CS for CS for CS for SB 408                     Second Engrossed
       
       
       
       
       
       
       
       
       2011408e2
       
    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; requiring the insurer
  205         to provide repairs in accordance with the insurer’s
  206         engineer’s recommendations or tender the policy limits
  207         to the policyholder; providing a time limitation for
  208         demanding sinkhole testing by a policyholder and
  209         entering into a contract for repairs; requiring all
  210         repairs to be completed within a certain time;
  211         providing exceptions; providing a criminal penalty on
  212         a policyholder for accepting rebates from persons
  213         performing repairs; amending s. 627.7073, F.S.;
  214         revising provisions relating to inspection reports;
  215         providing that the presumption that the report is
  216         correct shifts the burden of proof; revising the
  217         reports that an insurer must file with the clerk of
  218         the court; requiring the policyholder to file certain
  219         reports as a precondition to accepting payment;
  220         requiring the professional engineer responsible for
  221         monitoring sinkhole repairs to issue a report and
  222         certification to the property owner and file such
  223         report with the court; providing that the act does not
  224         create liability for an insurer based on a
  225         representation or certification by the engineer;
  226         amending s. 627.7074, F.S.; revising provisions
  227         relating to neutral evaluation; requiring evaluation
  228         in order to make certain determinations; requiring
  229         that the neutral evaluator be allowed access to
  230         structures being evaluated; providing grounds for
  231         disqualifying an evaluator; allowing the Department of
  232         Financial Services to appoint an evaluator if the
  233         parties cannot come to agreement; revising the
  234         timeframes for scheduling a neutral evaluation
  235         conference; authorizing an evaluator to enlist another
  236         evaluator or other professionals; providing a time
  237         certain for issuing a report; providing that certain
  238         information is confidential; revising provisions
  239         relating to compliance with the evaluator’s
  240         recommendations; providing that the evaluator is an
  241         agent of the department for the purposes of immunity
  242         from suit; requiring the department to adopt rules;
  243         amending s. 627.711, F.S.; deleting the requirement
  244         that the insurer pay for verification of a uniform
  245         mitigation verification form that the insurer
  246         requires; amending s. 627.712, F.S.; conforming
  247         provisions to changes made by the act; providing for
  248         applicability; providing effective dates.
  249  
  250  Be It Enacted by the Legislature of the State of Florida:
  251  
  252         Section 1. Effective June 1, 2011, paragraph (d) of
  253  subsection (2) of section 215.555, Florida Statutes, is amended
  254  to read:
  255         215.555 Florida Hurricane Catastrophe Fund.—
  256         (2) DEFINITIONS.—As used in this section:
  257         (d) “Losses” means all direct incurred losses under covered
  258  policies, including which shall include losses for additional
  259  living expenses not to exceed 40 percent of the insured value of
  260  a residential structure or its contents and amounts paid as fees
  261  on behalf of or inuring to the benefit of a policyholder shall
  262  exclude loss adjustment expenses. The term “Losses” does not
  263  include:
  264         1. Losses for fair rental value, loss of rent or rental
  265  income, or business interruption losses;
  266         2. Losses under liability coverages;
  267         3. Property losses that are proximately caused by any peril
  268  other than a covered event, including, but not limited to, fire,
  269  theft, flood or rising water, or windstorm that does not
  270  constitute a covered event;
  271         4. Amounts paid as the result of a voluntary expansion of
  272  coverage by the insurer, including, but not limited to, a waiver
  273  of an applicable deductible;
  274         5. Amounts paid to reimburse a policyholder for condominium
  275  association or homeowners’ association loss assessments or under
  276  similar coverages for contractual liabilities;
  277         6. Amounts paid as bad faith awards, punitive damage
  278  awards, or other court-imposed fines, sanctions, or penalties;
  279         7. Amounts in excess of the coverage limits under the
  280  covered policy; or
  281         8. Allocated or unallocated loss adjustment expenses.
  282         Section 2. The amendment to s. 215.555, Florida Statutes,
  283  made by this act applies first to the Florida Hurricane
  284  Catastrophe Fund reimbursement contract that takes effect June
  285  1, 2011.
  286         Section 3. Subsection (12) is added to section 215.5595,
  287  Florida Statutes, to read:
  288         215.5595 Insurance Capital Build-Up Incentive Program.—
  289         (12) The insurer may request that the board renegotiate the
  290  terms of any surplus note issued under this section before
  291  January 1, 2011. The request must be submitted to the board by
  292  January 1, 2012. If the insurer agrees to accelerate the payment
  293  period of the note by at least 5 years, the board must agree to
  294  exempt the insurer from the premium-to-surplus ratios required
  295  under paragraph (2)(d). If the insurer agrees to an acceleration
  296  of the payment period for less than 5 years, the board may,
  297  after consultation with the Office of Insurance Regulation,
  298  agree to an appropriate revision of the premium-to-surplus
  299  ratios required under paragraph (2)(d) for the remaining term of
  300  the note if the revised ratios are not lower than a minimum
  301  writing ratio of net premium to surplus of at least 1 to 1 and,
  302  alternatively, a minimum writing ratio of gross premium to
  303  surplus of at least 3 to 1.
  304         Section 4. Section 624.407, Florida Statutes, is amended to
  305  read:
  306         624.407 Surplus Capital funds required; new insurers.—
  307         (1) To receive authority to transact any one kind or
  308  combinations of kinds of insurance, as defined in part V of this
  309  chapter, an insurer applying for its original certificate of
  310  authority in this state after November 10, 1993, the effective
  311  date of this section shall possess surplus funds as to
  312  policyholders at least not less than the greater of:
  313         (a) Five million dollars For a property and casualty
  314  insurer, $5 million, or $2.5 million for any other insurer;
  315         (b) For life insurers, 4 percent of the insurer’s total
  316  liabilities;
  317         (c) For life and health insurers, 4 percent of the
  318  insurer’s total liabilities, plus 6 percent of the insurer’s
  319  liabilities relative to health insurance; or
  320         (d) For all insurers other than life insurers and life and
  321  health insurers, 10 percent of the insurer’s total liabilities;
  322  or
  323         (e) Notwithstanding paragraph (a) or paragraph (d), for a
  324  domestic insurer that transacts residential property insurance
  325  and is:
  326         1. Not a wholly owned subsidiary of an insurer domiciled in
  327  any other state, $15 million.
  328         2.however, a domestic insurer that transacts residential
  329  property insurance and is A wholly owned subsidiary of an
  330  insurer domiciled in any other state, shall possess surplus as
  331  to policyholders of at least $50 million.
  332         (2) Notwithstanding subsection (1), a new insurer may not
  333  be required, but no insurer shall be required under this
  334  subsection to have surplus as to policyholders greater than $100
  335  million.
  336         (3)(2) The requirements of this section shall be based upon
  337  all the kinds of insurance actually transacted or to be
  338  transacted by the insurer in any and all areas in which it
  339  operates, whether or not only a portion of such kinds of
  340  insurance are to be transacted in this state.
  341         (4)(3) As to surplus funds as to policyholders required for
  342  qualification to transact one or more kinds of insurance,
  343  domestic mutual insurers are governed by chapter 628, and
  344  domestic reciprocal insurers are governed by chapter 629.
  345         (5)(4) For the purposes of this section, liabilities do
  346  shall not include liabilities required under s. 625.041(4). For
  347  purposes of computing minimum surplus funds as to policyholders
  348  pursuant to s. 625.305(1), liabilities shall include liabilities
  349  required under s. 625.041(4).
  350         (6)(5) The provisions of this section, as amended by
  351  chapter 89-360, Laws of Florida this act, shall apply only to
  352  insurers applying for a certificate of authority on or after
  353  October 1, 1989 the effective date of this act.
  354         Section 5. Section 624.408, Florida Statutes, is amended to
  355  read:
  356         624.408 Surplus funds as to policyholders required; current
  357  new and existing insurers.—
  358         (1)(a) To maintain a certificate of authority to transact
  359  any one kind or combinations of kinds of insurance, as defined
  360  in part V of this chapter, an insurer in this state must shall
  361  at all times maintain surplus funds as to policyholders at least
  362  not less than the greater of:
  363         (a)1. Except as provided in paragraphs (e),(f), and (g)
  364  subparagraph 5. and paragraph (b), $1.5 million.;
  365         (b)2. For life insurers, 4 percent of the insurer’s total
  366  liabilities.;
  367         (c)3. For life and health insurers, 4 percent of the
  368  insurer’s total liabilities plus 6 percent of the insurer’s
  369  liabilities relative to health insurance.; or
  370         (d)4. For all insurers other than mortgage guaranty
  371  insurers, life insurers, and life and health insurers, 10
  372  percent of the insurer’s total liabilities.
  373         (e)5. For property and casualty insurers, $4 million,
  374  except for property and casualty insurers authorized to
  375  underwrite any line of residential property insurance.
  376         (f)(b) For residential any property insurers not and
  377  casualty insurer holding a certificate of authority before July
  378  1, 2011 on December 1, 1993, $15 million. the
  379         (g) For residential property insurers holding a certificate
  380  of authority before July 1, 2011, and until June 30, 2016, $5
  381  million; on or after July 1, 2016, and until June 30, 2021, $10
  382  million; on or after July 1, 2021, $15 million. The office may
  383  reduce this surplus requirement if the insurer is not writing
  384  new business, has premiums in force of less than $1 million per
  385  year in residential property insurance, or is a mutual insurance
  386  company. following amounts apply instead of the $4 million
  387  required by subparagraph (a)5.:
  388         1.On December 31, 2001, and until December 30, 2002, $3
  389  million.
  390         2.On December 31, 2002, and until December 30, 2003, $3.25
  391  million.
  392         3.On December 31, 2003, and until December 30, 2004, $3.6
  393  million.
  394         4.On December 31, 2004, and thereafter, $4 million.
  395         (2) For purposes of this section, liabilities do shall not
  396  include liabilities required under s. 625.041(4). For purposes
  397  of computing minimum surplus as to policyholders pursuant to s.
  398  625.305(1), liabilities shall include liabilities required under
  399  s. 625.041(4).
  400         (3) This section does not require an No insurer shall be
  401  required under this section to have surplus as to policyholders
  402  greater than $100 million.
  403         (4) A mortgage guaranty insurer shall maintain a minimum
  404  surplus as required by s. 635.042.
  405         Section 6. Subsection (7) is added to section 624.4095,
  406  Florida Statutes, to read:
  407         624.4095 Premiums written; restrictions.—
  408         (7)For the purposes of this section and ss. 624.407 and
  409  624.408, with respect to capital and surplus requirements, gross
  410  written premiums for federal multiple-peril crop insurance which
  411  are ceded to the Federal Crop Insurance Corporation or
  412  authorized reinsurers may not be included in the calculation of
  413  an insurer’s gross writing ratio. The liabilities for ceded
  414  reinsurance premiums payable for federal multiple-peril crop
  415  insurance ceded to the Federal Crop Insurance Corporation and
  416  authorized reinsurers shall be netted against the asset for
  417  amounts recoverable from reinsurers. Each insurer that writes
  418  other insurance products together with federal multiple-peril
  419  crop insurance must disclose in the notes to its annual and
  420  quarterly financial statements, or in a supplement to those
  421  statements, the gross written premiums for federal multiple
  422  peril crop insurance.
  423         Section 7. Paragraph (d) of subsection (8) of section
  424  624.424, Florida Statutes, is amended to read:
  425         624.424 Annual statement and other information.—
  426         (8)
  427         (d) An insurer may not use the same accountant or partner
  428  of an accounting firm responsible for preparing the report
  429  required by this subsection for more than 5 7 consecutive years.
  430  Following this period, the insurer may not use such accountant
  431  or partner for a period of 5 2 years, but may use another
  432  accountant or partner of the same firm. An insurer may request
  433  the office to waive this prohibition based upon an unusual
  434  hardship to the insurer and a determination that the accountant
  435  is exercising independent judgment that is not unduly influenced
  436  by the insurer considering such factors as the number of
  437  partners, expertise of the partners or the number of insurance
  438  clients of the accounting firm; the premium volume of the
  439  insurer; and the number of jurisdictions in which the insurer
  440  transacts business.
  441         Section 8. Section 626.7452, Florida Statutes, is amended
  442  to read:
  443         626.7452 Managing general agents; examination authority.
  444  The acts of the managing general agent are considered to be the
  445  acts of the insurer on whose behalf it is acting. A managing
  446  general agent may be examined as if it were the insurer except
  447  in the case where the managing general agent solely represents a
  448  single domestic insurer.
  449         Section 9. Subsection (7) is added to section 626.852,
  450  Florida Statutes, to read:
  451         626.852 Scope of this part.—
  452         (7) Notwithstanding any other provision of law, a person
  453  who provides claims adjusting services solely to institutions
  454  that service or guarantee mortgages with regard to policies
  455  covering the mortgaged properties is exempt from licensure as an
  456  adjuster. This exemption does not apply to any person who
  457  provides insurance, property repair, or preservation services or
  458  to any affiliate of such persons.
  459         Section 10. Effective June 1, 2011, subsection (11) of
  460  section 626.854, Florida Statutes, is amended to read:
  461         626.854 “Public adjuster” defined; prohibitions.—The
  462  Legislature finds that it is necessary for the protection of the
  463  public to regulate public insurance adjusters and to prevent the
  464  unauthorized practice of law.
  465         (11)(a) If a public adjuster enters into a contract with an
  466  insured or claimant to reopen a claim or to file a supplemental
  467  claim that seeks additional payments for a claim that has been
  468  previously paid in part or in full or settled by the insurer,
  469  the public adjuster may not charge, agree to, or accept any
  470  compensation, payment, commission, fee, or other thing of value
  471  based on a previous settlement or previous claim payments by the
  472  insurer for the same cause of loss. The charge, compensation,
  473  payment, commission, fee, or other thing of value must may be
  474  based only on the claim payments or settlement obtained through
  475  the work of the public adjuster after entering into the contract
  476  with the insured or claimant. Compensation for the reopened or
  477  supplemental claim may not exceed 20 percent of the reopened or
  478  supplemental claim payment. The contracts described in this
  479  paragraph are not subject to the limitations in paragraph (b).
  480         (b) A public adjuster may not charge, agree to, or accept
  481  any compensation, payment, commission, fee, or other thing of
  482  value in excess of:
  483         1. Ten percent of the amount of insurance claim payments
  484  made by the insurer for claims based on events that are the
  485  subject of a declaration of a state of emergency by the
  486  Governor. This provision applies to claims made during the
  487  period of 1 year after the declaration of emergency. After that
  488  year, the limitations in subparagraph 2. apply.
  489         2. Twenty percent of the amount of all other insurance
  490  claim payments made by the insurer for claims that are not based
  491  on events that are the subject of a declaration of a state of
  492  emergency by the Governor.
  493  
  494  The provisions of subsections (5)-(13) apply only to residential
  495  property insurance policies and condominium association policies
  496  as defined in s. 718.111(11).
  497         Section 11. Effective January 1, 2012, section 626.854,
  498  Florida Statutes, as amended by this act, is amended to read:
  499         626.854 “Public adjuster” defined; prohibitions.—The
  500  Legislature finds that it is necessary for the protection of the
  501  public to regulate public insurance adjusters and to prevent the
  502  unauthorized practice of law.
  503         (1) A “public adjuster” is any person, except a duly
  504  licensed attorney at law as exempted under hereinafter in s.
  505  626.860 provided, who, for money, commission, or any other thing
  506  of value, prepares, completes, or files an insurance claim form
  507  for an insured or third-party claimant or who, for money,
  508  commission, or any other thing of value, acts or aids in any
  509  manner on behalf of, or aids an insured or third-party claimant
  510  in negotiating for or effecting the settlement of a claim or
  511  claims for loss or damage covered by an insurance contract or
  512  who advertises for employment as an adjuster of such claims. The
  513  term, and also includes any person who, for money, commission,
  514  or any other thing of value, solicits, investigates, or adjusts
  515  such claims on behalf of a any such public adjuster.
  516         (2) This definition does not apply to:
  517         (a) A licensed health care provider or employee thereof who
  518  prepares or files a health insurance claim form on behalf of a
  519  patient.
  520         (b) A person who files a health claim on behalf of another
  521  and does so without compensation.
  522         (3) A public adjuster may not give legal advice or. A
  523  public adjuster may not act on behalf of or aid any person in
  524  negotiating or settling a claim relating to bodily injury,
  525  death, or noneconomic damages.
  526         (4) For purposes of this section, the term “insured”
  527  includes only the policyholder and any beneficiaries named or
  528  similarly identified in the policy.
  529         (5) A public adjuster may not directly or indirectly
  530  through any other person or entity solicit an insured or
  531  claimant by any means except on Monday through Saturday of each
  532  week and only between the hours of 8 a.m. and 8 p.m. on those
  533  days.
  534         (6) A public adjuster may not directly or indirectly
  535  through any other person or entity initiate contact or engage in
  536  face-to-face or telephonic solicitation or enter into a contract
  537  with any insured or claimant under an insurance policy until at
  538  least 48 hours after the occurrence of an event that may be the
  539  subject of a claim under the insurance policy unless contact is
  540  initiated by the insured or claimant.
  541         (7) An insured or claimant may cancel a public adjuster’s
  542  contract to adjust a claim without penalty or obligation within
  543  3 business days after the date on which the contract is executed
  544  or within 3 business days after the date on which the insured or
  545  claimant has notified the insurer of the claim, by phone or in
  546  writing, whichever is later. The public adjuster’s contract must
  547  shall disclose to the insured or claimant his or her right to
  548  cancel the contract and advise the insured or claimant that
  549  notice of cancellation must be submitted in writing and sent by
  550  certified mail, return receipt requested, or other form of
  551  mailing that which provides proof thereof, to the public
  552  adjuster at the address specified in the contract; provided,
  553  during any state of emergency as declared by the Governor and
  554  for a period of 1 year after the date of loss, the insured or
  555  claimant has shall have 5 business days after the date on which
  556  the contract is executed to cancel a public adjuster’s contract.
  557         (8) It is an unfair and deceptive insurance trade practice
  558  pursuant to s. 626.9541 for a public adjuster or any other
  559  person to circulate or disseminate any advertisement,
  560  announcement, or statement containing any assertion,
  561  representation, or statement with respect to the business of
  562  insurance which is untrue, deceptive, or misleading.
  563         (a) The following statements, made in any public adjuster’s
  564  advertisement or solicitation, are considered deceptive or
  565  misleading:
  566         1. A statement or representation that invites an insured
  567  policyholder to submit a claim when the policyholder does not
  568  have covered damage to insured property.
  569         2. A statement or representation that invites an insured
  570  policyholder to submit a claim by offering monetary or other
  571  valuable inducement.
  572         3. A statement or representation that invites an insured
  573  policyholder to submit a claim by stating that there is “no
  574  risk” to the policyholder by submitting such claim.
  575         4. A statement or representation, or use of a logo or
  576  shield, that implies or could mistakenly be construed to imply
  577  that the solicitation was issued or distributed by a
  578  governmental agency or is sanctioned or endorsed by a
  579  governmental agency.
  580         (b) For purposes of this paragraph, the term “written
  581  advertisement” includes only newspapers, magazines, flyers, and
  582  bulk mailers. The following disclaimer, which is not required to
  583  be printed on standard size business cards, must be added in
  584  bold print and capital letters in typeface no smaller than the
  585  typeface of the body of the text to all written advertisements
  586  by a public adjuster:
  587         “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD
  588         A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU
  589         ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU
  590         MAY DISREGARD THIS ADVERTISEMENT.”
  591  
  592         (9) A public adjuster, a public adjuster apprentice, or any
  593  person or entity acting on behalf of a public adjuster or public
  594  adjuster apprentice may not give or offer to give a monetary
  595  loan or advance to a client or prospective client.
  596         (10) A public adjuster, public adjuster apprentice, or any
  597  individual or entity acting on behalf of a public adjuster or
  598  public adjuster apprentice may not give or offer to give,
  599  directly or indirectly, any article of merchandise having a
  600  value in excess of $25 to any individual for the purpose of
  601  advertising or as an inducement to entering into a contract with
  602  a public adjuster.
  603         (11)(a) If a public adjuster enters into a contract with an
  604  insured or claimant to reopen a claim or file a supplemental
  605  claim that seeks additional payments for a claim that has been
  606  previously paid in part or in full or settled by the insurer,
  607  the public adjuster may not charge, agree to, or accept any
  608  compensation, payment, commission, fee, or other thing of value
  609  based on a previous settlement or previous claim payments by the
  610  insurer for the same cause of loss. The charge, compensation,
  611  payment, commission, fee, or other thing of value must be based
  612  only on the claim payments or settlement obtained through the
  613  work of the public adjuster after entering into the contract
  614  with the insured or claimant. Compensation for the reopened or
  615  supplemental claim may not exceed 20 percent of the reopened or
  616  supplemental claim payment. The contracts described in this
  617  paragraph are not subject to the limitations in paragraph (b).
  618         (b) A public adjuster may not charge, agree to, or accept
  619  any compensation, payment, commission, fee, or other thing of
  620  value in excess of:
  621         1. Ten percent of the amount of insurance claim payments
  622  made by the insurer for claims based on events that are the
  623  subject of a declaration of a state of emergency by the
  624  Governor. This provision applies to claims made during the year
  625  after the declaration of emergency. After that year, the
  626  limitations in subparagraph 2. apply.
  627         2. Twenty percent of the amount of insurance claim payments
  628  made by the insurer for claims that are not based on events that
  629  are the subject of a declaration of a state of emergency by the
  630  Governor.
  631         (12) Each public adjuster must shall provide to the
  632  claimant or insured a written estimate of the loss to assist in
  633  the submission of a proof of loss or any other claim for payment
  634  of insurance proceeds. The public adjuster shall retain such
  635  written estimate for at least 5 years and shall make the such
  636  estimate available to the claimant or insured, the insurer, and
  637  the department upon request.
  638         (13) A public adjuster, public adjuster apprentice, or any
  639  person acting on behalf of a public adjuster or apprentice may
  640  not accept referrals of business from any person with whom the
  641  public adjuster conducts business if there is any form or manner
  642  of agreement to compensate the person, whether directly or
  643  indirectly, for referring business to the public adjuster. A
  644  public adjuster may not compensate any person, except for
  645  another public adjuster, whether directly or indirectly, for the
  646  principal purpose of referring business to the public adjuster.
  647         (14) A company employee adjuster, independent adjuster,
  648  attorney, investigator, or other persons acting on behalf of an
  649  insurer that needs access to an insured or claimant or to the
  650  insured property that is the subject of a claim must provide at
  651  least 48 hours’ notice to the insured or claimant, public
  652  adjuster, or legal representative before scheduling a meeting
  653  with the claimant or an onsite inspection of the insured
  654  property. The insured or claimant may deny access to the
  655  property if the notice has not been provided. The insured or
  656  claimant may waive the 48-hour notice.
  657         (15) A public adjuster must ensure prompt notice of
  658  property loss claims submitted to an insurer by or through a
  659  public adjuster or on which a public adjuster represents the
  660  insured at the time the claim or notice of loss is submitted to
  661  the insurer. The public adjuster must ensure that notice is
  662  given to the insurer, the public adjuster’s contract is provided
  663  to the insurer, the property is available for inspection of the
  664  loss or damage by the insurer, and the insurer is given an
  665  opportunity to interview the insured directly about the loss and
  666  claim. The insurer must be allowed to obtain necessary
  667  information to investigate and respond to the claim.
  668         (a) The insurer may not exclude the public adjuster from
  669  its in-person meetings with the insured. The insurer shall meet
  670  or communicate with the public adjuster in an effort to reach
  671  agreement as to the scope of the covered loss under the
  672  insurance policy. This section does not impair the terms and
  673  conditions of the insurance policy in effect at the time the
  674  claim is filed.
  675         (b) A public adjuster may not restrict or prevent an
  676  insurer, company employee adjuster, independent adjuster,
  677  attorney, investigator, or other person acting on behalf of the
  678  insurer from having reasonable access at reasonable times to an
  679  insured or claimant or to the insured property that is the
  680  subject of a claim.
  681         (c) A public adjuster may not act or fail to reasonably act
  682  in any manner that obstructs or prevents an insurer or insurer’s
  683  adjuster from timely conducting an inspection of any part of the
  684  insured property for which there is a claim for loss or damage.
  685  The public adjuster representing the insured may be present for
  686  the insurer’s inspection, but if the unavailability of the
  687  public adjuster otherwise delays the insurer’s timely inspection
  688  of the property, the public adjuster or the insured must allow
  689  the insurer to have access to the property without the
  690  participation or presence of the public adjuster or insured in
  691  order to facilitate the insurer’s prompt inspection of the loss
  692  or damage.
  693         (16) A licensed contractor under part I of chapter 489, or
  694  a subcontractor, may not adjust a claim on behalf of an insured
  695  unless licensed and compliant as a public adjuster under this
  696  chapter. However, the contractor may discuss or explain a bid
  697  for construction or repair of covered property with the
  698  residential property owner who has suffered loss or damage
  699  covered by a property insurance policy, or the insurer of such
  700  property, if the contractor is doing so for the usual and
  701  customary fees applicable to the work to be performed as stated
  702  in the contract between the contractor and the insured.
  703         (17) The provisions of subsections (5)-(16) (5)-(13) apply
  704  only to residential property insurance policies and condominium
  705  unit owner association policies as defined in s. 718.111(11).
  706         Section 12. Effective January 1, 2012, subsection (6) of
  707  section 626.8651, Florida Statutes, is amended to read:
  708         626.8651 Public adjuster apprentice license;
  709  qualifications.—
  710         (6) To qualify for licensure as a public adjuster, a public
  711  adjuster apprentice must shall complete: at
  712         (a) A minimum of 100 hours of employment per month for 12
  713  months of employment under the supervision of a licensed and
  714  appointed all-lines public adjuster in order to qualify for
  715  licensure as a public adjuster. The department may adopt rules
  716  that establish standards for such employment requirements.
  717         (b) A minimum of 8 hours of continuing education specific
  718  to the practice of a public adjuster, 2 hours of which must
  719  relate to ethics. The continuing education must be designed to
  720  inform the licensee about the current insurance laws of this
  721  state for the purpose of enabling him or her to engage in
  722  business as an insurance adjuster fairly and without injury to
  723  the public and to adjust all claims in accordance with the
  724  insurance contract and the laws of this state.
  725         Section 13. Effective January 1, 2012, section 626.8796,
  726  Florida Statutes, is amended to read:
  727         626.8796 Public adjuster contracts; fraud statement.—
  728         (1) All contracts for public adjuster services must be in
  729  writing and must prominently display the following statement on
  730  the contract: “Pursuant to s. 817.234, Florida Statutes, any
  731  person who, with the intent to injure, defraud, or deceive an
  732  any insurer or insured, prepares, presents, or causes to be
  733  presented a proof of loss or estimate of cost or repair of
  734  damaged property in support of a claim under an insurance policy
  735  knowing that the proof of loss or estimate of claim or repairs
  736  contains any false, incomplete, or misleading information
  737  concerning any fact or thing material to the claim commits a
  738  felony of the third degree, punishable as provided in s.
  739  775.082, s. 775.083, or s. 775.084, Florida Statutes.”
  740         (2) A public adjuster contract must contain the full name,
  741  permanent business address, and license number of the public
  742  adjuster; the full name of the public adjusting firm; and the
  743  insured’s full name and street address, together with a brief
  744  description of the loss. The contract must state the percentage
  745  of compensation for the public adjuster’s services; the type of
  746  claim, including an emergency claim, nonemergency claim, or
  747  supplemental claim; the signatures of the public adjuster and
  748  all named insureds; and the signature date. If all of the named
  749  insureds signatures are not available, the public adjuster must
  750  submit an affidavit signed by the available named insureds
  751  attesting that they have authority to enter into the contract
  752  and settle all claim issues on behalf of the named insureds. An
  753  unaltered copy of the executed contract must be remitted to the
  754  insurer within 30 days after execution.
  755         Section 14. Effective June 1, 2011, section 626.70132,
  756  Florida Statutes, is created to read:
  757         626.70132Notice of windstorm or hurricane claim.—A claim,
  758  supplemental claim, or reopened claim under an insurance policy
  759  that provides property insurance, as defined in s. 624.604, for
  760  loss or damage caused by the peril of windstorm or hurricane is
  761  barred unless notice of the claim, supplemental claim, or
  762  reopened claim was given to the insurer in accordance with the
  763  terms of the policy within 3 years after the hurricane first
  764  made landfall or the windstorm caused the covered damage. For
  765  purposes of this section, the term “supplemental claim” or
  766  “reopened claim” means any additional claim for recovery from
  767  the insurer for losses from the same hurricane or windstorm
  768  which the insurer has previously adjusted pursuant to the
  769  initial claim. This section does not affect any applicable
  770  limitation on civil actions provided in s. 95.11 for claims,
  771  supplemental claims, or reopened claims timely filed under this
  772  section.
  773         Section 15. Subsection (4) of section 627.0613, Florida
  774  Statutes, is repealed.
  775         Section 16. Section 627.062, Florida Statutes, is amended
  776  to read:
  777         627.062 Rate standards.—
  778         (1) The rates for all classes of insurance to which the
  779  provisions of this part are applicable may shall not be
  780  excessive, inadequate, or unfairly discriminatory.
  781         (2) As to all such classes of insurance:
  782         (a) Insurers or rating organizations shall establish and
  783  use rates, rating schedules, or rating manuals that to allow the
  784  insurer a reasonable rate of return on the such classes of
  785  insurance written in this state. A copy of rates, rating
  786  schedules, rating manuals, premium credits or discount
  787  schedules, and surcharge schedules, and changes thereto, must
  788  shall be filed with the office under one of the following
  789  procedures except as provided in subparagraph 3.:
  790         1. If the filing is made at least 90 days before the
  791  proposed effective date and the filing is not implemented during
  792  the office’s review of the filing and any proceeding and
  793  judicial review, then such filing is shall be considered a “file
  794  and use” filing. In such case, the office shall finalize its
  795  review by issuance of an approval a notice of intent to approve
  796  or a notice of intent to disapprove within 90 days after receipt
  797  of the filing. The approval notice of intent to approve and the
  798  notice of intent to disapprove constitute agency action for
  799  purposes of the Administrative Procedure Act. Requests for
  800  supporting information, requests for mathematical or mechanical
  801  corrections, or notification to the insurer by the office of its
  802  preliminary findings does shall not toll the 90-day period
  803  during any such proceedings and subsequent judicial review. The
  804  rate shall be deemed approved if the office does not issue an
  805  approval a notice of intent to approve or a notice of intent to
  806  disapprove within 90 days after receipt of the filing.
  807         2. If the filing is not made in accordance with the
  808  provisions of subparagraph 1., such filing must shall be made as
  809  soon as practicable, but within no later than 30 days after the
  810  effective date, and is shall be considered a “use and file”
  811  filing. An insurer making a “use and file” filing is potentially
  812  subject to an order by the office to return to policyholders
  813  those portions of rates found to be excessive, as provided in
  814  paragraph (h).
  815         3. For all property insurance filings made or submitted
  816  after January 25, 2007, but before May 1, 2012 December 31,
  817  2010, an insurer seeking a rate that is greater than the rate
  818  most recently approved by the office shall make a “file and use”
  819  filing. For purposes of this subparagraph, motor vehicle
  820  collision and comprehensive coverages are not considered to be
  821  property coverages.
  822         (b) Upon receiving a rate filing, the office shall review
  823  the rate filing to determine if a rate is excessive, inadequate,
  824  or unfairly discriminatory. In making that determination, the
  825  office shall, in accordance with generally accepted and
  826  reasonable actuarial techniques, consider the following factors:
  827         1. Past and prospective loss experience within and without
  828  this state.
  829         2. Past and prospective expenses.
  830         3. The degree of competition among insurers for the risk
  831  insured.
  832         4. Investment income reasonably expected by the insurer,
  833  consistent with the insurer’s investment practices, from
  834  investable premiums anticipated in the filing, plus any other
  835  expected income from currently invested assets representing the
  836  amount expected on unearned premium reserves and loss reserves.
  837  The commission may adopt rules using reasonable techniques of
  838  actuarial science and economics to specify the manner in which
  839  insurers shall calculate investment income attributable to such
  840  classes of insurance written in this state and the manner in
  841  which such investment income is shall be used to calculate
  842  insurance rates. Such manner must shall contemplate allowances
  843  for an underwriting profit factor and full consideration of
  844  investment income which produce a reasonable rate of return;
  845  however, investment income from invested surplus may not be
  846  considered.
  847         5. The reasonableness of the judgment reflected in the
  848  filing.
  849         6. Dividends, savings, or unabsorbed premium deposits
  850  allowed or returned to Florida policyholders, members, or
  851  subscribers.
  852         7. The adequacy of loss reserves.
  853         8. The cost of reinsurance. The office may shall not
  854  disapprove a rate as excessive solely due to the insurer having
  855  obtained catastrophic reinsurance to cover the insurer’s
  856  estimated 250-year probable maximum loss or any lower level of
  857  loss.
  858         9. Trend factors, including trends in actual losses per
  859  insured unit for the insurer making the filing.
  860         10. Conflagration and catastrophe hazards, if applicable.
  861         11. Projected hurricane losses, if applicable, which must
  862  be estimated using a model or method found to be acceptable or
  863  reliable by the Florida Commission on Hurricane Loss Projection
  864  Methodology, and as further provided in s. 627.0628.
  865         12. A reasonable margin for underwriting profit and
  866  contingencies.
  867         13. The cost of medical services, if applicable.
  868         14. Other relevant factors that affect which impact upon
  869  the frequency or severity of claims or upon expenses.
  870         (c) In the case of fire insurance rates, consideration must
  871  shall be given to the availability of water supplies and the
  872  experience of the fire insurance business during a period of not
  873  less than the most recent 5-year period for which such
  874  experience is available.
  875         (d) If conflagration or catastrophe hazards are considered
  876  given consideration by an insurer in its rates or rating plan,
  877  including surcharges and discounts, the insurer shall establish
  878  a reserve for that portion of the premium allocated to such
  879  hazard and shall maintain the premium in a catastrophe reserve.
  880  Any Removal of such premiums from the reserve for purposes other
  881  than paying claims associated with a catastrophe or purchasing
  882  reinsurance for catastrophes must be approved by shall be
  883  subject to approval of the office. Any ceding commission
  884  received by an insurer purchasing reinsurance for catastrophes
  885  must shall be placed in the catastrophe reserve.
  886         (e) After consideration of the rate factors provided in
  887  paragraphs (b), (c), and (d), the office may find a rate may be
  888  found by the office to be excessive, inadequate, or unfairly
  889  discriminatory based upon the following standards:
  890         1. Rates shall be deemed excessive if they are likely to
  891  produce a profit from Florida business which that is
  892  unreasonably high in relation to the risk involved in the class
  893  of business or if expenses are unreasonably high in relation to
  894  services rendered.
  895         2. Rates shall be deemed excessive if, among other things,
  896  the rate structure established by a stock insurance company
  897  provides for replenishment of surpluses from premiums, if when
  898  the replenishment is attributable to investment losses.
  899         3. Rates shall be deemed inadequate if they are clearly
  900  insufficient, together with the investment income attributable
  901  to them, to sustain projected losses and expenses in the class
  902  of business to which they apply.
  903         4. A rating plan, including discounts, credits, or
  904  surcharges, shall be deemed unfairly discriminatory if it fails
  905  to clearly and equitably reflect consideration of the
  906  policyholder’s participation in a risk management program
  907  adopted pursuant to s. 627.0625.
  908         5. A rate shall be deemed inadequate as to the premium
  909  charged to a risk or group of risks if discounts or credits are
  910  allowed which exceed a reasonable reflection of expense savings
  911  and reasonably expected loss experience from the risk or group
  912  of risks.
  913         6. A rate shall be deemed unfairly discriminatory as to a
  914  risk or group of risks if the application of premium discounts,
  915  credits, or surcharges among such risks does not bear a
  916  reasonable relationship to the expected loss and expense
  917  experience among the various risks.
  918         (f) In reviewing a rate filing, the office may require the
  919  insurer to provide, at the insurer’s expense, all information
  920  necessary to evaluate the condition of the company and the
  921  reasonableness of the filing according to the criteria
  922  enumerated in this section.
  923         (g) The office may at any time review a rate, rating
  924  schedule, rating manual, or rate change; the pertinent records
  925  of the insurer; and market conditions. If the office finds on a
  926  preliminary basis that a rate may be excessive, inadequate, or
  927  unfairly discriminatory, the office shall initiate proceedings
  928  to disapprove the rate and shall so notify the insurer. However,
  929  the office may not disapprove as excessive any rate for which it
  930  has given final approval or which has been deemed approved for a
  931  period of 1 year after the effective date of the filing unless
  932  the office finds that a material misrepresentation or material
  933  error was made by the insurer or was contained in the filing.
  934  Upon being so notified, the insurer or rating organization
  935  shall, within 60 days, file with the office all information that
  936  which, in the belief of the insurer or organization, proves the
  937  reasonableness, adequacy, and fairness of the rate or rate
  938  change. The office shall issue an approval a notice of intent to
  939  approve or a notice of intent to disapprove pursuant to the
  940  procedures of paragraph (a) within 90 days after receipt of the
  941  insurer’s initial response. In such instances and in any
  942  administrative proceeding relating to the legality of the rate,
  943  the insurer or rating organization shall carry the burden of
  944  proof by a preponderance of the evidence to show that the rate
  945  is not excessive, inadequate, or unfairly discriminatory. After
  946  the office notifies an insurer that a rate may be excessive,
  947  inadequate, or unfairly discriminatory, unless the office
  948  withdraws the notification, the insurer may shall not alter the
  949  rate except to conform to with the office’s notice until the
  950  earlier of 120 days after the date the notification was provided
  951  or 180 days after the date of implementing the implementation of
  952  the rate. The office may, subject to chapter 120, may disapprove
  953  without the 60-day notification any rate increase filed by an
  954  insurer within the prohibited time period or during the time
  955  that the legality of the increased rate is being contested.
  956         (h) If In the event the office finds that a rate or rate
  957  change is excessive, inadequate, or unfairly discriminatory, the
  958  office shall issue an order of disapproval specifying that a new
  959  rate or rate schedule, which responds to the findings of the
  960  office, be filed by the insurer. The office shall further order,
  961  for any “use and file” filing made in accordance with
  962  subparagraph (a)2., that premiums charged each policyholder
  963  constituting the portion of the rate above that which was
  964  actuarially justified be returned to the such policyholder in
  965  the form of a credit or refund. If the office finds that an
  966  insurer’s rate or rate change is inadequate, the new rate or
  967  rate schedule filed with the office in response to such a
  968  finding is shall be applicable only to new or renewal business
  969  of the insurer written on or after the effective date of the
  970  responsive filing.
  971         (i) Except as otherwise specifically provided in this
  972  chapter, the office may shall not, directly or indirectly:
  973         1. Prohibit any insurer, including any residual market plan
  974  or joint underwriting association, from paying acquisition costs
  975  based on the full amount of premium, as defined in s. 627.403,
  976  applicable to any policy, or prohibit any such insurer from
  977  including the full amount of acquisition costs in a rate filing;
  978  or.
  979         2. Impede, abridge, or otherwise compromise an insurer’s
  980  right to acquire policyholders, advertise, or appoint agents,
  981  including the calculation, manner, or amount of such agent
  982  commissions, if any.
  983         (j) With respect to residential property insurance rate
  984  filings, the rate filing must account for mitigation measures
  985  undertaken by policyholders to reduce hurricane losses.
  986         (k)1. An insurer may make a separate filing limited solely
  987  to an adjustment of its rates for reinsurance or financing costs
  988  incurred in the purchase of reinsurance or financing products to
  989  replace or finance the payment of the amount covered by the
  990  Temporary Increase in Coverage Limits (TICL) portion of the
  991  Florida Hurricane Catastrophe Fund including replacement
  992  reinsurance for the TICL reductions made pursuant to s.
  993  215.555(17)(e); the actual cost paid due to the application of
  994  the TICL premium factor pursuant to s. 215.555(17)(f); and the
  995  actual cost paid due to the application of the cash build-up
  996  factor pursuant to s. 215.555(5)(b) if the insurer:
  997         a. Elects to purchase financing products such as a
  998  liquidity instrument or line of credit, in which case the cost
  999  included in the filing for the liquidity instrument or line of
 1000  credit may not result in a premium increase exceeding 3 percent
 1001  for any individual policyholder. All costs contained in the
 1002  filing may not result in an overall premium increase of more
 1003  than 10 percent for any individual policyholder.
 1004         b. An insurer that makes a separate filing relating to
 1005  reinsurance or financing products must include Includes in the
 1006  filing a copy of all of its reinsurance, liquidity instrument,
 1007  or line of credit contracts; proof of the billing or payment for
 1008  the contracts; and the calculation upon which the proposed rate
 1009  change is based demonstrating demonstrates that the costs meet
 1010  the criteria of this section and are not loaded for expenses or
 1011  profit for the insurer making the filing.
 1012         c.Includes no other changes to its rates in the filing.
 1013         d.Has not implemented a rate increase within the 6 months
 1014  immediately preceding the filing.
 1015         e.Does not file for a rate increase under any other
 1016  paragraph within 6 months after making a filing under this
 1017  paragraph.
 1018         c.f.An insurer that purchases reinsurance or financing
 1019  products from an affiliated company may make a separate filing
 1020  in compliance with this paragraph does so only if the costs for
 1021  such reinsurance or financing products are charged at or below
 1022  charges made for comparable coverage by nonaffiliated reinsurers
 1023  or financial entities making such coverage or financing products
 1024  available in this state.
 1025         2. An insurer may only make only one filing per in any 12
 1026  month period under this paragraph.
 1027         3. An insurer that elects to implement a rate change under
 1028  this paragraph must file its rate filing with the office at
 1029  least 45 days before the effective date of the rate change.
 1030  After an insurer submits a complete filing that meets all of the
 1031  requirements of this paragraph, the office has 45 days after the
 1032  date of the filing to review the rate filing and determine if
 1033  the rate is excessive, inadequate, or unfairly discriminatory.
 1034         (l)The office may disapprove a rate for sinkhole coverage
 1035  only if the rate is inadequate or the insurer charges an
 1036  applicant or an insured a higher premium solely because of the
 1037  applicant’s or the insured’s race, religion, sex, national
 1038  origin, or marital status. Policies subject to this paragraph
 1039  may not be counted in the calculation under s. 627.171(2).
 1040  
 1041  The provisions of this subsection do shall not apply to workers’
 1042  compensation, and employer’s liability insurance, and to motor
 1043  vehicle insurance.
 1044         (3)(a) For individual risks that are not rated in
 1045  accordance with the insurer’s rates, rating schedules, rating
 1046  manuals, and underwriting rules filed with the office and that
 1047  which have been submitted to the insurer for individual rating,
 1048  the insurer must maintain documentation on each risk subject to
 1049  individual risk rating. The documentation must identify the
 1050  named insured and specify the characteristics and classification
 1051  of the risk supporting the reason for the risk being
 1052  individually risk rated, including any modifications to existing
 1053  approved forms to be used on the risk. The insurer must maintain
 1054  these records for a period of at least 5 years after the
 1055  effective date of the policy.
 1056         (b) Individual risk rates and modifications to existing
 1057  approved forms are not subject to this part or part II, except
 1058  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
 1059  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
 1060  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
 1061  627.4265, 627.427, and 627.428, but are subject to all other
 1062  applicable provisions of this code and rules adopted thereunder.
 1063         (c) This subsection does not apply to private passenger
 1064  motor vehicle insurance.
 1065         (d)1. The following categories or kinds of insurance and
 1066  types of commercial lines risks are not subject to paragraph
 1067  (2)(a) or paragraph (2)(f):
 1068         a. Excess or umbrella.
 1069         b. Surety and fidelity.
 1070         c. Boiler and machinery and leakage and fire extinguishing
 1071  equipment.
 1072         d. Errors and omissions.
 1073         e. Directors and officers, employment practices, and
 1074  management liability.
 1075         f. Intellectual property and patent infringement liability.
 1076         g. Advertising injury and Internet liability insurance.
 1077         h. Property risks rated under a highly protected risks
 1078  rating plan.
 1079         i. Any other commercial lines categories or kinds of
 1080  insurance or types of commercial lines risks that the office
 1081  determines should not be subject to paragraph (2)(a) or
 1082  paragraph (2)(f) because of the existence of a competitive
 1083  market for such insurance, similarity of such insurance to other
 1084  categories or kinds of insurance not subject to paragraph (2)(a)
 1085  or paragraph (2)(f), or to improve the general operational
 1086  efficiency of the office.
 1087         2. Insurers or rating organizations shall establish and use
 1088  rates, rating schedules, or rating manuals to allow the insurer
 1089  a reasonable rate of return on insurance and risks described in
 1090  subparagraph 1. which are written in this state.
 1091         3. An insurer must notify the office of any changes to
 1092  rates for insurance and risks described in subparagraph 1.
 1093  within no later than 30 days after the effective date of the
 1094  change. The notice must include the name of the insurer, the
 1095  type or kind of insurance subject to rate change, total premium
 1096  written during the immediately preceding year by the insurer for
 1097  the type or kind of insurance subject to the rate change, and
 1098  the average statewide percentage change in rates. Underwriting
 1099  files, premiums, losses, and expense statistics with regard to
 1100  such insurance and risks described in subparagraph 1. written by
 1101  an insurer must shall be maintained by the insurer and subject
 1102  to examination by the office. Upon examination, the office
 1103  shall, in accordance with generally accepted and reasonable
 1104  actuarial techniques, shall consider the rate factors in
 1105  paragraphs (2)(b), (c), and (d) and the standards in paragraph
 1106  (2)(e) to determine if the rate is excessive, inadequate, or
 1107  unfairly discriminatory.
 1108         4. A rating organization must notify the office of any
 1109  changes to loss cost for insurance and risks described in
 1110  subparagraph 1. within no later than 30 days after the effective
 1111  date of the change. The notice must include the name of the
 1112  rating organization, the type or kind of insurance subject to a
 1113  loss cost change, loss costs during the immediately preceding
 1114  year for the type or kind of insurance subject to the loss cost
 1115  change, and the average statewide percentage change in loss
 1116  cost. Loss and exposure statistics with regard to risks
 1117  applicable to loss costs for a rating organization not subject
 1118  to paragraph (2)(a) or paragraph (2)(f) must shall be maintained
 1119  by the rating organization and are subject to examination by the
 1120  office. Upon examination, the office shall, in accordance with
 1121  generally accepted and reasonable actuarial techniques, shall
 1122  consider the rate factors in paragraphs (2)(b)-(d) and the
 1123  standards in paragraph (2)(e) to determine if the rate is
 1124  excessive, inadequate, or unfairly discriminatory.
 1125         5. In reviewing a rate, the office may require the insurer
 1126  to provide, at the insurer’s expense, all information necessary
 1127  to evaluate the condition of the company and the reasonableness
 1128  of the rate according to the applicable criteria described in
 1129  this section.
 1130         (4) The establishment of any rate, rating classification,
 1131  rating plan or schedule, or variation thereof in violation of
 1132  part IX of chapter 626 is also in violation of this section. In
 1133  order to enhance the ability of consumers to compare premiums
 1134  and to increase the accuracy and usefulness of rate-comparison
 1135  information provided by the office to the public, the office
 1136  shall develop a proposed standard rating territory plan to be
 1137  used by all authorized property and casualty insurers for
 1138  residential property insurance. In adopting the proposed plan,
 1139  the office may consider geographical characteristics relevant to
 1140  risk, county lines, major roadways, existing rating territories
 1141  used by a significant segment of the market, and other relevant
 1142  factors. Such plan shall be submitted to the President of the
 1143  Senate and the Speaker of the House of Representatives by
 1144  January 15, 2006. The plan may not be implemented unless
 1145  authorized by further act of the Legislature.
 1146         (5) With respect to a rate filing involving coverage of the
 1147  type for which the insurer is required to pay a reimbursement
 1148  premium to the Florida Hurricane Catastrophe Fund, the insurer
 1149  may fully recoup in its property insurance premiums any
 1150  reimbursement premiums paid to the Florida Hurricane Catastrophe
 1151  fund, together with reasonable costs of other reinsurance;
 1152  however, but except as otherwise provided in this section, the
 1153  insurer may not recoup reinsurance costs that duplicate coverage
 1154  provided by the Florida Hurricane Catastrophe fund. An insurer
 1155  may not recoup more than 1 year of reimbursement premium at a
 1156  time. Any under-recoupment from the prior year may be added to
 1157  the following year’s reimbursement premium, and any over
 1158  recoupment must shall be subtracted from the following year’s
 1159  reimbursement premium.
 1160         (6)(a) If an insurer requests an administrative hearing
 1161  pursuant to s. 120.57 related to a rate filing under this
 1162  section, the director of the Division of Administrative Hearings
 1163  shall expedite the hearing and assign an administrative law
 1164  judge who shall commence the hearing within 30 days after the
 1165  receipt of the formal request and shall enter a recommended
 1166  order within 30 days after the hearing or within 30 days after
 1167  receipt of the hearing transcript by the administrative law
 1168  judge, whichever is later. Each party shall have be allowed 10
 1169  days in which to submit written exceptions to the recommended
 1170  order. The office shall enter a final order within 30 days after
 1171  the entry of the recommended order. The provisions of this
 1172  paragraph may be waived upon stipulation of all parties.
 1173         (b) Upon entry of a final order, the insurer may request a
 1174  expedited appellate review pursuant to the Florida Rules of
 1175  Appellate Procedure. It is the intent of the Legislature that
 1176  the First District Court of Appeal grant an insurer’s request
 1177  for an expedited appellate review.
 1178         (7)(a) The provisions of this subsection apply only with
 1179  respect to rates for medical malpractice insurance and shall
 1180  control to the extent of any conflict with other provisions of
 1181  this section.
 1182         (a)(b) Any portion of a judgment entered or settlement paid
 1183  as a result of a statutory or common-law bad faith action and
 1184  any portion of a judgment entered which awards punitive damages
 1185  against an insurer may not be included in the insurer’s rate
 1186  base, and shall not be used to justify a rate or rate change.
 1187  Any common-law bad faith action identified as such, any portion
 1188  of a settlement entered as a result of a statutory or common-law
 1189  action, or any portion of a settlement wherein an insurer agrees
 1190  to pay specific punitive damages may not be used to justify a
 1191  rate or rate change. The portion of the taxable costs and
 1192  attorney’s fees which is identified as being related to the bad
 1193  faith and punitive damages in these judgments and settlements
 1194  may not be included in the insurer’s rate base and used may not
 1195  be utilized to justify a rate or rate change.
 1196         (b)(c) Upon reviewing a rate filing and determining whether
 1197  the rate is excessive, inadequate, or unfairly discriminatory,
 1198  the office shall consider, in accordance with generally accepted
 1199  and reasonable actuarial techniques, past and present
 1200  prospective loss experience, either using loss experience solely
 1201  for this state or giving greater credibility to this state’s
 1202  loss data after applying actuarially sound methods of assigning
 1203  credibility to such data.
 1204         (c)(d) Rates shall be deemed excessive if, among other
 1205  standards established by this section, the rate structure
 1206  provides for replenishment of reserves or surpluses from
 1207  premiums when the replenishment is attributable to investment
 1208  losses.
 1209         (d)(e) The insurer must apply a discount or surcharge based
 1210  on the health care provider’s loss experience or shall establish
 1211  an alternative method giving due consideration to the provider’s
 1212  loss experience. The insurer must include in the filing a copy
 1213  of the surcharge or discount schedule or a description of the
 1214  alternative method used, and must provide a copy of such
 1215  schedule or description, as approved by the office, to
 1216  policyholders at the time of renewal and to prospective
 1217  policyholders at the time of application for coverage.
 1218         (e)(f) Each medical malpractice insurer must make a rate
 1219  filing under this section, sworn to by at least two executive
 1220  officers of the insurer, at least once each calendar year.
 1221         (8)(a)1.No later than 60 days after the effective date of
 1222  medical malpractice legislation enacted during the 2003 Special
 1223  Session D of the Florida Legislature, the office shall calculate
 1224  a presumed factor that reflects the impact that the changes
 1225  contained in such legislation will have on rates for medical
 1226  malpractice insurance and shall issue a notice informing all
 1227  insurers writing medical malpractice coverage of such presumed
 1228  factor. In determining the presumed factor, the office shall use
 1229  generally accepted actuarial techniques and standards provided
 1230  in this section in determining the expected impact on losses,
 1231  expenses, and investment income of the insurer. To the extent
 1232  that the operation of a provision of medical malpractice
 1233  legislation enacted during the 2003 Special Session D of the
 1234  Florida Legislature is stayed pending a constitutional
 1235  challenge, the impact of that provision shall not be included in
 1236  the calculation of a presumed factor under this subparagraph.
 1237         2.No later than 60 days after the office issues its notice
 1238  of the presumed rate change factor under subparagraph 1., each
 1239  insurer writing medical malpractice coverage in this state shall
 1240  submit to the office a rate filing for medical malpractice
 1241  insurance, which will take effect no later than January 1, 2004,
 1242  and apply retroactively to policies issued or renewed on or
 1243  after the effective date of medical malpractice legislation
 1244  enacted during the 2003 Special Session D of the Florida
 1245  Legislature. Except as authorized under paragraph (b), the
 1246  filing shall reflect an overall rate reduction at least as great
 1247  as the presumed factor determined under subparagraph 1. With
 1248  respect to policies issued on or after the effective date of
 1249  such legislation and prior to the effective date of the rate
 1250  filing required by this subsection, the office shall order the
 1251  insurer to make a refund of the amount that was charged in
 1252  excess of the rate that is approved.
 1253         (b)Any insurer or rating organization that contends that
 1254  the rate provided for in paragraph (a) is excessive, inadequate,
 1255  or unfairly discriminatory shall separately state in its filing
 1256  the rate it contends is appropriate and shall state with
 1257  specificity the factors or data that it contends should be
 1258  considered in order to produce such appropriate rate. The
 1259  insurer or rating organization shall be permitted to use all of
 1260  the generally accepted actuarial techniques provided in this
 1261  section in making any filing pursuant to this subsection. The
 1262  office shall review each such exception and approve or
 1263  disapprove it prior to use. It shall be the insurer’s burden to
 1264  actuarially justify any deviations from the rates required to be
 1265  filed under paragraph (a). The insurer making a filing under
 1266  this paragraph shall include in the filing the expected impact
 1267  of medical malpractice legislation enacted during the 2003
 1268  Special Session D of the Florida Legislature on losses,
 1269  expenses, and rates.
 1270         (c)If any provision of medical malpractice legislation
 1271  enacted during the 2003 Special Session D of the Florida
 1272  Legislature is held invalid by a court of competent
 1273  jurisdiction, the office shall permit an adjustment of all
 1274  medical malpractice rates filed under this section to reflect
 1275  the impact of such holding on such rates so as to ensure that
 1276  the rates are not excessive, inadequate, or unfairly
 1277  discriminatory.
 1278         (d)Rates approved on or before July 1, 2003, for medical
 1279  malpractice insurance shall remain in effect until the effective
 1280  date of a new rate filing approved under this subsection.
 1281         (e)The calculation and notice by the office of the
 1282  presumed factor pursuant to paragraph (a) is not an order or
 1283  rule that is subject to chapter 120. If the office enters into a
 1284  contract with an independent consultant to assist the office in
 1285  calculating the presumed factor, such contract shall not be
 1286  subject to the competitive solicitation requirements of s.
 1287  287.057.
 1288         (8)(9)(a) The chief executive officer or chief financial
 1289  officer of a property insurer and the chief actuary of a
 1290  property insurer must certify under oath and subject to the
 1291  penalty of perjury, on a form approved by the commission, the
 1292  following information, which must accompany a rate filing:
 1293         1. The signing officer and actuary have reviewed the rate
 1294  filing;
 1295         2. Based on the signing officer’s and actuary’s knowledge,
 1296  the rate filing does not contain any untrue statement of a
 1297  material fact or omit to state a material fact necessary in
 1298  order to make the statements made, in light of the circumstances
 1299  under which such statements were made, not misleading;
 1300         3. Based on the signing officer’s and actuary’s knowledge,
 1301  the information and other factors described in paragraph (2)(b),
 1302  including, but not limited to, investment income, fairly present
 1303  in all material respects the basis of the rate filing for the
 1304  periods presented in the filing; and
 1305         4. Based on the signing officer’s and actuary’s knowledge,
 1306  the rate filing reflects all premium savings that are reasonably
 1307  expected to result from legislative enactments and are in
 1308  accordance with generally accepted and reasonable actuarial
 1309  techniques.
 1310         (b) A signing officer or actuary who knowingly makes making
 1311  a false certification under this subsection commits a violation
 1312  of s. 626.9541(1)(e) and is subject to the penalties under s.
 1313  626.9521.
 1314         (c) Failure to provide such certification by the officer
 1315  and actuary shall result in the rate filing being disapproved
 1316  without prejudice to be refiled.
 1317         (d)The certification made pursuant to paragraph (a) is not
 1318  rendered false if, after making the subject rate filing, the
 1319  insurer provides the office with additional or supplementary
 1320  information pursuant to a formal or informal request from the
 1321  office. However, the actuary who is primarily responsible for
 1322  preparing and submitting such information must certify the
 1323  information in accordance with the certification required under
 1324  paragraph (a) and the penalties in paragraph (b), except that
 1325  the chief executive officer, chief financial officer, or chief
 1326  actuary need not certify the additional or supplementary
 1327  information.
 1328         (e)(d) The commission may adopt rules and forms pursuant to
 1329  ss. 120.536(1) and 120.54 to administer this subsection.
 1330         (9)(10) The burden is on the office to establish that rates
 1331  are excessive for personal lines residential coverage with a
 1332  dwelling replacement cost of $1 million or more or for a single
 1333  condominium unit with a combined dwelling and contents
 1334  replacement cost of $1 million or more. Upon request of the
 1335  office, the insurer shall provide to the office such loss and
 1336  expense information as the office reasonably needs to meet this
 1337  burden.
 1338         (10)(11) Any interest paid pursuant to s. 627.70131(5) may
 1339  not be included in the insurer’s rate base and may not be used
 1340  to justify a rate or rate change.
 1341         Section 17. Paragraph (b) of subsection (3) of section
 1342  627.06281, Florida Statutes, is amended to read:
 1343         627.06281 Public hurricane loss projection model; reporting
 1344  of data by insurers.—
 1345         (3)
 1346         (b) The fees charged for private sector access and use of
 1347  the model shall be the reasonable costs associated with the
 1348  operation and maintenance of the model by the office. Such fees
 1349  do not apply to access and use of the model by the office. By
 1350  January 1, 2009, The office shall establish by rule a fee
 1351  schedule for access to and the use of the model. The fee
 1352  schedule must be reasonably calculated to cover only the actual
 1353  costs of providing access to and the use of the model.
 1354         Section 18. Subsections (1) and (5) and paragraph (b) of
 1355  subsection (8) of section 627.0629, Florida Statutes, are
 1356  amended to read:
 1357         627.0629 Residential property insurance; rate filings.—
 1358         (1)(a) It is the intent of the Legislature that insurers
 1359  must provide savings to consumers who install or implement
 1360  windstorm damage mitigation techniques, alterations, or
 1361  solutions to their properties to prevent windstorm losses. A
 1362  rate filing for residential property insurance must include
 1363  actuarially reasonable discounts, credits, or other rate
 1364  differentials, or appropriate reductions in deductibles, for
 1365  properties on which fixtures or construction techniques
 1366  demonstrated to reduce the amount of loss in a windstorm have
 1367  been installed or implemented. The fixtures or construction
 1368  techniques must shall include, but are not be limited to,
 1369  fixtures or construction techniques that which enhance roof
 1370  strength, roof covering performance, roof-to-wall strength,
 1371  wall-to-floor-to-foundation strength, opening protection, and
 1372  window, door, and skylight strength. Credits, discounts, or
 1373  other rate differentials, or appropriate reductions in
 1374  deductibles, for fixtures and construction techniques that which
 1375  meet the minimum requirements of the Florida Building Code must
 1376  be included in the rate filing. All insurance companies must
 1377  make a rate filing that which includes the credits, discounts,
 1378  or other rate differentials or reductions in deductibles by
 1379  February 28, 2003. By July 1, 2007, the office shall reevaluate
 1380  the discounts, credits, other rate differentials, and
 1381  appropriate reductions in deductibles for fixtures and
 1382  construction techniques that meet the minimum requirements of
 1383  the Florida Building Code, based upon actual experience or any
 1384  other loss relativity studies available to the office. The
 1385  office shall determine the discounts, credits, other rate
 1386  differentials, and appropriate reductions in deductibles that
 1387  reflect the full actuarial value of such revaluation, which may
 1388  be used by insurers in rate filings.
 1389         (b) By February 1, 2011, the Office of Insurance
 1390  Regulation, in consultation with the Department of Financial
 1391  Services and the Department of Community Affairs, shall develop
 1392  and make publicly available a proposed method for insurers to
 1393  establish discounts, credits, or other rate differentials for
 1394  hurricane mitigation measures which directly correlate to the
 1395  numerical rating assigned to a structure pursuant to the uniform
 1396  home grading scale adopted by the Financial Services Commission
 1397  pursuant to s. 215.55865, including any proposed changes to the
 1398  uniform home grading scale. By October 1, 2011, the commission
 1399  shall adopt rules requiring insurers to make rate filings for
 1400  residential property insurance which revise insurers’ discounts,
 1401  credits, or other rate differentials for hurricane mitigation
 1402  measures so that such rate differentials correlate directly to
 1403  the uniform home grading scale. The rules may include such
 1404  changes to the uniform home grading scale as the commission
 1405  determines are necessary, and may specify the minimum required
 1406  discounts, credits, or other rate differentials. Such rate
 1407  differentials must be consistent with generally accepted
 1408  actuarial principles and wind-loss mitigation studies. The rules
 1409  shall allow a period of at least 2 years after the effective
 1410  date of the revised mitigation discounts, credits, or other rate
 1411  differentials for a property owner to obtain an inspection or
 1412  otherwise qualify for the revised credit, during which time the
 1413  insurer shall continue to apply the mitigation credit that was
 1414  applied immediately prior to the effective date of the revised
 1415  credit. Discounts, credits, and other rate differentials
 1416  established for rate filings under this paragraph shall
 1417  supersede, after adoption, the discounts, credits, and other
 1418  rate differentials included in rate filings under paragraph (a).
 1419         (5) In order to provide an appropriate transition period,
 1420  an insurer may, in its sole discretion, implement an approved
 1421  rate filing for residential property insurance over a period of
 1422  years. Such An insurer electing to phase in its rate filing must
 1423  provide an informational notice to the office setting out its
 1424  schedule for implementation of the phased-in rate filing. The An
 1425  insurer may include in its rate the actual cost of private
 1426  market reinsurance that corresponds to available coverage of the
 1427  Temporary Increase in Coverage Limits, TICL, from the Florida
 1428  Hurricane Catastrophe Fund. The insurer may also include the
 1429  cost of reinsurance to replace the TICL reduction implemented
 1430  pursuant to s. 215.555(17)(d)9. However, this cost for
 1431  reinsurance may not include any expense or profit load or result
 1432  in a total annual base rate increase in excess of 10 percent.
 1433         (8) EVALUATION OF RESIDENTIAL PROPERTY STRUCTURAL
 1434  SOUNDNESS.—
 1435         (b) To the extent that funds are provided for this purpose
 1436  in the General Appropriations Act, the Legislature hereby
 1437  authorizes the establishment of a program to be administered by
 1438  the Citizens Property Insurance Corporation for homeowners
 1439  insured in the coastal high-risk account is authorized.
 1440         Section 19. Paragraphs (a), (b), (c), (d), (n), (v), and
 1441  (y) of subsection (6) of section 627.351, Florida Statutes, are
 1442  amended to read:
 1443         627.351 Insurance risk apportionment plans.—
 1444         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1445         (a)1.It is The public purpose of this subsection is to
 1446  ensure that there is the existence of an orderly market for
 1447  property insurance for residents Floridians and Florida
 1448  businesses of this state.
 1449         1. The Legislature finds that private insurers are
 1450  unwilling or unable to provide affordable property insurance
 1451  coverage in this state to the extent sought and needed. The
 1452  absence of affordable property insurance threatens the public
 1453  health, safety, and welfare and likewise threatens the economic
 1454  health of the state. The state therefore has a compelling public
 1455  interest and a public purpose to assist in assuring that
 1456  property in the state is insured and that it is insured at
 1457  affordable rates so as to facilitate the remediation,
 1458  reconstruction, and replacement of damaged or destroyed property
 1459  in order to reduce or avoid the negative effects otherwise
 1460  resulting to the public health, safety, and welfare, to the
 1461  economy of the state, and to the revenues of the state and local
 1462  governments which are needed to provide for the public welfare.
 1463  It is necessary, therefore, to provide affordable property
 1464  insurance to applicants who are in good faith entitled to
 1465  procure insurance through the voluntary market but are unable to
 1466  do so. The Legislature intends, therefore, by this subsection
 1467  that affordable property insurance be provided and that it
 1468  continue to be provided, as long as necessary, through Citizens
 1469  Property Insurance Corporation, a government entity that is an
 1470  integral part of the state, and that is not a private insurance
 1471  company. To that end, the Citizens Property Insurance
 1472  corporation shall strive to increase the availability of
 1473  affordable property insurance in this state, while achieving
 1474  efficiencies and economies, and while providing service to
 1475  policyholders, applicants, and agents which is no less than the
 1476  quality generally provided in the voluntary market, for the
 1477  achievement of the foregoing public purposes. Because it is
 1478  essential for this government entity to have the maximum
 1479  financial resources to pay claims following a catastrophic
 1480  hurricane, it is the intent of the Legislature that the Citizens
 1481  Property Insurance corporation continue to be an integral part
 1482  of the state and that the income of the corporation be exempt
 1483  from federal income taxation and that interest on the debt
 1484  obligations issued by the corporation be exempt from federal
 1485  income taxation. The corporate logo of the corporation must
 1486  include the name of the corporation and the words “A Taxpayer
 1487  Funded Corporation.”
 1488         2. The Residential Property and Casualty Joint Underwriting
 1489  Association originally created by this statute shall be known,
 1490  as of July 1, 2002, as the Citizens Property Insurance
 1491  Corporation. The corporation shall provide insurance for
 1492  residential and commercial property, for applicants who are in
 1493  good faith entitled, but, in good faith, are unable, to procure
 1494  insurance through the voluntary market. The corporation shall
 1495  operate pursuant to a plan of operation approved by order of the
 1496  Financial Services Commission. The plan is subject to continuous
 1497  review by the commission. The commission may, by order, withdraw
 1498  approval of all or part of a plan if the commission determines
 1499  that conditions have changed since approval was granted and that
 1500  the purposes of the plan require changes in the plan. The
 1501  corporation shall continue to operate pursuant to the plan of
 1502  operation approved by the Office of Insurance Regulation until
 1503  October 1, 2006. For the purposes of this subsection,
 1504  residential coverage includes both personal lines residential
 1505  coverage, which consists of the type of coverage provided by
 1506  homeowner’s, mobile home owner’s, dwelling, tenant’s,
 1507  condominium unit owner’s, and similar policies;, and commercial
 1508  lines residential coverage, which consists of the type of
 1509  coverage provided by condominium association, apartment
 1510  building, and similar policies.
 1511         3. Effective January 1, 2009, a personal lines residential
 1512  structure that has a dwelling replacement cost of $2 million or
 1513  more, or a single condominium unit that has a combined dwelling
 1514  and contents content replacement cost of $2 million or more is
 1515  not eligible for coverage by the corporation. Such dwellings
 1516  insured by the corporation on December 31, 2008, may continue to
 1517  be covered by the corporation until the end of the policy term.
 1518  However, such dwellings that are insured by the corporation and
 1519  become ineligible for coverage due to the provisions of this
 1520  subparagraph may reapply and obtain coverage if the property
 1521  owner provides the corporation with a sworn affidavit from one
 1522  or more insurance agents, on a form provided by the corporation,
 1523  stating that the agents have made their best efforts to obtain
 1524  coverage and that the property has been rejected for coverage by
 1525  at least one authorized insurer and at least three surplus lines
 1526  insurers. If such conditions are met, the dwelling may be
 1527  insured by the corporation for up to 3 years, after which time
 1528  the dwelling is ineligible for coverage. The office shall
 1529  approve the method used by the corporation for valuing the
 1530  dwelling replacement cost for the purposes of this subparagraph.
 1531  If a policyholder is insured by the corporation prior to being
 1532  determined to be ineligible pursuant to this subparagraph and
 1533  such policyholder files a lawsuit challenging the determination,
 1534  the policyholder may remain insured by the corporation until the
 1535  conclusion of the litigation.
 1536         4. It is the intent of the Legislature that policyholders,
 1537  applicants, and agents of the corporation receive service and
 1538  treatment of the highest possible level but never less than that
 1539  generally provided in the voluntary market. It is also is
 1540  intended that the corporation be held to service standards no
 1541  less than those applied to insurers in the voluntary market by
 1542  the office with respect to responsiveness, timeliness, customer
 1543  courtesy, and overall dealings with policyholders, applicants,
 1544  or agents of the corporation.
 1545         5. Effective January 1, 2009, a personal lines residential
 1546  structure that is located in the “wind-borne debris region,” as
 1547  defined in s. 1609.2, International Building Code (2006), and
 1548  that has an insured value on the structure of $750,000 or more
 1549  is not eligible for coverage by the corporation unless the
 1550  structure has opening protections as required under the Florida
 1551  Building Code for a newly constructed residential structure in
 1552  that area. A residential structure shall be deemed to comply
 1553  with the requirements of this subparagraph if it has shutters or
 1554  opening protections on all openings and if such opening
 1555  protections complied with the Florida Building Code at the time
 1556  they were installed.
 1557         6. In recognition of the corporation’s status as a
 1558  governmental entity, policies issued by the corporation must
 1559  include a provision stating that as a condition of coverage with
 1560  the corporation, policyholders may not engage the services of a
 1561  public adjuster to represent the policyholder with respect to
 1562  any claim filed under a policy issued by the corporation until
 1563  after the corporation has tendered an offer with respect to such
 1564  claim. For any claim filed under any policy of the corporation,
 1565  a public adjuster may not charge, agree to, or accept any
 1566  compensation, payment, commission, fee, or other thing of value
 1567  greater than 10 percent of the additional amount actually paid
 1568  over the amount that was originally offered by the corporation
 1569  for any one claim.
 1570         (b)1. All insurers authorized to write one or more subject
 1571  lines of business in this state are subject to assessment by the
 1572  corporation and, for the purposes of this subsection, are
 1573  referred to collectively as “assessable insurers.” Insurers
 1574  writing one or more subject lines of business in this state
 1575  pursuant to part VIII of chapter 626 are not assessable
 1576  insurers, but insureds who procure one or more subject lines of
 1577  business in this state pursuant to part VIII of chapter 626 are
 1578  subject to assessment by the corporation and are referred to
 1579  collectively as “assessable insureds.” An authorized insurer’s
 1580  assessment liability begins shall begin on the first day of the
 1581  calendar year following the year in which the insurer was issued
 1582  a certificate of authority to transact insurance for subject
 1583  lines of business in this state and terminates shall terminate 1
 1584  year after the end of the first calendar year during which the
 1585  insurer no longer holds a certificate of authority to transact
 1586  insurance for subject lines of business in this state.
 1587         2.a. All revenues, assets, liabilities, losses, and
 1588  expenses of the corporation shall be divided into three separate
 1589  accounts as follows:
 1590         (I) A personal lines account for personal residential
 1591  policies issued by the corporation, or issued by the Residential
 1592  Property and Casualty Joint Underwriting Association and renewed
 1593  by the corporation, which provides that provide comprehensive,
 1594  multiperil coverage on risks that are not located in areas
 1595  eligible for coverage by in the Florida Windstorm Underwriting
 1596  Association as those areas were defined on January 1, 2002, and
 1597  for such policies that do not provide coverage for the peril of
 1598  wind on risks that are located in such areas;
 1599         (II) A commercial lines account for commercial residential
 1600  and commercial nonresidential policies issued by the
 1601  corporation, or issued by the Residential Property and Casualty
 1602  Joint Underwriting Association and renewed by the corporation,
 1603  which provides that provide coverage for basic property perils
 1604  on risks that are not located in areas eligible for coverage by
 1605  in the Florida Windstorm Underwriting Association as those areas
 1606  were defined on January 1, 2002, and for such policies that do
 1607  not provide coverage for the peril of wind on risks that are
 1608  located in such areas; and
 1609         (III) A coastal high-risk account for personal residential
 1610  policies and commercial residential and commercial
 1611  nonresidential property policies issued by the corporation, or
 1612  transferred to the corporation, which provides that provide
 1613  coverage for the peril of wind on risks that are located in
 1614  areas eligible for coverage by in the Florida Windstorm
 1615  Underwriting Association as those areas were defined on January
 1616  1, 2002. The corporation may offer policies that provide
 1617  multiperil coverage and the corporation shall continue to offer
 1618  policies that provide coverage only for the peril of wind for
 1619  risks located in areas eligible for coverage in the coastal
 1620  high-risk account. In issuing multiperil coverage, the
 1621  corporation may use its approved policy forms and rates for the
 1622  personal lines account. An applicant or insured who is eligible
 1623  to purchase a multiperil policy from the corporation may
 1624  purchase a multiperil policy from an authorized insurer without
 1625  prejudice to the applicant’s or insured’s eligibility to
 1626  prospectively purchase a policy that provides coverage only for
 1627  the peril of wind from the corporation. An applicant or insured
 1628  who is eligible for a corporation policy that provides coverage
 1629  only for the peril of wind may elect to purchase or retain such
 1630  policy and also purchase or retain coverage excluding wind from
 1631  an authorized insurer without prejudice to the applicant’s or
 1632  insured’s eligibility to prospectively purchase a policy that
 1633  provides multiperil coverage from the corporation. It is the
 1634  goal of the Legislature that there would be an overall average
 1635  savings of 10 percent or more for a policyholder who currently
 1636  has a wind-only policy with the corporation, and an ex-wind
 1637  policy with a voluntary insurer or the corporation, and who then
 1638  obtains a multiperil policy from the corporation. It is the
 1639  intent of the Legislature that the offer of multiperil coverage
 1640  in the coastal high-risk account be made and implemented in a
 1641  manner that does not adversely affect the tax-exempt status of
 1642  the corporation or creditworthiness of or security for currently
 1643  outstanding financing obligations or credit facilities of the
 1644  coastal high-risk account, the personal lines account, or the
 1645  commercial lines account. The coastal high-risk account must
 1646  also include quota share primary insurance under subparagraph
 1647  (c)2. The area eligible for coverage under the coastal high-risk
 1648  account also includes the area within Port Canaveral, which is
 1649  bordered on the south by the City of Cape Canaveral, bordered on
 1650  the west by the Banana River, and bordered on the north by
 1651  Federal Government property.
 1652         b. The three separate accounts must be maintained as long
 1653  as financing obligations entered into by the Florida Windstorm
 1654  Underwriting Association or Residential Property and Casualty
 1655  Joint Underwriting Association are outstanding, in accordance
 1656  with the terms of the corresponding financing documents. If When
 1657  the financing obligations are no longer outstanding, in
 1658  accordance with the terms of the corresponding financing
 1659  documents, the corporation may use a single account for all
 1660  revenues, assets, liabilities, losses, and expenses of the
 1661  corporation. Consistent with the requirement of this
 1662  subparagraph and prudent investment policies that minimize the
 1663  cost of carrying debt, the board shall exercise its best efforts
 1664  to retire existing debt or to obtain the approval of necessary
 1665  parties to amend the terms of existing debt, so as to structure
 1666  the most efficient plan to consolidate the three separate
 1667  accounts into a single account.
 1668         c. Creditors of the Residential Property and Casualty Joint
 1669  Underwriting Association and of the accounts specified in sub
 1670  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1671  recourse to, those the accounts referred to in sub-sub
 1672  subparagraphs a.(I) and (II) and shall have no claim against, or
 1673  recourse to, the account referred to in sub-sub-subparagraph
 1674  a.(III). Creditors of the Florida Windstorm Underwriting
 1675  Association shall have a claim against, and recourse to, the
 1676  account referred to in sub-sub-subparagraph a.(III) and shall
 1677  have no claim against, or recourse to, the accounts referred to
 1678  in sub-sub-subparagraphs a.(I) and (II).
 1679         d. Revenues, assets, liabilities, losses, and expenses not
 1680  attributable to particular accounts shall be prorated among the
 1681  accounts.
 1682         e. The Legislature finds that the revenues of the
 1683  corporation are revenues that are necessary to meet the
 1684  requirements set forth in documents authorizing the issuance of
 1685  bonds under this subsection.
 1686         f. No part of the income of the corporation may inure to
 1687  the benefit of any private person.
 1688         3. With respect to a deficit in an account:
 1689         a. After accounting for the Citizens policyholder surcharge
 1690  imposed under sub-subparagraph h. i., if when the remaining
 1691  projected deficit incurred in a particular calendar year:
 1692         (I) Is not greater than 6 percent of the aggregate
 1693  statewide direct written premium for the subject lines of
 1694  business for the prior calendar year, the entire deficit shall
 1695  be recovered through regular assessments of assessable insurers
 1696  under paragraph (q) and assessable insureds.
 1697         (II)b.After accounting for the Citizens policyholder
 1698  surcharge imposed under sub-subparagraph i., when the remaining
 1699  projected deficit incurred in a particular calendar year Exceeds
 1700  6 percent of the aggregate statewide direct written premium for
 1701  the subject lines of business for the prior calendar year, the
 1702  corporation shall levy regular assessments on assessable
 1703  insurers under paragraph (q) and on assessable insureds in an
 1704  amount equal to the greater of 6 percent of the deficit or 6
 1705  percent of the aggregate statewide direct written premium for
 1706  the subject lines of business for the prior calendar year. Any
 1707  remaining deficit shall be recovered through emergency
 1708  assessments under sub-subparagraph c. d.
 1709         b.c. Each assessable insurer’s share of the amount being
 1710  assessed under sub-subparagraph a. must or sub-subparagraph b.
 1711  shall be in the proportion that the assessable insurer’s direct
 1712  written premium for the subject lines of business for the year
 1713  preceding the assessment bears to the aggregate statewide direct
 1714  written premium for the subject lines of business for that year.
 1715  The applicable assessment percentage applicable to each
 1716  assessable insured is the ratio of the amount being assessed
 1717  under sub-subparagraph a. or sub-subparagraph b. to the
 1718  aggregate statewide direct written premium for the subject lines
 1719  of business for the prior year. Assessments levied by the
 1720  corporation on assessable insurers under sub-subparagraph a.
 1721  must sub-subparagraphs a. and b. shall be paid as required by
 1722  the corporation’s plan of operation and paragraph (q).
 1723  Assessments levied by the corporation on assessable insureds
 1724  under sub-subparagraph a. sub-subparagraphs a. and b. shall be
 1725  collected by the surplus lines agent at the time the surplus
 1726  lines agent collects the surplus lines tax required by s.
 1727  626.932, and shall be paid to the Florida Surplus Lines Service
 1728  Office at the time the surplus lines agent pays the surplus
 1729  lines tax to that the Florida Surplus Lines Service office. Upon
 1730  receipt of regular assessments from surplus lines agents, the
 1731  Florida Surplus Lines Service Office shall transfer the
 1732  assessments directly to the corporation as determined by the
 1733  corporation.
 1734         c.d. Upon a determination by the board of governors that a
 1735  deficit in an account exceeds the amount that will be recovered
 1736  through regular assessments under sub-subparagraph a. or sub
 1737  subparagraph b., plus the amount that is expected to be
 1738  recovered through surcharges under sub-subparagraph h. i., as to
 1739  the remaining projected deficit the board shall levy, after
 1740  verification by the office, shall levy emergency assessments,
 1741  for as many years as necessary to cover the deficits, to be
 1742  collected by assessable insurers and the corporation and
 1743  collected from assessable insureds upon issuance or renewal of
 1744  policies for subject lines of business, excluding National Flood
 1745  Insurance policies. The amount of the emergency assessment
 1746  collected in a particular year must shall be a uniform
 1747  percentage of that year’s direct written premium for subject
 1748  lines of business and all accounts of the corporation, excluding
 1749  National Flood Insurance Program policy premiums, as annually
 1750  determined by the board and verified by the office. The office
 1751  shall verify the arithmetic calculations involved in the board’s
 1752  determination within 30 days after receipt of the information on
 1753  which the determination was based. Notwithstanding any other
 1754  provision of law, the corporation and each assessable insurer
 1755  that writes subject lines of business shall collect emergency
 1756  assessments from its policyholders without such obligation being
 1757  affected by any credit, limitation, exemption, or deferment.
 1758  Emergency assessments levied by the corporation on assessable
 1759  insureds shall be collected by the surplus lines agent at the
 1760  time the surplus lines agent collects the surplus lines tax
 1761  required by s. 626.932 and shall be paid to the Florida Surplus
 1762  Lines Service Office at the time the surplus lines agent pays
 1763  the surplus lines tax to that the Florida Surplus Lines Service
 1764  office. The emergency assessments so collected shall be
 1765  transferred directly to the corporation on a periodic basis as
 1766  determined by the corporation and shall be held by the
 1767  corporation solely in the applicable account. The aggregate
 1768  amount of emergency assessments levied for an account under this
 1769  sub-subparagraph in any calendar year may, at the discretion of
 1770  the board of governors, be less than but may not exceed the
 1771  greater of 10 percent of the amount needed to cover the deficit,
 1772  plus interest, fees, commissions, required reserves, and other
 1773  costs associated with financing of the original deficit, or 10
 1774  percent of the aggregate statewide direct written premium for
 1775  subject lines of business and for all accounts of the
 1776  corporation for the prior year, plus interest, fees,
 1777  commissions, required reserves, and other costs associated with
 1778  financing the deficit.
 1779         d.e. The corporation may pledge the proceeds of
 1780  assessments, projected recoveries from the Florida Hurricane
 1781  Catastrophe Fund, other insurance and reinsurance recoverables,
 1782  policyholder surcharges and other surcharges, and other funds
 1783  available to the corporation as the source of revenue for and to
 1784  secure bonds issued under paragraph (q), bonds or other
 1785  indebtedness issued under subparagraph (c)3., or lines of credit
 1786  or other financing mechanisms issued or created under this
 1787  subsection, or to retire any other debt incurred as a result of
 1788  deficits or events giving rise to deficits, or in any other way
 1789  that the board determines will efficiently recover such
 1790  deficits. The purpose of the lines of credit or other financing
 1791  mechanisms is to provide additional resources to assist the
 1792  corporation in covering claims and expenses attributable to a
 1793  catastrophe. As used in this subsection, the term “assessments”
 1794  includes regular assessments under sub-subparagraph a., sub
 1795  subparagraph b., or subparagraph (q)1. and emergency assessments
 1796  under sub-subparagraph d. Emergency assessments collected under
 1797  sub-subparagraph d. are not part of an insurer’s rates, are not
 1798  premium, and are not subject to premium tax, fees, or
 1799  commissions; however, failure to pay the emergency assessment
 1800  shall be treated as failure to pay premium. The emergency
 1801  assessments under sub-subparagraph c. d. shall continue as long
 1802  as any bonds issued or other indebtedness incurred with respect
 1803  to a deficit for which the assessment was imposed remain
 1804  outstanding, unless adequate provision has been made for the
 1805  payment of such bonds or other indebtedness pursuant to the
 1806  documents governing such bonds or other indebtedness.
 1807         e.f. As used in this subsection for purposes of any deficit
 1808  incurred on or after January 25, 2007, the term “subject lines
 1809  of business” means insurance written by assessable insurers or
 1810  procured by assessable insureds for all property and casualty
 1811  lines of business in this state, but not including workers’
 1812  compensation or medical malpractice. As used in this the sub
 1813  subparagraph, the term “property and casualty lines of business”
 1814  includes all lines of business identified on Form 2, Exhibit of
 1815  Premiums and Losses, in the annual statement required of
 1816  authorized insurers under by s. 624.424 and any rule adopted
 1817  under this section, except for those lines identified as
 1818  accident and health insurance and except for policies written
 1819  under the National Flood Insurance Program or the Federal Crop
 1820  Insurance Program. For purposes of this sub-subparagraph, the
 1821  term “workers’ compensation” includes both workers’ compensation
 1822  insurance and excess workers’ compensation insurance.
 1823         f.g. The Florida Surplus Lines Service Office shall
 1824  determine annually the aggregate statewide written premium in
 1825  subject lines of business procured by assessable insureds and
 1826  shall report that information to the corporation in a form and
 1827  at a time the corporation specifies to ensure that the
 1828  corporation can meet the requirements of this subsection and the
 1829  corporation’s financing obligations.
 1830         g.h. The Florida Surplus Lines Service Office shall verify
 1831  the proper application by surplus lines agents of assessment
 1832  percentages for regular assessments and emergency assessments
 1833  levied under this subparagraph on assessable insureds and shall
 1834  assist the corporation in ensuring the accurate, timely
 1835  collection and payment of assessments by surplus lines agents as
 1836  required by the corporation.
 1837         h.i. If a deficit is incurred in any account in 2008 or
 1838  thereafter, the board of governors shall levy a Citizens
 1839  policyholder surcharge against all policyholders of the
 1840  corporation. for a 12-month period, which
 1841         (I) The surcharge shall be levied collected at the time of
 1842  issuance or renewal of a policy, as a uniform percentage of the
 1843  premium for the policy of up to 15 percent of such premium,
 1844  which funds shall be used to offset the deficit.
 1845         (II) The surcharge is payable upon cancellation or
 1846  termination of the policy, upon renewal of the policy, or upon
 1847  issuance of a new policy by the corporation within the first 12
 1848  months after the date of the levy or the period of time
 1849  necessary to fully collect the surcharge amount.
 1850         (III) The corporation may not levy any regular assessments
 1851  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1852  subparagraph b. with respect to a particular year’s deficit
 1853  until the corporation has first levied the full amount of the
 1854  surcharge authorized by this sub-subparagraph.
 1855         (IV) The surcharge is Citizens policyholder surcharges
 1856  under this sub-subparagraph are not considered premium and is
 1857  are not subject to commissions, fees, or premium taxes. However,
 1858  failure to pay the surcharge such surcharges shall be treated as
 1859  failure to pay premium.
 1860         i.j. If the amount of any assessments or surcharges
 1861  collected from corporation policyholders, assessable insurers or
 1862  their policyholders, or assessable insureds exceeds the amount
 1863  of the deficits, such excess amounts shall be remitted to and
 1864  retained by the corporation in a reserve to be used by the
 1865  corporation, as determined by the board of governors and
 1866  approved by the office, to pay claims or reduce any past,
 1867  present, or future plan-year deficits or to reduce outstanding
 1868  debt.
 1869         (c) The corporation’s plan of operation of the corporation:
 1870         1. Must provide for adoption of residential property and
 1871  casualty insurance policy forms and commercial residential and
 1872  nonresidential property insurance forms, which forms must be
 1873  approved by the office before prior to use. The corporation
 1874  shall adopt the following policy forms:
 1875         a. Standard personal lines policy forms that are
 1876  comprehensive multiperil policies providing full coverage of a
 1877  residential property equivalent to the coverage provided in the
 1878  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1879         b. Basic personal lines policy forms that are policies
 1880  similar to an HO-8 policy or a dwelling fire policy that provide
 1881  coverage meeting the requirements of the secondary mortgage
 1882  market, but which coverage is more limited than the coverage
 1883  under a standard policy.
 1884         c. Commercial lines residential and nonresidential policy
 1885  forms that are generally similar to the basic perils of full
 1886  coverage obtainable for commercial residential structures and
 1887  commercial nonresidential structures in the admitted voluntary
 1888  market.
 1889         d. Personal lines and commercial lines residential property
 1890  insurance forms that cover the peril of wind only. The forms are
 1891  applicable only to residential properties located in areas
 1892  eligible for coverage under the coastal high-risk account
 1893  referred to in sub-subparagraph (b)2.a.
 1894         e. Commercial lines nonresidential property insurance forms
 1895  that cover the peril of wind only. The forms are applicable only
 1896  to nonresidential properties located in areas eligible for
 1897  coverage under the coastal high-risk account referred to in sub
 1898  subparagraph (b)2.a.
 1899         f. The corporation may adopt variations of the policy forms
 1900  listed in sub-subparagraphs a.-e. which that contain more
 1901  restrictive coverage.
 1902         2.a. Must provide that the corporation adopt a program in
 1903  which the corporation and authorized insurers enter into quota
 1904  share primary insurance agreements for hurricane coverage, as
 1905  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1906  property insurance forms for eligible risks which cover the
 1907  peril of wind only.
 1908         a. As used in this subsection, the term:
 1909         (I) “Quota share primary insurance” means an arrangement in
 1910  which the primary hurricane coverage of an eligible risk is
 1911  provided in specified percentages by the corporation and an
 1912  authorized insurer. The corporation and authorized insurer are
 1913  each solely responsible for a specified percentage of hurricane
 1914  coverage of an eligible risk as set forth in a quota share
 1915  primary insurance agreement between the corporation and an
 1916  authorized insurer and the insurance contract. The
 1917  responsibility of the corporation or authorized insurer to pay
 1918  its specified percentage of hurricane losses of an eligible
 1919  risk, as set forth in the quota share primary insurance
 1920  agreement, may not be altered by the inability of the other
 1921  party to the agreement to pay its specified percentage of
 1922  hurricane losses. Eligible risks that are provided hurricane
 1923  coverage through a quota share primary insurance arrangement
 1924  must be provided policy forms that set forth the obligations of
 1925  the corporation and authorized insurer under the arrangement,
 1926  clearly specify the percentages of quota share primary insurance
 1927  provided by the corporation and authorized insurer, and
 1928  conspicuously and clearly state that neither the authorized
 1929  insurer and nor the corporation may not be held responsible
 1930  beyond their its specified percentage of coverage of hurricane
 1931  losses.
 1932         (II) “Eligible risks” means personal lines residential and
 1933  commercial lines residential risks that meet the underwriting
 1934  criteria of the corporation and are located in areas that were
 1935  eligible for coverage by the Florida Windstorm Underwriting
 1936  Association on January 1, 2002.
 1937         b. The corporation may enter into quota share primary
 1938  insurance agreements with authorized insurers at corporation
 1939  coverage levels of 90 percent and 50 percent.
 1940         c. If the corporation determines that additional coverage
 1941  levels are necessary to maximize participation in quota share
 1942  primary insurance agreements by authorized insurers, the
 1943  corporation may establish additional coverage levels. However,
 1944  the corporation’s quota share primary insurance coverage level
 1945  may not exceed 90 percent.
 1946         d. Any quota share primary insurance agreement entered into
 1947  between an authorized insurer and the corporation must provide
 1948  for a uniform specified percentage of coverage of hurricane
 1949  losses, by county or territory as set forth by the corporation
 1950  board, for all eligible risks of the authorized insurer covered
 1951  under the quota share primary insurance agreement.
 1952         e. Any quota share primary insurance agreement entered into
 1953  between an authorized insurer and the corporation is subject to
 1954  review and approval by the office. However, such agreement shall
 1955  be authorized only as to insurance contracts entered into
 1956  between an authorized insurer and an insured who is already
 1957  insured by the corporation for wind coverage.
 1958         f. For all eligible risks covered under quota share primary
 1959  insurance agreements, the exposure and coverage levels for both
 1960  the corporation and authorized insurers shall be reported by the
 1961  corporation to the Florida Hurricane Catastrophe Fund. For all
 1962  policies of eligible risks covered under such quota share
 1963  primary insurance agreements, the corporation and the authorized
 1964  insurer must shall maintain complete and accurate records for
 1965  the purpose of exposure and loss reimbursement audits as
 1966  required by Florida Hurricane Catastrophe fund rules. The
 1967  corporation and the authorized insurer shall each maintain
 1968  duplicate copies of policy declaration pages and supporting
 1969  claims documents.
 1970         g. The corporation board shall establish in its plan of
 1971  operation standards for quota share agreements which ensure that
 1972  there is no discriminatory application among insurers as to the
 1973  terms of the quota share agreements, pricing of the quota share
 1974  agreements, incentive provisions if any, and consideration paid
 1975  for servicing policies or adjusting claims.
 1976         h. The quota share primary insurance agreement between the
 1977  corporation and an authorized insurer must set forth the
 1978  specific terms under which coverage is provided, including, but
 1979  not limited to, the sale and servicing of policies issued under
 1980  the agreement by the insurance agent of the authorized insurer
 1981  producing the business, the reporting of information concerning
 1982  eligible risks, the payment of premium to the corporation, and
 1983  arrangements for the adjustment and payment of hurricane claims
 1984  incurred on eligible risks by the claims adjuster and personnel
 1985  of the authorized insurer. Entering into a quota sharing
 1986  insurance agreement between the corporation and an authorized
 1987  insurer is shall be voluntary and at the discretion of the
 1988  authorized insurer.
 1989         3. May provide that the corporation may employ or otherwise
 1990  contract with individuals or other entities to provide
 1991  administrative or professional services that may be appropriate
 1992  to effectuate the plan. The corporation may shall have the power
 1993  to borrow funds, by issuing bonds or by incurring other
 1994  indebtedness, and shall have other powers reasonably necessary
 1995  to effectuate the requirements of this subsection, including,
 1996  without limitation, the power to issue bonds and incur other
 1997  indebtedness in order to refinance outstanding bonds or other
 1998  indebtedness. The corporation may, but is not required to, seek
 1999  judicial validation of its bonds or other indebtedness under
 2000  chapter 75. The corporation may issue bonds or incur other
 2001  indebtedness, or have bonds issued on its behalf by a unit of
 2002  local government pursuant to subparagraph (q)2., in the absence
 2003  of a hurricane or other weather-related event, upon a
 2004  determination by the corporation, subject to approval by the
 2005  office, that such action would enable it to efficiently meet the
 2006  financial obligations of the corporation and that such
 2007  financings are reasonably necessary to effectuate the
 2008  requirements of this subsection. The corporation may is
 2009  authorized to take all actions needed to facilitate tax-free
 2010  status for any such bonds or indebtedness, including formation
 2011  of trusts or other affiliated entities. The corporation may
 2012  shall have the authority to pledge assessments, projected
 2013  recoveries from the Florida Hurricane Catastrophe Fund, other
 2014  reinsurance recoverables, market equalization and other
 2015  surcharges, and other funds available to the corporation as
 2016  security for bonds or other indebtedness. In recognition of s.
 2017  10, Art. I of the State Constitution, prohibiting the impairment
 2018  of obligations of contracts, it is the intent of the Legislature
 2019  that no action be taken whose purpose is to impair any bond
 2020  indenture or financing agreement or any revenue source committed
 2021  by contract to such bond or other indebtedness.
 2022         4.a. Must require that the corporation operate subject to
 2023  the supervision and approval of a board of governors consisting
 2024  of eight individuals who are residents of this state, from
 2025  different geographical areas of this state.
 2026         a. The Governor, the Chief Financial Officer, the President
 2027  of the Senate, and the Speaker of the House of Representatives
 2028  shall each appoint two members of the board. At least one of the
 2029  two members appointed by each appointing officer must have
 2030  demonstrated expertise in insurance, and is deemed to be within
 2031  the scope of the exemption provided in s. 112.313(7)(b). The
 2032  Chief Financial Officer shall designate one of the appointees as
 2033  chair. All board members serve at the pleasure of the appointing
 2034  officer. All members of the board of governors are subject to
 2035  removal at will by the officers who appointed them. All board
 2036  members, including the chair, must be appointed to serve for 3
 2037  year terms beginning annually on a date designated by the plan.
 2038  However, for the first term beginning on or after July 1, 2009,
 2039  each appointing officer shall appoint one member of the board
 2040  for a 2-year term and one member for a 3-year term. A Any board
 2041  vacancy shall be filled for the unexpired term by the appointing
 2042  officer. The Chief Financial Officer shall appoint a technical
 2043  advisory group to provide information and advice to the board of
 2044  governors in connection with the board’s duties under this
 2045  subsection. The executive director and senior managers of the
 2046  corporation shall be engaged by the board and serve at the
 2047  pleasure of the board. Any executive director appointed on or
 2048  after July 1, 2006, is subject to confirmation by the Senate.
 2049  The executive director is responsible for employing other staff
 2050  as the corporation may require, subject to review and
 2051  concurrence by the board.
 2052         b. The board shall create a Market Accountability Advisory
 2053  Committee to assist the corporation in developing awareness of
 2054  its rates and its customer and agent service levels in
 2055  relationship to the voluntary market insurers writing similar
 2056  coverage.
 2057         (I) The members of the advisory committee shall consist of
 2058  the following 11 persons, one of whom must be elected chair by
 2059  the members of the committee: four representatives, one
 2060  appointed by the Florida Association of Insurance Agents, one by
 2061  the Florida Association of Insurance and Financial Advisors, one
 2062  by the Professional Insurance Agents of Florida, and one by the
 2063  Latin American Association of Insurance Agencies; three
 2064  representatives appointed by the insurers with the three highest
 2065  voluntary market share of residential property insurance
 2066  business in the state; one representative from the Office of
 2067  Insurance Regulation; one consumer appointed by the board who is
 2068  insured by the corporation at the time of appointment to the
 2069  committee; one representative appointed by the Florida
 2070  Association of Realtors; and one representative appointed by the
 2071  Florida Bankers Association. All members shall be appointed to
 2072  must serve for 3-year terms and may serve for consecutive terms.
 2073         (II) The committee shall report to the corporation at each
 2074  board meeting on insurance market issues which may include rates
 2075  and rate competition with the voluntary market; service,
 2076  including policy issuance, claims processing, and general
 2077  responsiveness to policyholders, applicants, and agents; and
 2078  matters relating to depopulation.
 2079         5. Must provide a procedure for determining the eligibility
 2080  of a risk for coverage, as follows:
 2081         a. Subject to the provisions of s. 627.3517, with respect
 2082  to personal lines residential risks, if the risk is offered
 2083  coverage from an authorized insurer at the insurer’s approved
 2084  rate under either a standard policy including wind coverage or,
 2085  if consistent with the insurer’s underwriting rules as filed
 2086  with the office, a basic policy including wind coverage, for a
 2087  new application to the corporation for coverage, the risk is not
 2088  eligible for any policy issued by the corporation unless the
 2089  premium for coverage from the authorized insurer is more than 15
 2090  percent greater than the premium for comparable coverage from
 2091  the corporation. If the risk is not able to obtain any such
 2092  offer, the risk is eligible for either a standard policy
 2093  including wind coverage or a basic policy including wind
 2094  coverage issued by the corporation; however, if the risk could
 2095  not be insured under a standard policy including wind coverage
 2096  regardless of market conditions, the risk is shall be eligible
 2097  for a basic policy including wind coverage unless rejected under
 2098  subparagraph 8. However, with regard to a policyholder of the
 2099  corporation or a policyholder removed from the corporation
 2100  through an assumption agreement until the end of the assumption
 2101  period, the policyholder remains eligible for coverage from the
 2102  corporation regardless of any offer of coverage from an
 2103  authorized insurer or surplus lines insurer. The corporation
 2104  shall determine the type of policy to be provided on the basis
 2105  of objective standards specified in the underwriting manual and
 2106  based on generally accepted underwriting practices.
 2107         (I) If the risk accepts an offer of coverage through the
 2108  market assistance plan or an offer of coverage through a
 2109  mechanism established by the corporation before a policy is
 2110  issued to the risk by the corporation or during the first 30
 2111  days of coverage by the corporation, and the producing agent who
 2112  submitted the application to the plan or to the corporation is
 2113  not currently appointed by the insurer, the insurer shall:
 2114         (A) Pay to the producing agent of record of the policy, for
 2115  the first year, an amount that is the greater of the insurer’s
 2116  usual and customary commission for the type of policy written or
 2117  a fee equal to the usual and customary commission of the
 2118  corporation; or
 2119         (B) Offer to allow the producing agent of record of the
 2120  policy to continue servicing the policy for at least a period of
 2121  not less than 1 year and offer to pay the agent the greater of
 2122  the insurer’s or the corporation’s usual and customary
 2123  commission for the type of policy written.
 2124  
 2125  If the producing agent is unwilling or unable to accept
 2126  appointment, the new insurer shall pay the agent in accordance
 2127  with sub-sub-sub-subparagraph (A).
 2128         (II) If When the corporation enters into a contractual
 2129  agreement for a take-out plan, the producing agent of record of
 2130  the corporation policy is entitled to retain any unearned
 2131  commission on the policy, and the insurer shall:
 2132         (A) Pay to the producing agent of record of the corporation
 2133  policy, for the first year, an amount that is the greater of the
 2134  insurer’s usual and customary commission for the type of policy
 2135  written or a fee equal to the usual and customary commission of
 2136  the corporation; or
 2137         (B) Offer to allow the producing agent of record of the
 2138  corporation policy to continue servicing the policy for at least
 2139  a period of not less than 1 year and offer to pay the agent the
 2140  greater of the insurer’s or the corporation’s usual and
 2141  customary commission for the type of policy written.
 2142  
 2143  If the producing agent is unwilling or unable to accept
 2144  appointment, the new insurer shall pay the agent in accordance
 2145  with sub-sub-sub-subparagraph (A).
 2146         b. With respect to commercial lines residential risks, for
 2147  a new application to the corporation for coverage, if the risk
 2148  is offered coverage under a policy including wind coverage from
 2149  an authorized insurer at its approved rate, the risk is not
 2150  eligible for a any policy issued by the corporation unless the
 2151  premium for coverage from the authorized insurer is more than 15
 2152  percent greater than the premium for comparable coverage from
 2153  the corporation. If the risk is not able to obtain any such
 2154  offer, the risk is eligible for a policy including wind coverage
 2155  issued by the corporation. However, with regard to a
 2156  policyholder of the corporation or a policyholder removed from
 2157  the corporation through an assumption agreement until the end of
 2158  the assumption period, the policyholder remains eligible for
 2159  coverage from the corporation regardless of an any offer of
 2160  coverage from an authorized insurer or surplus lines insurer.
 2161         (I) If the risk accepts an offer of coverage through the
 2162  market assistance plan or an offer of coverage through a
 2163  mechanism established by the corporation before a policy is
 2164  issued to the risk by the corporation or during the first 30
 2165  days of coverage by the corporation, and the producing agent who
 2166  submitted the application to the plan or the corporation is not
 2167  currently appointed by the insurer, the insurer shall:
 2168         (A) Pay to the producing agent of record of the policy, for
 2169  the first year, an amount that is the greater of the insurer’s
 2170  usual and customary commission for the type of policy written or
 2171  a fee equal to the usual and customary commission of the
 2172  corporation; or
 2173         (B) Offer to allow the producing agent of record of the
 2174  policy to continue servicing the policy for at least a period of
 2175  not less than 1 year and offer to pay the agent the greater of
 2176  the insurer’s or the corporation’s usual and customary
 2177  commission for the type of policy written.
 2178  
 2179  If the producing agent is unwilling or unable to accept
 2180  appointment, the new insurer shall pay the agent in accordance
 2181  with sub-sub-sub-subparagraph (A).
 2182         (II) If When the corporation enters into a contractual
 2183  agreement for a take-out plan, the producing agent of record of
 2184  the corporation policy is entitled to retain any unearned
 2185  commission on the policy, and the insurer shall:
 2186         (A) Pay to the producing agent of record of the corporation
 2187  policy, for the first year, an amount that is the greater of the
 2188  insurer’s usual and customary commission for the type of policy
 2189  written or a fee equal to the usual and customary commission of
 2190  the corporation; or
 2191         (B) Offer to allow the producing agent of record of the
 2192  corporation policy to continue servicing the policy for at least
 2193  a period of not less than 1 year and offer to pay the agent the
 2194  greater of the insurer’s or the corporation’s usual and
 2195  customary commission for the type of policy written.
 2196  
 2197  If the producing agent is unwilling or unable to accept
 2198  appointment, the new insurer shall pay the agent in accordance
 2199  with sub-sub-sub-subparagraph (A).
 2200         c. For purposes of determining comparable coverage under
 2201  sub-subparagraphs a. and b., the comparison must shall be based
 2202  on those forms and coverages that are reasonably comparable. The
 2203  corporation may rely on a determination of comparable coverage
 2204  and premium made by the producing agent who submits the
 2205  application to the corporation, made in the agent’s capacity as
 2206  the corporation’s agent. A comparison may be made solely of the
 2207  premium with respect to the main building or structure only on
 2208  the following basis: the same coverage A or other building
 2209  limits; the same percentage hurricane deductible that applies on
 2210  an annual basis or that applies to each hurricane for commercial
 2211  residential property; the same percentage of ordinance and law
 2212  coverage, if the same limit is offered by both the corporation
 2213  and the authorized insurer; the same mitigation credits, to the
 2214  extent the same types of credits are offered both by the
 2215  corporation and the authorized insurer; the same method for loss
 2216  payment, such as replacement cost or actual cash value, if the
 2217  same method is offered both by the corporation and the
 2218  authorized insurer in accordance with underwriting rules; and
 2219  any other form or coverage that is reasonably comparable as
 2220  determined by the board. If an application is submitted to the
 2221  corporation for wind-only coverage in the coastal high-risk
 2222  account, the premium for the corporation’s wind-only policy plus
 2223  the premium for the ex-wind policy that is offered by an
 2224  authorized insurer to the applicant must shall be compared to
 2225  the premium for multiperil coverage offered by an authorized
 2226  insurer, subject to the standards for comparison specified in
 2227  this subparagraph. If the corporation or the applicant requests
 2228  from the authorized insurer a breakdown of the premium of the
 2229  offer by types of coverage so that a comparison may be made by
 2230  the corporation or its agent and the authorized insurer refuses
 2231  or is unable to provide such information, the corporation may
 2232  treat the offer as not being an offer of coverage from an
 2233  authorized insurer at the insurer’s approved rate.
 2234         6. Must include rules for classifications of risks and
 2235  rates therefor.
 2236         7. Must provide that if premium and investment income for
 2237  an account attributable to a particular calendar year are in
 2238  excess of projected losses and expenses for the account
 2239  attributable to that year, such excess shall be held in surplus
 2240  in the account. Such surplus must shall be available to defray
 2241  deficits in that account as to future years and shall be used
 2242  for that purpose before prior to assessing assessable insurers
 2243  and assessable insureds as to any calendar year.
 2244         8. Must provide objective criteria and procedures to be
 2245  uniformly applied to for all applicants in determining whether
 2246  an individual risk is so hazardous as to be uninsurable. In
 2247  making this determination and in establishing the criteria and
 2248  procedures, the following must shall be considered:
 2249         a. Whether the likelihood of a loss for the individual risk
 2250  is substantially higher than for other risks of the same class;
 2251  and
 2252         b. Whether the uncertainty associated with the individual
 2253  risk is such that an appropriate premium cannot be determined.
 2254  
 2255  The acceptance or rejection of a risk by the corporation shall
 2256  be construed as the private placement of insurance, and the
 2257  provisions of chapter 120 do shall not apply.
 2258         9. Must provide that the corporation shall make its best
 2259  efforts to procure catastrophe reinsurance at reasonable rates,
 2260  to cover its projected 100-year probable maximum loss as
 2261  determined by the board of governors.
 2262         10. The policies issued by the corporation must provide
 2263  that, if the corporation or the market assistance plan obtains
 2264  an offer from an authorized insurer to cover the risk at its
 2265  approved rates, the risk is no longer eligible for renewal
 2266  through the corporation, except as otherwise provided in this
 2267  subsection.
 2268         11. Corporation policies and applications must include a
 2269  notice that the corporation policy could, under this section, be
 2270  replaced with a policy issued by an authorized insurer which
 2271  that does not provide coverage identical to the coverage
 2272  provided by the corporation. The notice must shall also specify
 2273  that acceptance of corporation coverage creates a conclusive
 2274  presumption that the applicant or policyholder is aware of this
 2275  potential.
 2276         12. May establish, subject to approval by the office,
 2277  different eligibility requirements and operational procedures
 2278  for any line or type of coverage for any specified county or
 2279  area if the board determines that such changes to the
 2280  eligibility requirements and operational procedures are
 2281  justified due to the voluntary market being sufficiently stable
 2282  and competitive in such area or for such line or type of
 2283  coverage and that consumers who, in good faith, are unable to
 2284  obtain insurance through the voluntary market through ordinary
 2285  methods would continue to have access to coverage from the
 2286  corporation. If When coverage is sought in connection with a
 2287  real property transfer, the such requirements and procedures may
 2288  shall not provide for an effective date of coverage later than
 2289  the date of the closing of the transfer as established by the
 2290  transferor, the transferee, and, if applicable, the lender.
 2291         13. Must provide that, with respect to the coastal high
 2292  risk account, any assessable insurer with a surplus as to
 2293  policyholders of $25 million or less writing 25 percent or more
 2294  of its total countrywide property insurance premiums in this
 2295  state may petition the office, within the first 90 days of each
 2296  calendar year, to qualify as a limited apportionment company. A
 2297  regular assessment levied by the corporation on a limited
 2298  apportionment company for a deficit incurred by the corporation
 2299  for the coastal high-risk account in 2006 or thereafter may be
 2300  paid to the corporation on a monthly basis as the assessments
 2301  are collected by the limited apportionment company from its
 2302  insureds pursuant to s. 627.3512, but the regular assessment
 2303  must be paid in full within 12 months after being levied by the
 2304  corporation. A limited apportionment company shall collect from
 2305  its policyholders any emergency assessment imposed under sub
 2306  subparagraph (b)3.d. The plan must shall provide that, if the
 2307  office determines that any regular assessment will result in an
 2308  impairment of the surplus of a limited apportionment company,
 2309  the office may direct that all or part of such assessment be
 2310  deferred as provided in subparagraph (q)4. However, there shall
 2311  be no limitation or deferment of an emergency assessment to be
 2312  collected from policyholders under sub-subparagraph (b)3.d. may
 2313  not be limited or deferred.
 2314         14. Must provide that the corporation appoint as its
 2315  licensed agents only those agents who also hold an appointment
 2316  as defined in s. 626.015(3) with an insurer who at the time of
 2317  the agent’s initial appointment by the corporation is authorized
 2318  to write and is actually writing personal lines residential
 2319  property coverage, commercial residential property coverage, or
 2320  commercial nonresidential property coverage within the state.
 2321         15. Must provide, by July 1, 2007, a premium payment plan
 2322  option to its policyholders which, allows at a minimum, allows
 2323  for quarterly and semiannual payment of premiums. A monthly
 2324  payment plan may, but is not required to, be offered.
 2325         16. Must limit coverage on mobile homes or manufactured
 2326  homes built before prior to 1994 to actual cash value of the
 2327  dwelling rather than replacement costs of the dwelling.
 2328         17. May provide such limits of coverage as the board
 2329  determines, consistent with the requirements of this subsection.
 2330         18. May require commercial property to meet specified
 2331  hurricane mitigation construction features as a condition of
 2332  eligibility for coverage.
 2333         19. Must offer sinkhole coverage. However, effective
 2334  February 1, 2012, coverage is not included for losses to
 2335  appurtenant structures, driveways, sidewalks, decks, or patios
 2336  that are directly or indirectly caused by sinkhole activity. The
 2337  corporation shall exclude such coverage using a notice of
 2338  coverage change, which may be included with the policy renewal,
 2339  and not by issuance of a notice of nonrenewal of the excluded
 2340  coverage upon renewal of the current policy.
 2341         20. As a condition for making payment for damage caused by
 2342  the peril of sinkhole, regardless of whether such payment is
 2343  made pursuant to the contract, mediation, neutral evaluation,
 2344  appraisal, arbitration, settlement, or litigation, the payment
 2345  must be dedicated entirely to the costs of repairing the
 2346  structure or remediation of the land. Unless this condition is
 2347  met, the corporation is prohibited from making payment.
 2348         (d)1. All prospective employees for senior management
 2349  positions, as defined by the plan of operation, are subject to
 2350  background checks as a prerequisite for employment. The office
 2351  shall conduct the background checks on such prospective
 2352  employees pursuant to ss. 624.34, 624.404(3), and 628.261.
 2353         2. On or before July 1 of each year, employees of the
 2354  corporation must are required to sign and submit a statement
 2355  attesting that they do not have a conflict of interest, as
 2356  defined in part III of chapter 112. As a condition of
 2357  employment, all prospective employees must are required to sign
 2358  and submit to the corporation a conflict-of-interest statement.
 2359         3. Senior managers and members of the board of governors
 2360  are subject to the provisions of part III of chapter 112,
 2361  including, but not limited to, the code of ethics and public
 2362  disclosure and reporting of financial interests, pursuant to s.
 2363  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2364  vote on any measure that would inure to his or her special
 2365  private gain or loss; that he or she knows would inure to the
 2366  special private gain or loss of any principal by whom he or she
 2367  is retained or to the parent organization or subsidiary of a
 2368  corporate principal by which he or she is retained, other than
 2369  an agency as defined in s. 112.312; or that he or she knows
 2370  would inure to the special private gain or loss of a relative or
 2371  business associate of the public officer. Before the vote is
 2372  taken, such member shall publicly state to the assembly the
 2373  nature of his or her interest in the matter from which he or she
 2374  is abstaining from voting and, within 15 days after the vote
 2375  occurs, disclose the nature of his or her interest as a public
 2376  record in a memorandum filed with the person responsible for
 2377  recording the minutes of the meeting, who shall incorporate the
 2378  memorandum in the minutes. Senior managers and board members are
 2379  also required to file such disclosures with the Commission on
 2380  Ethics and the Office of Insurance Regulation. The executive
 2381  director of the corporation or his or her designee shall notify
 2382  each existing and newly appointed and existing appointed member
 2383  of the board of governors and senior managers of their duty to
 2384  comply with the reporting requirements of part III of chapter
 2385  112. At least quarterly, the executive director or his or her
 2386  designee shall submit to the Commission on Ethics a list of
 2387  names of the senior managers and members of the board of
 2388  governors who are subject to the public disclosure requirements
 2389  under s. 112.3145.
 2390         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2391  provision of law, an employee or board member may not knowingly
 2392  accept, directly or indirectly, any gift or expenditure from a
 2393  person or entity, or an employee or representative of such
 2394  person or entity, which that has a contractual relationship with
 2395  the corporation or who is under consideration for a contract. An
 2396  employee or board member who fails to comply with subparagraph
 2397  3. or this subparagraph is subject to penalties provided under
 2398  ss. 112.317 and 112.3173.
 2399         5. Any senior manager of the corporation who is employed on
 2400  or after January 1, 2007, regardless of the date of hire, who
 2401  subsequently retires or terminates employment is prohibited from
 2402  representing another person or entity before the corporation for
 2403  2 years after retirement or termination of employment from the
 2404  corporation.
 2405         6. Any senior manager of the corporation who is employed on
 2406  or after January 1, 2007, regardless of the date of hire, who
 2407  subsequently retires or terminates employment is prohibited from
 2408  having any employment or contractual relationship for 2 years
 2409  with an insurer that has entered into a take-out bonus agreement
 2410  with the corporation.
 2411         (n)1. Rates for coverage provided by the corporation must
 2412  shall be actuarially sound and subject to the requirements of s.
 2413  627.062, except as otherwise provided in this paragraph. The
 2414  corporation shall file its recommended rates with the office at
 2415  least annually. The corporation shall provide any additional
 2416  information regarding the rates which the office requires. The
 2417  office shall consider the recommendations of the board and issue
 2418  a final order establishing the rates for the corporation within
 2419  45 days after the recommended rates are filed. The corporation
 2420  may not pursue an administrative challenge or judicial review of
 2421  the final order of the office.
 2422         2. In addition to the rates otherwise determined pursuant
 2423  to this paragraph, the corporation shall impose and collect an
 2424  amount equal to the premium tax provided for in s. 624.509 to
 2425  augment the financial resources of the corporation.
 2426         3. After the public hurricane loss-projection model under
 2427  s. 627.06281 has been found to be accurate and reliable by the
 2428  Florida Commission on Hurricane Loss Projection Methodology, the
 2429  that model shall serve as the minimum benchmark for determining
 2430  the windstorm portion of the corporation’s rates. This
 2431  subparagraph does not require or allow the corporation to adopt
 2432  rates lower than the rates otherwise required or allowed by this
 2433  paragraph.
 2434         4. The rate filings for the corporation which were approved
 2435  by the office and which took effect January 1, 2007, are
 2436  rescinded, except for those rates that were lowered. As soon as
 2437  possible, the corporation shall begin using the lower rates that
 2438  were in effect on December 31, 2006, and shall provide refunds
 2439  to policyholders who have paid higher rates as a result of that
 2440  rate filing. The rates in effect on December 31, 2006, shall
 2441  remain in effect for the 2007 and 2008 calendar years except for
 2442  any rate change that results in a lower rate. The next rate
 2443  change that may increase rates shall take effect pursuant to a
 2444  new rate filing recommended by the corporation and established
 2445  by the office, subject to the requirements of this paragraph.
 2446         5. Beginning on July 15, 2009, and annually each year
 2447  thereafter, the corporation must make a recommended actuarially
 2448  sound rate filing for each personal and commercial line of
 2449  business it writes, to be effective no earlier than January 1,
 2450  2010.
 2451         6. Beginning on or after January 1, 2010, and
 2452  notwithstanding the board’s recommended rates and the office’s
 2453  final order regarding the corporation’s filed rates under
 2454  subparagraph 1., the corporation shall annually implement a rate
 2455  increase each year which, except for sinkhole coverage, does not
 2456  exceed 10 percent for any single policy issued by the
 2457  corporation, excluding coverage changes and surcharges.
 2458         7. The corporation may also implement an increase to
 2459  reflect the effect on the corporation of the cash buildup factor
 2460  pursuant to s. 215.555(5)(b).
 2461         8. The corporation’s implementation of rates as prescribed
 2462  in subparagraph 6. shall cease for any line of business written
 2463  by the corporation upon the corporation’s implementation of
 2464  actuarially sound rates. Thereafter, the corporation shall
 2465  annually make a recommended actuarially sound rate filing for
 2466  each commercial and personal line of business the corporation
 2467  writes.
 2468         (v)1. Effective July 1, 2002, policies of the Residential
 2469  Property and Casualty Joint Underwriting Association shall
 2470  become policies of the corporation. All obligations, rights,
 2471  assets and liabilities of the Residential Property and Casualty
 2472  Joint Underwriting association, including bonds, note and debt
 2473  obligations, and the financing documents pertaining to them
 2474  become those of the corporation as of July 1, 2002. The
 2475  corporation is not required to issue endorsements or
 2476  certificates of assumption to insureds during the remaining term
 2477  of in-force transferred policies.
 2478         2. Effective July 1, 2002, policies of the Florida
 2479  Windstorm Underwriting Association are transferred to the
 2480  corporation and shall become policies of the corporation. All
 2481  obligations, rights, assets, and liabilities of the Florida
 2482  Windstorm Underwriting association, including bonds, note and
 2483  debt obligations, and the financing documents pertaining to them
 2484  are transferred to and assumed by the corporation on July 1,
 2485  2002. The corporation is not required to issue endorsements or
 2486  certificates of assumption to insureds during the remaining term
 2487  of in-force transferred policies.
 2488         3. The Florida Windstorm Underwriting Association and the
 2489  Residential Property and Casualty Joint Underwriting Association
 2490  shall take all actions necessary as may be proper to further
 2491  evidence the transfers and shall provide the documents and
 2492  instruments of further assurance as may reasonably be requested
 2493  by the corporation for that purpose. The corporation shall
 2494  execute assumptions and instruments as the trustees or other
 2495  parties to the financing documents of the Florida Windstorm
 2496  Underwriting Association or the Residential Property and
 2497  Casualty Joint Underwriting Association may reasonably request
 2498  to further evidence the transfers and assumptions, which
 2499  transfers and assumptions, however, are effective on the date
 2500  provided under this paragraph whether or not, and regardless of
 2501  the date on which, the assumptions or instruments are executed
 2502  by the corporation. Subject to the relevant financing documents
 2503  pertaining to their outstanding bonds, notes, indebtedness, or
 2504  other financing obligations, the moneys, investments,
 2505  receivables, choses in action, and other intangibles of the
 2506  Florida Windstorm Underwriting Association shall be credited to
 2507  the coastal high-risk account of the corporation, and those of
 2508  the personal lines residential coverage account and the
 2509  commercial lines residential coverage account of the Residential
 2510  Property and Casualty Joint Underwriting Association shall be
 2511  credited to the personal lines account and the commercial lines
 2512  account, respectively, of the corporation.
 2513         4. Effective July 1, 2002, a new applicant for property
 2514  insurance coverage who would otherwise have been eligible for
 2515  coverage in the Florida Windstorm Underwriting Association is
 2516  eligible for coverage from the corporation as provided in this
 2517  subsection.
 2518         5. The transfer of all policies, obligations, rights,
 2519  assets, and liabilities from the Florida Windstorm Underwriting
 2520  Association to the corporation and the renaming of the
 2521  Residential Property and Casualty Joint Underwriting Association
 2522  as the corporation does not shall in no way affect the coverage
 2523  with respect to covered policies as defined in s. 215.555(2)(c)
 2524  provided to these entities by the Florida Hurricane Catastrophe
 2525  Fund. The coverage provided by the Florida Hurricane Catastrophe
 2526  fund to the Florida Windstorm Underwriting Association based on
 2527  its exposures as of June 30, 2002, and each June 30 thereafter
 2528  shall be redesignated as coverage for the coastal high-risk
 2529  account of the corporation. Notwithstanding any other provision
 2530  of law, the coverage provided by the Florida Hurricane
 2531  Catastrophe fund to the Residential Property and Casualty Joint
 2532  Underwriting Association based on its exposures as of June 30,
 2533  2002, and each June 30 thereafter shall be transferred to the
 2534  personal lines account and the commercial lines account of the
 2535  corporation. Notwithstanding any other provision of law, the
 2536  coastal high-risk account shall be treated, for all Florida
 2537  Hurricane Catastrophe Fund purposes, as if it were a separate
 2538  participating insurer with its own exposures, reimbursement
 2539  premium, and loss reimbursement. Likewise, the personal lines
 2540  and commercial lines accounts shall be viewed together, for all
 2541  Florida Hurricane Catastrophe fund purposes, as if the two
 2542  accounts were one and represent a single, separate participating
 2543  insurer with its own exposures, reimbursement premium, and loss
 2544  reimbursement. The coverage provided by the Florida Hurricane
 2545  Catastrophe fund to the corporation shall constitute and operate
 2546  as a full transfer of coverage from the Florida Windstorm
 2547  Underwriting Association and Residential Property and Casualty
 2548  Joint Underwriting to the corporation.
 2549         (y) It is the intent of the Legislature that the amendments
 2550  to this subsection enacted in 2002 should, over time, reduce the
 2551  probable maximum windstorm losses in the residual markets and
 2552  should reduce the potential assessments to be levied on property
 2553  insurers and policyholders statewide. In furtherance of this
 2554  intent,:
 2555         1. the board shall, on or before February 1 of each year,
 2556  provide a report to the President of the Senate and the Speaker
 2557  of the House of Representatives showing the reduction or
 2558  increase in the 100-year probable maximum loss attributable to
 2559  wind-only coverages and the quota share program under this
 2560  subsection combined, as compared to the benchmark 100-year
 2561  probable maximum loss of the Florida Windstorm Underwriting
 2562  Association. For purposes of this paragraph, the benchmark 100
 2563  year probable maximum loss of the Florida Windstorm Underwriting
 2564  Association is shall be the calculation dated February 2001 and
 2565  based on November 30, 2000, exposures. In order to ensure
 2566  comparability of data, the board shall use the same methods for
 2567  calculating its probable maximum loss as were used to calculate
 2568  the benchmark probable maximum loss.
 2569         2.Beginning December 1, 2010, if the report under
 2570  subparagraph 1. for any year indicates that the 100-year
 2571  probable maximum loss attributable to wind-only coverages and
 2572  the quota share program combined does not reflect a reduction of
 2573  at least 25 percent from the benchmark, the board shall reduce
 2574  the boundaries of the high-risk area eligible for wind-only
 2575  coverages under this subsection in a manner calculated to reduce
 2576  such probable maximum loss to an amount at least 25 percent
 2577  below the benchmark.
 2578         3.Beginning February 1, 2015, if the report under
 2579  subparagraph 1. for any year indicates that the 100-year
 2580  probable maximum loss attributable to wind-only coverages and
 2581  the quota share program combined does not reflect a reduction of
 2582  at least 50 percent from the benchmark, the boundaries of the
 2583  high-risk area eligible for wind-only coverages under this
 2584  subsection shall be reduced by the elimination of any area that
 2585  is not seaward of a line 1,000 feet inland from the Intracoastal
 2586  Waterway.
 2587         Section 20. Paragraph (a) of subsection (5) of section
 2588  627.3511, Florida Statutes, is amended to read:
 2589         627.3511 Depopulation of Citizens Property Insurance
 2590  Corporation.—
 2591         (5) APPLICABILITY.—
 2592         (a) The take-out bonus provided by subsection (2) and the
 2593  exemption from assessment provided by paragraph (3)(a) apply
 2594  only if the corporation policy is replaced by either a standard
 2595  policy including wind coverage or, if consistent with the
 2596  insurer’s underwriting rules as filed with the office, a basic
 2597  policy including wind coverage; however, for with respect to
 2598  risks located in areas where coverage through the coastal high
 2599  risk account of the corporation is available, the replacement
 2600  policy need not provide wind coverage. The insurer must renew
 2601  the replacement policy at approved rates on substantially
 2602  similar terms for four additional 1-year terms, unless canceled
 2603  or not renewed by the policyholder. If an insurer assumes the
 2604  corporation’s obligations for a policy, it must issue a
 2605  replacement policy for a 1-year term upon expiration of the
 2606  corporation policy and must renew the replacement policy at
 2607  approved rates on substantially similar terms for four
 2608  additional 1-year terms, unless canceled or not renewed by the
 2609  policyholder. For each replacement policy canceled or nonrenewed
 2610  by the insurer for any reason during the 5-year coverage period
 2611  required by this paragraph, the insurer must remove from the
 2612  corporation one additional policy covering a risk similar to the
 2613  risk covered by the canceled or nonrenewed policy. In addition
 2614  to these requirements, the corporation must place the bonus
 2615  moneys in escrow for a period of 5 years; such moneys may be
 2616  released from escrow only to pay claims. If the policy is
 2617  canceled or nonrenewed before the end of the 5-year period, the
 2618  amount of the take-out bonus must be prorated for the time
 2619  period the policy was insured. A take-out bonus provided by
 2620  subsection (2) or subsection (6) is shall not be considered
 2621  premium income for purposes of taxes and assessments under the
 2622  Florida Insurance Code and shall remain the property of the
 2623  corporation, subject to the prior security interest of the
 2624  insurer under the escrow agreement until it is released from
 2625  escrow;, and after it is released from escrow it is shall be
 2626  considered an asset of the insurer and credited to the insurer’s
 2627  capital and surplus.
 2628         Section 21. Paragraph (b) of subsection (2) of section
 2629  627.4133, Florida Statutes, is amended to read:
 2630         627.4133 Notice of cancellation, nonrenewal, or renewal
 2631  premium.—
 2632         (2) With respect to any personal lines or commercial
 2633  residential property insurance policy, including, but not
 2634  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2635  condominium association, condominium unit owner’s, apartment
 2636  building, or other policy covering a residential structure or
 2637  its contents:
 2638         (b) The insurer shall give the named insured written notice
 2639  of nonrenewal, cancellation, or termination at least 90 100 days
 2640  before prior to the effective date of the nonrenewal,
 2641  cancellation, or termination. However, the insurer shall give at
 2642  least 100 days’ written notice, or written notice by June 1,
 2643  whichever is earlier, for any nonrenewal, cancellation, or
 2644  termination that would be effective between June 1 and November
 2645  30. The notice must include the reason or reasons for the
 2646  nonrenewal, cancellation, or termination, except that:
 2647         1. A policy covering both a home and motor vehicle may be
 2648  nonrenewed for any reason applicable to either the property or
 2649  motor vehicle insurance after providing 90 days’ notice. The
 2650  insurer shall give the named insured written notice of
 2651  nonrenewal, cancellation, or termination at least 180 days prior
 2652  to the effective date of the nonrenewal, cancellation, or
 2653  termination for a named insured whose residential structure has
 2654  been insured by that insurer or an affiliated insurer for at
 2655  least a 5-year period immediately prior to the date of the
 2656  written notice.
 2657         2. If When cancellation is for nonpayment of premium, at
 2658  least 10 days’ written notice of cancellation accompanied by the
 2659  reason therefor must shall be given. As used in this
 2660  subparagraph, the term “nonpayment of premium” means failure of
 2661  the named insured to discharge when due any of her or his
 2662  obligations in connection with the payment of premiums on a
 2663  policy or any installment of such premium, whether the premium
 2664  is payable directly to the insurer or its agent or indirectly
 2665  under any premium finance plan or extension of credit, or
 2666  failure to maintain membership in an organization if such
 2667  membership is a condition precedent to insurance coverage. The
 2668  term “Nonpayment of premium” also means the failure of a
 2669  financial institution to honor an insurance applicant’s check
 2670  after delivery to a licensed agent for payment of a premium,
 2671  even if the agent has previously delivered or transferred the
 2672  premium to the insurer. If a dishonored check represents the
 2673  initial premium payment, the contract and all contractual
 2674  obligations are shall be void ab initio unless the nonpayment is
 2675  cured within the earlier of 5 days after actual notice by
 2676  certified mail is received by the applicant or 15 days after
 2677  notice is sent to the applicant by certified mail or registered
 2678  mail, and if the contract is void, any premium received by the
 2679  insurer from a third party must shall be refunded to that party
 2680  in full.
 2681         3. If When such cancellation or termination occurs during
 2682  the first 90 days during which the insurance is in force and the
 2683  insurance is canceled or terminated for reasons other than
 2684  nonpayment of premium, at least 20 days’ written notice of
 2685  cancellation or termination accompanied by the reason therefor
 2686  must shall be given unless except where there has been a
 2687  material misstatement or misrepresentation or failure to comply
 2688  with the underwriting requirements established by the insurer.
 2689         4. The requirement for providing written notice of
 2690  nonrenewal by June 1 of any nonrenewal that would be effective
 2691  between June 1 and November 30 does not apply to the following
 2692  situations, but the insurer remains subject to the requirement
 2693  to provide such notice at least 100 days before prior to the
 2694  effective date of nonrenewal:
 2695         a. A policy that is nonrenewed due to a revision in the
 2696  coverage for sinkhole losses and catastrophic ground cover
 2697  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2698  2007-1, Laws of Florida.
 2699         b. A policy that is nonrenewed by Citizens Property
 2700  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2701  that has been assumed by an authorized insurer offering
 2702  replacement or renewal coverage to the policyholder is exempt
 2703  from the notice requirements of paragraph (a) and this
 2704  paragraph. In such cases, the corporation must give the named
 2705  insured written notice of nonrenewal at least 45 days before the
 2706  effective date of the nonrenewal.
 2707  
 2708  After the policy has been in effect for 90 days, the policy may
 2709  shall not be canceled by the insurer unless except when there
 2710  has been a material misstatement, a nonpayment of premium, a
 2711  failure to comply with underwriting requirements established by
 2712  the insurer within 90 days after of the date of effectuation of
 2713  coverage, or a substantial change in the risk covered by the
 2714  policy or if when the cancellation is for all insureds under
 2715  such policies for a given class of insureds. This paragraph does
 2716  not apply to individually rated risks having a policy term of
 2717  less than 90 days.
 2718         5. Notwithstanding any other provision of law, an insurer
 2719  may cancel or nonrenew a property insurance policy after at
 2720  least 45 days notice if the office finds that the early
 2721  cancellation of some or all of the insurer’s policies is
 2722  necessary to protect the best interests of the public or
 2723  policyholders and the office approves the insurer’s plan for
 2724  early cancellation or nonrenewal of some or all of its policies.
 2725  The office may base such finding upon the financial condition of
 2726  the insurer, lack of adequate reinsurance coverage for hurricane
 2727  risk, or other relevant factors. The office may condition its
 2728  finding on the consent of the insurer to be placed under
 2729  administrative supervision pursuant to s. 624.81 or to the
 2730  appointment of a receiver under chapter 631.
 2731         Section 22. Section 627.43141, Florida Statutes, is created
 2732  to read:
 2733         627.43141 Notice of change in policy terms.—
 2734         (1) As used in this section, the term:
 2735         (a) “Change in policy terms” means the modification,
 2736  addition, or deletion of any term, coverage, duty, or condition
 2737  from the previous policy. The correction of typographical or
 2738  scrivener’s errors or the application of mandated legislative
 2739  changes is not a change in policy terms.
 2740         (b) “Policy” means a written contract or written agreement
 2741  for personal lines property and casualty insurance, or the
 2742  certificate of such insurance, by whatever name called, and
 2743  includes all clauses, riders, endorsements, and papers that are
 2744  a part of such policy. The term does not include a binder as
 2745  defined in s. 627.420 unless the duration of the binder period
 2746  exceeds 60 days.
 2747         (c) “Renewal” means the issuance and delivery by an insurer
 2748  of a policy superseding at the end of the policy period a policy
 2749  previously issued and delivered by the same insurer or the
 2750  issuance and delivery of a certificate or notice extending the
 2751  term of a policy beyond its policy period or term. Any policy
 2752  that has a policy period or term of less than 6 months or that
 2753  does not have a fixed expiration date shall, for purposes of
 2754  this section, be considered as written for successive policy
 2755  periods or terms of 6 months.
 2756         (2) A renewal policy may contain a change in policy terms.
 2757  If a renewal policy does contains such change, the insurer must
 2758  give the named insured written notice of the change, which must
 2759  be enclosed along with the written notice of renewal premium
 2760  required by ss. 627.4133 and 627.728. Such notice shall be
 2761  entitled “Notice of Change in Policy Terms.”
 2762         (3) Although not required, proof of mailing or registered
 2763  mailing through the United States Postal Service of the Notice
 2764  of Change in Policy Terms to the named insured at the address
 2765  shown in the policy is sufficient proof of notice.
 2766         (4) Receipt of the premium payment for the renewal policy
 2767  by the insurer is deemed to be acceptance of the new policy
 2768  terms by the named insured.
 2769         (5) If an insurer fails to provide the notice required in
 2770  subsection (2), the original policy terms remain in effect until
 2771  the next renewal and the proper service of the notice, or until
 2772  the effective date of replacement coverage obtained by the named
 2773  insured, whichever occurs first.
 2774         (6) The intent of this section is to:
 2775         (a) Allow an insurer to make a change in policy terms
 2776  without nonrenewing those policyholders that the insurer wishes
 2777  to continue insuring.
 2778         (b) Alleviate concern and confusion to the policyholder
 2779  caused by the required policy nonrenewal for the limited issue
 2780  if an insurer intends to renew the insurance policy, but the new
 2781  policy contains a change in policy terms.
 2782         (c) Encourage policyholders to discuss their coverages with
 2783  their insurance agents.
 2784         Section 23. Section 627.7011, Florida Statutes, is amended
 2785  to read:
 2786         627.7011 Homeowners’ policies; offer of replacement cost
 2787  coverage and law and ordinance coverage.—
 2788         (1) Before Prior to issuing or renewing a homeowner’s
 2789  insurance policy on or after October 1, 2005, or prior to the
 2790  first renewal of a homeowner’s insurance policy on or after
 2791  October 1, 2005, the insurer must offer each of the following:
 2792         (a) A policy or endorsement providing that any loss that
 2793  which is repaired or replaced will be adjusted on the basis of
 2794  replacement costs to the dwelling not exceeding policy limits as
 2795  to the dwelling, rather than actual cash value, but not
 2796  including costs necessary to meet applicable laws and ordinances
 2797  regulating the construction, use, or repair of any property or
 2798  requiring the tearing down of any property, including the costs
 2799  of removing debris.
 2800         (b) A policy or endorsement providing that, subject to
 2801  other policy provisions, any loss that which is repaired or
 2802  replaced at any location will be adjusted on the basis of
 2803  replacement costs to the dwelling not exceeding policy limits as
 2804  to the dwelling, rather than actual cash value, and also
 2805  including costs necessary to meet applicable laws and ordinances
 2806  regulating the construction, use, or repair of any property or
 2807  requiring the tearing down of any property, including the costs
 2808  of removing debris.; However, such additional costs necessary to
 2809  meet applicable laws and ordinances may be limited to either 25
 2810  percent or 50 percent of the dwelling limit, as selected by the
 2811  policyholder, and such coverage applies shall apply only to
 2812  repairs of the damaged portion of the structure unless the total
 2813  damage to the structure exceeds 50 percent of the replacement
 2814  cost of the structure.
 2815  
 2816  An insurer is not required to make the offers required by this
 2817  subsection with respect to the issuance or renewal of a
 2818  homeowner’s policy that contains the provisions specified in
 2819  paragraph (b) for law and ordinance coverage limited to 25
 2820  percent of the dwelling limit, except that the insurer must
 2821  offer the law and ordinance coverage limited to 50 percent of
 2822  the dwelling limit. This subsection does not prohibit the offer
 2823  of a guaranteed replacement cost policy.
 2824         (2) Unless the insurer obtains the policyholder’s written
 2825  refusal of the policies or endorsements specified in subsection
 2826  (1), any policy covering the dwelling is deemed to include the
 2827  law and ordinance coverage limited to 25 percent of the dwelling
 2828  limit. The rejection or selection of alternative coverage shall
 2829  be made on a form approved by the office. The form must shall
 2830  fully advise the applicant of the nature of the coverage being
 2831  rejected. If this form is signed by a named insured, it is will
 2832  be conclusively presumed that there was an informed, knowing
 2833  rejection of the coverage or election of the alternative
 2834  coverage on behalf of all insureds. Unless the policyholder
 2835  requests in writing the coverage specified in this section, it
 2836  need not be provided in or supplemental to any other policy that
 2837  renews, insures, extends, changes, supersedes, or replaces an
 2838  existing policy if when the policyholder has rejected the
 2839  coverage specified in this section or has selected alternative
 2840  coverage. The insurer must provide the such policyholder with
 2841  notice of the availability of such coverage in a form approved
 2842  by the office at least once every 3 years. The failure to
 2843  provide such notice constitutes a violation of this code, but
 2844  does not affect the coverage provided under the policy.
 2845         (3) In the event of a loss for which a dwelling or personal
 2846  property is insured on the basis of replacement costs:
 2847         (a) For a dwelling, the insurer must initially pay at least
 2848  the actual cash value of the insured loss, less any applicable
 2849  deductible. To receive payment from an insurer for replacement
 2850  costs, the policyholder must enter into a contract for the
 2851  performance of building and structural repairs, unless the
 2852  requirement for a contract is waived by the insurer. The insurer
 2853  shall pay any remaining amounts necessary to perform such
 2854  repairs as work is performed and expenses are incurred. The
 2855  insurer or any contractor or subcontractor may not require the
 2856  policyholder to advance payment for such repairs or expenses,
 2857  with the exception of incidental expenses to mitigate further
 2858  damage. If a total loss of a dwelling occurs, the insurer shall
 2859  pay the replacement cost coverage without reservation or
 2860  holdback of any depreciation in value, pursuant to s. 627.702.
 2861         (b) For personal property:
 2862         1. The insurer must offer coverage under which the insurer
 2863  is obligated to pay the replacement cost without reservation or
 2864  holdback for any depreciation in value, whether or not the
 2865  insured replaces the property.
 2866         2. The insurer may also offer coverage under which the
 2867  insurer may limit the initial payment to the actual cash value
 2868  of the personal property to be replaced, require the insured to
 2869  provide receipts for the purchase of the property financed by
 2870  the initial payment, use such receipts to make the next payment
 2871  requested by the insured for the replacement of insured
 2872  property, and continue this process until the insured remits all
 2873  receipts up to the policy limits for replacement costs. The
 2874  insurer must provide clear notice of this process in the
 2875  insurance contract. The insurer may not require the policyholder
 2876  to advance payment for the replaced property, the insurer shall
 2877  pay the replacement cost without reservation or holdback of any
 2878  depreciation in value, whether or not the insured replaces or
 2879  repairs the dwelling or property.
 2880         (4) A Any homeowner’s insurance policy issued or renewed on
 2881  or after October 1, 2005, must include in bold type no smaller
 2882  than 18 points the following statement:
 2883         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2884         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2885         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2886         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2887         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2888         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2889  
 2890  The intent of this subsection is to encourage policyholders to
 2891  purchase sufficient coverage to protect them in case events
 2892  excluded from the standard homeowners policy, such as law and
 2893  ordinance enforcement and flood, combine with covered events to
 2894  produce damage or loss to the insured property. The intent is
 2895  also to encourage policyholders to discuss these issues with
 2896  their insurance agent.
 2897         (5) Nothing in This section does not: shall be construed to
 2898         (a) Apply to policies not considered to be “homeowners’
 2899  policies,” as that term is commonly understood in the insurance
 2900  industry. This section specifically does not
 2901         (b) Apply to mobile home policies. Nothing in this section
 2902         (c) Limit shall be construed as limiting the ability of an
 2903  any insurer to reject or nonrenew any insured or applicant on
 2904  the grounds that the structure does not meet underwriting
 2905  criteria applicable to replacement cost or law and ordinance
 2906  policies or for other lawful reasons.
 2907         (d)(6)This section does not Prohibit an insurer from
 2908  limiting its liability under a policy or endorsement providing
 2909  that loss will be adjusted on the basis of replacement costs to
 2910  the lesser of:
 2911         1.(a) The limit of liability shown on the policy
 2912  declarations page;
 2913         2.(b) The reasonable and necessary cost to repair the
 2914  damaged, destroyed, or stolen covered property; or
 2915         3.(c) The reasonable and necessary cost to replace the
 2916  damaged, destroyed, or stolen covered property.
 2917         (e)(7)This section does not Prohibit an insurer from
 2918  exercising its right to repair damaged property in compliance
 2919  with its policy and s. 627.702(7).
 2920         Section 24. Paragraph (a) of subsection (5) of section
 2921  627.70131, Florida Statutes, is amended to read:
 2922         627.70131 Insurer’s duty to acknowledge communications
 2923  regarding claims; investigation.—
 2924         (5)(a) Within 90 days after an insurer receives notice of
 2925  an initial, reopened, or supplemental a property insurance claim
 2926  from a policyholder, the insurer shall pay or deny such claim or
 2927  a portion of the claim unless the failure to pay such claim or a
 2928  portion of the claim is caused by factors beyond the control of
 2929  the insurer which reasonably prevent such payment. Any payment
 2930  of an initial or supplemental a claim or portion of such a claim
 2931  made paid 90 days after the insurer receives notice of the
 2932  claim, or made paid more than 15 days after there are no longer
 2933  factors beyond the control of the insurer which reasonably
 2934  prevented such payment, whichever is later, bears shall bear
 2935  interest at the rate set forth in s. 55.03. Interest begins to
 2936  accrue from the date the insurer receives notice of the claim.
 2937  The provisions of this subsection may not be waived, voided, or
 2938  nullified by the terms of the insurance policy. If there is a
 2939  right to prejudgment interest, the insured shall select whether
 2940  to receive prejudgment interest or interest under this
 2941  subsection. Interest is payable when the claim or portion of the
 2942  claim is paid. Failure to comply with this subsection
 2943  constitutes a violation of this code. However, failure to comply
 2944  with this subsection does shall not form the sole basis for a
 2945  private cause of action.
 2946         Section 25. The Legislature finds and declares:
 2947         (1) There is a compelling state interest in maintaining a
 2948  viable and orderly private-sector market for property insurance
 2949  in this state. The lack of a viable and orderly property market
 2950  reduces the availability of property insurance coverage to state
 2951  residents, increases the cost of property insurance, and
 2952  increases the state’s reliance on a residual property insurance
 2953  market and its potential for imposing assessments on
 2954  policyholders throughout the state.
 2955         (2) In 2005, the Legislature revised ss. 627.706627.7074,
 2956  Florida Statutes, to adopt certain geological or technical
 2957  terms; to increase reliance on objective, scientific testing
 2958  requirements; and generally to reduce the number of sinkhole
 2959  claims and related disputes arising under prior law. The
 2960  Legislature determined that since the enactment of these
 2961  statutory revisions, both private-sector insurers and Citizens
 2962  Property Insurance Corporation have, nevertheless, continued to
 2963  experience high claims frequency and severity for sinkhole
 2964  insurance claims. In addition, many properties remain unrepaired
 2965  even after loss payments, which reduces the local property tax
 2966  base and adversely affects the real estate market. Therefore,
 2967  the Legislature finds that losses associated with sinkhole
 2968  claims adversely affect the public health, safety, and welfare
 2969  of this state and its citizens.
 2970         (3) Pursuant to sections 19 through 24 of this act,
 2971  technical or scientific definitions adopted in the 2005
 2972  legislation are clarified to implement and advance the
 2973  Legislature’s intended reduction of sinkhole claims and
 2974  disputes. The legal presumption intended by the Legislature is
 2975  clarified to reduce disputes and litigation associated with the
 2976  technical reviews associated with sinkhole claims. Certain other
 2977  revisions to ss. 627.706627.7074, Florida Statutes, are enacted
 2978  to advance legislative intent to rely on scientific or technical
 2979  determinations relating to sinkholes and sinkhole claims, reduce
 2980  the number and cost of disputes relating to sinkhole claims, and
 2981  ensure that repairs are made commensurate with the scientific
 2982  and technical determinations and insurance claims payments.
 2983         Section 26. Section 627.706, Florida Statutes, is reordered
 2984  and amended to read:
 2985         627.706 Sinkhole insurance; catastrophic ground cover
 2986  collapse; definitions.—
 2987         (1) Every insurer authorized to transact property insurance
 2988  in this state must shall provide coverage for a catastrophic
 2989  ground cover collapse. However, the insurer may restrict such
 2990  coverage to the principal building, as defined in the applicable
 2991  policy. The insurer may and shall make available, for an
 2992  appropriate additional premium, coverage for sinkhole losses on
 2993  any structure, including the contents of personal property
 2994  contained therein, to the extent provided in the form to which
 2995  the coverage attaches. A policy for residential property
 2996  insurance may include a deductible amount applicable to sinkhole
 2997  losses, including any expenses incurred by an insurer
 2998  investigating whether sinkhole activity is present. The
 2999  deductible may be equal to 1 percent, 2 percent, 5 percent, or
 3000  10 percent of the policy dwelling limits, with appropriate
 3001  premium discounts offered with each deductible amount.
 3002         (2) As used in ss. 627.706-627.7074, and as used in
 3003  connection with any policy providing coverage for a catastrophic
 3004  ground cover collapse or for sinkhole losses, the term:
 3005         (a) “Catastrophic ground cover collapse” means geological
 3006  activity that results in all the following:
 3007         1. The abrupt collapse of the ground cover;
 3008         2. A depression in the ground cover clearly visible to the
 3009  naked eye;
 3010         3. Structural damage to the covered building, including the
 3011  foundation; and
 3012         4. The insured structure being condemned and ordered to be
 3013  vacated by the governmental agency authorized by law to issue
 3014  such an order for that structure.
 3015  
 3016  Contents coverage applies if there is a loss resulting from a
 3017  catastrophic ground cover collapse. Structural Damage consisting
 3018  merely of the settling or cracking of a foundation, structure,
 3019  or building does not constitute a loss resulting from a
 3020  catastrophic ground cover collapse.
 3021         (b) “Neutral evaluation” means the alternative dispute
 3022  resolution provided in s. 627.7074.
 3023         (c) “Neutral evaluator” means a professional engineer or a
 3024  professional geologist who has completed a course of study in
 3025  alternative dispute resolution designed or approved by the
 3026  department for use in the neutral evaluation process and who is
 3027  determined to be fair and impartial.
 3028         (f)(b) “Sinkhole” means a landform created by subsidence of
 3029  soil, sediment, or rock as underlying strata are dissolved by
 3030  groundwater. A sinkhole forms may form by collapse into
 3031  subterranean voids created by dissolution of limestone or
 3032  dolostone or by subsidence as these strata are dissolved.
 3033         (h)(c) “Sinkhole loss” means structural damage to the
 3034  covered building, including the foundation, caused by sinkhole
 3035  activity. Contents coverage and additional living expenses shall
 3036  apply only if there is structural damage to the covered building
 3037  caused by sinkhole activity.
 3038         (g)(d) “Sinkhole activity” means settlement or systematic
 3039  weakening of the earth supporting such property only if the when
 3040  such settlement or systematic weakening results from
 3041  contemporary movement or raveling of soils, sediments, or rock
 3042  materials into subterranean voids created by the effect of water
 3043  on a limestone or similar rock formation.
 3044         (d)(e) “Professional engineer” means a person, as defined
 3045  in s. 471.005, who has a bachelor’s degree or higher in
 3046  engineering with a specialty in the geotechnical engineering
 3047  field. A professional engineer must also have geotechnical
 3048  experience and expertise in the identification of sinkhole
 3049  activity as well as other potential causes of structural damage
 3050  to the structure.
 3051         (e)(f) “Professional geologist” means a person, as defined
 3052  in by s. 492.102, who has a bachelor’s degree or higher in
 3053  geology or related earth science and with expertise in the
 3054  geology of Florida. A professional geologist must have
 3055  geological experience and expertise in the identification of
 3056  sinkhole activity as well as other potential geologic causes of
 3057  structural damage to the structure.
 3058         (i) “Structural damage” means:
 3059         1. A covered building that suffers foundation movement
 3060  outside an acceptable variance under the applicable building
 3061  code; and
 3062         2. Damage to a covered building, including the foundation,
 3063  which prevents the primary structural members or primary
 3064  structural systems from supporting the loads and forces they
 3065  were designed to support.
 3066         (3) On or before June 1, 2007, Every insurer authorized to
 3067  transact property insurance in this state shall make a proper
 3068  filing with the office for the purpose of extending the
 3069  appropriate forms of property insurance to include coverage for
 3070  catastrophic ground cover collapse or for sinkhole losses.
 3071  coverage for catastrophic ground cover collapse may not go into
 3072  effect until the effective date provided for in the filing
 3073  approved by the office.
 3074         (3)(4) Insurers offering policies that exclude coverage for
 3075  sinkhole losses must shall inform policyholders in bold type of
 3076  not less than 14 points as follows: “YOUR POLICY PROVIDES
 3077  COVERAGE FOR A CATASTROPHIC GROUND COVER COLLAPSE THAT RESULTS
 3078  IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE. OTHERWISE,
 3079  YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU
 3080  MAY PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN
 3081  ADDITIONAL PREMIUM.”
 3082         (4)(5) An insurer offering sinkhole coverage to
 3083  policyholders before or after the adoption of s. 30, chapter
 3084  2007-1, Laws of Florida, may nonrenew the policies of
 3085  policyholders maintaining sinkhole coverage in Pasco County or
 3086  Hernando County, at the option of the insurer, and provide an
 3087  offer of coverage that to such policyholders which includes
 3088  catastrophic ground cover collapse and excludes sinkhole
 3089  coverage. Insurers acting in accordance with this subsection are
 3090  subject to the following requirements:
 3091         (a) Policyholders must be notified that a nonrenewal is for
 3092  purposes of removing sinkhole coverage, and that the
 3093  policyholder is still being offered a policy that provides
 3094  coverage for catastrophic ground cover collapse.
 3095         (b) Policyholders must be provided an actuarially
 3096  reasonable premium credit or discount for the removal of
 3097  sinkhole coverage and provision of only catastrophic ground
 3098  cover collapse.
 3099         (c) Subject to the provisions of this subsection and the
 3100  insurer’s approved underwriting or insurability guidelines, the
 3101  insurer may shall provide each policyholder with the opportunity
 3102  to purchase an endorsement to his or her policy providing
 3103  sinkhole coverage and may require an inspection of the property
 3104  before issuance of a sinkhole coverage endorsement.
 3105         (d) Section 624.4305 does not apply to nonrenewal notices
 3106  issued pursuant to this subsection.
 3107         (5) Any claim, including, but not limited to, initial,
 3108  supplemental, and reopened claims under an insurance policy that
 3109  provides sinkhole coverage is barred unless notice of the claim
 3110  was given to the insurer in accordance with the terms of the
 3111  policy within 2 years after the policyholder knew or reasonably
 3112  should have known about the sinkhole loss.
 3113         Section 27. Section 627.7061, Florida Statutes, is amended
 3114  to read:
 3115         627.7061 Coverage inquiries.—Inquiries about coverage on a
 3116  property insurance contract are not claim activity, unless an
 3117  actual claim is filed by the policyholder which insured that
 3118  results in a company investigation of the claim.
 3119         Section 28. Section 627.7065, Florida Statutes, is
 3120  repealed.
 3121         Section 29. Section 627.707, Florida Statutes, is amended
 3122  to read:
 3123         627.707 Standards for Investigation of sinkhole claims by
 3124  policyholders insurers; insurer payment; nonrenewals.—Upon
 3125  receipt of a claim for a sinkhole loss to a covered building, an
 3126  insurer must meet the following standards in investigating a
 3127  claim:
 3128         (1) The insurer must inspect make an inspection of the
 3129  policyholder’s insured’s premises to determine if there is
 3130  structural has been physical damage that to the structure which
 3131  may be the result of sinkhole activity.
 3132         (2) If the insurer confirms that structural damage exists
 3133  but is unable to identify a valid cause of such damage or
 3134  discovers that such damage is consistent with sinkhole loss
 3135  Following the insurer’s initial inspection, the insurer shall
 3136  engage a professional engineer or a professional geologist to
 3137  conduct testing as provided in s. 627.7072 to determine the
 3138  cause of the loss within a reasonable professional probability
 3139  and issue a report as provided in s. 627.7073, only if sinkhole
 3140  loss is covered under the policy. Except as provided in
 3141  subsection (6), the fees and costs of the professional engineer
 3142  or professional geologist shall be paid by the insurer.:
 3143         (a) The insurer is unable to identify a valid cause of the
 3144  damage or discovers damage to the structure which is consistent
 3145  with sinkhole loss; or
 3146         (b) The policyholder demands testing in accordance with
 3147  this section or s. 627.7072.
 3148         (3) Following the initial inspection of the policyholder’s
 3149  insured premises, the insurer shall provide written notice to
 3150  the policyholder disclosing the following information:
 3151         (a) What the insurer has determined to be the cause of
 3152  damage, if the insurer has made such a determination.
 3153         (b) A statement of the circumstances under which the
 3154  insurer is required to engage a professional engineer or a
 3155  professional geologist to verify or eliminate sinkhole loss and
 3156  to engage a professional engineer to make recommendations
 3157  regarding land and building stabilization and foundation repair.
 3158         (c) A statement regarding the right of the policyholder to
 3159  request testing by a professional engineer or a professional
 3160  geologist and the circumstances under which the policyholder may
 3161  demand certain testing.
 3162         (4) If the insurer determines that there is no sinkhole
 3163  loss, the insurer may deny the claim. If coverage for sinkhole
 3164  loss is available and If the insurer denies the claim on such
 3165  basis, without performing testing under s. 627.7072, the
 3166  policyholder may demand testing by the insurer under s.
 3167  627.7072. The policyholder’s demand for testing must be
 3168  communicated to the insurer in writing within 60 days after the
 3169  policyholder’s receipt of the insurer’s denial of the claim.
 3170         (5)(a)Subject to paragraph (b), If a sinkhole loss is
 3171  verified, the insurer shall pay to stabilize the land and
 3172  building and repair the foundation in accordance with the
 3173  recommendations of the professional engineer retained pursuant
 3174  to subsection (2), as provided under s. 627.7073, and in
 3175  consultation with notice to the policyholder, subject to the
 3176  coverage and terms of the policy. The insurer shall pay for
 3177  other repairs to the structure and contents in accordance with
 3178  the terms of the policy. If a covered building suffers a
 3179  sinkhole loss or a catastrophic ground cover collapse, the
 3180  insured must repair such damage or loss in accordance with the
 3181  insurer’s professional engineer’s recommended repairs. However,
 3182  if the insurer’s professional engineer determines that the
 3183  repair cannot be completed within policy limits, the insurer
 3184  must pay to complete the repairs recommended by the insurer’s
 3185  professional engineer or tender the policy limits to the
 3186  policyholder.
 3187         (a)(b) The insurer may limit its total claims payment to
 3188  the actual cash value of the sinkhole loss, which does not
 3189  include including underpinning or grouting or any other repair
 3190  technique performed below the existing foundation of the
 3191  building, until the policyholder enters into a contract for the
 3192  performance of building stabilization or foundation repairs in
 3193  accordance with the recommendations set forth in the insurer’s
 3194  report issued pursuant to s. 627.7073.
 3195         (b) In order to prevent additional damage to the building
 3196  or structure, the policyholder must enter into a contract for
 3197  the performance of building stabilization or foundation repairs
 3198  within 90 days after the insurance company confirms coverage for
 3199  the sinkhole loss and notifies the policyholder of such
 3200  confirmation. This time period is tolled if either party invokes
 3201  the neutral evaluation process.
 3202         (c) After the policyholder enters into the contract for the
 3203  performance of building stabilization or foundation repairs, the
 3204  insurer shall pay the amounts necessary to begin and perform
 3205  such repairs as the work is performed and the expenses are
 3206  incurred. The insurer may not require the policyholder to
 3207  advance payment for such repairs. If repair covered by a
 3208  personal lines residential property insurance policy has begun
 3209  and the professional engineer selected or approved by the
 3210  insurer determines that the repair cannot be completed within
 3211  the policy limits, the insurer must either complete the
 3212  professional engineer’s recommended repair or tender the policy
 3213  limits to the policyholder without a reduction for the repair
 3214  expenses incurred.
 3215         (d) The stabilization and all other repairs to the
 3216  structure and contents must be completed within 12 months after
 3217  entering into the contract for repairs described in paragraph
 3218  (b) unless:
 3219         1. There is a mutual agreement between the insurer and the
 3220  policyholder;
 3221         2. The claim is involved with the neutral evaluation
 3222  process;
 3223         3. The claim is in litigation; or
 3224         4. The claim is under appraisal.
 3225         (e)(c) Upon the insurer’s obtaining the written approval of
 3226  the policyholder and any lienholder, the insurer may make
 3227  payment directly to the persons selected by the policyholder to
 3228  perform the land and building stabilization and foundation
 3229  repairs. The decision by the insurer to make payment to such
 3230  persons does not hold the insurer liable for the work performed.
 3231  The policyholder may not accept a rebate from any person
 3232  performing the repairs specified in this section. If a
 3233  policyholder does receive a rebate, coverage is void and the
 3234  policyholder must refund the amount of the rebate to the
 3235  insurer. Any person making the repairs specified in this section
 3236  who offers a rebate, or any policyholder who accepts a rebate
 3237  for such repairs, commits insurance fraud punishable as a third
 3238  degree felony as provided in s. 775.082, s. 775.083, or s.
 3239  775.084.
 3240         (6) Except as provided in subsection (7), the fees and
 3241  costs of the professional engineer or the professional geologist
 3242  shall be paid by the insurer.
 3243         (6)(7) If the insurer obtains, pursuant to s. 627.7073,
 3244  written certification that there is no sinkhole loss or that the
 3245  cause of the damage was not sinkhole activity, and if the
 3246  policyholder has submitted the sinkhole claim without good faith
 3247  grounds for submitting such claim, the policyholder shall
 3248  reimburse the insurer for 50 percent of the actual costs of the
 3249  analyses and services provided under ss. 627.7072 and 627.7073;
 3250  however, a policyholder is not required to reimburse an insurer
 3251  more than the deductible or $2,500, whichever is greater, with
 3252  respect to any claim. A policyholder is required to pay
 3253  reimbursement under this subsection only if the policyholder
 3254  requested the testing and report provided pursuant to ss.
 3255  627.7072 and 627.7073 and the insurer, before prior to ordering
 3256  the analysis under s. 627.7072, informs the policyholder in
 3257  writing of the policyholder’s potential liability for
 3258  reimbursement and gives the policyholder the opportunity to
 3259  withdraw the claim.
 3260         (7)(8)An No insurer may not shall nonrenew any policy of
 3261  property insurance on the basis of filing of claims for partial
 3262  loss caused by sinkhole damage or clay shrinkage if as long as
 3263  the total of such payments does not equal or exceed the current
 3264  policy limits of coverage for the policy in effect on the date
 3265  of loss, for property damage to the covered building, as set
 3266  forth on the declarations page, or if and provided the
 3267  policyholder insured has repaired the structure in accordance
 3268  with the engineering recommendations made pursuant to subsection
 3269  (2) upon which any payment or policy proceeds were based. If the
 3270  insurer pays such limits, it may nonrenew the policy.
 3271         (8)(9) The insurer may engage a professional structural
 3272  engineer to make recommendations as to the repair of the
 3273  structure.
 3274         Section 30. Section 627.7073, Florida Statutes, is amended
 3275  to read:
 3276         627.7073 Sinkhole reports.—
 3277         (1) Upon completion of testing as provided in s. 627.7072,
 3278  the professional engineer or professional geologist shall issue
 3279  a report and certification to the insurer and the policyholder
 3280  as provided in this section.
 3281         (a) Sinkhole loss is verified if, based upon tests
 3282  performed in accordance with s. 627.7072, a professional
 3283  engineer or a professional geologist issues a written report and
 3284  certification stating:
 3285         1. That structural damage to the covered building has been
 3286  identified within a reasonable professional probability.
 3287         2.1. That the cause of the actual physical and structural
 3288  damage is sinkhole activity within a reasonable professional
 3289  probability.
 3290         3.2. That the analyses conducted were of sufficient scope
 3291  to identify sinkhole activity as the cause of damage within a
 3292  reasonable professional probability.
 3293         4.3. A description of the tests performed.
 3294         5.4. A recommendation by the professional engineer of
 3295  methods for stabilizing the land and building and for making
 3296  repairs to the foundation.
 3297         (b) If there is no structural damage or if sinkhole
 3298  activity is eliminated as the cause of such damage to the
 3299  covered building structure, the professional engineer or
 3300  professional geologist shall issue a written report and
 3301  certification to the policyholder and the insurer stating:
 3302         1. That there is no structural damage or the cause of such
 3303  the damage is not sinkhole activity within a reasonable
 3304  professional probability.
 3305         2. That the analyses and tests conducted were of sufficient
 3306  scope to eliminate sinkhole activity as the cause of the
 3307  structural damage within a reasonable professional probability.
 3308         3. A statement of the cause of the structural damage within
 3309  a reasonable professional probability.
 3310         4. A description of the tests performed.
 3311         (c) All of the respective findings, opinions, and
 3312  recommendations of the insurer’s professional engineer or
 3313  professional geologist as to the cause of distress to the
 3314  property and all of the findings, opinions, and recommendations
 3315  of the insurer’s professional engineer as to land and building
 3316  stabilization and foundation repair set forth by s. 627.7072
 3317  shall be presumed correct, which presumption shifts the burden
 3318  of proof in accordance with s. 90.302(2). The presumption of
 3319  correctness is based upon public policy concerns regarding the
 3320  affordability of sinkhole coverage, consistency in claims
 3321  handling, and a reduction in the number of disputed sinkhole
 3322  claims.
 3323         (2)(a)An Any insurer that has paid a claim for a sinkhole
 3324  loss shall file a copy of the report and certification, prepared
 3325  pursuant to subsection (1), including the legal description of
 3326  the real property and the name of the property owner, the
 3327  neutral evaluator’s report, if any, which indicates that
 3328  sinkhole activity caused the damage claimed, a copy of the
 3329  certification indicating that stabilization has been completed,
 3330  if applicable, and the amount of the payment, with the county
 3331  clerk of court, who shall record the report and certification.
 3332  The insurer shall bear the cost of filing and recording one or
 3333  more reports and certifications the report and certification.
 3334  There shall be no cause of action or liability against an
 3335  insurer for compliance with this section.
 3336         (a) The recording of the report and certification does not:
 3337         1. Constitute a lien, encumbrance, or restriction on the
 3338  title to the real property or constitute a defect in the title
 3339  to the real property;
 3340         2. Create any cause of action or liability against any
 3341  grantor of the real property for breach of any warranty of good
 3342  title or warranty against encumbrances; or
 3343         3. Create any cause of action or liability against any
 3344  title insurer that insures the title to the real property.
 3345         (b) As a precondition to accepting payment for a sinkhole
 3346  loss, the policyholder must file a copy of any sinkhole report
 3347  regarding the insured property which was prepared on behalf or
 3348  at the request of the policyholder. The policyholder shall bear
 3349  the cost of filing and recording the sinkhole report. The
 3350  recording of the report does not:
 3351         1. Constitute a lien, encumbrance, or restriction on the
 3352  title to the real property or constitute a defect in the title
 3353  to the real property;
 3354         2. Create any cause of action or liability against any
 3355  grantor of the real property for breach of any warranty of good
 3356  title or warranty against encumbrances; or
 3357         3. Create any cause of action or liability against a title
 3358  insurer that insures the title to the real property.
 3359         (c)(b) The seller of real property upon which a sinkhole
 3360  claim has been made by the seller and paid by the insurer must
 3361  shall disclose to the buyer of such property, before the
 3362  closing, that a claim has been paid and whether or not the full
 3363  amount of the proceeds were used to repair the sinkhole damage.
 3364         (3) Upon completion of any building stabilization or
 3365  foundation repairs for a verified sinkhole loss, the
 3366  professional engineer responsible for monitoring the repairs
 3367  shall issue a report to the property owner which specifies what
 3368  repairs have been performed and certifies within a reasonable
 3369  degree of professional probability that such repairs have been
 3370  properly performed. The professional engineer issuing the report
 3371  shall file a copy of the report and certification, which
 3372  includes a legal description of the real property and the name
 3373  of the property owner, with the county clerk of the court, who
 3374  shall record the report and certification. This subsection does
 3375  not create liability for an insurer based on any representation
 3376  or certification by a professional engineer related to the
 3377  stabilization or foundation repairs for the verified sinkhole
 3378  loss.
 3379         Section 31. Section 627.7074, Florida Statutes, is amended
 3380  to read:
 3381         627.7074 Alternative procedure for resolution of disputed
 3382  sinkhole insurance claims.—
 3383         (1) As used in this section, the term:
 3384         (a) “Neutral evaluation” means the alternative dispute
 3385  resolution provided for in this section.
 3386         (b) “Neutral evaluator” means a professional engineer or a
 3387  professional geologist who has completed a course of study in
 3388  alternative dispute resolution designed or approved by the
 3389  department for use in the neutral evaluation process, who is
 3390  determined to be fair and impartial.
 3391         (1)(2)(a) The department shall:
 3392         (a) Certify and maintain a list of persons who are neutral
 3393  evaluators.
 3394         (b) The department shall Prepare a consumer information
 3395  pamphlet for distribution by insurers to policyholders which
 3396  clearly describes the neutral evaluation process and includes
 3397  information and forms necessary for the policyholder to request
 3398  a neutral evaluation.
 3399         (2) Neutral evaluation is available to either party if a
 3400  sinkhole report has been issued pursuant to s. 627.7073. At a
 3401  minimum, neutral evaluation must determine:
 3402         (a) Causation;
 3403         (b) All methods of stabilization and repair both above and
 3404  below ground;
 3405         (c) The costs for stabilization and all repairs; and
 3406         (d) Information necessary to carry out subsection (12).
 3407         (3) Following the receipt of the report provided under s.
 3408  627.7073 or the denial of a claim for a sinkhole loss, the
 3409  insurer shall notify the policyholder of his or her right to
 3410  participate in the neutral evaluation program under this
 3411  section. Neutral evaluation supersedes the alternative dispute
 3412  resolution process under s. 627.7015, but does not invalidate
 3413  the appraisal clause of the insurance policy. The insurer shall
 3414  provide to the policyholder the consumer information pamphlet
 3415  prepared by the department pursuant to subsection (1)
 3416  electronically or by United States mail paragraph (2)(b).
 3417         (4) Neutral evaluation is nonbinding, but mandatory if
 3418  requested by either party. A request for neutral evaluation may
 3419  be filed with the department by the policyholder or the insurer
 3420  on a form approved by the department. The request for neutral
 3421  evaluation must state the reason for the request and must
 3422  include an explanation of all the issues in dispute at the time
 3423  of the request. Filing a request for neutral evaluation tolls
 3424  the applicable time requirements for filing suit for a period of
 3425  60 days following the conclusion of the neutral evaluation
 3426  process or the time prescribed in s. 95.11, whichever is later.
 3427         (5) Neutral evaluation shall be conducted as an informal
 3428  process in which formal rules of evidence and procedure need not
 3429  be observed. A party to neutral evaluation is not required to
 3430  attend neutral evaluation if a representative of the party
 3431  attends and has the authority to make a binding decision on
 3432  behalf of the party. All parties shall participate in the
 3433  evaluation in good faith. The neutral evaluator must be allowed
 3434  reasonable access to the interior and exterior of insured
 3435  structures to be evaluated or for which a claim has been made.
 3436  Any reports initiated by the policyholder, or an agent of the
 3437  policyholder, confirming a sinkhole loss or disputing another
 3438  sinkhole report regarding insured structures must be provided to
 3439  the neutral evaluator before the evaluator’s physical inspection
 3440  of the insured property.
 3441         (6) The insurer shall pay reasonable the costs associated
 3442  with the neutral evaluation. However, if a party chooses to hire
 3443  a court reporter or stenographer to contemporaneously record and
 3444  document the neutral evaluation, that party must bear such
 3445  costs.
 3446         (7) Upon receipt of a request for neutral evaluation, the
 3447  department shall provide the parties a list of certified neutral
 3448  evaluators. The parties shall mutually select a neutral
 3449  evaluator from the list and promptly inform the department. If
 3450  the parties cannot agree to a neutral evaluator within 10
 3451  business days, The department shall allow the parties to submit
 3452  requests to disqualify evaluators on the list for cause.
 3453         (a) The department shall disqualify neutral evaluators for
 3454  cause based only on any of the following grounds:
 3455         1. A familial relationship exists between the neutral
 3456  evaluator and either party or a representative of either party
 3457  within the third degree.
 3458         2. The proposed neutral evaluator has, in a professional
 3459  capacity, previously represented either party or a
 3460  representative of either party, in the same or a substantially
 3461  related matter.
 3462         3. The proposed neutral evaluator has, in a professional
 3463  capacity, represented another person in the same or a
 3464  substantially related matter and that person’s interests are
 3465  materially adverse to the interests of the parties. The term
 3466  “substantially related matter” means participation by the
 3467  neutral evaluator on the same claim, property, or adjacent
 3468  property.
 3469         4. The proposed neutral evaluator has, within the preceding
 3470  5 years, worked as an employer or employee of any party to the
 3471  case.
 3472         (b) The parties shall appoint a neutral evaluator from the
 3473  department list and promptly inform the department. If the
 3474  parties cannot agree to a neutral evaluator within 14 days, the
 3475  department shall appoint a neutral evaluator from the list of
 3476  certified neutral evaluators. The department shall allow each
 3477  party to disqualify two neutral evaluators without cause. Upon
 3478  selection or appointment, the department shall promptly refer
 3479  the request to the neutral evaluator.
 3480         (c) Within 14 5 business days after the referral, the
 3481  neutral evaluator shall notify the policyholder and the insurer
 3482  of the date, time, and place of the neutral evaluation
 3483  conference. The conference may be held by telephone, if feasible
 3484  and desirable. The neutral evaluator shall make reasonable
 3485  efforts to hold the neutral evaluation conference shall be held
 3486  within 90 45 days after the receipt of the request by the
 3487  department. Failure of the neutral evaluator to hold the
 3488  conference within 90 days does not invalidate either party’s
 3489  right to neutral evaluation or to a neutral evaluation
 3490  conference held outside this timeframe.
 3491         (8) The department shall adopt rules of procedure for the
 3492  neutral evaluation process.
 3493         (8)(9) For policyholders not represented by an attorney, a
 3494  consumer affairs specialist of the department or an employee
 3495  designated as the primary contact for consumers on issues
 3496  relating to sinkholes under s. 20.121 shall be available for
 3497  consultation to the extent that he or she may lawfully do so.
 3498         (9)(10) Evidence of an offer to settle a claim during the
 3499  neutral evaluation process, as well as any relevant conduct or
 3500  statements made in negotiations concerning the offer to settle a
 3501  claim, is inadmissible to prove liability or absence of
 3502  liability for the claim or its value, except as provided in
 3503  subsection (14) (13).
 3504         (10)(11)Regardless of when noticed, any court proceeding
 3505  related to the subject matter of the neutral evaluation shall be
 3506  stayed pending completion of the neutral evaluation and for 5
 3507  days after the filing of the neutral evaluator’s report with the
 3508  court.
 3509         (11) If, based upon his or her professional training and
 3510  credentials, a neutral evaluator is qualified to determine only
 3511  disputes relating to causation or method of repair, the
 3512  department shall allow the neutral evaluator to enlist the
 3513  assistance of another professional from the neutral evaluators
 3514  list not previously stricken, who, based upon his or her
 3515  professional training and credentials, is able to provide an
 3516  opinion as to other disputed issues. A professional who would be
 3517  disqualified for any reason listed in subsection (7) must be
 3518  disqualified. The neutral evaluator may also use the services of
 3519  professional engineers and professional geologists who are not
 3520  certified as neutral evaluators, as well as licensed building
 3521  contractors, in order to ensure that all items in dispute are
 3522  addressed and the neutral evaluation can be completed. Any
 3523  professional engineer, professional geologist, or licensed
 3524  building contractor retained may be disqualified for any of the
 3525  reasons listed in subsection (7). The neutral evaluator may
 3526  request the entity that performed the investigation pursuant to
 3527  s. 627.7072 perform such additional and reasonable testing as
 3528  deemed necessary in the professional opinion of the neutral
 3529  evaluator.
 3530         (12) At For matters that are not resolved by the parties at
 3531  the conclusion of the neutral evaluation, the neutral evaluator
 3532  shall prepare a report describing all matters that are the
 3533  subject of the neutral evaluation, including whether, stating
 3534  that in his or her opinion, the sinkhole loss has been verified
 3535  or eliminated within a reasonable degree of professional
 3536  probability and, if verified, whether the sinkhole activity
 3537  caused structural damage to the covered building, and if so, the
 3538  need for and estimated costs of stabilizing the land and any
 3539  covered structures or buildings and other appropriate
 3540  remediation or necessary building structural repairs due to the
 3541  sinkhole loss. The evaluator’s report shall be sent to all
 3542  parties in attendance at the neutral evaluation and to the
 3543  department, within 14 days after completing the neutral
 3544  evaluation conference.
 3545         (13) The recommendation of the neutral evaluator is not
 3546  binding on any party, and the parties retain access to the
 3547  court. The neutral evaluator’s written recommendation, oral
 3548  testimony, and full report shall be admitted is admissible in
 3549  any subsequent action, litigation, or proceeding relating to the
 3550  claim or to the cause of action giving rise to the claim.
 3551  However, oral or written statements or nonverbal conduct
 3552  intended to make an assertion made by a party or neutral
 3553  evaluator during the course of neutral evaluation, other than
 3554  those statements or conduct expressly required to be admitted by
 3555  this subsection, are confidential and may not be disclosed to a
 3556  person other than a party to neutral evaluation or a party’s
 3557  counsel.
 3558         (14) If the neutral evaluator first verifies the existence
 3559  of a sinkhole that caused structural damage and, second,
 3560  recommends the need for and estimates costs of stabilizing the
 3561  land and any covered structures or buildings and other
 3562  appropriate remediation or building structural repairs, which
 3563  costs exceed the amount that the insurer estimates as necessary
 3564  to stabilize and repair, and the insurer refuses to comply with
 3565  the neutral evaluator’s findings and recommendations has offered
 3566  to pay the policyholder, the insurer is liable to the
 3567  policyholder for up to $2,500 in attorney’s fees for the
 3568  attorney’s participation in the neutral evaluation process. For
 3569  purposes of this subsection, the term “offer to pay” means a
 3570  written offer signed by the insurer or its legal representative
 3571  and delivered to the policyholder within 10 days after the
 3572  insurer receives notice that a request for neutral evaluation
 3573  has been made under this section.
 3574         (15) If the insurer timely agrees in writing to comply and
 3575  timely complies with the recommendation of the neutral
 3576  evaluator, but the policyholder declines to resolve the matter
 3577  in accordance with the recommendation of the neutral evaluator
 3578  pursuant to this section:
 3579         (a) The insurer is not liable for extracontractual damages
 3580  related to a claim for a sinkhole loss but only as related to
 3581  the issues determined by the neutral evaluation process. This
 3582  section does not affect or impair claims for extracontractual
 3583  damages unrelated to the issues determined by the neutral
 3584  evaluation process contained in this section; and
 3585         (b) The actions of the insurer are not a confession of
 3586  judgment or admission of liability, and the insurer is not
 3587  liable for attorney’s fees under s. 627.428 or other provisions
 3588  of the insurance code unless the policyholder obtains a judgment
 3589  that is more favorable than the recommendation of the neutral
 3590  evaluator.
 3591         (16) If the insurer agrees to comply with the neutral
 3592  evaluator’s report, payments shall be made in accordance with
 3593  the terms and conditions of the applicable insurance policy
 3594  pursuant to s. 627.707(5).
 3595         (17) Neutral evaluators are deemed to be agents of the
 3596  department and have immunity from suit as provided in s. 44.107.
 3597         (18) The department shall adopt rules of procedure for the
 3598  neutral evaluation process.
 3599         Section 32. Subsection (8) of section 627.711, Florida
 3600  Statutes, is amended to read:
 3601         627.711 Notice of premium discounts for hurricane loss
 3602  mitigation; uniform mitigation verification inspection form.—
 3603         (8) At its expense, The insurer may require that a any
 3604  uniform mitigation verification form provided by a policyholder,
 3605  a policyholder’s agency, or an authorized mitigation inspector
 3606  or inspection company be independently verified by an inspector,
 3607  an inspection company, or an independent third-party quality
 3608  assurance provider which possesses does possess a quality
 3609  assurance program before prior to accepting the uniform
 3610  mitigation verification form as valid.
 3611         Section 33. Subsection (1) of section 627.712, Florida
 3612  Statutes, is amended to read:
 3613         627.712 Residential windstorm coverage required;
 3614  availability of exclusions for windstorm or contents.—
 3615         (1) An insurer issuing a residential property insurance
 3616  policy must provide windstorm coverage. Except as provided in
 3617  paragraph (2)(c), this section does not apply with respect to
 3618  risks that are eligible for wind-only coverage from Citizens
 3619  Property Insurance Corporation under s. 627.351(6), and with
 3620  respect to risks that are not eligible for coverage from
 3621  Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
 3622  or 5. A risk ineligible for Citizens coverage by the corporation
 3623  under s. 627.351(6)(a)3. or 5. is exempt from the requirements
 3624  of this section only if the risk is located within the
 3625  boundaries of the coastal high-risk account of the corporation.
 3626         Section 34. The amendments made by this act to ss. 627.706
 3627  627.7074, Florida Statutes, and the accompanying legislative
 3628  findings related to those statutes, which affect procedural
 3629  rights, do not apply to insurance claims reported to an insurer
 3630  before February 1, 2011, but do apply to claims reported to an
 3631  insurer on or after that date. Amendments made by this act to
 3632  ss. 627.706-627.7074, Florida Statutes, and the accompanying
 3633  legislative findings related to those statutes, which affect
 3634  substantive rights, apply to claims reported to an insurer on or
 3635  after July 1, 2011.
 3636         Section 35. Except as otherwise expressly provided in this
 3637  act and except for this section, which shall take effect June 1,
 3638  2011, this act shall take effect July 1, 2011.