Florida Senate - 2012 SB 1318 By Senator Fasano 11-00884-12 20121318__ 1 A bill to be entitled 2 An act relating to property loss appraisals; amending 3 s. 627.351, F.S.; requiring Citizens Property 4 Insurance Corporation’s plan of operation to provide 5 for the adoption of policy forms that require 6 compliance with certain conditions and procedures 7 relating to the participation of umpires and 8 appraisers in the loss appraisal process under certain 9 circumstances; providing that either party may submit 10 a written demand to enter into the process of 11 appraisal when the insured and the corporation fail to 12 mutually agree to the actual cash value, the amount of 13 loss, or the cost of repair or replacement of property 14 for which a claim has been filed; providing an 15 exception upon which the corporation may refuse to 16 accept such demand; providing that the corporation 17 waives the right to demand an appraisal under certain 18 circumstances; requiring each party to select a 19 competent and independent appraiser and to notify the 20 opposing party within a specified period; requiring 21 the appraisers to select an appraisal umpire; 22 authorizing either party to file a petition, in a 23 county or circuit court in the jurisdiction in which 24 the covered property is located, to designate an 25 appraisal umpire if the appraisers cannot agree on the 26 selection of an umpire; providing that appraisal 27 proceedings are informal unless the corporation and 28 the insured agree otherwise; defining and providing 29 the scope of the term “informal” for purposes of 30 appraisal proceedings; requiring each appraiser to 31 submit a written report to the other appraiser; 32 requiring that any differences in findings between the 33 appraisers that cannot be resolved by the appraisers 34 themselves within a specified period be submitted to 35 the umpire for review; providing an exception; 36 requiring the umpire to submit his or her conclusions 37 regarding any unresolved differences in the findings 38 of the appraisers within a specified period; providing 39 that if either appraiser agrees with the conclusions 40 of the umpire, an itemized written appraisal award 41 signed by the umpire and appraiser shall be filed with 42 the corporation and shall determine the amount of the 43 loss; providing that the appraisal award is binding 44 upon the corporation and the insured; providing for 45 compensation of the appraisers and the umpire; 46 providing applicability of the Florida Arbitration 47 Code to residential or commercial residential property 48 insurance loss appraisal proceedings and specified 49 procedural matters; prohibiting the appraisal process 50 from addressing issues involving coverage or lack 51 thereof under an insurance contract; authorizing the 52 umpire and appraisers to consider causation issues 53 when necessary to determine the amount of loss; 54 providing an effective date. 55 56 Be It Enacted by the Legislature of the State of Florida: 57 58 Section 1. Paragraph (c) of subsection (6) of section 59 627.351, Florida Statutes, is amended to read: 60 627.351 Insurance risk apportionment plans.— 61 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 62 (c) The corporation’s plan of operation: 63 1. Must provide for adoption of residential property and 64 casualty insurance policy forms and commercial residential and 65 nonresidential property insurance forms, which must be approved 66 by the office before use. The corporation shall adopt the 67 following policy forms: 68 a. Standard personal lines policy forms that are 69 comprehensive multiperil policies providing full coverage of a 70 residential property equivalent to the coverage provided in the 71 private insurance market under an HO-3, HO-4, or HO-6 policy. 72 b. Basic personal lines policy forms that are policies 73 similar to an HO-8 policy or a dwelling fire policy that provide 74 coverage meeting the requirements of the secondary mortgage 75 market, but which is more limited than the coverage under a 76 standard policy. 77 c. Commercial lines residential and nonresidential policy 78 forms that are generally similar to the basic perils of full 79 coverage obtainable for commercial residential structures and 80 commercial nonresidential structures in the admitted voluntary 81 market. 82 d. Personal lines and commercial lines residential property 83 insurance forms that cover the peril of wind only. The forms are 84 applicable only to residential properties located in areas 85 eligible for coverage under the coastal account referred to in 86 sub-subparagraph (b)2.a. 87 e. Commercial lines nonresidential property insurance forms 88 that cover the peril of wind only. The forms are applicable only 89 to nonresidential properties located in areas eligible for 90 coverage under the coastal account referred to in sub 91 subparagraph (b)2.a. 92 f. When the only issue remaining between an insured and the 93 corporation on a residential or commercial residential property 94 is the actual cash value, the amount of loss, or the cost of 95 repair or replacement of property for which a claim has been 96 filed, residential and commercial residential property insurance 97 forms that apply to the umpires and appraisers who participate 98 in the appraisal process and that require compliance with the 99 following conditions and procedures: 100 (I) Either party may submit a written demand to enter into 101 the process of appraisal. 102 (II) The corporation may refuse to accept the demand only 103 if the insured materially fails to comply with the proof-of-loss 104 obligations of the insured as set forth in the policy 105 conditions. 106 (III) The corporation is deemed to have waived its right to 107 demand an appraisal if it fails to invoke an appraisal within 30 108 days after the insured substantially complies with the proof-of 109 loss obligation as set forth in the policy conditions. 110 (IV) Each party shall select a competent appraiser and 111 notify the other party of the appraiser selected within 20 days 112 after the date of the demand for an appraisal. The appraisers 113 shall select a competent, independent, and impartial umpire. If 114 the appraisers are unable to agree on an umpire within 15 days, 115 the insured or the corporation may file a petition with a county 116 or circuit court in the jurisdiction in which the covered 117 property is located to designate a property insurance appraisal 118 umpire for the appraisal. 119 (V) Appraisal proceedings are informal unless the insured 120 and the corporation mutually agree otherwise. As used in this 121 sub-sub-subparagraph, the term “informal” means that formal 122 discovery is not conducted, including depositions, 123 interrogatories, requests for admission, or other forms of 124 formal civil discovery; formal rules of evidence are not 125 applied; and a court reporter is not used for the proceedings. 126 However, either appraiser may rely on experts in reaching the 127 value of loss. 128 (VI) Within 60 days after being appointed, each appraiser 129 shall appraise the loss and submit a written report to the other 130 appraiser that separately states the cost of the loss, the 131 actual cash value, or the cost to repair or replace each item. 132 Within 30 days after submitting the reports, the appraisers 133 shall attempt to resolve any differences in the appraisals and 134 reach a mutual agreement on all matters. If the appraisers are 135 unable to agree, they shall, within 5 days after the end of the 136 30-day period, submit the differences in their findings in 137 writing to the umpire. However, the appraisers have an 138 additional 60 days after appointment to appraise the loss and 139 submit a written report if the loss is covered under a 140 commercial property insurance policy and the insured structure 141 is 10,000 square feet or more or is covered under a residential 142 or commercial residential insurance policy and the claim is 143 based on and made subsequent to a hurricane designated by the 144 National Hurricane Center or an emergency declared by the 145 Governor. 146 (VII) The umpire shall review any differences in appraisals 147 submitted by the appraisers and determine the amount of the loss 148 for each item submitted. Within 10 days after receipt of any 149 differences in appraisals, the umpire shall submit his or her 150 conclusions in writing to each appraiser. 151 (VIII) If either appraiser agrees with the conclusions of 152 the umpire, an itemized written appraisal award signed by the 153 umpire and the appraiser shall be filed with the corporation and 154 shall determine the amount of the loss. 155 (IX) The appraisal award is binding on the corporation and 156 the insured with regard to the amount of the loss. If the 157 insurance policy so provides, the corporation may assert that 158 there is no coverage under the policy for the loss as a whole or 159 that there has been a violation of the policy conditions with 160 respect to fraud, lack of notice, or failure to cooperate. 161 (X) Each appraiser shall be paid by the party who selects 162 the appraiser, and the expenses of the appraisal and fees of the 163 umpire shall be paid by the parties equally, except that if the 164 final determination of the amount of the loss exceeds the 165 corporation’s preappraisal estimate of the loss communicated to 166 the insured in writing by 50 percent or more, the corporation 167 shall pay all expenses, including any fees and expenses charged 168 by the insured’s appraiser and all fees and expenses of the 169 umpire. This sub-sub-subparagraph does not affect an insured’s 170 claim for attorney fees under s. 627.428. 171 (XI) The Florida Arbitration Code does not apply to 172 residential and commercial residential property insurance loss 173 appraisal proceedings, except for those provisions of the code 174 regarding proceedings to compel and stay arbitration in s. 175 682.03; procedures for correcting, vacating, or modifying an 176 award in ss. 682.10, 682.13, and 682.14; procedures for entry of 177 judgment on the award in s. 682.15; and procedures regarding 178 confirmation of an award in s. 682.12. 179 (XII) The appraisal process may not address issues 180 involving whether the loss or damage is covered under the terms 181 of the insurance contract. However, the appraisers and the 182 umpire may consider causation issues, if necessary, to determine 183 the amount of loss. 184 185f.The corporation may adopt variations of the policy forms 186 listed in sub-subparagraphs a.-e. which contain more restrictive 187 coverage. 188 2. Must provide that the corporation adopt a program in 189 which the corporation and authorized insurers enter into quota 190 share primary insurance agreements for hurricane coverage, as 191 defined in s. 627.4025(2)(a), for eligible risks, and adopt 192 property insurance forms for eligible risks which cover the 193 peril of wind only. 194 a. As used in this subsection, the term: 195 (I) “Quota share primary insurance” means an arrangement in 196 which the primary hurricane coverage of an eligible risk is 197 provided in specified percentages by the corporation and an 198 authorized insurer. The corporation and authorized insurer are 199 each solely responsible for a specified percentage of hurricane 200 coverage of an eligible risk as set forth in a quota share 201 primary insurance agreement between the corporation and an 202 authorized insurer and the insurance contract. The 203 responsibility of the corporation or authorized insurer to pay 204 its specified percentage of hurricane losses of an eligible 205 risk, as set forth in the agreement, may not be altered by the 206 inability of the other party to pay its specified percentage of 207 losses. Eligible risks that are provided hurricane coverage 208 through a quota share primary insurance arrangement must be 209 provided policy forms that set forth the obligations of the 210 corporation and authorized insurer under the arrangement, 211 clearly specify the percentages of quota share primary insurance 212 provided by the corporation and authorized insurer, and 213 conspicuously and clearly state that the authorized insurer and 214 the corporation may not be held responsible beyond their 215 specified percentage of coverage of hurricane losses. 216 (II) “Eligible risks” means personal lines residential and 217 commercial lines residential risks that meet the underwriting 218 criteria of the corporation and are located in areas that were 219 eligible for coverage by the Florida Windstorm Underwriting 220 Association on January 1, 2002. 221 b. The corporation may enter into quota share primary 222 insurance agreements with authorized insurers at corporation 223 coverage levels of 90 percent and 50 percent. 224 c. If the corporation determines that additional coverage 225 levels are necessary to maximize participation in quota share 226 primary insurance agreements by authorized insurers, the 227 corporation may establish additional coverage levels. However, 228 the corporation’s quota share primary insurance coverage level 229 may not exceed 90 percent. 230 d. Any quota share primary insurance agreement entered into 231 between an authorized insurer and the corporation must provide 232 for a uniform specified percentage of coverage of hurricane 233 losses, by county or territory as set forth by the corporation 234 board, for all eligible risks of the authorized insurer covered 235 under the agreement. 236 e. Any quota share primary insurance agreement entered into 237 between an authorized insurer and the corporation is subject to 238 review and approval by the office. However, such agreement shall 239 be authorized only as to insurance contracts entered into 240 between an authorized insurer and an insured who is already 241 insured by the corporation for wind coverage. 242 f. For all eligible risks covered under quota share primary 243 insurance agreements, the exposure and coverage levels for both 244 the corporation and authorized insurers shall be reported by the 245 corporation to the Florida Hurricane Catastrophe Fund. For all 246 policies of eligible risks covered under such agreements, the 247 corporation and the authorized insurer must maintain complete 248 and accurate records for the purpose of exposure and loss 249 reimbursement audits as required by fund rules. The corporation 250 and the authorized insurer shall each maintain duplicate copies 251 of policy declaration pages and supporting claims documents. 252 g. The corporation board shall establish in its plan of 253 operation standards for quota share agreements which ensure that 254 there is no discriminatory application among insurers as to the 255 terms of the agreements, pricing of the agreements, incentive 256 provisions if any, and consideration paid for servicing policies 257 or adjusting claims. 258 h. The quota share primary insurance agreement between the 259 corporation and an authorized insurer must set forth the 260 specific terms under which coverage is provided, including, but 261 not limited to, the sale and servicing of policies issued under 262 the agreement by the insurance agent of the authorized insurer 263 producing the business, the reporting of information concerning 264 eligible risks, the payment of premium to the corporation, and 265 arrangements for the adjustment and payment of hurricane claims 266 incurred on eligible risks by the claims adjuster and personnel 267 of the authorized insurer. Entering into a quota sharing 268 insurance agreement between the corporation and an authorized 269 insurer is voluntary and at the discretion of the authorized 270 insurer. 271 3.a. May provide that the corporation may employ or 272 otherwise contract with individuals or other entities to provide 273 administrative or professional services that may be appropriate 274 to effectuate the plan. The corporation may borrow funds by 275 issuing bonds or by incurring other indebtedness, and shall have 276 other powers reasonably necessary to effectuate the requirements 277 of this subsection, including, without limitation, the power to 278 issue bonds and incur other indebtedness in order to refinance 279 outstanding bonds or other indebtedness. The corporation may 280 seek judicial validation of its bonds or other indebtedness 281 under chapter 75. The corporation may issue bonds or incur other 282 indebtedness, or have bonds issued on its behalf by a unit of 283 local government pursuant to subparagraph (q)2. in the absence 284 of a hurricane or other weather-related event, upon a 285 determination by the corporation, subject to approval by the 286 office, that such action would enable it to efficiently meet the 287 financial obligations of the corporation and that such 288 financings are reasonably necessary to effectuate the 289 requirements of this subsection. The corporation may take all 290 actions needed to facilitate tax-free status for such bonds or 291 indebtedness, including formation of trusts or other affiliated 292 entities. The corporation may pledge assessments, projected 293 recoveries from the Florida Hurricane Catastrophe Fund, other 294 reinsurance recoverables, market equalization and other 295 surcharges, and other funds available to the corporation as 296 security for bonds or other indebtedness. In recognition of s. 297 10, Art. I of the State Constitution, prohibiting the impairment 298 of obligations of contracts, it is the intent of the Legislature 299 that no action be taken whose purpose is to impair any bond 300 indenture or financing agreement or any revenue source committed 301 by contract to such bond or other indebtedness. 302 b. To ensure that the corporation is operating in an 303 efficient and economic manner while providing quality service to 304 policyholders, applicants, and agents, the board shall 305 commission an independent third-party consultant having 306 expertise in insurance company management or insurance company 307 management consulting to prepare a report and make 308 recommendations on the relative costs and benefits of 309 outsourcing various policy issuance and service functions to 310 private servicing carriers or entities performing similar 311 functions in the private market for a fee, rather than 312 performing such functions in-house. In making such 313 recommendations, the consultant shall consider how other 314 residual markets, both in this state and around the country, 315 outsource appropriate functions or use servicing carriers to 316 better match expenses with revenues that fluctuate based on a 317 widely varying policy count. The report must be completed by 318 July 1, 2012. Upon receiving the report, the board shall develop 319 a plan to implement the report and submit the plan for review, 320 modification, and approval to the Financial Services Commission. 321 Upon the commission’s approval of the plan, the board shall 322 begin implementing the plan by January 1, 2013. 323 4. Must require that the corporation operate subject to the 324 supervision and approval of a board of governors consisting of 325 eight individuals who are residents of this state, from 326 different geographical areas of this state. 327 a. The Governor, the Chief Financial Officer, the President 328 of the Senate, and the Speaker of the House of Representatives 329 shall each appoint two members of the board. At least one of the 330 two members appointed by each appointing officer must have 331 demonstrated expertise in insurance and is deemed to be within 332 the scope of the exemption provided in s. 112.313(7)(b). The 333 Chief Financial Officer shall designate one of the appointees as 334 chair. All board members serve at the pleasure of the appointing 335 officer. All members of the board are subject to removal at will 336 by the officers who appointed them. All board members, including 337 the chair, must be appointed to serve for 3-year terms beginning 338 annually on a date designated by the plan. However, for the 339 first term beginning on or after July 1, 2009, each appointing 340 officer shall appoint one member of the board for a 2-year term 341 and one member for a 3-year term. A board vacancy shall be 342 filled for the unexpired term by the appointing officer. The 343 Chief Financial Officer shall appoint a technical advisory group 344 to provide information and advice to the board in connection 345 with the board’s duties under this subsection. The executive 346 director and senior managers of the corporation shall be engaged 347 by the board and serve at the pleasure of the board. Any 348 executive director appointed on or after July 1, 2006, is 349 subject to confirmation by the Senate. The executive director is 350 responsible for employing other staff as the corporation may 351 require, subject to review and concurrence by the board. 352 b. The board shall create a Market Accountability Advisory 353 Committee to assist the corporation in developing awareness of 354 its rates and its customer and agent service levels in 355 relationship to the voluntary market insurers writing similar 356 coverage. 357 (I) The members of the advisory committee consist of the 358 following 11 persons, one of whom must be elected chair by the 359 members of the committee: four representatives, one appointed by 360 the Florida Association of Insurance Agents, one by the Florida 361 Association of Insurance and Financial Advisors, one by the 362 Professional Insurance Agents of Florida, and one by the Latin 363 American Association of Insurance Agencies; three 364 representatives appointed by the insurers with the three highest 365 voluntary market share of residential property insurance 366 business in the state; one representative from the Office of 367 Insurance Regulation; one consumer appointed by the board who is 368 insured by the corporation at the time of appointment to the 369 committee; one representative appointed by the Florida 370 Association of Realtors; and one representative appointed by the 371 Florida Bankers Association. All members shall be appointed to 372 3-year terms and may serve for consecutive terms. 373 (II) The committee shall report to the corporation at each 374 board meeting on insurance market issues which may include rates 375 and rate competition with the voluntary market; service, 376 including policy issuance, claims processing, and general 377 responsiveness to policyholders, applicants, and agents; and 378 matters relating to depopulation. 379 5. Must provide a procedure for determining the eligibility 380 of a risk for coverage, as follows: 381 a. Subject to s. 627.3517, with respect to personal lines 382 residential risks, if the risk is offered coverage from an 383 authorized insurer at the insurer’s approved rate under a 384 standard policy including wind coverage or, if consistent with 385 the insurer’s underwriting rules as filed with the office, a 386 basic policy including wind coverage, for a new application to 387 the corporation for coverage, the risk is not eligible for any 388 policy issued by the corporation unless the premium for coverage 389 from the authorized insurer is more than 15 percent greater than 390 the premium for comparable coverage from the corporation. If the 391 risk is not able to obtain such offer, the risk is eligible for 392 a standard policy including wind coverage or a basic policy 393 including wind coverage issued by the corporation; however, if 394 the risk could not be insured under a standard policy including 395 wind coverage regardless of market conditions, the risk is 396 eligible for a basic policy including wind coverage unless 397 rejected under subparagraph 8. However, a policyholder of the 398 corporation or a policyholder removed from the corporation 399 through an assumption agreement until the end of the assumption 400 period remains eligible for coverage from the corporation 401 regardless of any offer of coverage from an authorized insurer 402 or surplus lines insurer. The corporation shall determine the 403 type of policy to be provided on the basis of objective 404 standards specified in the underwriting manual and based on 405 generally accepted underwriting practices. 406 (I) If the risk accepts an offer of coverage through the 407 market assistance plan or through a mechanism established by the 408 corporation before a policy is issued to the risk by the 409 corporation or during the first 30 days of coverage by the 410 corporation, and the producing agent who submitted the 411 application to the plan or to the corporation is not currently 412 appointed by the insurer, the insurer shall: 413 (A) Pay to the producing agent of record of the policy for 414 the first year, an amount that is the greater of the insurer’s 415 usual and customary commission for the type of policy written or 416 a fee equal to the usual and customary commission of the 417 corporation; or 418 (B) Offer to allow the producing agent of record of the 419 policy to continue servicing the policy for at least 1 year and 420 offer to pay the agent the greater of the insurer’s or the 421 corporation’s usual and customary commission for the type of 422 policy written. 423 424 If the producing agent is unwilling or unable to accept 425 appointment, the new insurer shall pay the agent in accordance 426 with sub-sub-sub-subparagraph (A). 427 (II) If the corporation enters into a contractual agreement 428 for a take-out plan, the producing agent of record of the 429 corporation policy is entitled to retain any unearned commission 430 on the policy, and the insurer shall: 431 (A) Pay to the producing agent of record, for the first 432 year, an amount that is the greater of the insurer’s usual and 433 customary commission for the type of policy written or a fee 434 equal to the usual and customary commission of the corporation; 435 or 436 (B) Offer to allow the producing agent of record to 437 continue servicing the policy for at least 1 year and offer to 438 pay the agent the greater of the insurer’s or the corporation’s 439 usual and customary commission for the type of policy written. 440 441 If the producing agent is unwilling or unable to accept 442 appointment, the new insurer shall pay the agent in accordance 443 with sub-sub-sub-subparagraph (A). 444 b. With respect to commercial lines residential risks, for 445 a new application to the corporation for coverage, if the risk 446 is offered coverage under a policy including wind coverage from 447 an authorized insurer at its approved rate, the risk is not 448 eligible for a policy issued by the corporation unless the 449 premium for coverage from the authorized insurer is more than 15 450 percent greater than the premium for comparable coverage from 451 the corporation. If the risk is not able to obtain any such 452 offer, the risk is eligible for a policy including wind coverage 453 issued by the corporation. However, a policyholder of the 454 corporation or a policyholder removed from the corporation 455 through an assumption agreement until the end of the assumption 456 period remains eligible for coverage from the corporation 457 regardless of an offer of coverage from an authorized insurer or 458 surplus lines insurer. 459 (I) If the risk accepts an offer of coverage through the 460 market assistance plan or through a mechanism established by the 461 corporation before a policy is issued to the risk by the 462 corporation or during the first 30 days of coverage by the 463 corporation, and the producing agent who submitted the 464 application to the plan or the corporation is not currently 465 appointed by the insurer, the insurer shall: 466 (A) Pay to the producing agent of record of the policy, for 467 the first year, an amount that is the greater of the insurer’s 468 usual and customary commission for the type of policy written or 469 a fee equal to the usual and customary commission of the 470 corporation; or 471 (B) Offer to allow the producing agent of record of the 472 policy to continue servicing the policy for at least 1 year and 473 offer to pay the agent the greater of the insurer’s or the 474 corporation’s usual and customary commission for the type of 475 policy written. 476 477 If the producing agent is unwilling or unable to accept 478 appointment, the new insurer shall pay the agent in accordance 479 with sub-sub-sub-subparagraph (A). 480 (II) If the corporation enters into a contractual agreement 481 for a take-out plan, the producing agent of record of the 482 corporation policy is entitled to retain any unearned commission 483 on the policy, and the insurer shall: 484 (A) Pay to the producing agent of record, for the first 485 year, an amount that is the greater of the insurer’s usual and 486 customary commission for the type of policy written or a fee 487 equal to the usual and customary commission of the corporation; 488 or 489 (B) Offer to allow the producing agent of record to 490 continue servicing the policy for at least 1 year and offer to 491 pay the agent the greater of the insurer’s or the corporation’s 492 usual and customary commission for the type of policy written. 493 494 If the producing agent is unwilling or unable to accept 495 appointment, the new insurer shall pay the agent in accordance 496 with sub-sub-sub-subparagraph (A). 497 c. For purposes of determining comparable coverage under 498 sub-subparagraphs a. and b., the comparison must be based on 499 those forms and coverages that are reasonably comparable. The 500 corporation may rely on a determination of comparable coverage 501 and premium made by the producing agent who submits the 502 application to the corporation, made in the agent’s capacity as 503 the corporation’s agent. A comparison may be made solely of the 504 premium with respect to the main building or structure only on 505 the following basis: the same coverage A or other building 506 limits; the same percentage hurricane deductible that applies on 507 an annual basis or that applies to each hurricane for commercial 508 residential property; the same percentage of ordinance and law 509 coverage, if the same limit is offered by both the corporation 510 and the authorized insurer; the same mitigation credits, to the 511 extent the same types of credits are offered both by the 512 corporation and the authorized insurer; the same method for loss 513 payment, such as replacement cost or actual cash value, if the 514 same method is offered both by the corporation and the 515 authorized insurer in accordance with underwriting rules; and 516 any other form or coverage that is reasonably comparable as 517 determined by the board. If an application is submitted to the 518 corporation for wind-only coverage in the coastal account, the 519 premium for the corporation’s wind-only policy plus the premium 520 for the ex-wind policy that is offered by an authorized insurer 521 to the applicant must be compared to the premium for multiperil 522 coverage offered by an authorized insurer, subject to the 523 standards for comparison specified in this subparagraph. If the 524 corporation or the applicant requests from the authorized 525 insurer a breakdown of the premium of the offer by types of 526 coverage so that a comparison may be made by the corporation or 527 its agent and the authorized insurer refuses or is unable to 528 provide such information, the corporation may treat the offer as 529 not being an offer of coverage from an authorized insurer at the 530 insurer’s approved rate. 531 6. Must include rules for classifications of risks and 532 rates. 533 7. Must provide that if premium and investment income for 534 an account attributable to a particular calendar year are in 535 excess of projected losses and expenses for the account 536 attributable to that year, such excess shall be held in surplus 537 in the account. Such surplus must be available to defray 538 deficits in that account as to future years and used for that 539 purpose before assessing assessable insurers and assessable 540 insureds as to any calendar year. 541 8. Must provide objective criteria and procedures to be 542 uniformly applied to all applicants in determining whether an 543 individual risk is so hazardous as to be uninsurable. In making 544 this determination and in establishing the criteria and 545 procedures, the following must be considered: 546 a. Whether the likelihood of a loss for the individual risk 547 is substantially higher than for other risks of the same class; 548 and 549 b. Whether the uncertainty associated with the individual 550 risk is such that an appropriate premium cannot be determined. 551 552 The acceptance or rejection of a risk by the corporation shall 553 be construed as the private placement of insurance, and the 554 provisions of chapter 120 do not apply. 555 9. Must provide that the corporation make its best efforts 556 to procure catastrophe reinsurance at reasonable rates, to cover 557 its projected 100-year probable maximum loss as determined by 558 the board of governors. 559 10. The policies issued by the corporation must provide 560 that if the corporation or the market assistance plan obtains an 561 offer from an authorized insurer to cover the risk at its 562 approved rates, the risk is no longer eligible for renewal 563 through the corporation, except as otherwise provided in this 564 subsection. 565 11. Corporation policies and applications must include a 566 notice that the corporation policy could, under this section, be 567 replaced with a policy issued by an authorized insurer which 568 does not provide coverage identical to the coverage provided by 569 the corporation. The notice must also specify that acceptance of 570 corporation coverage creates a conclusive presumption that the 571 applicant or policyholder is aware of this potential. 572 12. May establish, subject to approval by the office, 573 different eligibility requirements and operational procedures 574 for any line or type of coverage for any specified county or 575 area if the board determines that such changes are justified due 576 to the voluntary market being sufficiently stable and 577 competitive in such area or for such line or type of coverage 578 and that consumers who, in good faith, are unable to obtain 579 insurance through the voluntary market through ordinary methods 580 continue to have access to coverage from the corporation. If 581 coverage is sought in connection with a real property transfer, 582 the requirements and procedures may not provide an effective 583 date of coverage later than the date of the closing of the 584 transfer as established by the transferor, the transferee, and, 585 if applicable, the lender. 586 13. Must provide that, with respect to the coastal account, 587 any assessable insurer with a surplus as to policyholders of $25 588 million or less writing 25 percent or more of its total 589 countrywide property insurance premiums in this state may 590 petition the office, within the first 90 days of each calendar 591 year, to qualify as a limited apportionment company. A regular 592 assessment levied by the corporation on a limited apportionment 593 company for a deficit incurred by the corporation for the 594 coastal account may be paid to the corporation on a monthly 595 basis as the assessments are collected by the limited 596 apportionment company from its insureds pursuant to s. 627.3512, 597 but the regular assessment must be paid in full within 12 months 598 after being levied by the corporation. A limited apportionment 599 company shall collect from its policyholders any emergency 600 assessment imposed under sub-subparagraph (b)3.d. The plan must 601 provide that, if the office determines that any regular 602 assessment will result in an impairment of the surplus of a 603 limited apportionment company, the office may direct that all or 604 part of such assessment be deferred as provided in subparagraph 605 (q)4. However, an emergency assessment to be collected from 606 policyholders under sub-subparagraph (b)3.d. may not be limited 607 or deferred. 608 14. Must provide that the corporation appoint as its 609 licensed agents only those agents who also hold an appointment 610 as defined in s. 626.015(3) with an insurer who at the time of 611 the agent’s initial appointment by the corporation is authorized 612 to write and is actually writing personal lines residential 613 property coverage, commercial residential property coverage, or 614 commercial nonresidential property coverage within the state. 615 15. Must provide a premium payment plan option to its 616 policyholders which, at a minimum, allows for quarterly and 617 semiannual payment of premiums. A monthly payment plan may, but 618 is not required to, be offered. 619 16. Must limit coverage on mobile homes or manufactured 620 homes built before 1994 to actual cash value of the dwelling 621 rather than replacement costs of the dwelling. 622 17. May provide such limits of coverage as the board 623 determines, consistent with the requirements of this subsection. 624 18. May require commercial property to meet specified 625 hurricane mitigation construction features as a condition of 626 eligibility for coverage. 627 19. Must provide that new or renewal policies issued by the 628 corporation on or after January 1, 2012, which cover sinkhole 629 loss do not include coverage for any loss to appurtenant 630 structures, driveways, sidewalks, decks, or patios that are 631 directly or indirectly caused by sinkhole activity. The 632 corporation shall exclude such coverage using a notice of 633 coverage change, which may be included with the policy renewal, 634 and not by issuance of a notice of nonrenewal of the excluded 635 coverage upon renewal of the current policy. 636 20. As of January 1, 2012, must require that the agent 637 obtain from an applicant for coverage from the corporation an 638 acknowledgement signed by the applicant, which includes, at a 639 minimum, the following statement: 640 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE 641 AND ASSESSMENT LIABILITY: 642 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE 643 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A 644 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON, 645 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 646 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE 647 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT 648 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 649 LEGISLATURE. 650 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY 651 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER 652 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE 653 FLORIDA LEGISLATURE. 654 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE 655 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE 656 STATE OF FLORIDA. 657 a. The corporation shall maintain, in electronic format or 658 otherwise, a copy of the applicant’s signed acknowledgement and 659 provide a copy of the statement to the policyholder as part of 660 the first renewal after the effective date of this subparagraph. 661 b. The signed acknowledgement form creates a conclusive 662 presumption that the policyholder understood and accepted his or 663 her potential surcharge and assessment liability as a 664 policyholder of the corporation. 665 Section 2. This act shall take effect July 1, 2012.