337  to justify a rate or rate change.
 1338         Section 17. Paragraph (b) of subsection (3) of section
 1339  627.06281, Florida Statutes, is amended to read:
 1340         627.06281 Public hurricane loss projection model; reporting
 1341  of data by insurers.—
 1342         (3)
 1343         (b) The fees charged for private sector access and use of
 1344  the model shall be the reasonable costs associated with the
 1345  operation and maintenance of the model by the office. Such fees
 1346  do not apply to access and use of the model by the office. By
 1347  January 1, 2009, The office shall establish by rule a fee
 1348  schedule for access to and the use of the model. The fee
 1349  schedule must be reasonably calculated to cover only the actual
 1350  costs of providing access to and the use of the model.
 1351         Section 18. Subsections (1) and (5) and paragraph (b) of
 1352  subsection (8) of section 627.0629, Florida Statutes, are
 1353  amended to read:
 1354         627.0629 Residential property insurance; rate filings.—
 1355         (1)(a) It is the intent of the Legislature that insurers
 1356  must provide savings to consumers who install or implement
 1357  windstorm damage mitigation techniques, alterations, or
 1358  solutions to their properties to prevent windstorm losses. A
 1359  rate filing for residential property insurance must include
 1360  actuarially reasonable discounts, credits, or other rate
 1361  differentials, or appropriate reductions in deductibles, for
 1362  properties on which fixtures or construction techniques
 1363  demonstrated to reduce the amount of loss in a windstorm have
 1364  been installed or implemented. The fixtures or construction
 1365  techniques must shall include, but are not be limited to,
 1366  fixtures or construction techniques that which enhance roof
 1367  strength, roof covering performance, roof-to-wall strength,
 1368  wall-to-floor-to-foundation strength, opening protection, and
 1369  window, door, and skylight strength. Credits, discounts, or
 1370  other rate differentials, or appropriate reductions in
 1371  deductibles, for fixtures and construction techniques that which
 1372  meet the minimum requirements of the Florida Building Code must
 1373  be included in the rate filing. All insurance companies must
 1374  make a rate filing that which includes the credits, discounts,
 1375  or other rate differentials or reductions in deductibles by
 1376  February 28, 2003. By July 1, 2007, the office shall reevaluate
 1377  the discounts, credits, other rate differentials, and
 1378  appropriate reductions in deductibles for fixtures and
 1379  construction techniques that meet the minimum requirements of
 1380  the Florida Building Code, based upon actual experience or any
 1381  other loss relativity studies available to the office. The
 1382  office shall determine the discounts, credits, other rate
 1383  differentials, and appropriate reductions in deductibles that
 1384  reflect the full actuarial value of such revaluation, which may
 1385  be used by insurers in rate filings.
 1386         (b) By February 1, 2011, the Office of Insurance
 1387  Regulation, in consultation with the Department of Financial
 1388  Services and the Department of Community Affairs, shall develop
 1389  and make publicly available a proposed method for insurers to
 1390  establish discounts, credits, or other rate differentials for
 1391  hurricane mitigation measures which directly correlate to the
 1392  numerical rating assigned to a structure pursuant to the uniform
 1393  home grading scale adopted by the Financial Services Commission
 1394  pursuant to s. 215.55865, including any proposed changes to the
 1395  uniform home grading scale. By October 1, 2011, the commission
 1396  shall adopt rules requiring insurers to make rate filings for
 1397  residential property insurance which revise insurers’ discounts,
 1398  credits, or other rate differentials for hurricane mitigation
 1399  measures so that such rate differentials correlate directly to
 1400  the uniform home grading scale. The rules may include such
 1401  changes to the uniform home grading scale as the commission
 1402  determines are necessary, and may specify the minimum required
 1403  discounts, credits, or other rate differentials. Such rate
 1404  differentials must be consistent with generally accepted
 1405  actuarial principles and wind-loss mitigation studies. The rules
 1406  shall allow a period of at least 2 years after the effective
 1407  date of the revised mitigation discounts, credits, or other rate
 1408  differentials for a property owner to obtain an inspection or
 1409  otherwise qualify for the revised credit, during which time the
 1410  insurer shall continue to apply the mitigation credit that was
 1411  applied immediately prior to the effective date of the revised
 1412  credit. Discounts, credits, and other rate differentials
 1413  established for rate filings under this paragraph shall
 1414  supersede, after adoption, the discounts, credits, and other
 1415  rate differentials included in rate filings under paragraph (a).
 1416         (5) In order to provide an appropriate transition period,
 1417  an insurer may, in its sole discretion, implement an approved
 1418  rate filing for residential property insurance over a period of
 1419  years. Such An insurer electing to phase in its rate filing must
 1420  provide an informational notice to the office setting out its
 1421  schedule for implementation of the phased-in rate filing. The An
 1422  insurer may include in its rate the actual cost of private
 1423  market reinsurance that corresponds to available coverage of the
 1424  Temporary Increase in Coverage Limits, TICL, from the Florida
 1425  Hurricane Catastrophe Fund. The insurer may also include the
 1426  cost of reinsurance to replace the TICL reduction implemented
 1427  pursuant to s. 215.555(17)(d)9. However, this cost for
 1428  reinsurance may not include any expense or profit load or result
 1429  in a total annual base rate increase in excess of 10 percent.
 1430         (8) EVALUATION OF RESIDENTIAL PROPERTY STRUCTURAL
 1431  SOUNDNESS.—
 1432         (b) To the extent that funds are provided for this purpose
 1433  in the General Appropriations Act, the Legislature hereby
 1434  authorizes the establishment of a program to be administered by
 1435  the Citizens Property Insurance Corporation for homeowners
 1436  insured in the coastal high-risk account is authorized.
 1437         Section 19. Paragraphs (a), (b), (c), (d), (n), (v), and
 1438  (y) of subsection (6) of section 627.351, Florida Statutes, are
 1439  amended to read:
 1440         627.351 Insurance risk apportionment plans.—
 1441         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1442         (a)1.It is The public purpose of this subsection is to
 1443  ensure that there is the existence of an orderly market for
 1444  property insurance for residents Floridians and Florida
 1445  businesses of this state.
 1446         1. The Legislature finds that private insurers are
 1447  unwilling or unable to provide affordable property insurance
 1448  coverage in this state to the extent sought and needed. The
 1449  absence of affordable property insurance threatens the public
 1450  health, safety, and welfare and likewise threatens the economic
 1451  health of the state. The state therefore has a compelling public
 1452  interest and a public purpose to assist in assuring that
 1453  property in the state is insured and that it is insured at
 1454  affordable rates so as to facilitate the remediation,
 1455  reconstruction, and replacement of damaged or destroyed property
 1456  in order to reduce or avoid the negative effects otherwise
 1457  resulting to the public health, safety, and welfare, to the
 1458  economy of the state, and to the revenues of the state and local
 1459  governments which are needed to provide for the public welfare.
 1460  It is necessary, therefore, to provide affordable property
 1461  insurance to applicants who are in good faith entitled to
 1462  procure insurance through the voluntary market but are unable to
 1463  do so. The Legislature intends, therefore, by this subsection
 1464  that affordable property insurance be provided and that it
 1465  continue to be provided, as long as necessary, through Citizens
 1466  Property Insurance Corporation, a government entity that is an
 1467  integral part of the state, and that is not a private insurance
 1468  company. To that end, the Citizens Property Insurance
 1469  corporation shall strive to increase the availability of
 1470  affordable property insurance in this state, while achieving
 1471  efficiencies and economies, and while providing service to
 1472  policyholders, applicants, and agents which is no less than the
 1473  quality generally provided in the voluntary market, for the
 1474  achievement of the foregoing public purposes. Because it is
 1475  essential for this government entity to have the maximum
 1476  financial resources to pay claims following a catastrophic
 1477  hurricane, it is the intent of the Legislature that the Citizens
 1478  Property Insurance corporation continue to be an integral part
 1479  of the state and that the income of the corporation be exempt
 1480  from federal income taxation and that interest on the debt
 1481  obligations issued by the corporation be exempt from federal
 1482  income taxation. The corporate logo of the corporation must
 1483  include the name of the corporation and the words “A Taxpayer
 1484  Funded Corporation.”
 1485         2. The Residential Property and Casualty Joint Underwriting
 1486  Association originally created by this statute shall be known,
 1487  as of July 1, 2002, as the Citizens Property Insurance
 1488  Corporation. The corporation shall provide insurance for
 1489  residential and commercial property, for applicants who are in
 1490  good faith entitled, but, in good faith, are unable, to procure
 1491  insurance through the voluntary market. The corporation shall
 1492  operate pursuant to a plan of operation approved by order of the
 1493  Financial Services Commission. The plan is subject to continuous
 1494  review by the commission. The commission may, by order, withdraw
 1495  approval of all or part of a plan if the commission determines
 1496  that conditions have changed since approval was granted and that
 1497  the purposes of the plan require changes in the plan. The
 1498  corporation shall continue to operate pursuant to the plan of
 1499  operation approved by the Office of Insurance Regulation until
 1500  October 1, 2006. For the purposes of this subsection,
 1501  residential coverage includes both personal lines residential
 1502  coverage, which consists of the type of coverage provided by
 1503  homeowner’s, mobile home owner’s, dwelling, tenant’s,
 1504  condominium unit owner’s, and similar policies;, and commercial
 1505  lines residential coverage, which consists of the type of
 1506  coverage provided by condominium association, apartment
 1507  building, and similar policies.
 1508         3. Effective January 1, 2009, a personal lines residential
 1509  structure that has a dwelling replacement cost of $2 million or
 1510  more, or a single condominium unit that has a combined dwelling
 1511  and contents content replacement cost of $2 million or more is
 1512  not eligible for coverage by the corporation. Such dwellings
 1513  insured by the corporation on December 31, 2008, may continue to
 1514  be covered by the corporation until the end of the policy term.
 1515  However, such dwellings that are insured by the corporation and
 1516  become ineligible for coverage due to the provisions of this
 1517  subparagraph may reapply and obtain coverage if the property
 1518  owner provides the corporation with a sworn affidavit from one
 1519  or more insurance agents, on a form provided by the corporation,
 1520  stating that the agents have made their best efforts to obtain
 1521  coverage and that the property has been rejected for coverage by
 1522  at least one authorized insurer and at least three surplus lines
 1523  insurers. If such conditions are met, the dwelling may be
 1524  insured by the corporation for up to 3 years, after which time
 1525  the dwelling is ineligible for coverage. The office shall
 1526  approve the method used by the corporation for valuing the
 1527  dwelling replacement cost for the purposes of this subparagraph.
 1528  If a policyholder is insured by the corporation prior to being
 1529  determined to be ineligible pursuant to this subparagraph and
 1530  such policyholder files a lawsuit challenging the determination,
 1531  the policyholder may remain insured by the corporation until the
 1532  conclusion of the litigation.
 1533         4. It is the intent of the Legislature that policyholders,
 1534  applicants, and agents of the corporation receive service and
 1535  treatment of the highest possible level but never less than that
 1536  generally provided in the voluntary market. It is also is
 1537  intended that the corporation be held to service standards no
 1538  less than those applied to insurers in the voluntary market by
 1539  the office with respect to responsiveness, timeliness, customer
 1540  courtesy, and overall dealings with policyholders, applicants,
 1541  or agents of the corporation.
 1542         5. Effective January 1, 2009, a personal lines residential
 1543  structure that is located in the “wind-borne debris region,” as
 1544  defined in s. 1609.2, International Building Code (2006), and
 1545  that has an insured value on the structure of $750,000 or more
 1546  is not eligible for coverage by the corporation unless the
 1547  structure has opening protections as required under the Florida
 1548  Building Code for a newly constructed residential structure in
 1549  that area. A residential structure shall be deemed to comply
 1550  with the requirements of this subparagraph if it has shutters or
 1551  opening protections on all openings and if such opening
 1552  protections complied with the Florida Building Code at the time
 1553  they were installed.
 1554         6. In recognition of the corporation’s status as a
 1555  governmental entity, policies issued by the corporation must
 1556  include a provision stating that as a condition of coverage with
 1557  the corporation, policyholders may not engage the services of a
 1558  public adjuster to represent the policyholder with respect to
 1559  any claim filed under a policy issued by the corporation until
 1560  after the corporation has tendered an offer with respect to such
 1561  claim. For any claim filed under any policy of the corporation,
 1562  a public adjuster may not charge, agree to, or accept any
 1563  compensation, payment, commission, fee, or other thing of value
 1564  greater than 10 percent of the additional amount actually paid
 1565  over the amount that was originally offered by the corporation
 1566  for any one claim.
 1567         (b)1. All insurers authorized to write one or more subject
 1568  lines of business in this state are subject to assessment by the
 1569  corporation and, for the purposes of this subsection, are
 1570  referred to collectively as “assessable insurers.” Insurers
 1571  writing one or more subject lines of business in this state
 1572  pursuant to part VIII of chapter 626 are not assessable
 1573  insurers, but insureds who procure one or more subject lines of
 1574  business in this state pursuant to part VIII of chapter 626 are
 1575  subject to assessment by the corporation and are referred to
 1576  collectively as “assessable insureds.” An authorized insurer’s
 1577  assessment liability begins shall begin on the first day of the
 1578  calendar year following the year in which the insurer was issued
 1579  a certificate of authority to transact insurance for subject
 1580  lines of business in this state and terminates shall terminate 1
 1581  year after the end of the first calendar year during which the
 1582  insurer no longer holds a certificate of authority to transact
 1583  insurance for subject lines of business in this state.
 1584         2.a. All revenues, assets, liabilities, losses, and
 1585  expenses of the corporation shall be divided into three separate
 1586  accounts as follows:
 1587         (I) A personal lines account for personal residential
 1588  policies issued by the corporation, or issued by the Residential
 1589  Property and Casualty Joint Underwriting Association and renewed
 1590  by the corporation, which provides that provide comprehensive,
 1591  multiperil coverage on risks that are not located in areas
 1592  eligible for coverage by in the Florida Windstorm Underwriting
 1593  Association as those areas were defined on January 1, 2002, and
 1594  for such policies that do not provide coverage for the peril of
 1595  wind on risks that are located in such areas;
 1596         (II) A commercial lines account for commercial residential
 1597  and commercial nonresidential policies issued by the
 1598  corporation, or issued by the Residential Property and Casualty
 1599  Joint Underwriting Association and renewed by the corporation,
 1600  which provides that provide coverage for basic property perils
 1601  on risks that are not located in areas eligible for coverage by
 1602  in the Florida Windstorm Underwriting Association as those areas
 1603  were defined on January 1, 2002, and for such policies that do
 1604  not provide coverage for the peril of wind on risks that are
 1605  located in such areas; and
 1606         (III) A coastal high-risk account for personal residential
 1607  policies and commercial residential and commercial
 1608  nonresidential property policies issued by the corporation, or
 1609  transferred to the corporation, which provides that provide
 1610  coverage for the peril of wind on risks that are located in
 1611  areas eligible for coverage by in the Florida Windstorm
 1612  Underwriting Association as those areas were defined on January
 1613  1, 2002. The corporation may offer policies that provide
 1614  multiperil coverage and the corporation shall continue to offer
 1615  policies that provide coverage only for the peril of wind for
 1616  risks located in areas eligible for coverage in the coastal
 1617  high-risk account. In issuing multiperil coverage, the
 1618  corporation may use its approved policy forms and rates for the
 1619  personal lines account. An applicant or insured who is eligible
 1620  to purchase a multiperil policy from the corporation may
 1621  purchase a multiperil policy from an authorized insurer without
 1622  prejudice to the applicant’s or insured’s eligibility to
 1623  prospectively purchase a policy that provides coverage only for
 1624  the peril of wind from the corporation. An applicant or insured
 1625  who is eligible for a corporation policy that provides coverage
 1626  only for the peril of wind may elect to purchase or retain such
 1627  policy and also purchase or retain coverage excluding wind from
 1628  an authorized insurer without prejudice to the applicant’s or
 1629  insured’s eligibility to prospectively purchase a policy that
 1630  provides multiperil coverage from the corporation. It is the
 1631  goal of the Legislature that there would be an overall average
 1632  savings of 10 percent or more for a policyholder who currently
 1633  has a wind-only policy with the corporation, and an ex-wind
 1634  policy with a voluntary insurer or the corporation, and who then
 1635  obtains a multiperil policy from the corporation. It is the
 1636  intent of the Legislature that the offer of multiperil coverage
 1637  in the coastal high-risk account be made and implemented in a
 1638  manner that does not adversely affect the tax-exempt status of
 1639  the corporation or creditworthiness of or security for currently
 1640  outstanding financing obligations or credit facilities of the
 1641  coastal high-risk account, the personal lines account, or the
 1642  commercial lines account. The coastal high-risk account must
 1643  also include quota share primary insurance under subparagraph
 1644  (c)2. The area eligible for coverage under the coastal high-risk
 1645  account also includes the area within Port Canaveral, which is
 1646  bordered on the south by the City of Cape Canaveral, bordered on
 1647  the west by the Banana River, and bordered on the north by
 1648  Federal Government property.
 1649         b. The three separate accounts must be maintained as long
 1650  as financing obligations entered into by the Florida Windstorm
 1651  Underwriting Association or Residential Property and Casualty
 1652  Joint Underwriting Association are outstanding, in accordance
 1653  with the terms of the corresponding financing documents. If When
 1654  the financing obligations are no longer outstanding, in
 1655  accordance with the terms of the corresponding financing
 1656  documents, the corporation may use a single account for all
 1657  revenues, assets, liabilities, losses, and expenses of the
 1658  corporation. Consistent with the requirement of this
 1659  subparagraph and prudent investment policies that minimize the
 1660  cost of carrying debt, the board shall exercise its best efforts
 1661  to retire existing debt or to obtain the approval of necessary
 1662  parties to amend the terms of existing debt, so as to structure
 1663  the most efficient plan to consolidate the three separate
 1664  accounts into a single account.
 1665         c. Creditors of the Residential Property and Casualty Joint
 1666  Underwriting Association and of the accounts specified in sub
 1667  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1668  recourse to, those the accounts referred to in sub-sub
 1669  subparagraphs a.(I) and (II) and shall have no claim against, or
 1670  recourse to, the account referred to in sub-sub-subparagraph
 1671  a.(III). Creditors of the Florida Windstorm Underwriting
 1672  Association shall have a claim against, and recourse to, the
 1673  account referred to in sub-sub-subparagraph a.(III) and shall
 1674  have no claim against, or recourse to, the accounts referred to
 1675  in sub-sub-subparagraphs a.(I) and (II).
 1676         d. Revenues, assets, liabilities, losses, and expenses not
 1677  attributable to particular accounts shall be prorated among the
 1678  accounts.
 1679         e. The Legislature finds that the revenues of the
 1680  corporation are revenues that are necessary to meet the
 1681  requirements set forth in documents authorizing the issuance of
 1682  bonds under this subsection.
 1683         f. No part of the income of the corporation may inure to
 1684  the benefit of any private person.
 1685         3. With respect to a deficit in an account:
 1686         a. After accounting for the Citizens policyholder surcharge
 1687  imposed under sub-subparagraph h. i., if when the remaining
 1688  projected deficit incurred in a particular calendar year:
 1689         (I) Is not greater than 6 percent of the aggregate
 1690  statewide direct written premium for the subject lines of
 1691  business for the prior calendar year, the entire deficit shall
 1692  be recovered through regular assessments of assessable insurers
 1693  under paragraph (q) and assessable insureds.
 1694         (II)b.After accounting for the Citizens policyholder
 1695  surcharge imposed under sub-subparagraph i., when the remaining
 1696  projected deficit incurred in a particular calendar year Exceeds
 1697  6 percent of the aggregate statewide direct written premium for
 1698  the subject lines of business for the prior calendar year, the
 1699  corporation shall levy regular assessments on assessable
 1700  insurers under paragraph (q) and on assessable insureds in an
 1701  amount equal to the greater of 6 percent of the deficit or 6
 1702  percent of the aggregate statewide direct written premium for
 1703  the subject lines of business for the prior calendar year. Any
 1704  remaining deficit shall be recovered through emergency
 1705  assessments under sub-subparagraph c. d.
 1706         b.c. Each assessable insurer’s share of the amount being
 1707  assessed under sub-subparagraph a. must or sub-subparagraph b.
 1708  shall be in the proportion that the assessable insurer’s direct
 1709  written premium for the subject lines of business for the year
 1710  preceding the assessment bears to the aggregate statewide direct
 1711  written premium for the subject lines of business for that year.
 1712  The applicable assessment percentage applicable to each
 1713  assessable insured is the ratio of the amount being assessed
 1714  under sub-subparagraph a. or sub-subparagraph b. to the
 1715  aggregate statewide direct written premium for the subject lines
 1716  of business for the prior year. Assessments levied by the
 1717  corporation on assessable insurers under sub-subparagraph a.
 1718  must sub-subparagraphs a. and b. shall be paid as required by
 1719  the corporation’s plan of operation and paragraph (q).
 1720  Assessments levied by the corporation on assessable insureds
 1721  under sub-subparagraph a. sub-subparagraphs a. and b. shall be
 1722  collected by the surplus lines agent at the time the surplus
 1723  lines agent collects the surplus lines tax required by s.
 1724  626.932, and shall be paid to the Florida Surplus Lines Service
 1725  Office at the time the surplus lines agent pays the surplus
 1726  lines tax to that the Florida Surplus Lines Service office. Upon
 1727  receipt of regular assessments from surplus lines agents, the
 1728  Florida Surplus Lines Service Office shall transfer the
 1729  assessments directly to the corporation as determined by the
 1730  corporation.
 1731         c.d. Upon a determination by the board of governors that a
 1732  deficit in an account exceeds the amount that will be recovered
 1733  through regular assessments under sub-subparagraph a. or sub
 1734  subparagraph b., plus the amount that is expected to be
 1735  recovered through surcharges under sub-subparagraph h. i., as to
 1736  the remaining projected deficit the board shall levy, after
 1737  verification by the office, shall levy emergency assessments,
 1738  for as many years as necessary to cover the deficits, to be
 1739  collected by assessable insurers and the corporation and
 1740  collected from assessable insureds upon issuance or renewal of
 1741  policies for subject lines of business, excluding National Flood
 1742  Insurance policies. The amount of the emergency assessment
 1743  collected in a particular year must shall be a uniform
 1744  percentage of that year’s direct written premium for subject
 1745  lines of business and all accounts of the corporation, excluding
 1746  National Flood Insurance Program policy premiums, as annually
 1747  determined by the board and verified by the office. The office
 1748  shall verify the arithmetic calculations involved in the board’s
 1749  determination within 30 days after receipt of the information on
 1750  which the determination was based. Notwithstanding any other
 1751  provision of law, the corporation and each assessable insurer
 1752  that writes subject lines of business shall collect emergency
 1753  assessments from its policyholders without such obligation being
 1754  affected by any credit, limitation, exemption, or deferment.
 1755  Emergency assessments levied by the corporation on assessable
 1756  insureds shall be collected by the surplus lines agent at the
 1757  time the surplus lines agent collects the surplus lines tax
 1758  required by s. 626.932 and shall be paid to the Florida Surplus
 1759  Lines Service Office at the time the surplus lines agent pays
 1760  the surplus lines tax to that the Florida Surplus Lines Service
 1761  office. The emergency assessments so collected shall be
 1762  transferred directly to the corporation on a periodic basis as
 1763  determined by the corporation and shall be held by the
 1764  corporation solely in the applicable account. The aggregate
 1765  amount of emergency assessments levied for an account under this
 1766  sub-subparagraph in any calendar year may, at the discretion of
 1767  the board of governors, be less than but may not exceed the
 1768  greater of 10 percent of the amount needed to cover the deficit,
 1769  plus interest, fees, commissions, required reserves, and other
 1770  costs associated with financing of the original deficit, or 10
 1771  percent of the aggregate statewide direct written premium for
 1772  subject lines of business and for all accounts of the
 1773  corporation for the prior year, plus interest, fees,
 1774  commissions, required reserves, and other costs associated with
 1775  financing the deficit.
 1776         d.e. The corporation may pledge the proceeds of
 1777  assessments, projected recoveries from the Florida Hurricane
 1778  Catastrophe Fund, other insurance and reinsurance recoverables,
 1779  policyholder surcharges and other surcharges, and other funds
 1780  available to the corporation as the source of revenue for and to
 1781  secure bonds issued under paragraph (q), bonds or other
 1782  indebtedness issued under subparagraph (c)3., or lines of credit
 1783  or other financing mechanisms issued or created under this
 1784  subsection, or to retire any other debt incurred as a result of
 1785  deficits or events giving rise to deficits, or in any other way
 1786  that the board determines will efficiently recover such
 1787  deficits. The purpose of the lines of credit or other financing
 1788  mechanisms is to provide additional resources to assist the
 1789  corporation in covering claims and expenses attributable to a
 1790  catastrophe. As used in this subsection, the term “assessments”
 1791  includes regular assessments under sub-subparagraph a., sub
 1792  subparagraph b., or subparagraph (q)1. and emergency assessments
 1793  under sub-subparagraph d. Emergency assessments collected under
 1794  sub-subparagraph d. are not part of an insurer’s rates, are not
 1795  premium, and are not subject to premium tax, fees, or
 1796  commissions; however, failure to pay the emergency assessment
 1797  shall be treated as failure to pay premium. The emergency
 1798  assessments under sub-subparagraph c. d. shall continue as long
 1799  as any bonds issued or other indebtedness incurred with respect
 1800  to a deficit for which the assessment was imposed remain
 1801  outstanding, unless adequate provision has been made for the
 1802  payment of such bonds or other indebtedness pursuant to the
 1803  documents governing such bonds or other indebtedness.
 1804         e.f. As used in this subsection for purposes of any deficit
 1805  incurred on or after January 25, 2007, the term “subject lines
 1806  of business” means insurance written by assessable insurers or
 1807  procured by assessable insureds for all property and casualty
 1808  lines of business in this state, but not including workers’
 1809  compensation or medical malpractice. As used in this the sub
 1810  subparagraph, the term “property and casualty lines of business”
 1811  includes all lines of business identified on Form 2, Exhibit of
 1812  Premiums and Losses, in the annual statement required of
 1813  authorized insurers under by s. 624.424 and any rule adopted
 1814  under this section, except for those lines identified as
 1815  accident and health insurance and except for policies written
 1816  under the National Flood Insurance Program or the Federal Crop
 1817  Insurance Program. For purposes of this sub-subparagraph, the
 1818  term “workers’ compensation” includes both workers’ compensation
 1819  insurance and excess workers’ compensation insurance.
 1820         f.g. The Florida Surplus Lines Service Office shall
 1821  determine annually the aggregate statewide written premium in
 1822  subject lines of business procured by assessable insureds and
 1823  shall report that information to the corporation in a form and
 1824  at a time the corporation specifies to ensure that the
 1825  corporation can meet the requirements of this subsection and the
 1826  corporation’s financing obligations.
 1827         g.h. The Florida Surplus Lines Service Office shall verify
 1828  the proper application by surplus lines agents of assessment
 1829  percentages for regular assessments and emergency assessments
 1830  levied under this subparagraph on assessable insureds and shall
 1831  assist the corporation in ensuring the accurate, timely
 1832  collection and payment of assessments by surplus lines agents as
 1833  required by the corporation.
 1834         h.i. If a deficit is incurred in any account in 2008 or
 1835  thereafter, the board of governors shall levy a Citizens
 1836  policyholder surcharge against all policyholders of the
 1837  corporation. for a 12-month period, which
 1838         (I) The surcharge shall be levied collected at the time of
 1839  issuance or renewal of a policy, as a uniform percentage of the
 1840  premium for the policy of up to 15 percent of such premium,
 1841  which funds shall be used to offset the deficit.
 1842         (II) The surcharge is payable upon cancellation or
 1843  termination of the policy, upon renewal of the policy, or upon
 1844  issuance of a new policy by the corporation within the first 12
 1845  months after the date of the levy or the period of time
 1846  necessary to fully collect the surcharge amount.
 1847         (III) The corporation may not levy any regular assessments
 1848  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1849  subparagraph b. with respect to a particular year’s deficit
 1850  until the corporation has first levied the full amount of the
 1851  surcharge authorized by this sub-subparagraph.
 1852         (IV) The surcharge is Citizens policyholder surcharges
 1853  under this sub-subparagraph are not considered premium and is
 1854  are not subject to commissions, fees, or premium taxes. However,
 1855  failure to pay the surcharge such surcharges shall be treated as
 1856  failure to pay premium.
 1857         i.j. If the amount of any assessments or surcharges
 1858  collected from corporation policyholders, assessable insurers or
 1859  their policyholders, or assessable insureds exceeds the amount
 1860  of the deficits, such excess amounts shall be remitted to and
 1861  retained by the corporation in a reserve to be used by the
 1862  corporation, as determined by the board of governors and
 1863  approved by the office, to pay claims or reduce any past,
 1864  present, or future plan-year deficits or to reduce outstanding
 1865  debt.
 1866         (c) The corporation’s plan of operation of the corporation:
 1867         1. Must provide for adoption of residential property and
 1868  casualty insurance policy forms and commercial residential and
 1869  nonresidential property insurance forms, which forms must be
 1870  approved by the office before prior to use. The corporation
 1871  shall adopt the following policy forms:
 1872         a. Standard personal lines policy forms that are
 1873  comprehensive multiperil policies providing full coverage of a
 1874  residential property equivalent to the coverage provided in the
 1875  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1876         b. Basic personal lines policy forms that are policies
 1877  similar to an HO-8 policy or a dwelling fire policy that provide
 1878  coverage meeting the requirements of the secondary mortgage
 1879  market, but which coverage is more limited than the coverage
 1880  under a standard policy.
 1881         c. Commercial lines residential and nonresidential policy
 1882  forms that are generally similar to the basic perils of full
 1883  coverage obtainable for commercial residential structures and
 1884  commercial nonresidential structures in the admitted voluntary
 1885  market.
 1886         d. Personal lines and commercial lines residential property
 1887  insurance forms that cover the peril of wind only. The forms are
 1888  applicable only to residential properties located in areas
 1889  eligible for coverage under the coastal high-risk account
 1890  referred to in sub-subparagraph (b)2.a.
 1891         e. Commercial lines nonresidential property insurance forms
 1892  that cover the peril of wind only. The forms are applicable only
 1893  to nonresidential properties located in areas eligible for
 1894  coverage under the coastal high-risk account referred to in sub
 1895  subparagraph (b)2.a.
 1896         f. The corporation may adopt variations of the policy forms
 1897  listed in sub-subparagraphs a.-e. which that contain more
 1898  restrictive coverage.
 1899         2.a. Must provide that the corporation adopt a program in
 1900  which the corporation and authorized insurers enter into quota
 1901  share primary insurance agreements for hurricane coverage, as
 1902  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1903  property insurance forms for eligible risks which cover the
 1904  peril of wind only.
 1905         a. As used in this subsection, the term:
 1906         (I) “Quota share primary insurance” means an arrangement in
 1907  which the primary hurricane coverage of an eligible risk is
 1908  provided in specified percentages by the corporation and an
 1909  authorized insurer. The corporation and authorized insurer are
 1910  each solely responsible for a specified percentage of hurricane
 1911  coverage of an eligible risk as set forth in a quota share
 1912  primary insurance agreement between the corporation and an
 1913  authorized insurer and the insurance contract. The
 1914  responsibility of the corporation or authorized insurer to pay
 1915  its specified percentage of hurricane losses of an eligible
 1916  risk, as set forth in the quota share primary insurance
 1917  agreement, may not be altered by the inability of the other
 1918  party to the agreement to pay its specified percentage of
 1919  hurricane losses. Eligible risks that are provided hurricane
 1920  coverage through a quota share primary insurance arrangement
 1921  must be provided policy forms that set forth the obligations of
 1922  the corporation and authorized insurer under the arrangement,
 1923  clearly specify the percentages of quota share primary insurance
 1924  provided by the corporation and authorized insurer, and
 1925  conspicuously and clearly state that neither the authorized
 1926  insurer and nor the corporation may not be held responsible
 1927  beyond their its specified percentage of coverage of hurricane
 1928  losses.
 1929         (II) “Eligible risks” means personal lines residential and
 1930  commercial lines residential risks that meet the underwriting
 1931  criteria of the corporation and are located in areas that were
 1932  eligible for coverage by the Florida Windstorm Underwriting
 1933  Association on January 1, 2002.
 1934         b. The corporation may enter into quota share primary
 1935  insurance agreements with authorized insurers at corporation
 1936  coverage levels of 90 percent and 50 percent.
 1937         c. If the corporation determines that additional coverage
 1938  levels are necessary to maximize participation in quota share
 1939  primary insurance agreements by authorized insurers, the
 1940  corporation may establish additional coverage levels. However,
 1941  the corporation’s quota share primary insurance coverage level
 1942  may not exceed 90 percent.
 1943         d. Any quota share primary insurance agreement entered into
 1944  between an authorized insurer and the corporation must provide
 1945  for a uniform specified percentage of coverage of hurricane
 1946  losses, by county or territory as set forth by the corporation
 1947  board, for all eligible risks of the authorized insurer covered
 1948  under the quota share primary insurance agreement.
 1949         e. Any quota share primary insurance agreement entered into
 1950  between an authorized insurer and the corporation is subject to
 1951  review and approval by the office. However, such agreement shall
 1952  be authorized only as to insurance contracts entered into
 1953  between an authorized insurer and an insured who is already
 1954  insured by the corporation for wind coverage.
 1955         f. For all eligible risks covered under quota share primary
 1956  insurance agreements, the exposure and coverage levels for both
 1957  the corporation and authorized insurers shall be reported by the
 1958  corporation to the Florida Hurricane Catastrophe Fund. For all
 1959  policies of eligible risks covered under such quota share
 1960  primary insurance agreements, the corporation and the authorized
 1961  insurer must shall maintain complete and accurate records for
 1962  the purpose of exposure and loss reimbursement audits as
 1963  required by Florida Hurricane Catastrophe fund rules. The
 1964  corporation and the authorized insurer shall each maintain
 1965  duplicate copies of policy declaration pages and supporting
 1966  claims documents.
 1967         g. The corporation board shall establish in its plan of
 1968  operation standards for quota share agreements which ensure that
 1969  there is no discriminatory application among insurers as to the
 1970  terms of the quota share agreements, pricing of the quota share
 1971  agreements, incentive provisions if any, and consideration paid
 1972  for servicing policies or adjusting claims.
 1973         h. The quota share primary insurance agreement between the
 1974  corporation and an authorized insurer must set forth the
 1975  specific terms under which coverage is provided, including, but
 1976  not limited to, the sale and servicing of policies issued under
 1977  the agreement by the insurance agent of the authorized insurer
 1978  producing the business, the reporting of information concerning
 1979  eligible risks, the payment of premium to the corporation, and
 1980  arrangements for the adjustment and payment of hurricane claims
 1981  incurred on eligible risks by the claims adjuster and personnel
 1982  of the authorized insurer. Entering into a quota sharing
 1983  insurance agreement between the corporation and an authorized
 1984  insurer is shall be voluntary and at the discretion of the
 1985  authorized insurer.
 1986         3. May provide that the corporation may employ or otherwise
 1987  contract with individuals or other entities to provide
 1988  administrative or professional services that may be appropriate
 1989  to effectuate the plan. The corporation may shall have the power
 1990  to borrow funds, by issuing bonds or by incurring other
 1991  indebtedness, and shall have other powers reasonably necessary
 1992  to effectuate the requirements of this subsection, including,
 1993  without limitation, the power to issue bonds and incur other
 1994  indebtedness in order to refinance outstanding bonds or other
 1995  indebtedness. The corporation may, but is not required to, seek
 1996  judicial validation of its bonds or other indebtedness under
 1997  chapter 75. The corporation may issue bonds or incur other
 1998  indebtedness, or have bonds issued on its behalf by a unit of
 1999  local government pursuant to subparagraph (q)2., in the absence
 2000  of a hurricane or other weather-related event, upon a
 2001  determination by the corporation, subject to approval by the
 2002  office, that such action would enable it to efficiently meet the
 2003  financial obligations of the corporation and that such
 2004  financings are reasonably necessary to effectuate the
 2005  requirements of this subsection. The corporation may is
 2006  authorized to take all actions needed to facilitate tax-free
 2007  status for any such bonds or indebtedness, including formation
 2008  of trusts or other affiliated entities. The corporation may
 2009  shall have the authority to pledge assessments, projected
 2010  recoveries from the Florida Hurricane Catastrophe Fund, other
 2011  reinsurance recoverables, market equalization and other
 2012  surcharges, and other funds available to the corporation as
 2013  security for bonds or other indebtedness. In recognition of s.
 2014  10, Art. I of the State Constitution, prohibiting the impairment
 2015  of obligations of contracts, it is the intent of the Legislature
 2016  that no action be taken whose purpose is to impair any bond
 2017  indenture or financing agreement or any revenue source committed
 2018  by contract to such bond or other indebtedness.
 2019         4.a. Must require that the corporation operate subject to
 2020  the supervision and approval of a board of governors consisting
 2021  of eight individuals who are residents of this state, from
 2022  different geographical areas of this state.
 2023         a. The Governor, the Chief Financial Officer, the President
 2024  of the Senate, and the Speaker of the House of Representatives
 2025  shall each appoint two members of the board. At least one of the
 2026  two members appointed by each appointing officer must have
 2027  demonstrated expertise in insurance, and is deemed to be within
 2028  the scope of the exemption provided in s. 112.313(7)(b). The
 2029  Chief Financial Officer shall designate one of the appointees as
 2030  chair. All board members serve at the pleasure of the appointing
 2031  officer. All members of the board of governors are subject to
 2032  removal at will by the officers who appointed them. All board
 2033  members, including the chair, must be appointed to serve for 3
 2034  year terms beginning annually on a date designated by the plan.
 2035  However, for the first term beginning on or after July 1, 2009,
 2036  each appointing officer shall appoint one member of the board
 2037  for a 2-year term and one member for a 3-year term. A Any board
 2038  vacancy shall be filled for the unexpired term by the appointing
 2039  officer. The Chief Financial Officer shall appoint a technical
 2040  advisory group to provide information and advice to the board of
 2041  governors in connection with the board’s duties under this
 2042  subsection. The executive director and senior managers of the
 2043  corporation shall be engaged by the board and serve at the
 2044  pleasure of the board. Any executive director appointed on or
 2045  after July 1, 2006, is subject to confirmation by the Senate.
 2046  The executive director is responsible for employing other staff
 2047  as the corporation may require, subject to review and
 2048  concurrence by the board.
 2049         b. The board shall create a Market Accountability Advisory
 2050  Committee to assist the corporation in developing awareness of
 2051  its rates and its customer and agent service levels in
 2052  relationship to the voluntary market insurers writing similar
 2053  coverage.
 2054         (I) The members of the advisory committee shall consist of
 2055  the following 11 persons, one of whom must be elected chair by
 2056  the members of the committee: four representatives, one
 2057  appointed by the Florida Association of Insurance Agents, one by
 2058  the Florida Association of Insurance and Financial Advisors, one
 2059  by the Professional Insurance Agents of Florida, and one by the
 2060  Latin American Association of Insurance Agencies; three
 2061  representatives appointed by the insurers with the three highest
 2062  voluntary market share of residential property insurance
 2063  business in the state; one representative from the Office of
 2064  Insurance Regulation; one consumer appointed by the board who is
 2065  insured by the corporation at the time of appointment to the
 2066  committee; one representative appointed by the Florida
 2067  Association of Realtors; and one representative appointed by the
 2068  Florida Bankers Association. All members shall be appointed to
 2069  must serve for 3-year terms and may serve for consecutive terms.
 2070         (II) The committee shall report to the corporation at each
 2071  board meeting on insurance market issues which may include rates
 2072  and rate competition with the voluntary market; service,
 2073  including policy issuance, claims processing, and general
 2074  responsiveness to policyholders, applicants, and agents; and
 2075  matters relating to depopulation.
 2076         5. Must provide a procedure for determining the eligibility
 2077  of a risk for coverage, as follows:
 2078         a. Subject to the provisions of s. 627.3517, with respect
 2079  to personal lines residential risks, if the risk is offered
 2080  coverage from an authorized insurer at the insurer’s approved
 2081  rate under either a standard policy including wind coverage or,
 2082  if consistent with the insurer’s underwriting rules as filed
 2083  with the office, a basic policy including wind coverage, for a
 2084  new application to the corporation for coverage, the risk is not
 2085  eligible for any policy issued by the corporation unless the
 2086  premium for coverage from the authorized insurer is more than 15
 2087  percent greater than the premium for comparable coverage from
 2088  the corporation. If the risk is not able to obtain any such
 2089  offer, the risk is eligible for either a standard policy
 2090  including wind coverage or a basic policy including wind
 2091  coverage issued by the corporation; however, if the risk could
 2092  not be insured under a standard policy including wind coverage
 2093  regardless of market conditions, the risk is shall be eligible
 2094  for a basic policy including wind coverage unless rejected under
 2095  subparagraph 8. However, with regard to a policyholder of the
 2096  corporation or a policyholder removed from the corporation
 2097  through an assumption agreement until the end of the assumption
 2098  period, the policyholder remains eligible for coverage from the
 2099  corporation regardless of any offer of coverage from an
 2100  authorized insurer or surplus lines insurer. The corporation
 2101  shall determine the type of policy to be provided on the basis
 2102  of objective standards specified in the underwriting manual and
 2103  based on generally accepted underwriting practices.
 2104         (I) If the risk accepts an offer of coverage through the
 2105  market assistance plan or an offer of coverage through a
 2106  mechanism established by the corporation before a policy is
 2107  issued to the risk by the corporation or during the first 30
 2108  days of coverage by the corporation, and the producing agent who
 2109  submitted the application to the plan or to the corporation is
 2110  not currently appointed by the insurer, the insurer shall:
 2111         (A) Pay to the producing agent of record of the policy, for
 2112  the first year, an amount that is the greater of the insurer’s
 2113  usual and customary commission for the type of policy written or
 2114  a fee equal to the usual and customary commission of the
 2115  corporation; or
 2116         (B) Offer to allow the producing agent of record of the
 2117  policy to continue servicing the policy for at least a period of
 2118  not less than 1 year and offer to pay the agent the greater of
 2119  the insurer’s or the corporation’s usual and customary
 2120  commission for the type of policy written.
 2121  
 2122  If the producing agent is unwilling or unable to accept
 2123  appointment, the new insurer shall pay the agent in accordance
 2124  with sub-sub-sub-subparagraph (A).
 2125         (II) If When the corporation enters into a contractual
 2126  agreement for a take-out plan, the producing agent of record of
 2127  the corporation policy is entitled to retain any unearned
 2128  commission on the policy, and the insurer shall:
 2129         (A) Pay to the producing agent of record of the corporation
 2130  policy, for the first year, an amount that is the greater of the
 2131  insurer’s usual and customary commission for the type of policy
 2132  written or a fee equal to the usual and customary commission of
 2133  the corporation; or
 2134         (B) Offer to allow the producing agent of record of the
 2135  corporation policy to continue servicing the policy for at least
 2136  a period of not less than 1 year and offer to pay the agent the
 2137  greater of the insurer’s or the corporation’s usual and
 2138  customary commission for the type of policy written.
 2139  
 2140  If the producing agent is unwilling or unable to accept
 2141  appointment, the new insurer shall pay the agent in accordance
 2142  with sub-sub-sub-subparagraph (A).
 2143         b. With respect to commercial lines residential risks, for
 2144  a new application to the corporation for coverage, if the risk
 2145  is offered coverage under a policy including wind coverage from
 2146  an authorized insurer at its approved rate, the risk is not
 2147  eligible for a any policy issued by the corporation unless the
 2148  premium for coverage from the authorized insurer is more than 15
 2149  percent greater than the premium for comparable coverage from
 2150  the corporation. If the risk is not able to obtain any such
 2151  offer, the risk is eligible for a policy including wind coverage
 2152  issued by the corporation. However, with regard to a
 2153  policyholder of the corporation or a policyholder removed from
 2154  the corporation through an assumption agreement until the end of
 2155  the assumption period, the policyholder remains eligible for
 2156  coverage from the corporation regardless of an any offer of
 2157  coverage from an authorized insurer or surplus lines insurer.
 2158         (I) If the risk accepts an offer of coverage through the
 2159  market assistance plan or an offer of coverage through a
 2160  mechanism established by the corporation before a policy is
 2161  issued to the risk by the corporation or during the first 30
 2162  days of coverage by the corporation, and the producing agent who
 2163  submitted the application to the plan or the corporation is not
 2164  currently appointed by the insurer, the insurer shall:
 2165         (A) Pay to the producing agent of record of the policy, for
 2166  the first year, an amount that is the greater of the insurer’s
 2167  usual and customary commission for the type of policy written or
 2168  a fee equal to the usual and customary commission of the
 2169  corporation; or
 2170         (B) Offer to allow the producing agent of record of the
 2171  policy to continue servicing the policy for at least a period of
 2172  not less than 1 year and offer to pay the agent the greater of
 2173  the insurer’s or the corporation’s usual and customary
 2174  commission for the type of policy written.
 2175  
 2176  If the producing agent is unwilling or unable to accept
 2177  appointment, the new insurer shall pay the agent in accordance
 2178  with sub-sub-sub-subparagraph (A).
 2179         (II) If When the corporation enters into a contractual
 2180  agreement for a take-out plan, the producing agent of record of
 2181  the corporation policy is entitled to retain any unearned
 2182  commission on the policy, and the insurer shall:
 2183         (A) Pay to the producing agent of record of the corporation
 2184  policy, for the first year, an amount that is the greater of the
 2185  insurer’s usual and customary commission for the type of policy
 2186  written or a fee equal to the usual and customary commission of
 2187  the corporation; or
 2188         (B) Offer to allow the producing agent of record of the
 2189  corporation policy to continue servicing the policy for at least
 2190  a period of not less than 1 year and offer to pay the agent the
 2191  greater of the insurer’s or the corporation’s usual and
 2192  customary commission for the type of policy written.
 2193  
 2194  If the producing agent is unwilling or unable to accept
 2195  appointment, the new insurer shall pay the agent in accordance
 2196  with sub-sub-sub-subparagraph (A).
 2197         c. For purposes of determining comparable coverage under
 2198  sub-subparagraphs a. and b., the comparison must shall be based
 2199  on those forms and coverages that are reasonably comparable. The
 2200  corporation may rely on a determination of comparable coverage
 2201  and premium made by the producing agent who submits the
 2202  application to the corporation, made in the agent’s capacity as
 2203  the corporation’s agent. A comparison may be made solely of the
 2204  premium with respect to the main building or structure only on
 2205  the following basis: the same coverage A or other building
 2206  limits; the same percentage hurricane deductible that applies on
 2207  an annual basis or that applies to each hurricane for commercial
 2208  residential property; the same percentage of ordinance and law
 2209  coverage, if the same limit is offered by both the corporation
 2210  and the authorized insurer; the same mitigation credits, to the
 2211  extent the same types of credits are offered both by the
 2212  corporation and the authorized insurer; the same method for loss
 2213  payment, such as replacement cost or actual cash value, if the
 2214  same method is offered both by the corporation and the
 2215  authorized insurer in accordance with underwriting rules; and
 2216  any other form or coverage that is reasonably comparable as
 2217  determined by the board. If an application is submitted to the
 2218  corporation for wind-only coverage in the coastal high-risk
 2219  account, the premium for the corporation’s wind-only policy plus
 2220  the premium for the ex-wind policy that is offered by an
 2221  authorized insurer to the applicant must shall be compared to
 2222  the premium for multiperil coverage offered by an authorized
 2223  insurer, subject to the standards for comparison specified in
 2224  this subparagraph. If the corporation or the applicant requests
 2225  from the authorized insurer a breakdown of the premium of the
 2226  offer by types of coverage so that a comparison may be made by
 2227  the corporation or its agent and the authorized insurer refuses
 2228  or is unable to provide such information, the corporation may
 2229  treat the offer as not being an offer of coverage from an
 2230  authorized insurer at the insurer’s approved rate.
 2231         6. Must include rules for classifications of risks and
 2232  rates therefor.
 2233         7. Must provide that if premium and investment income for
 2234  an account attributable to a particular calendar year are in
 2235  excess of projected losses and expenses for the account
 2236  attributable to that year, such excess shall be held in surplus
 2237  in the account. Such surplus must shall be available to defray
 2238  deficits in that account as to future years and shall be used
 2239  for that purpose before prior to assessing assessable insurers
 2240  and assessable insureds as to any calendar year.
 2241         8. Must provide objective criteria and procedures to be
 2242  uniformly applied to for all applicants in determining whether
 2243  an individual risk is so hazardous as to be uninsurable. In
 2244  making this determination and in establishing the criteria and
 2245  procedures, the following must shall be considered:
 2246         a. Whether the likelihood of a loss for the individual risk
 2247  is substantially higher than for other risks of the same class;
 2248  and
 2249         b. Whether the uncertainty associated with the individual
 2250  risk is such that an appropriate premium cannot be determined.
 2251  
 2252  The acceptance or rejection of a risk by the corporation shall
 2253  be construed as the private placement of insurance, and the
 2254  provisions of chapter 120 do shall not apply.
 2255         9. Must provide that the corporation shall make its best
 2256  efforts to procure catastrophe reinsurance at reasonable rates,
 2257  to cover its projected 100-year probable maximum loss as
 2258  determined by the board of governors.
 2259         10. The policies issued by the corporation must provide
 2260  that, if the corporation or the market assistance plan obtains
 2261  an offer from an authorized insurer to cover the risk at its
 2262  approved rates, the risk is no longer eligible for renewal
 2263  through the corporation, except as otherwise provided in this
 2264  subsection.
 2265         11. Corporation policies and applications must include a
 2266  notice that the corporation policy could, under this section, be
 2267  replaced with a policy issued by an authorized insurer which
 2268  that does not provide coverage identical to the coverage
 2269  provided by the corporation. The notice must shall also specify
 2270  that acceptance of corporation coverage creates a conclusive
 2271  presumption that the applicant or policyholder is aware of this
 2272  potential.
 2273         12. May establish, subject to approval by the office,
 2274  different eligibility requirements and operational procedures
 2275  for any line or type of coverage for any specified county or
 2276  area if the board determines that such changes to the
 2277  eligibility requirements and operational procedures are
 2278  justified due to the voluntary market being sufficiently stable
 2279  and competitive in such area or for such line or type of
 2280  coverage and that consumers who, in good faith, are unable to
 2281  obtain insurance through the voluntary market through ordinary
 2282  methods would continue to have access to coverage from the
 2283  corporation. If When coverage is sought in connection with a
 2284  real property transfer, the such requirements and procedures may
 2285  shall not provide for an effective date of coverage later than
 2286  the date of the closing of the transfer as established by the
 2287  transferor, the transferee, and, if applicable, the lender.
 2288         13. Must provide that, with respect to the coastal high
 2289  risk account, any assessable insurer with a surplus as to
 2290  policyholders of $25 million or less writing 25 percent or more
 2291  of its total countrywide property insurance premiums in this
 2292  state may petition the office, within the first 90 days of each
 2293  calendar year, to qualify as a limited apportionment company. A
 2294  regular assessment levied by the corporation on a limited
 2295  apportionment company for a deficit incurred by the corporation
 2296  for the coastal high-risk account in 2006 or thereafter may be
 2297  paid to the corporation on a monthly basis as the assessments
 2298  are collected by the limited apportionment company from its
 2299  insureds pursuant to s. 627.3512, but the regular assessment
 2300  must be paid in full within 12 months after being levied by the
 2301  corporation. A limited apportionment company shall collect from
 2302  its policyholders any emergency assessment imposed under sub
 2303  subparagraph (b)3.d. The plan must shall provide that, if the
 2304  office determines that any regular assessment will result in an
 2305  impairment of the surplus of a limited apportionment company,
 2306  the office may direct that all or part of such assessment be
 2307  deferred as provided in subparagraph (q)4. However, there shall
 2308  be no limitation or deferment of an emergency assessment to be
 2309  collected from policyholders under sub-subparagraph (b)3.d. may
 2310  not be limited or deferred.
 2311         14. Must provide that the corporation appoint as its
 2312  licensed agents only those agents who also hold an appointment
 2313  as defined in s. 626.015(3) with an insurer who at the time of
 2314  the agent’s initial appointment by the corporation is authorized
 2315  to write and is actually writing personal lines residential
 2316  property coverage, commercial residential property coverage, or
 2317  commercial nonresidential property coverage within the state.
 2318         15. Must provide, by July 1, 2007, a premium payment plan
 2319  option to its policyholders which, allows at a minimum, allows
 2320  for quarterly and semiannual payment of premiums. A monthly
 2321  payment plan may, but is not required to, be offered.
 2322         16. Must limit coverage on mobile homes or manufactured
 2323  homes built before prior to 1994 to actual cash value of the
 2324  dwelling rather than replacement costs of the dwelling.
 2325         17. May provide such limits of coverage as the board
 2326  determines, consistent with the requirements of this subsection.
 2327         18. May require commercial property to meet specified
 2328  hurricane mitigation construction features as a condition of
 2329  eligibility for coverage.
 2330         19. Must offer sinkhole coverage. However, effective
 2331  February 1, 2012, coverage is not included for losses to
 2332  appurtenant structures, driveways, sidewalks, decks, or patios
 2333  that are directly or indirectly caused by sinkhole activity. The
 2334  corporation shall exclude such coverage using a notice of
 2335  coverage change, which may be included with the policy renewal,
 2336  and not by issuance of a notice of nonrenewal of the excluded
 2337  coverage upon renewal of the current policy.
 2338         20. As a condition for making payment for damage caused by
 2339  the peril of sinkhole, regardless of whether such payment is
 2340  made pursuant to the contract, mediation, neutral evaluation,
 2341  appraisal, arbitration, settlement, or litigation, the payment
 2342  must be dedicated entirely to the costs of repairing the
 2343  structure or remediation of the land. Unless this condition is
 2344  met, the corporation is prohibited from making payment.
 2345         (d)1. All prospective employees for senior management
 2346  positions, as defined by the plan of operation, are subject to
 2347  background checks as a prerequisite for employment. The office
 2348  shall conduct the background checks on such prospective
 2349  employees pursuant to ss. 624.34, 624.404(3), and 628.261.
 2350         2. On or before July 1 of each year, employees of the
 2351  corporation must are required to sign and submit a statement
 2352  attesting that they do not have a conflict of interest, as
 2353  defined in part III of chapter 112. As a condition of
 2354  employment, all prospective employees must are required to sign
 2355  and submit to the corporation a conflict-of-interest statement.
 2356         3. Senior managers and members of the board of governors
 2357  are subject to the provisions of part III of chapter 112,
 2358  including, but not limited to, the code of ethics and public
 2359  disclosure and reporting of financial interests, pursuant to s.
 2360  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2361  vote on any measure that would inure to his or her special
 2362  private gain or loss; that he or she knows would inure to the
 2363  special private gain or loss of any principal by whom he or she
 2364  is retained or to the parent organization or subsidiary of a
 2365  corporate principal by which he or she is retained, other than
 2366  an agency as defined in s. 112.312; or that he or she knows
 2367  would inure to the special private gain or loss of a relative or
 2368  business associate of the public officer. Before the vote is
 2369  taken, such member shall publicly state to the assembly the
 2370  nature of his or her interest in the matter from which he or she
 2371  is abstaining from voting and, within 15 days after the vote
 2372  occurs, disclose the nature of his or her interest as a public
 2373  record in a memorandum filed with the person responsible for
 2374  recording the minutes of the meeting, who shall incorporate the
 2375  memorandum in the minutes. Senior managers and board members are
 2376  also required to file such disclosures with the Commission on
 2377  Ethics and the Office of Insurance Regulation. The executive
 2378  director of the corporation or his or her designee shall notify
 2379  each existing and newly appointed and existing appointed member
 2380  of the board of governors and senior managers of their duty to
 2381  comply with the reporting requirements of part III of chapter
 2382  112. At least quarterly, the executive director or his or her
 2383  designee shall submit to the Commission on Ethics a list of
 2384  names of the senior managers and members of the board of
 2385  governors who are subject to the public disclosure requirements
 2386  under s. 112.3145.
 2387         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2388  provision of law, an employee or board member may not knowingly
 2389  accept, directly or indirectly, any gift or expenditure from a
 2390  person or entity, or an employee or representative of such
 2391  person or entity, which that has a contractual relationship with
 2392  the corporation or who is under consideration for a contract. An
 2393  employee or board member who fails to comply with subparagraph
 2394  3. or this subparagraph is subject to penalties provided under
 2395  ss. 112.317 and 112.3173.
 2396         5. Any senior manager of the corporation who is employed on
 2397  or after January 1, 2007, regardless of the date of hire, who
 2398  subsequently retires or terminates employment is prohibited from
 2399  representing another person or entity before the corporation for
 2400  2 years after retirement or termination of employment from the
 2401  corporation.
 2402         6. Any senior manager of the corporation who is employed on
 2403  or after January 1, 2007, regardless of the date of hire, who
 2404  subsequently retires or terminates employment is prohibited from
 2405  having any employment or contractual relationship for 2 years
 2406  with an insurer that has entered into a take-out bonus agreement
 2407  with the corporation.
 2408         (n)1. Rates for coverage provided by the corporation must
 2409  shall be actuarially sound and subject to the requirements of s.
 2410  627.062, except as otherwise provided in this paragraph. The
 2411  corporation shall file its recommended rates with the office at
 2412  least annually. The corporation shall provide any additional
 2413  information regarding the rates which the office requires. The
 2414  office shall consider the recommendations of the board and issue
 2415  a final order establishing the rates for the corporation within
 2416  45 days after the recommended rates are filed. The corporation
 2417  may not pursue an administrative challenge or judicial review of
 2418  the final order of the office.
 2419         2. In addition to the rates otherwise determined pursuant
 2420  to this paragraph, the corporation shall impose and collect an
 2421  amount equal to the premium tax provided for in s. 624.509 to
 2422  augment the financial resources of the corporation.
 2423         3. After the public hurricane loss-projection model under
 2424  s. 627.06281 has been found to be accurate and reliable by the
 2425  Florida Commission on Hurricane Loss Projection Methodology, the
 2426  that model shall serve as the minimum benchmark for determining
 2427  the windstorm portion of the corporation’s rates. This
 2428  subparagraph does not require or allow the corporation to adopt
 2429  rates lower than the rates otherwise required or allowed by this
 2430  paragraph.
 2431         4. The rate filings for the corporation which were approved
 2432  by the office and which took effect January 1, 2007, are
 2433  rescinded, except for those rates that were lowered. As soon as
 2434  possible, the corporation shall begin using the lower rates that
 2435  were in effect on December 31, 2006, and shall provide refunds
 2436  to policyholders who have paid higher rates as a result of that
 2437  rate filing. The rates in effect on December 31, 2006, shall
 2438  remain in effect for the 2007 and 2008 calendar years except for
 2439  any rate change that results in a lower rate. The next rate
 2440  change that may increase rates shall take effect pursuant to a
 2441  new rate filing recommended by the corporation and established
 2442  by the office, subject to the requirements of this paragraph.
 2443         5. Beginning on July 15, 2009, and annually each year
 2444  thereafter, the corporation must make a recommended actuarially
 2445  sound rate filing for each personal and commercial line of
 2446  business it writes, to be effective no earlier than January 1,
 2447  2010.
 2448         6. Beginning on or after January 1, 2010, and
 2449  notwithstanding the board’s recommended rates and the office’s
 2450  final order regarding the corporation’s filed rates under
 2451  subparagraph 1., the corporation shall annually implement a rate
 2452  increase each year which, except for sinkhole coverage, does not
 2453  exceed 10 percent for any single policy issued by the
 2454  corporation, excluding coverage changes and surcharges.
 2455         7. The corporation may also implement an increase to
 2456  reflect the effect on the corporation of the cash buildup factor
 2457  pursuant to s. 215.555(5)(b).
 2458         8. The corporation’s implementation of rates as prescribed
 2459  in subparagraph 6. shall cease for any line of business written
 2460  by the corporation upon the corporation’s implementation of
 2461  actuarially sound rates. Thereafter, the corporation shall
 2462  annually make a recommended actuarially sound rate filing for
 2463  each commercial and personal line of business the corporation
 2464  writes.
 2465         (v)1. Effective July 1, 2002, policies of the Residential
 2466  Property and Casualty Joint Underwriting Association shall
 2467  become policies of the corporation. All obligations, rights,
 2468  assets and liabilities of the Residential Property and Casualty
 2469  Joint Underwriting association, including bonds, note and debt
 2470  obligations, and the financing documents pertaining to them
 2471  become those of the corporation as of July 1, 2002. The
 2472  corporation is not required to issue endorsements or
 2473  certificates of assumption to insureds during the remaining term
 2474  of in-force transferred policies.
 2475         2. Effective July 1, 2002, policies of the Florida
 2476  Windstorm Underwriting Association are transferred to the
 2477  corporation and shall become policies of the corporation. All
 2478  obligations, rights, assets, and liabilities of the Florida
 2479  Windstorm Underwriting association, including bonds, note and
 2480  debt obligations, and the financing documents pertaining to them
 2481  are transferred to and assumed by the corporation on July 1,
 2482  2002. The corporation is not required to issue endorsements or
 2483  certificates of assumption to insureds during the remaining term
 2484  of in-force transferred policies.
 2485         3. The Florida Windstorm Underwriting Association and the
 2486  Residential Property and Casualty Joint Underwriting Association
 2487  shall take all actions necessary as may be proper to further
 2488  evidence the transfers and shall provide the documents and
 2489  instruments of further assurance as may reasonably be requested
 2490  by the corporation for that purpose. The corporation shall
 2491  execute assumptions and instruments as the trustees or other
 2492  parties to the financing documents of the Florida Windstorm
 2493  Underwriting Association or the Residential Property and
 2494  Casualty Joint Underwriting Association may reasonably request
 2495  to further evidence the transfers and assumptions, which
 2496  transfers and assumptions, however, are effective on the date
 2497  provided under this paragraph whether or not, and regardless of
 2498  the date on which, the assumptions or instruments are executed
 2499  by the corporation. Subject to the relevant financing documents
 2500  pertaining to their outstanding bonds, notes, indebtedness, or
 2501  other financing obligations, the moneys, investments,
 2502  receivables, choses in action, and other intangibles of the
 2503  Florida Windstorm Underwriting Association shall be credited to
 2504  the coastal high-risk account of the corporation, and those of
 2505  the personal lines residential coverage account and the
 2506  commercial lines residential coverage account of the Residential
 2507  Property and Casualty Joint Underwriting Association shall be
 2508  credited to the personal lines account and the commercial lines
 2509  account, respectively, of the corporation.
 2510         4. Effective July 1, 2002, a new applicant for property
 2511  insurance coverage who would otherwise have been eligible for
 2512  coverage in the Florida Windstorm Underwriting Association is
 2513  eligible for coverage from the corporation as provided in this
 2514  subsection.
 2515         5. The transfer of all policies, obligations, rights,
 2516  assets, and liabilities from the Florida Windstorm Underwriting
 2517  Association to the corporation and the renaming of the
 2518  Residential Property and Casualty Joint Underwriting Association
 2519  as the corporation does not shall in no way affect the coverage
 2520  with respect to covered policies as defined in s. 215.555(2)(c)
 2521  provided to these entities by the Florida Hurricane Catastrophe
 2522  Fund. The coverage provided by the Florida Hurricane Catastrophe
 2523  fund to the Florida Windstorm Underwriting Association based on
 2524  its exposures as of June 30, 2002, and each June 30 thereafter
 2525  shall be redesignated as coverage for the coastal high-risk
 2526  account of the corporation. Notwithstanding any other provision
 2527  of law, the coverage provided by the Florida Hurricane
 2528  Catastrophe fund to the Residential Property and Casualty Joint
 2529  Underwriting Association based on its exposures as of June 30,
 2530  2002, and each June 30 thereafter shall be transferred to the
 2531  personal lines account and the commercial lines account of the
 2532  corporation. Notwithstanding any other provision of law, the
 2533  coastal high-risk account shall be treated, for all Florida
 2534  Hurricane Catastrophe Fund purposes, as if it were a separate
 2535  participating insurer with its own exposures, reimbursement
 2536  premium, and loss reimbursement. Likewise, the personal lines
 2537  and commercial lines accounts shall be viewed together, for all
 2538  Florida Hurricane Catastrophe fund purposes, as if the two
 2539  accounts were one and represent a single, separate participating
 2540  insurer with its own exposures, reimbursement premium, and loss
 2541  reimbursement. The coverage provided by the Florida Hurricane
 2542  Catastrophe fund to the corporation shall constitute and operate
 2543  as a full transfer of coverage from the Florida Windstorm
 2544  Underwriting Association and Residential Property and Casualty
 2545  Joint Underwriting to the corporation.
 2546         (y) It is the intent of the Legislature that the amendments
 2547  to this subsection enacted in 2002 should, over time, reduce the
 2548  probable maximum windstorm losses in the residual markets and
 2549  should reduce the potential assessments to be levied on property
 2550  insurers and policyholders statewide. In furtherance of this
 2551  intent,:
 2552         1. the board shall, on or before February 1 of each year,
 2553  provide a report to the President of the Senate and the Speaker
 2554  of the House of Representatives showing the reduction or
 2555  increase in the 100-year probable maximum loss attributable to
 2556  wind-only coverages and the quota share program under this
 2557  subsection combined, as compared to the benchmark 100-year
 2558  probable maximum loss of the Florida Windstorm Underwriting
 2559  Association. For purposes of this paragraph, the benchmark 100
 2560  year probable maximum loss of the Florida Windstorm Underwriting
 2561  Association is shall be the calculation dated February 2001 and
 2562  based on November 30, 2000, exposures. In order to ensure
 2563  comparability of data, the board shall use the same methods for
 2564  calculating its probable maximum loss as were used to calculate
 2565  the benchmark probable maximum loss.
 2566         2.Beginning December 1, 2010, if the report under
 2567  subparagraph 1. for any year indicates that the 100-year
 2568  probable maximum loss attributable to wind-only coverages and
 2569  the quota share program combined does not reflect a reduction of
 2570  at least 25 percent from the benchmark, the board shall reduce
 2571  the boundaries of the high-risk area eligible for wind-only
 2572  coverages under this subsection in a manner calculated to reduce
 2573  such probable maximum loss to an amount at least 25 percent
 2574  below the benchmark.
 2575         3.Beginning February 1, 2015, if the report under
 2576  subparagraph 1. for any year indicates that the 100-year
 2577  probable maximum loss attributable to wind-only coverages and
 2578  the quota share program combined does not reflect a reduction of
 2579  at least 50 percent from the benchmark, the boundaries of the
 2580  high-risk area eligible for wind-only coverages under this
 2581  subsection shall be reduced by the elimination of any area that
 2582  is not seaward of a line 1,000 feet inland from the Intracoastal
 2583  Waterway.
 2584         Section 20. Paragraph (a) of subsection (5) of section
 2585  627.3511, Florida Statutes, is amended to read:
 2586         627.3511 Depopulation of Citizens Property Insurance
 2587  Corporation.—
 2588         (5) APPLICABILITY.—
 2589         (a) The take-out bonus provided by subsection (2) and the
 2590  exemption from assessment provided by paragraph (3)(a) apply
 2591  only if the corporation policy is replaced by either a standard
 2592  policy including wind coverage or, if consistent with the
 2593  insurer’s underwriting rules as filed with the office, a basic
 2594  policy including wind coverage; however, for with respect to
 2595  risks located in areas where coverage through the coastal high
 2596  risk account of the corporation is available, the replacement
 2597  policy need not provide wind coverage. The insurer must renew
 2598  the replacement policy at approved rates on substantially
 2599  similar terms for four additional 1-year terms, unless canceled
 2600  or not renewed by the policyholder. If an insurer assumes the
 2601  corporation’s obligations for a policy, it must issue a
 2602  replacement policy for a 1-year term upon expiration of the
 2603  corporation policy and must renew the replacement policy at
 2604  approved rates on substantially similar terms for four
 2605  additional 1-year terms, unless canceled or not renewed by the
 2606  policyholder. For each replacement policy canceled or nonrenewed
 2607  by the insurer for any reason during the 5-year coverage period
 2608  required by this paragraph, the insurer must remove from the
 2609  corporation one additional policy covering a risk similar to the
 2610  risk covered by the canceled or nonrenewed policy. In addition
 2611  to these requirements, the corporation must place the bonus
 2612  moneys in escrow for a period of 5 years; such moneys may be
 2613  released from escrow only to pay claims. If the policy is
 2614  canceled or nonrenewed before the end of the 5-year period, the
 2615  amount of the take-out bonus must be prorated for the time
 2616  period the policy was insured. A take-out bonus provided by
 2617  subsection (2) or subsection (6) is shall not be considered
 2618  premium income for purposes of taxes and assessments under the
 2619  Florida Insurance Code and shall remain the property of the
 2620  corporation, subject to the prior security interest of the
 2621  insurer under the escrow agreement until it is released from
 2622  escrow;, and after it is released from escrow it is shall be
 2623  considered an asset of the insurer and credited to the insurer’s
 2624  capital and surplus.
 2625         Section 21. Paragraph (b) of subsection (2) of section
 2626  627.4133, Florida Statutes, is amended to read:
 2627         627.4133 Notice of cancellation, nonrenewal, or renewal
 2628  premium.—
 2629         (2) With respect to any personal lines or commercial
 2630  residential property insurance policy, including, but not
 2631  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2632  condominium association, condominium unit owner’s, apartment
 2633  building, or other policy covering a residential structure or
 2634  its contents:
 2635         (b) The insurer shall give the named insured written notice
 2636  of nonrenewal, cancellation, or termination at least 90 100 days
 2637  before prior to the effective date of the nonrenewal,
 2638  cancellation, or termination. However, the insurer shall give at
 2639  least 100 days’ written notice, or written notice by June 1,
 2640  whichever is earlier, for any nonrenewal, cancellation, or
 2641  termination that would be effective between June 1 and November
 2642  30. The notice must include the reason or reasons for the
 2643  nonrenewal, cancellation, or termination, except that:
 2644         1. A policy covering both a home and motor vehicle may be
 2645  nonrenewed for any reason applicable to either the property or
 2646  motor vehicle insurance after providing 90 days’ notice. The
 2647  insurer shall give the named insured written notice of
 2648  nonrenewal, cancellation, or termination at least 180 days prior
 2649  to the effective date of the nonrenewal, cancellation, or
 2650  termination for a named insured whose residential structure has
 2651  been insured by that insurer or an affiliated insurer for at
 2652  least a 5-year period immediately prior to the date of the
 2653  written notice.
 2654         2. If When cancellation is for nonpayment of premium, at
 2655  least 10 days’ written notice of cancellation accompanied by the
 2656  reason therefor must shall be given. As used in this
 2657  subparagraph, the term “nonpayment of premium” means failure of
 2658  the named insured to discharge when due any of her or his
 2659  obligations in connection with the payment of premiums on a
 2660  policy or any installment of such premium, whether the premium
 2661  is payable directly to the insurer or its agent or indirectly
 2662  under any premium finance plan or extension of credit, or
 2663  failure to maintain membership in an organization if such
 2664  membership is a condition precedent to insurance coverage. The
 2665  term “Nonpayment of premium” also means the failure of a
 2666  financial institution to honor an insurance applicant’s check
 2667  after delivery to a licensed agent for payment of a premium,
 2668  even if the agent has previously delivered or transferred the
 2669  premium to the insurer. If a dishonored check represents the
 2670  initial premium payment, the contract and all contractual
 2671  obligations are shall be void ab initio unless the nonpayment is
 2672  cured within the earlier of 5 days after actual notice by
 2673  certified mail is received by the applicant or 15 days after
 2674  notice is sent to the applicant by certified mail or registered
 2675  mail, and if the contract is void, any premium received by the
 2676  insurer from a third party must shall be refunded to that party
 2677  in full.
 2678         3. If When such cancellation or termination occurs during
 2679  the first 90 days during which the insurance is in force and the
 2680  insurance is canceled or terminated for reasons other than
 2681  nonpayment of premium, at least 20 days’ written notice of
 2682  cancellation or termination accompanied by the reason therefor
 2683  must shall be given unless except where there has been a
 2684  material misstatement or misrepresentation or failure to comply
 2685  with the underwriting requirements established by the insurer.
 2686         4. The requirement for providing written notice of
 2687  nonrenewal by June 1 of any nonrenewal that would be effective
 2688  between June 1 and November 30 does not apply to the following
 2689  situations, but the insurer remains subject to the requirement
 2690  to provide such notice at least 100 days before prior to the
 2691  effective date of nonrenewal:
 2692         a. A policy that is nonrenewed due to a revision in the
 2693  coverage for sinkhole losses and catastrophic ground cover
 2694  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2695  2007-1, Laws of Florida.
 2696         b. A policy that is nonrenewed by Citizens Property
 2697  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2698  that has been assumed by an authorized insurer offering
 2699  replacement or renewal coverage to the policyholder is exempt
 2700  from the notice requirements of paragraph (a) and this
 2701  paragraph. In such cases, the corporation must give the named
 2702  insured written notice of nonrenewal at least 45 days before the
 2703  effective date of the nonrenewal.
 2704  
 2705  After the policy has been in effect for 90 days, the policy may
 2706  shall not be canceled by the insurer unless except when there
 2707  has been a material misstatement, a nonpayment of premium, a
 2708  failure to comply with underwriting requirements established by
 2709  the insurer within 90 days after of the date of effectuation of
 2710  coverage, or a substantial change in the risk covered by the
 2711  policy or if when the cancellation is for all insureds under
 2712  such policies for a given class of insureds. This paragraph does
 2713  not apply to individually rated risks having a policy term of
 2714  less than 90 days.
 2715         5. Notwithstanding any other provision of law, an insurer
 2716  may cancel or nonrenew a property insurance policy after at
 2717  least 45 days notice if the office finds that the early
 2718  cancellation of some or all of the insurer’s policies is
 2719  necessary to protect the best interests of the public or
 2720  policyholders and the office approves the insurer’s plan for
 2721  early cancellation or nonrenewal of some or all of its policies.
 2722  The office may base such finding upon the financial condition of
 2723  the insurer, lack of adequate reinsurance coverage for hurricane
 2724  risk, or other relevant factors. The office may condition its
 2725  finding on the consent of the insurer to be placed under
 2726  administrative supervision pursuant to s. 624.81 or to the
 2727  appointment of a receiver under chapter 631.
 2728         Section 22. Section 627.43141, Florida Statutes, is created
 2729  to read:
 2730         627.43141 Notice of change in policy terms.—
 2731         (1) As used in this section, the term:
 2732         (a) “Change in policy terms” means the modification,
 2733  addition, or deletion of any term, coverage, duty, or condition
 2734  from the previous policy. The correction of typographical or
 2735  scrivener’s errors or the application of mandated legislative
 2736  changes is not a change in policy terms.
 2737         (b) “Policy” means a written contract or written agreement
 2738  for personal lines property and casualty insurance, or the
 2739  certificate of such insurance, by whatever name called, and
 2740  includes all clauses, riders, endorsements, and papers that are
 2741  a part of such policy. The term does not include a binder as
 2742  defined in s. 627.420 unless the duration of the binder period
 2743  exceeds 60 days.
 2744         (c) “Renewal” means the issuance and delivery by an insurer
 2745  of a policy superseding at the end of the policy period a policy
 2746  previously issued and delivered by the same insurer or the
 2747  issuance and delivery of a certificate or notice extending the
 2748  term of a policy beyond its policy period or term. Any policy
 2749  that has a policy period or term of less than 6 months or that
 2750  does not have a fixed expiration date shall, for purposes of
 2751  this section, be considered as written for successive policy
 2752  periods or terms of 6 months.
 2753         (2) A renewal policy may contain a change in policy terms.
 2754  If a renewal policy does contains such change, the insurer must
 2755  give the named insured written notice of the change, which must
 2756  be enclosed along with the written notice of renewal premium
 2757  required by ss. 627.4133 and 627.728. Such notice shall be
 2758  entitled “Notice of Change in Policy Terms.”
 2759         (3) Although not required, proof of mailing or registered
 2760  mailing through the United States Postal Service of the Notice
 2761  of Change in Policy Terms to the named insured at the address
 2762  shown in the policy is sufficient proof of notice.
 2763         (4) Receipt of the premium payment for the renewal policy
 2764  by the insurer is deemed to be acceptance of the new policy
 2765  terms by the named insured.
 2766         (5) If an insurer fails to provide the notice required in
 2767  subsection (2), the original policy terms remain in effect until
 2768  the next renewal and the proper service of the notice, or until
 2769  the effective date of replacement coverage obtained by the named
 2770  insured, whichever occurs first.
 2771         (6) The intent of this section is to:
 2772         (a) Allow an insurer to make a change in policy terms
 2773  without nonrenewing those policyholders that the insurer wishes
 2774  to continue insuring.
 2775         (b) Alleviate concern and confusion to the policyholder
 2776  caused by the required policy nonrenewal for the limited issue
 2777  if an insurer intends to renew the insurance policy, but the new
 2778  policy contains a change in policy terms.
 2779         (c) Encourage policyholders to discuss their coverages with
 2780  their insurance agents.
 2781         Section 23. Section 627.7011, Florida Statutes, is amended
 2782  to read:
 2783         627.7011 Homeowners’ policies; offer of replacement cost
 2784  coverage and law and ordinance coverage.—
 2785         (1) Before Prior to issuing or renewing a homeowner’s
 2786  insurance policy on or after October 1, 2005, or prior to the
 2787  first renewal of a homeowner’s insurance policy on or after
 2788  October 1, 2005, the insurer must offer each of the following:
 2789         (a) A policy or endorsement providing that any loss that
 2790  which is repaired or replaced will be adjusted on the basis of
 2791  replacement costs to the dwelling not exceeding policy limits as
 2792  to the dwelling, rather than actual cash value, but not
 2793  including costs necessary to meet applicable laws and ordinances
 2794  regulating the construction, use, or repair of any property or
 2795  requiring the tearing down of any property, including the costs
 2796  of removing debris.
 2797         (b) A policy or endorsement providing that, subject to
 2798  other policy provisions, any loss that which is repaired or
 2799  replaced at any location will be adjusted on the basis of
 2800  replacement costs to the dwelling not exceeding policy limits as
 2801  to the dwelling, rather than actual cash value, and also
 2802  including costs necessary to meet applicable laws and ordinances
 2803  regulating the construction, use, or repair of any property or
 2804  requiring the tearing down of any property, including the costs
 2805  of removing debris.; However, such additional costs necessary to
 2806  meet applicable laws and ordinances may be limited to either 25
 2807  percent or 50 percent of the dwelling limit, as selected by the
 2808  policyholder, and such coverage applies shall apply only to
 2809  repairs of the damaged portion of the structure unless the total
 2810  damage to the structure exceeds 50 percent of the replacement
 2811  cost of the structure.
 2812  
 2813  An insurer is not required to make the offers required by this
 2814  subsection with respect to the issuance or renewal of a
 2815  homeowner’s policy that contains the provisions specified in
 2816  paragraph (b) for law and ordinance coverage limited to 25
 2817  percent of the dwelling limit, except that the insurer must
 2818  offer the law and ordinance coverage limited to 50 percent of
 2819  the dwelling limit. This subsection does not prohibit the offer
 2820  of a guaranteed replacement cost policy.
 2821         (2) Unless the insurer obtains the policyholder’s written
 2822  refusal of the policies or endorsements specified in subsection
 2823  (1), any policy covering the dwelling is deemed to include the
 2824  law and ordinance coverage limited to 25 percent of the dwelling
 2825  limit. The rejection or selection of alternative coverage shall
 2826  be made on a form approved by the office. The form must shall
 2827  fully advise the applicant of the nature of the coverage being
 2828  rejected. If this form is signed by a named insured, it is will
 2829  be conclusively presumed that there was an informed, knowing
 2830  rejection of the coverage or election of the alternative
 2831  coverage on behalf of all insureds. Unless the policyholder
 2832  requests in writing the coverage specified in this section, it
 2833  need not be provided in or supplemental to any other policy that
 2834  renews, insures, extends, changes, supersedes, or replaces an
 2835  existing policy if when the policyholder has rejected the
 2836  coverage specified in this section or has selected alternative
 2837  coverage. The insurer must provide the such policyholder with
 2838  notice of the availability of such coverage in a form approved
 2839  by the office at least once every 3 years. The failure to
 2840  provide such notice constitutes a violation of this code, but
 2841  does not affect the coverage provided under the policy.
 2842         (3) In the event of a loss for which a dwelling or personal
 2843  property is insured on the basis of replacement costs:
 2844         (a) For a dwelling, the insurer must initially pay at least
 2845  the actual cash value of the insured loss, less any applicable
 2846  deductible. To receive payment from an insurer for replacement
 2847  costs, the policyholder must enter into a contract for the
 2848  performance of building and structural repairs, unless the
 2849  requirement for a contract is waived by the insurer. The insurer
 2850  shall pay any remaining amounts necessary to perform such
 2851  repairs as work is performed and expenses are incurred. The
 2852  insurer or any contractor or subcontractor may not require the
 2853  policyholder to advance payment for such repairs or expenses,
 2854  with the exception of incidental expenses to mitigate further
 2855  damage. If a total loss of a dwelling occurs, the insurer shall
 2856  pay the replacement cost coverage without reservation or
 2857  holdback of any depreciation in value, pursuant to s. 627.702.
 2858         (b) For personal property:
 2859         1. The insurer must offer coverage under which the insurer
 2860  is obligated to pay the replacement cost without reservation or
 2861  holdback for any depreciation in value, whether or not the
 2862  insured replaces the property.
 2863         2. The insurer may also offer coverage under which the
 2864  insurer may limit the initial payment to the actual cash value
 2865  of the personal property to be replaced, require the insured to
 2866  provide receipts for the purchase of the property financed by
 2867  the initial payment, use such receipts to make the next payment
 2868  requested by the insured for the replacement of insured
 2869  property, and continue this process until the insured remits all
 2870  receipts up to the policy limits for replacement costs. The
 2871  insurer must provide clear notice of this process in the
 2872  insurance contract. The insurer may not require the policyholder
 2873  to advance payment for the replaced property, the insurer shall
 2874  pay the replacement cost without reservation or holdback of any
 2875  depreciation in value, whether or not the insured replaces or
 2876  repairs the dwelling or property.
 2877         (4) A Any homeowner’s insurance policy issued or renewed on
 2878  or after October 1, 2005, must include in bold type no smaller
 2879  than 18 points the following statement:
 2880         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2881         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2882         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2883         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2884         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2885         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2886  
 2887  The intent of this subsection is to encourage policyholders to
 2888  purchase sufficient coverage to protect them in case events
 2889  excluded from the standard homeowners policy, such as law and
 2890  ordinance enforcement and flood, combine with covered events to
 2891  produce damage or loss to the insured property. The intent is
 2892  also to encourage policyholders to discuss these issues with
 2893  their insurance agent.
 2894         (5) Nothing in This section does not: shall be construed to
 2895         (a) Apply to policies not considered to be “homeowners’
 2896  policies,” as that term is commonly understood in the insurance
 2897  industry. This section specifically does not
 2898         (b) Apply to mobile home policies. Nothing in this section
 2899         (c) Limit shall be construed as limiting the ability of an
 2900  any insurer to reject or nonrenew any insured or applicant on
 2901  the grounds that the structure does not meet underwriting
 2902  criteria applicable to replacement cost or law and ordinance
 2903  policies or for other lawful reasons.
 2904         (d)(6)This section does not Prohibit an insurer from
 2905  limiting its liability under a policy or endorsement providing
 2906  that loss will be adjusted on the basis of replacement costs to
 2907  the lesser of:
 2908         1.(a) The limit of liability shown on the policy
 2909  declarations page;
 2910         2.(b) The reasonable and necessary cost to repair the
 2911  damaged, destroyed, or stolen covered property; or
 2912         3.(c) The reasonable and necessary cost to replace the
 2913  damaged, destroyed, or stolen covered property.
 2914         (e)(7)This section does not Prohibit an insurer from
 2915  exercising its right to repair damaged property in compliance
 2916  with its policy and s. 627.702(7).
 2917         Section 24. Paragraph (a) of subsection (5) of section
 2918  627.70131, Florida Statutes, is amended to read:
 2919         627.70131 Insurer’s duty to acknowledge communications
 2920  regarding claims; investigation.—
 2921         (5)(a) Within 90 days after an insurer receives notice of
 2922  an initial, reopened, or supplemental a property insurance claim
 2923  from a policyholder, the insurer shall pay or deny such claim or
 2924  a portion of the claim unless the failure to pay such claim or a
 2925  portion of the claim is caused by factors beyond the control of
 2926  the insurer which reasonably prevent such payment. Any payment
 2927  of an initial or supplemental a claim or portion of such a claim
 2928  made paid 90 days after the insurer receives notice of the
 2929  claim, or made paid more than 15 days after there are no longer
 2930  factors beyond the control of the insurer which reasonably
 2931  prevented such payment, whichever is later, bears shall bear
 2932  interest at the rate set forth in s. 55.03. Interest begins to
 2933  accrue from the date the insurer receives notice of the claim.
 2934  The provisions of this subsection may not be waived, voided, or
 2935  nullified by the terms of the insurance policy. If there is a
 2936  right to prejudgment interest, the insured shall select whether
 2937  to receive prejudgment interest or interest under this
 2938  subsection. Interest is payable when the claim or portion of the
 2939  claim is paid. Failure to comply with this subsection
 2940  constitutes a violation of this code. However, failure to comply
 2941  with this subsection does shall not form the sole basis for a
 2942  private cause of action.
 2943         Section 25. The Legislature finds and declares:
 2944         (1) There is a compelling state interest in maintaining a
 2945  viable and orderly private-sector market for property insurance
 2946  in this state. The lack of a viable and orderly property market
 2947  reduces the availability of property insurance coverage to state
 2948  residents, increases the cost of property insurance, and
 2949  increases the state’s reliance on a residual property insurance
 2950  market and its potential for imposing assessments on
 2951  policyholders throughout the state.
 2952         (2) In 2005, the Legislature revised ss. 627.706627.7074,
 2953  Florida Statutes, to adopt certain geological or technical
 2954  terms; to increase reliance on objective, scientific testing
 2955  requirements; and generally to reduce the number of sinkhole
 2956  claims and related disputes arising under prior law. The
 2957  Legislature determined that since the enactment of these
 2958  statutory revisions, both private-sector insurers and Citizens
 2959  Property Insurance Corporation have, nevertheless, continued to
 2960  experience high claims frequency and severity for sinkhole
 2961  insurance claims. In addition, many properties remain unrepaired
 2962  even after loss payments, which reduces the local property tax
 2963  base and adversely affects the real estate market. Therefore,
 2964  the Legislature finds that losses associated with sinkhole
 2965  claims adversely affect the public health, safety, and welfare
 2966  of this state and its citizens.
 2967         (3) Pursuant to sections 19 through 24 of this act,
 2968  technical or scientific definitions adopted in the 2005
 2969  legislation are clarified to implement and advance the
 2970  Legislature’s intended reduction of sinkhole claims and
 2971  disputes. The legal presumption intended by the Legislature is
 2972  clarified to reduce disputes and litigation associated with the
 2973  technical reviews associated with sinkhole claims. Certain other
 2974  revisions to ss. 627.706627.7074, Florida Statutes, are enacted
 2975  to advance legislative intent to rely on scientific or technical
 2976  determinations relating to sinkholes and sinkhole claims, reduce
 2977  the number and cost of disputes relating to sinkhole claims, and
 2978  ensure that repairs are made commensurate with the scientific
 2979  and technical determinations and insurance claims payments.
 2980         Section 26. Section 627.706, Florida Statutes, is reordered
 2981  and amended to read:
 2982         627.706 Sinkhole insurance; catastrophic ground cover
 2983  collapse; definitions.—
 2984         (1) Every insurer authorized to transact property insurance
 2985  in this state must shall provide coverage for a catastrophic
 2986  ground cover collapse. However, the insurer may restrict such
 2987  coverage to the principal building, as defined in the applicable
 2988  policy. The insurer may and shall make available, for an
 2989  appropriate additional premium, coverage for sinkhole losses on
 2990  any structure, including the contents of personal property
 2991  contained therein, to the extent provided in the form to which
 2992  the coverage attaches. A policy for residential property
 2993  insurance may include a deductible amount applicable to sinkhole
 2994  losses, including any expenses incurred by an insurer
 2995  investigating whether sinkhole activity is present. The
 2996  deductible may be equal to 1 percent, 2 percent, 5 percent, or
 2997  10 percent of the policy dwelling limits, with appropriate
 2998  premium discounts offered with each deductible amount.
 2999         (2) As used in ss. 627.706-627.7074, and as used in
 3000  connection with any policy providing coverage for a catastrophic
 3001  ground cover collapse or for sinkhole losses, the term:
 3002         (a) “Catastrophic ground cover collapse” means geological
 3003  activity that results in all the following:
 3004         1. The abrupt collapse of the ground cover;
 3005         2. A depression in the ground cover clearly visible to the
 3006  naked eye;
 3007         3. Structural damage to the covered building, including the
 3008  foundation; and
 3009         4. The insured structure being condemned and ordered to be
 3010  vacated by the governmental agency authorized by law to issue
 3011  such an order for that structure.
 3012  
 3013  Contents coverage applies if there is a loss resulting from a
 3014  catastrophic ground cover collapse. Structural Damage consisting
 3015  merely of the settling or cracking of a foundation, structure,
 3016  or building does not constitute a loss resulting from a
 3017  catastrophic ground cover collapse.
 3018         (b) “Neutral evaluation” means the alternative dispute
 3019  resolution provided in s. 627.7074.
 3020         (c) “Neutral evaluator” means a professional engineer or a
 3021  professional geologist who has completed a course of study in
 3022  alternative dispute resolution designed or approved by the
 3023  department for use in the neutral evaluation process and who is
 3024  determined to be fair and impartial.
 3025         (f)(b) “Sinkhole” means a landform created by subsidence of
 3026  soil, sediment, or rock as underlying strata are dissolved by
 3027  groundwater. A sinkhole forms may form by collapse into
 3028  subterranean voids created by dissolution of limestone or
 3029  dolostone or by subsidence as these strata are dissolved.
 3030         (h)(c) “Sinkhole loss” means structural damage to the
 3031  covered building, including the foundation, caused by sinkhole
 3032  activity. Contents coverage and additional living expenses shall
 3033  apply only if there is structural damage to the covered building
 3034  caused by sinkhole activity.
 3035         (g)(d) “Sinkhole activity” means settlement or systematic
 3036  weakening of the earth supporting such property only if the when
 3037  such settlement or systematic weakening results from
 3038  contemporary movement or raveling of soils, sediments, or rock
 3039  materials into subterranean voids created by the effect of water
 3040  on a limestone or similar rock formation.
 3041         (d)(e) “Professional engineer” means a person, as defined
 3042  in s. 471.005, who has a bachelor’s degree or higher in
 3043  engineering with a specialty in the geotechnical engineering
 3044  field. A professional engineer must also have geotechnical
 3045  experience and expertise in the identification of sinkhole
 3046  activity as well as other potential causes of structural damage
 3047  to the structure.
 3048         (e)(f) “Professional geologist” means a person, as defined
 3049  in by s. 492.102, who has a bachelor’s degree or higher in
 3050  geology or related earth science and with expertise in the
 3051  geology of Florida. A professional geologist must have
 3052  geological experience and expertise in the identification of
 3053  sinkhole activity as well as other potential geologic causes of
 3054  structural damage to the structure.
 3055         (i) “Structural damage” means:
 3056         1. A covered building that suffers foundation movement
 3057  outside an acceptable variance under the applicable building
 3058  code; and
 3059         2. Damage to a covered building, including the foundation,
 3060  which prevents the primary structural members or primary
 3061  structural systems from supporting the loads and forces they
 3062  were designed to support.
 3063         (3) On or before June 1, 2007, Every insurer authorized to
 3064  transact property insurance in this state shall make a proper
 3065  filing with the office for the purpose of extending the
 3066  appropriate forms of property insurance to include coverage for
 3067  catastrophic ground cover collapse or for sinkhole losses.
 3068  coverage for catastrophic ground cover collapse may not go into
 3069  effect until the effective date provided for in the filing
 3070  approved by the office.
 3071         (3)(4) Insurers offering policies that exclude coverage for
 3072  sinkhole losses must shall inform policyholders in bold type of
 3073  not less than 14 points as follows: “YOUR POLICY PROVIDES
 3074  COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS
 3075  IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE,
 3076  YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU
 3077  MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN
 3078  ADDITIONAL PREMIUM.”
 3079         (4)(5) An insurer offering sinkhole coverage to
 3080  policyholders before or after the adoption of s. 30, chapter
 3081  2007-1, Laws of Florida, may nonrenew the policies of
 3082  policyholders maintaining sinkhole coverage in Pasco County or
 3083  Hernando County, at the option of the insurer, and provide an
 3084  offer of coverage that to such policyholders which includes
 3085  catastrophic ground cover collapse and excludes sinkhole
 3086  coverage. Insurers acting in accordance with this subsection are
 3087  subject to the following requirements:
 3088         (a) Policyholders must be notified that a nonrenewal is for
 3089  purposes of removing sinkhole coverage, and that the
 3090  policyholder is still being offered a policy that provides
 3091  coverage for catastrophic ground cover collapse.
 3092         (b) Policyholders must be provided an actuarially
 3093  reasonable premium credit or discount for the removal of
 3094  sinkhole coverage and provision of only catastrophic ground
 3095  cover collapse.
 3096         (c) Subject to the provisions of this subsection and the
 3097  insurer’s approved underwriting or insurability guidelines, the
 3098  insurer may shall provide each policyholder with the opportunity
 3099  to purchase an endorsement to his or her policy providing
 3100  sinkhole coverage and may require an inspection of the property
 3101  before issuance of a sinkhole coverage endorsement.
 3102         (d) Section 624.4305 does not apply to nonrenewal notices
 3103  issued pursuant to this subsection.
 3104         (5) Any claim, including, but not limited to, initial,
 3105  supplemental, and reopened claims under an insurance policy that
 3106  provides sinkhole coverage is barred unless notice of the claim
 3107  was given to the insurer in accordance with the terms of the
 3108  policy within 2 years after the policyholder knew or reasonably
 3109  should have known about the sinkhole loss.
 3110         Section 27. Section 627.7061, Florida Statutes, is amended
 3111  to read:
 3112         627.7061 Coverage inquiries.—Inquiries about coverage on a
 3113  property insurance contract are not claim activity, unless an
 3114  actual claim is filed by the policyholder which insured that
 3115  results in a company investigation of the claim.
 3116         Section 28. Section 627.7065, Florida Statutes, is
 3117  repealed.
 3118         Section 29. Section 627.707, Florida Statutes, is amended
 3119  to read:
 3120         627.707 Standards for Investigation of sinkhole claims by
 3121  policyholders insurers; insurer payment; nonrenewals.—Upon
 3122  receipt of a claim for a sinkhole loss to a covered building, an
 3123  insurer must meet the following standards in investigating a
 3124  claim:
 3125         (1) The insurer must inspect make an inspection of the
 3126  policyholder’s insured’s premises to determine if there is
 3127  structural has been physical damage that to the structure which
 3128  may be the result of sinkhole activity.
 3129         (2) If the insurer confirms that structural damage exists
 3130  but is unable to identify a valid cause of such damage or
 3131  discovers that such damage is consistent with sinkhole loss
 3132  Following the insurer’s initial inspection, the insurer shall
 3133  engage a professional engineer or a professional geologist to
 3134  conduct testing as provided in s. 627.7072 to determine the
 3135  cause of the loss within a reasonable professional probability
 3136  and issue a report as provided in s. 627.7073, only if sinkhole
 3137  loss is covered under the policy. Except as provided in
 3138  subsection (6), the fees and costs of the professional engineer
 3139  or professional geologist shall be paid by the insurer.:
 3140         (a) The insurer is unable to identify a valid cause of the
 3141  damage or discovers damage to the structure which is consistent
 3142  with sinkhole loss; or
 3143         (b) The policyholder demands testing in accordance with
 3144  this section or s. 627.7072.
 3145         (3) Following the initial inspection of the policyholder’s
 3146  insured premises, the insurer shall provide written notice to
 3147  the policyholder disclosing the following information:
 3148         (a) What the insurer has determined to be the cause of
 3149  damage, if the insurer has made such a determination.
 3150         (b) A statement of the circumstances under which the
 3151  insurer is required to engage a professional engineer or a
 3152  professional geologist to verify or eliminate sinkhole loss and
 3153  to engage a professional engineer to make recommendations
 3154  regarding land and building stabilization and foundation repair.
 3155         (c) A statement regarding the right of the policyholder to
 3156  request testing by a professional engineer or a professional
 3157  geologist and the circumstances under which the policyholder may
 3158  demand certain testing.
 3159         (4) If the insurer determines that there is no sinkhole
 3160  loss, the insurer may deny the claim. If coverage for sinkhole
 3161  loss is available and If the insurer denies the claim on such
 3162  basis, without performing testing under s. 627.7072, the
 3163  policyholder may demand testing by the insurer under s.
 3164  627.7072. The policyholder’s demand for testing must be
 3165  communicated to the insurer in writing within 60 days after the
 3166  policyholder’s receipt of the insurer’s denial of the claim.
 3167         (5)(a)Subject to paragraph (b), If a sinkhole loss is
 3168  verified, the insurer shall pay to stabilize the land and
 3169  building and repair the foundation in accordance with the
 3170  recommendations of the professional engineer retained pursuant
 3171  to subsection (2), as provided under s. 627.7073, and in
 3172  consultation with notice to the policyholder, subject to the
 3173  coverage and terms of the policy. The insurer shall pay for
 3174  other repairs to the structure and contents in accordance with
 3175  the terms of the policy.
 3176         (a)(b) The insurer may limit its total claims payment to
 3177  the actual cash value of the sinkhole loss, which does not
 3178  include including underpinning or grouting or any other repair
 3179  technique performed below the existing foundation of the
 3180  building, until the policyholder enters into a contract for the
 3181  performance of building stabilization or foundation repairs in
 3182  accordance with the recommendations set forth in the insurer’s
 3183  report issued pursuant to s. 627.7073.
 3184         (b) In order to prevent additional damage to the building
 3185  or structure, the policyholder must enter into a contract for
 3186  the performance of building stabilization or foundation repairs
 3187  within 90 days after the insurance company confirms coverage for
 3188  the sinkhole loss and notifies the policyholder of such
 3189  confirmation. This time period is tolled if either party invokes
 3190  the neutral evaluation process.
 3191         (c) After the policyholder enters into the contract for the
 3192  performance of building stabilization or foundation repairs, the
 3193  insurer shall pay the amounts necessary to begin and perform
 3194  such repairs as the work is performed and the expenses are
 3195  incurred. The insurer may not require the policyholder to
 3196  advance payment for such repairs. If repair covered by a
 3197  personal lines residential property insurance policy has begun
 3198  and the professional engineer selected or approved by the
 3199  insurer determines that the repair cannot be completed within
 3200  the policy limits, the insurer must either complete the
 3201  professional engineer’s recommended repair or tender the policy
 3202  limits to the policyholder without a reduction for the repair
 3203  expenses incurred.
 3204         (d) The stabilization and all other repairs to the
 3205  structure and contents must be completed within 12 months after
 3206  entering into the contract for repairs described in paragraph
 3207  (b) unless:
 3208         1. There is a mutual agreement between the insurer and the
 3209  policyholder;
 3210         2. The claim is involved with the neutral evaluation
 3211  process;
 3212         3. The claim is in litigation; or
 3213         4. The claim is under appraisal.
 3214         (e)(c) Upon the insurer’s obtaining the written approval of
 3215  the policyholder and any lienholder, the insurer may make
 3216  payment directly to the persons selected by the policyholder to
 3217  perform the land and building stabilization and foundation
 3218  repairs. The decision by the insurer to make payment to such
 3219  persons does not hold the insurer liable for the work performed.
 3220  The policyholder may not accept a rebate from any person
 3221  performing the repairs specified in this section. If a
 3222  policyholder does receive a rebate, coverage is void and the
 3223  policyholder must refund the amount of the rebate to the
 3224  insurer. Any person making the repairs specified in this section
 3225  who offers a rebate, or any policyholder who accepts a rebate
 3226  for such repairs, commits insurance fraud punishable as a third
 3227  degree felony as provided in s. 775.082, s. 775.083, or s.
 3228  775.084.
 3229         (6) Except as provided in subsection (7), the fees and
 3230  costs of the professional engineer or the professional geologist
 3231  shall be paid by the insurer.
 3232         (6)(7) If the insurer obtains, pursuant to s. 627.7073,
 3233  written certification that there is no sinkhole loss or that the
 3234  cause of the damage was not sinkhole activity, and if the
 3235  policyholder has submitted the sinkhole claim without good faith
 3236  grounds for submitting such claim, the policyholder shall
 3237  reimburse the insurer for 50 percent of the actual costs of the
 3238  analyses and services provided under ss. 627.7072 and 627.7073;
 3239  however, a policyholder is not required to reimburse an insurer
 3240  more than the deductible or $2,500, whichever is greater, with
 3241  respect to any claim. A policyholder is required to pay
 3242  reimbursement under this subsection only if the policyholder
 3243  requested the testing and report provided pursuant to ss.
 3244  627.7072 and 627.7073 and the insurer, before prior to ordering
 3245  the analysis under s. 627.7072, informs the policyholder in
 3246  writing of the policyholder’s potential liability for
 3247  reimbursement and gives the policyholder the opportunity to
 3248  withdraw the claim.
 3249         (7)(8)An No insurer may not shall nonrenew any policy of
 3250  property insurance on the basis of filing of claims for partial
 3251  loss caused by sinkhole damage or clay shrinkage if as long as
 3252  the total of such payments does not equal or exceed the current
 3253  policy limits of coverage for the policy in effect on the date
 3254  of loss, for property damage to the covered building, as set
 3255  forth on the declarations page, or if and provided the
 3256  policyholder insured has repaired the structure in accordance
 3257  with the engineering recommendations made pursuant to subsection
 3258  (2) upon which any payment or policy proceeds were based. If the
 3259  insurer pays such limits, it may nonrenew the policy.
 3260         (8)(9) The insurer may engage a professional structural
 3261  engineer to make recommendations as to the repair of the
 3262  structure.
 3263         Section 30. Section 627.7073, Florida Statutes, is amended
 3264  to read:
 3265         627.7073 Sinkhole reports.—
 3266         (1) Upon completion of testing as provided in s. 627.7072,
 3267  the professional engineer or professional geologist shall issue
 3268  a report and certification to the insurer and the policyholder
 3269  as provided in this section.
 3270         (a) Sinkhole loss is verified if, based upon tests
 3271  performed in accordance with s. 627.7072, a professional
 3272  engineer or a professional geologist issues a written report and
 3273  certification stating:
 3274         1. That structural damage to the covered building has been
 3275  identified within a reasonable professional probability.
 3276         2.1. That the cause of the actual physical and structural
 3277  damage is sinkhole activity within a reasonable professional
 3278  probability.
 3279         3.2. That the analyses conducted were of sufficient scope
 3280  to identify sinkhole activity as the cause of damage within a
 3281  reasonable professional probability.
 3282         4.3. A description of the tests performed.
 3283         5.4. A recommendation by the professional engineer of
 3284  methods for stabilizing the land and building and for making
 3285  repairs to the foundation.
 3286         (b) If there is no structural damage or if sinkhole
 3287  activity is eliminated as the cause of such damage to the
 3288  covered building structure, the professional engineer or
 3289  professional geologist shall issue a written report and
 3290  certification to the policyholder and the insurer stating:
 3291         1. That there is no structural damage or the cause of such
 3292  the damage is not sinkhole activity within a reasonable
 3293  professional probability.
 3294         2. That the analyses and tests conducted were of sufficient
 3295  scope to eliminate sinkhole activity as the cause of the
 3296  structural damage within a reasonable professional probability.
 3297         3. A statement of the cause of the structural damage within
 3298  a reasonable professional probability.
 3299         4. A description of the tests performed.
 3300         (c) All of the respective findings, opinions, and
 3301  recommendations of the insurer’s professional engineer or
 3302  professional geologist as to the cause of distress to the
 3303  property and all of the findings, opinions, and recommendations
 3304  of the insurer’s professional engineer as to land and building
 3305  stabilization and foundation repair set forth by s. 627.7072
 3306  shall be presumed correct, which presumption shifts the burden
 3307  of proof in accordance with s. 90.302(2). The presumption of
 3308  correctness is based upon public policy concerns regarding the
 3309  affordability of sinkhole coverage, consistency in claims
 3310  handling, and a reduction in the number of disputed sinkhole
 3311  claims.
 3312         (2)(a)An Any insurer that has paid a claim for a sinkhole
 3313  loss shall file a copy of the report and certification, prepared
 3314  pursuant to subsection (1), including the legal description of
 3315  the real property and the name of the property owner, the
 3316  neutral evaluator’s report, if any, which indicates that
 3317  sinkhole activity caused the damage claimed, a copy of the
 3318  certification indicating that stabilization has been completed,
 3319  if applicable, and the amount of the payment, with the county
 3320  clerk of court, who shall record the report and certification.
 3321  The insurer shall bear the cost of filing and recording one or
 3322  more reports and certifications the report and certification.
 3323  There shall be no cause of action or liability against an
 3324  insurer for compliance with this section.
 3325         (a) The recording of the report and certification does not:
 3326         1. Constitute a lien, encumbrance, or restriction on the
 3327  title to the real property or constitute a defect in the title
 3328  to the real property;
 3329         2. Create any cause of action or liability against any
 3330  grantor of the real property for breach of any warranty of good
 3331  title or warranty against encumbrances; or
 3332         3. Create any cause of action or liability against any
 3333  title insurer that insures the title to the real property.
 3334         (b) As a precondition to accepting payment for a sinkhole
 3335  loss, the policyholder must file a copy of any sinkhole report
 3336  regarding the insured property which was prepared on behalf or
 3337  at the request of the policyholder. The policyholder shall bear
 3338  the cost of filing and recording the sinkhole report. The
 3339  recording of the report does not:
 3340         1. Constitute a lien, encumbrance, or restriction on the
 3341  title to the real property or constitute a defect in the title
 3342  to the real property;
 3343         2. Create any cause of action or liability against any
 3344  grantor of the real property for breach of any warranty of good
 3345  title or warranty against encumbrances; or
 3346         3. Create any cause of action or liability against a title
 3347  insurer that insures the title to the real property.
 3348         (c)(b) The seller of real property upon which a sinkhole
 3349  claim has been made by the seller and paid by the insurer must
 3350  shall disclose to the buyer of such property, before the
 3351  closing, that a claim has been paid and whether or not the full
 3352  amount of the proceeds were used to repair the sinkhole damage.
 3353         (3) Upon completion of any building stabilization or
 3354  foundation repairs for a verified sinkhole loss, the
 3355  professional engineer responsible for monitoring the repairs
 3356  shall issue a report to the property owner which specifies what
 3357  repairs have been performed and certifies within a reasonable
 3358  degree of professional probability that such repairs have been
 3359  properly performed. The professional engineer issuing the report
 3360  shall file a copy of the report and certification, which
 3361  includes a legal description of the real property and the name
 3362  of the property owner, with the county clerk of the court, who
 3363  shall record the report and certification. This subsection does
 3364  not create liability for an insurer based on any representation
 3365  or certification by a professional engineer related to the
 3366  stabilization or foundation repairs for the verified sinkhole
 3367  loss.
 3368         Section 31. Section 627.7074, Florida Statutes, is amended
 3369  to read:
 3370         627.7074 Alternative procedure for resolution of disputed
 3371  sinkhole insurance claims.—
 3372         (1) As used in this section, the term:
 3373         (a) “Neutral evaluation” means the alternative dispute
 3374  resolution provided for in this section.
 3375         (b) “Neutral evaluator” means a professional engineer or a
 3376  professional geologist who has completed a course of study in
 3377  alternative dispute resolution designed or approved by the
 3378  department for use in the neutral evaluation process, who is
 3379  determined to be fair and impartial.
 3380         (1)(2)(a) The department shall:
 3381         (a) Certify and maintain a list of persons who are neutral
 3382  evaluators.
 3383         (b) The department shall Prepare a consumer information
 3384  pamphlet for distribution by insurers to policyholders which
 3385  clearly describes the neutral evaluation process and includes
 3386  information and forms necessary for the policyholder to request
 3387  a neutral evaluation.
 3388         (2) Neutral evaluation is available to either party if a
 3389  sinkhole report has been issued pursuant to s. 627.7073. At a
 3390  minimum, neutral evaluation must determine:
 3391         (a) Causation;
 3392         (b) All methods of stabilization and repair both above and
 3393  below ground;
 3394         (c) The costs for stabilization and all repairs; and
 3395         (d) Information necessary to carry out subsection (12).
 3396         (3) Following the receipt of the report provided under s.
 3397  627.7073 or the denial of a claim for a sinkhole loss, the
 3398  insurer shall notify the policyholder of his or her right to
 3399  participate in the neutral evaluation program under this
 3400  section. Neutral evaluation supersedes the alternative dispute
 3401  resolution process under s. 627.7015, but does not invalidate
 3402  the appraisal clause of the insurance policy. The insurer shall
 3403  provide to the policyholder the consumer information pamphlet
 3404  prepared by the department pursuant to subsection (1)
 3405  electronically or by United States mail paragraph (2)(b).
 3406         (4) Neutral evaluation is nonbinding, but mandatory if
 3407  requested by either party. A request for neutral evaluation may
 3408  be filed with the department by the policyholder or the insurer
 3409  on a form approved by the department. The request for neutral
 3410  evaluation must state the reason for the request and must
 3411  include an explanation of all the issues in dispute at the time
 3412  of the request. Filing a request for neutral evaluation tolls
 3413  the applicable time requirements for filing suit for a period of
 3414  60 days following the conclusion of the neutral evaluation
 3415  process or the time prescribed in s. 95.11, whichever is later.
 3416         (5) Neutral evaluation shall be conducted as an informal
 3417  process in which formal rules of evidence and procedure need not
 3418  be observed. A party to neutral evaluation is not required to
 3419  attend neutral evaluation if a representative of the party
 3420  attends and has the authority to make a binding decision on
 3421  behalf of the party. All parties shall participate in the
 3422  evaluation in good faith. The neutral evaluator must be allowed
 3423  reasonable access to the interior and exterior of insured
 3424  structures to be evaluated or for which a claim has been made.
 3425  Any reports initiated by the policyholder, or an agent of the
 3426  policyholder, confirming a sinkhole loss or disputing another
 3427  sinkhole report regarding insured structures must be provided to
 3428  the neutral evaluator before the evaluator’s physical inspection
 3429  of the insured property.
 3430         (6) The insurer shall pay reasonable the costs associated
 3431  with the neutral evaluation. However, if a party chooses to hire
 3432  a court reporter or stenographer to contemporaneously record and
 3433  document the neutral evaluation, that party must bear such
 3434  costs.
 3435         (7) Upon receipt of a request for neutral evaluation, the
 3436  department shall provide the parties a list of certified neutral
 3437  evaluators. The parties shall mutually select a neutral
 3438  evaluator from the list and promptly inform the department. If
 3439  the parties cannot agree to a neutral evaluator within 10
 3440  business days, The department shall allow the parties to submit
 3441  requests to disqualify evaluators on the list for cause.
 3442         (a) The department shall disqualify neutral evaluators for
 3443  cause based only on any of the following grounds:
 3444         1. A familial relationship exists between the neutral
 3445  evaluator and either party or a representative of either party
 3446  within the third degree.
 3447         2. The proposed neutral evaluator has, in a professional
 3448  capacity, previously represented either party or a
 3449  representative of either party, in the same or a substantially
 3450  related matter.
 3451         3. The proposed neutral evaluator has, in a professional
 3452  capacity, represented another person in the same or a
 3453  substantially related matter and that person’s interests are
 3454  materially adverse to the interests of the parties. The term
 3455  “substantially related matter” means participation by the
 3456  neutral evaluator on the same claim, property, or adjacent
 3457  property.
 3458         4. The proposed neutral evaluator has, within the preceding
 3459  5 years, worked as an employer or employee of any party to the
 3460  case.
 3461         (b) The parties shall appoint a neutral evaluator from the
 3462  department list and promptly inform the department. If the
 3463  parties cannot agree to a neutral evaluator within 14 days, the
 3464  department shall appoint a neutral evaluator from the list of
 3465  certified neutral evaluators. The department shall allow each
 3466  party to disqualify two neutral evaluators without cause. Upon
 3467  selection or appointment, the department shall promptly refer
 3468  the request to the neutral evaluator.
 3469         (c) Within 14 5 business days after the referral, the
 3470  neutral evaluator shall notify the policyholder and the insurer
 3471  of the date, time, and place of the neutral evaluation
 3472  conference. The conference may be held by telephone, if feasible
 3473  and desirable. The neutral evaluator shall make reasonable
 3474  efforts to hold the neutral evaluation conference shall be held
 3475  within 90 45 days after the receipt of the request by the
 3476  department. Failure of the neutral evaluator to hold the
 3477  conference within 90 days does not invalidate either party’s
 3478  right to neutral evaluation or to a neutral evaluation
 3479  conference held outside this timeframe.
 3480         (8) The department shall adopt rules of procedure for the
 3481  neutral evaluation process.
 3482         (8)(9) For policyholders not represented by an attorney, a
 3483  consumer affairs specialist of the department or an employee
 3484  designated as the primary contact for consumers on issues
 3485  relating to sinkholes under s. 20.121 shall be available for
 3486  consultation to the extent that he or she may lawfully do so.
 3487         (9)(10) Evidence of an offer to settle a claim during the
 3488  neutral evaluation process, as well as any relevant conduct or
 3489  statements made in negotiations concerning the offer to settle a
 3490  claim, is inadmissible to prove liability or absence of
 3491  liability for the claim or its value, except as provided in
 3492  subsection (14) (13).
 3493         (10)(11)Regardless of when noticed, any court proceeding
 3494  related to the subject matter of the neutral evaluation shall be
 3495  stayed pending completion of the neutral evaluation and for 5
 3496  days after the filing of the neutral evaluator’s report with the
 3497  court.
 3498         (11) If, based upon his or her professional training and
 3499  credentials, a neutral evaluator is qualified to determine only
 3500  disputes relating to causation or method of repair, the
 3501  department shall allow the neutral evaluator to enlist the
 3502  assistance of another professional from the neutral evaluators
 3503  list not previously stricken, who, based upon his or her
 3504  professional training and credentials, is able to provide an
 3505  opinion as to other disputed issues. A professional who would be
 3506  disqualified for any reason listed in subsection (7) must be
 3507  disqualified. The neutral evaluator may also use the services of
 3508  professional engineers and professional geologists who are not
 3509  certified as neutral evaluators, as well as licensed building
 3510  contractors, in order to ensure that all items in dispute are
 3511  addressed and the neutral evaluation can be completed. Any
 3512  professional engineer, professional geologist, or licensed
 3513  building contractor retained may be disqualified for any of the
 3514  reasons listed in subsection (7). The neutral evaluator may
 3515  request the entity that performed the investigation pursuant to
 3516  s. 627.7072 perform such additional and reasonable testing as
 3517  deemed necessary in the professional opinion of the neutral
 3518  evaluator.
 3519         (12) At For matters that are not resolved by the parties at
 3520  the conclusion of the neutral evaluation, the neutral evaluator
 3521  shall prepare a report describing all matters that are the
 3522  subject of the neutral evaluation, including whether, stating
 3523  that in his or her opinion, the sinkhole loss has been verified
 3524  or eliminated within a reasonable degree of professional
 3525  probability and, if verified, whether the sinkhole activity
 3526  caused structural damage to the covered building, and if so, the
 3527  need for and estimated costs of stabilizing the land and any
 3528  covered structures or buildings and other appropriate
 3529  remediation or necessary building structural repairs due to the
 3530  sinkhole loss. The evaluator’s report shall be sent to all
 3531  parties in attendance at the neutral evaluation and to the
 3532  department, within 14 days after completing the neutral
 3533  evaluation conference.
 3534         (13) The recommendation of the neutral evaluator is not
 3535  binding on any party, and the parties retain access to the
 3536  court. The neutral evaluator’s written recommendation, oral
 3537  testimony, and full report shall be admitted is admissible in
 3538  any subsequent action, litigation, or proceeding relating to the
 3539  claim or to the cause of action giving rise to the claim.
 3540  However, oral or written statements or nonverbal conduct
 3541  intended to make an assertion made by a party or neutral
 3542  evaluator during the course of neutral evaluation, other than
 3543  those statements or conduct expressly required to be admitted by
 3544  this subsection, are confidential and may not be disclosed to a
 3545  person other than a party to neutral evaluation or a party’s
 3546  counsel.
 3547         (14) If the neutral evaluator first verifies the existence
 3548  of a sinkhole that caused structural damage and, second,
 3549  recommends the need for and estimates costs of stabilizing the
 3550  land and any covered structures or buildings and other
 3551  appropriate remediation or building structural repairs, which
 3552  costs exceed the amount that the insurer estimates as necessary
 3553  to stabilize and repair, and the insurer refuses to comply with
 3554  the neutral evaluator’s findings and recommendations has offered
 3555  to pay the policyholder, the insurer is liable to the
 3556  policyholder for up to $2,500 in attorney’s fees for the
 3557  attorney’s participation in the neutral evaluation process. For
 3558  purposes of this subsection, the term “offer to pay” means a
 3559  written offer signed by the insurer or its legal representative
 3560  and delivered to the policyholder within 10 days after the
 3561  insurer receives notice that a request for neutral evaluation
 3562  has been made under this section.
 3563         (15) If the insurer timely agrees in writing to comply and
 3564  timely complies with the recommendation of the neutral
 3565  evaluator, but the policyholder declines to resolve the matter
 3566  in accordance with the recommendation of the neutral evaluator
 3567  pursuant to this section:
 3568         (a) The insurer is not liable for extracontractual damages
 3569  related to a claim for a sinkhole loss but only as related to
 3570  the issues determined by the neutral evaluation process. This
 3571  section does not affect or impair claims for extracontractual
 3572  damages unrelated to the issues determined by the neutral
 3573  evaluation process contained in this section; and
 3574         (b) The actions of the insurer are not a confession of
 3575  judgment or admission of liability, and the insurer is not
 3576  liable for attorney’s fees under s. 627.428 or other provisions
 3577  of the insurance code unless the policyholder obtains a judgment
 3578  that is more favorable than the recommendation of the neutral
 3579  evaluator.
 3580         (16) If the insurer agrees to comply with the neutral
 3581  evaluator’s report, payments shall be made in accordance with
 3582  the terms and conditions of the applicable insurance policy
 3583  pursuant to s. 627.707(5).
 3584         (17) Neutral evaluators are deemed to be agents of the
 3585  department and have immunity from suit as provided in s. 44.107.
 3586         (18) The department shall adopt rules of procedure for the
 3587  neutral evaluation process.
 3588         Section 32. Subsection (8) of section 627.711, Florida
 3589  Statutes, is amended to read:
 3590         627.711 Notice of premium discounts for hurricane loss
 3591  mitigation; uniform mitigation verification inspection form.—
 3592         (8) At its expense, The insurer may require that a any
 3593  uniform mitigation verification form provided by a policyholder,
 3594  a policyholder’s agency, or an authorized mitigation inspector
 3595  or inspection company be independently verified by an inspector,
 3596  an inspection company, or an independent third-party quality
 3597  assurance provider which possesses does possess a quality
 3598  assurance program before prior to accepting the uniform
 3599  mitigation verification form as valid.
 3600         Section 33. Subsection (1) of section 627.712, Florida
 3601  Statutes, is amended to read:
 3602         627.712 Residential windstorm coverage required;
 3603  availability of exclusions for windstorm or contents.—
 3604         (1) An insurer issuing a residential property insurance
 3605  policy must provide windstorm coverage. Except as provided in
 3606  paragraph (2)(c), this section does not apply with respect to
 3607  risks that are eligible for wind-only coverage from Citizens
 3608  Property Insurance Corporation under s. 627.351(6), and with
 3609  respect to risks that are not eligible for coverage from
 3610  Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
 3611  or 5. A risk ineligible for Citizens coverage by the corporation
 3612  under s. 627.351(6)(a)3. or 5. is exempt from the requirements
 3613  of this section only if the risk is located within the
 3614  boundaries of the coastal high-risk account of the corporation.
 3615         Section 34. The amendments made by this act in sections 22,
 3616  23, 24, 26, 27, and 28 which affect procedural rights do not
 3617  apply to insurance claims reported to an insurer before February
 3618  1, 2011, but do apply to claims reported to an insurer on or
 3619  after that date. Amendments made by this act in sections 22, 23,
 3620  24, 26, 27, and 28 which affect substantive rights apply to
 3621  claims reported to an insurer on or after July 1, 2011.
 3622         Section 35. Except as otherwise expressly provided in this
 3623  act and except for this section, which shall take effect June 1,
 3624  2011, this act shall take effect July 1, 2011.