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  
  185  f. 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.