Florida Senate - 2012                                    SB 1346
       
       
       
       By Senator Oelrich
       
       
       
       
       14-01193C-12                                          20121346__
    1                        A bill to be entitled                      
    2         An act relating to Citizens Property Insurance
    3         Corporation; amending s. 627.351, F.S.; conforming
    4         cross-references; reducing to 2 percent from 6 percent
    5         the amount of the projected deficit in the coastal
    6         account for the prior calendar year which is recovered
    7         through regular assessments; requiring that remaining
    8         projected deficits in personal and commercial lines
    9         accounts be recovered through emergency assessments
   10         after accounting for the Citizens policyholder
   11         surcharge; requiring the Office of Insurance
   12         Regulation of the Financial Services Commission to
   13         notify assessable insurers and the Florida Surplus
   14         Lines Service Office of the dates assessable insurers
   15         shall collect and pay emergency assessments; removing
   16         reference to recoupment of residual market deficit
   17         assessments; requiring the board of governors to make
   18         a determination that an account has a projected
   19         deficit before it levies a Citizens policy holder
   20         surcharge; requiring that a limited apportionment
   21         company begin collecting regular assessments within 90
   22         days and pay in full within 15 months after the
   23         assessment is levied; authorizing the Office of
   24         Insurance Regulation to assist the Citizens Property
   25         Insurance Corporation in the collection of
   26         assessments; replacing the term “market equalization
   27         surcharge” with the term “policyholder surcharge”;
   28         providing an effective date.
   29  
   30  Be It Enacted by the Legislature of the State of Florida:
   31  
   32         Section 1. Paragraphs (b), (c), (q), and (w) of subsection
   33  (6) of section 627.351, Florida Statutes, are amended to read:
   34         627.351 Insurance risk apportionment plans.—
   35         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   36         (b)1. All insurers authorized to write one or more subject
   37  lines of business in this state are subject to assessment by the
   38  corporation and, for the purposes of this subsection, are
   39  referred to collectively as “assessable insurers.” Insurers
   40  writing one or more subject lines of business in this state
   41  pursuant to part VIII of chapter 626 are not assessable
   42  insurers, but insureds who procure one or more subject lines of
   43  business in this state pursuant to part VIII of chapter 626 are
   44  subject to assessment by the corporation and are referred to
   45  collectively as “assessable insureds.” An insurer’s assessment
   46  liability begins on the first day of the calendar year following
   47  the year in which the insurer was issued a certificate of
   48  authority to transact insurance for subject lines of business in
   49  this state and terminates 1 year after the end of the first
   50  calendar year during which the insurer no longer holds a
   51  certificate of authority to transact insurance for subject lines
   52  of business in this state.
   53         2.a. All revenues, assets, liabilities, losses, and
   54  expenses of the corporation shall be divided into three separate
   55  accounts as follows:
   56         (I) A personal lines account for personal residential
   57  policies issued by the corporation, or issued by the Residential
   58  Property and Casualty Joint Underwriting Association and renewed
   59  by the corporation, which provides comprehensive, multiperil
   60  coverage on risks that are not located in areas eligible for
   61  coverage by the Florida Windstorm Underwriting Association as
   62  those areas were defined on January 1, 2002, and for policies
   63  that do not provide coverage for the peril of wind on risks that
   64  are located in such areas;
   65         (II) A commercial lines account for commercial residential
   66  and commercial nonresidential policies issued by the
   67  corporation, or issued by the Residential Property and Casualty
   68  Joint Underwriting Association and renewed by the corporation,
   69  which provides coverage for basic property perils on risks that
   70  are not located in areas eligible for coverage by the Florida
   71  Windstorm Underwriting Association as those areas were defined
   72  on January 1, 2002, and for policies that do not provide
   73  coverage for the peril of wind on risks that are located in such
   74  areas; and
   75         (III) A coastal account for personal residential policies
   76  and commercial residential and commercial nonresidential
   77  property policies issued by the corporation, or transferred to
   78  the corporation, which provides coverage for the peril of wind
   79  on risks that are located in areas eligible for coverage by the
   80  Florida Windstorm Underwriting Association as those areas were
   81  defined on January 1, 2002. The corporation may offer policies
   82  that provide multiperil coverage and the corporation shall
   83  continue to offer policies that provide coverage only for the
   84  peril of wind for risks located in areas eligible for coverage
   85  in the coastal account. In issuing multiperil coverage, the
   86  corporation may use its approved policy forms and rates for the
   87  personal lines account. An applicant or insured who is eligible
   88  to purchase a multiperil policy from the corporation may
   89  purchase a multiperil policy from an authorized insurer without
   90  prejudice to the applicant’s or insured’s eligibility to
   91  prospectively purchase a policy that provides coverage only for
   92  the peril of wind from the corporation. An applicant or insured
   93  who is eligible for a corporation policy that provides coverage
   94  only for the peril of wind may elect to purchase or retain such
   95  policy and also purchase or retain coverage excluding wind from
   96  an authorized insurer without prejudice to the applicant’s or
   97  insured’s eligibility to prospectively purchase a policy that
   98  provides multiperil coverage from the corporation. It is the
   99  goal of the Legislature that there be an overall average savings
  100  of 10 percent or more for a policyholder who currently has a
  101  wind-only policy with the corporation, and an ex-wind policy
  102  with a voluntary insurer or the corporation, and who obtains a
  103  multiperil policy from the corporation. It is the intent of the
  104  Legislature that the offer of multiperil coverage in the coastal
  105  account be made and implemented in a manner that does not
  106  adversely affect the tax-exempt status of the corporation or
  107  creditworthiness of or security for currently outstanding
  108  financing obligations or credit facilities of the coastal
  109  account, the personal lines account, or the commercial lines
  110  account. The coastal account must also include quota share
  111  primary insurance under subparagraph (c)2. The area eligible for
  112  coverage under the coastal account also includes the area within
  113  Port Canaveral, which is bordered on the south by the City of
  114  Cape Canaveral, bordered on the west by the Banana River, and
  115  bordered on the north by Federal Government property.
  116         b. The three separate accounts must be maintained as long
  117  as financing obligations entered into by the Florida Windstorm
  118  Underwriting Association or Residential Property and Casualty
  119  Joint Underwriting Association are outstanding, in accordance
  120  with the terms of the corresponding financing documents. If the
  121  financing obligations are no longer outstanding, the corporation
  122  may use a single account for all revenues, assets, liabilities,
  123  losses, and expenses of the corporation. Consistent with this
  124  subparagraph and prudent investment policies that minimize the
  125  cost of carrying debt, the board shall exercise its best efforts
  126  to retire existing debt or obtain the approval of necessary
  127  parties to amend the terms of existing debt, so as to structure
  128  the most efficient plan to consolidate the three separate
  129  accounts into a single account.
  130         c. Creditors of the Residential Property and Casualty Joint
  131  Underwriting Association and the accounts specified in sub-sub
  132  subparagraphs a.(I) and (II) may have a claim against, and
  133  recourse to, those accounts and no claim against, or recourse
  134  to, the account referred to in sub-sub-subparagraph a.(III).
  135  Creditors of the Florida Windstorm Underwriting Association have
  136  a claim against, and recourse to, the account referred to in
  137  sub-sub-subparagraph a.(III) and no claim against, or recourse
  138  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
  139  (II).
  140         d. Revenues, assets, liabilities, losses, and expenses not
  141  attributable to particular accounts shall be prorated among the
  142  accounts.
  143         e. The Legislature finds that the revenues of the
  144  corporation are revenues that are necessary to meet the
  145  requirements set forth in documents authorizing the issuance of
  146  bonds under this subsection.
  147         f. No part of The income of the corporation may not inure
  148  to the benefit of any private person.
  149         3. With respect to a deficit in an account:
  150         a. After accounting for the Citizens policyholder surcharge
  151  imposed under sub-subparagraph i. h., if the remaining projected
  152  deficit incurred in the coastal account in a particular calendar
  153  year:
  154         (I) Is not greater than 2 6 percent of the aggregate
  155  statewide direct written premium for the subject lines of
  156  business for the prior calendar year, the entire deficit shall
  157  be recovered through regular assessments of assessable insurers
  158  under paragraph (q) and assessable insureds.
  159         (II) Exceeds 2 6 percent of the aggregate statewide direct
  160  written premium for the subject lines of business for the prior
  161  calendar year, the corporation shall levy regular assessments on
  162  assessable insurers under paragraph (q) and on assessable
  163  insureds in an amount equal to the greater of 2 6 percent of the
  164  projected deficit or 2 6 percent of the aggregate statewide
  165  direct written premium for the subject lines of business for the
  166  prior calendar year. Any remaining projected deficit shall be
  167  recovered through emergency assessments under sub-subparagraph
  168  d. c.
  169         b. Each assessable insurer’s share of the amount being
  170  assessed under sub-subparagraph a. must be in the proportion
  171  that the assessable insurer’s direct written premium for the
  172  subject lines of business for the year preceding the assessment
  173  bears to the aggregate statewide direct written premium for the
  174  subject lines of business for that year. The assessment
  175  percentage applicable to each assessable insured is the ratio of
  176  the amount being assessed under sub-subparagraph a. to the
  177  aggregate statewide direct written premium for the subject lines
  178  of business for the prior year. Assessments levied by the
  179  corporation on assessable insurers under sub-subparagraph a.
  180  must be paid as required by the corporation’s plan of operation
  181  and paragraph (q). Assessments levied by the corporation on
  182  assessable insureds under sub-subparagraph a. shall be collected
  183  by the surplus lines agent at the time the surplus lines agent
  184  collects the surplus lines tax required by s. 626.932, and paid
  185  to the Florida Surplus Lines Service Office at the time the
  186  surplus lines agent pays the surplus lines tax to that office.
  187  Upon receipt of regular assessments from surplus lines agents,
  188  the Florida Surplus Lines Service Office shall transfer the
  189  assessments directly to the corporation as determined by the
  190  corporation.
  191         c.After accounting for the Citizens policyholder surcharge
  192  imposed under sub-subparagraph i., the remaining projected
  193  deficits in the personal lines account and in the commercial
  194  lines account in a particular calendar year shall be recovered
  195  through emergency assessments under sub-subparagraph d.
  196         d.c. Upon a determination by the board of governors that a
  197  projected deficit in an account exceeds the amount that is
  198  expected to will be recovered through regular assessments under
  199  sub-subparagraph a., plus the amount that is expected to be
  200  recovered through surcharges under sub-subparagraph i. h., the
  201  board, after verification by the office, shall levy emergency
  202  assessments for as many years as necessary to cover the
  203  deficits, to be collected by assessable insurers and the
  204  corporation and collected from assessable insureds upon issuance
  205  or renewal of policies for subject lines of business, excluding
  206  National Flood Insurance policies. The amount collected in a
  207  particular year must be a uniform percentage of that year’s
  208  direct written premium for subject lines of business and all
  209  accounts of the corporation, excluding National Flood Insurance
  210  Program policy premiums, as annually determined by the board and
  211  verified by the office. The office shall verify the arithmetic
  212  calculations involved in the board’s determination within 30
  213  days after receipt of the information on which the determination
  214  was based. The office shall notify assessable insurers and the
  215  Florida Surplus Lines Service Office of the date on which
  216  assessable insurers shall begin to collect and assessable
  217  insureds shall begin to pay such assessment. The date may be not
  218  less than 90 days after the date the corporation levies
  219  emergency assessments pursuant to this sub-subparagraph.
  220  Notwithstanding any other provision of law, the corporation and
  221  each assessable insurer that writes subject lines of business
  222  shall collect emergency assessments from its policyholders
  223  without such obligation being affected by any credit,
  224  limitation, exemption, or deferment. Emergency assessments
  225  levied by the corporation on assessable insureds shall be
  226  collected by the surplus lines agent at the time the surplus
  227  lines agent collects the surplus lines tax required by s.
  228  626.932 and paid to the Florida Surplus Lines Service Office at
  229  the time the surplus lines agent pays the surplus lines tax to
  230  that office. The emergency assessments collected shall be
  231  transferred directly to the corporation on a periodic basis as
  232  determined by the corporation and held by the corporation solely
  233  in the applicable account. The aggregate amount of emergency
  234  assessments levied for an account under this sub-subparagraph in
  235  any calendar year may be less than but not exceed the greater of
  236  10 percent of the amount needed to cover the deficit, plus
  237  interest, fees, commissions, required reserves, and other costs
  238  associated with financing the original deficit, or 10 percent of
  239  the aggregate statewide direct written premium for subject lines
  240  of business and all accounts of the corporation for the prior
  241  year, plus interest, fees, commissions, required reserves, and
  242  other costs associated with financing the deficit.
  243         e.d. The corporation may pledge the proceeds of
  244  assessments, projected recoveries from the Florida Hurricane
  245  Catastrophe Fund, other insurance and reinsurance recoverables,
  246  policyholder surcharges and other surcharges, and other funds
  247  available to the corporation as the source of revenue for and to
  248  secure bonds issued under paragraph (q), bonds or other
  249  indebtedness issued under subparagraph (c)3., or lines of credit
  250  or other financing mechanisms issued or created under this
  251  subsection, or to retire any other debt incurred as a result of
  252  deficits or events giving rise to deficits, or in any other way
  253  that the board determines will efficiently recover such
  254  deficits. The purpose of the lines of credit or other financing
  255  mechanisms is to provide additional resources to assist the
  256  corporation in covering claims and expenses attributable to a
  257  catastrophe. As used in this subsection, the term “assessments”
  258  includes regular assessments under sub-subparagraph a. or
  259  subparagraph (q)1. and emergency assessments under sub
  260  subparagraph d. Emergency assessments collected under sub
  261  subparagraph d. are not part of an insurer’s rates, are not
  262  premium, and are not subject to premium tax, fees, or
  263  commissions; however, failure to pay the emergency assessment
  264  shall be treated as failure to pay premium. The emergency
  265  assessments under sub-subparagraph d. c. shall continue as long
  266  as any bonds issued or other indebtedness incurred with respect
  267  to a deficit for which the assessment was imposed remain
  268  outstanding, unless adequate provision has been made for the
  269  payment of such bonds or other indebtedness pursuant to the
  270  documents governing such bonds or indebtedness.
  271         f.e. As used in this subsection for purposes of any deficit
  272  incurred on or after January 25, 2007, the term “subject lines
  273  of business” means insurance written by assessable insurers or
  274  procured by assessable insureds for all property and casualty
  275  lines of business in this state, but not including workers’
  276  compensation or medical malpractice. As used in this sub
  277  subparagraph, the term “property and casualty lines of business”
  278  includes all lines of business identified on Form 2, Exhibit of
  279  Premiums and Losses, in the annual statement required of
  280  authorized insurers under s. 624.424 and any rule adopted under
  281  this section, except for those lines identified as accident and
  282  health insurance and except for policies written under the
  283  National Flood Insurance Program or the Federal Crop Insurance
  284  Program. For purposes of this sub-subparagraph, the term
  285  “workers’ compensation” includes both workers’ compensation
  286  insurance and excess workers’ compensation insurance.
  287         g.f. The Florida Surplus Lines Service Office shall
  288  determine annually the aggregate statewide written premium in
  289  subject lines of business procured by assessable insureds and
  290  report that information to the corporation in a form and at a
  291  time the corporation specifies to ensure that the corporation
  292  can meet the requirements of this subsection and the
  293  corporation’s financing obligations.
  294         h.g. The Florida Surplus Lines Service Office shall verify
  295  the proper application by surplus lines agents of assessment
  296  percentages for regular assessments and emergency assessments
  297  levied under this subparagraph on assessable insureds and assist
  298  the corporation in ensuring the accurate, timely collection and
  299  payment of assessments by surplus lines agents as required by
  300  the corporation.
  301         i.h.If a deficit is incurred in any account In 2008 or
  302  thereafter, upon a determination by the board of governors that
  303  an account has a projected deficit, the board shall levy a
  304  Citizens policyholder surcharge against all policyholders of the
  305  corporation.
  306         (I) The surcharge shall be levied as a uniform percentage
  307  of the premium for the policy of up to 15 percent of such
  308  premium, which funds shall be used to offset the deficit.
  309         (II) The surcharge is payable upon cancellation or
  310  termination of the policy, upon renewal of the policy, or upon
  311  issuance of a new policy by the corporation within the first 12
  312  months after the date of the levy or the period of time
  313  necessary to fully collect the surcharge amount.
  314         (III) The corporation may not levy any regular assessments
  315  under paragraph (q) pursuant to sub-subparagraph a. or sub
  316  subparagraph b. with respect to a particular year’s deficit
  317  until the corporation has first levied the full amount of the
  318  surcharge authorized by this sub-subparagraph.
  319         (IV) The surcharge is not considered premium and is not
  320  subject to commissions, fees, or premium taxes. However, failure
  321  to pay the surcharge shall be treated as failure to pay premium.
  322         j.i. If the amount of any assessments or surcharges
  323  collected from corporation policyholders, assessable insurers or
  324  their policyholders, or assessable insureds exceeds the amount
  325  of the deficits, such excess amounts shall be remitted to and
  326  retained by the corporation in a reserve to be used by the
  327  corporation, as determined by the board of governors and
  328  approved by the office, to pay claims or reduce any past,
  329  present, or future plan-year deficits or to reduce outstanding
  330  debt.
  331         (c) The corporation’s plan of operation:
  332         1. Must provide for adoption of residential property and
  333  casualty insurance policy forms and commercial residential and
  334  nonresidential property insurance forms, which must be approved
  335  by the office before use. The corporation shall adopt the
  336  following policy forms:
  337         a. Standard personal lines policy forms that are
  338  comprehensive multiperil policies providing full coverage of a
  339  residential property equivalent to the coverage provided in the
  340  private insurance market under an HO-3, HO-4, or HO-6 policy.
  341         b. Basic personal lines policy forms that are policies
  342  similar to an HO-8 policy or a dwelling fire policy that provide
  343  coverage meeting the requirements of the secondary mortgage
  344  market, but which is more limited than the coverage under a
  345  standard policy.
  346         c. Commercial lines residential and nonresidential policy
  347  forms that are generally similar to the basic perils of full
  348  coverage obtainable for commercial residential structures and
  349  commercial nonresidential structures in the admitted voluntary
  350  market.
  351         d. Personal lines and commercial lines residential property
  352  insurance forms that cover the peril of wind only. The forms are
  353  applicable only to residential properties located in areas
  354  eligible for coverage under the coastal account referred to in
  355  sub-subparagraph (b)2.a.
  356         e. Commercial lines nonresidential property insurance forms
  357  that cover the peril of wind only. The forms are applicable only
  358  to nonresidential properties located in areas eligible for
  359  coverage under the coastal account referred to in sub
  360  subparagraph (b)2.a.
  361         f. The corporation may adopt variations of the policy forms
  362  listed in sub-subparagraphs a.-e. which contain more restrictive
  363  coverage.
  364         2. Must provide that the corporation adopt a program in
  365  which the corporation and authorized insurers enter into quota
  366  share primary insurance agreements for hurricane coverage, as
  367  defined in s. 627.4025(2)(a), for eligible risks, and adopt
  368  property insurance forms for eligible risks which cover the
  369  peril of wind only.
  370         a. As used in this subsection, the term:
  371         (I) “Quota share primary insurance” means an arrangement in
  372  which the primary hurricane coverage of an eligible risk is
  373  provided in specified percentages by the corporation and an
  374  authorized insurer. The corporation and authorized insurer are
  375  each solely responsible for a specified percentage of hurricane
  376  coverage of an eligible risk as set forth in a quota share
  377  primary insurance agreement between the corporation and an
  378  authorized insurer and the insurance contract. The
  379  responsibility of the corporation or authorized insurer to pay
  380  its specified percentage of hurricane losses of an eligible
  381  risk, as set forth in the agreement, may not be altered by the
  382  inability of the other party to pay its specified percentage of
  383  losses. Eligible risks that are provided hurricane coverage
  384  through a quota share primary insurance arrangement must be
  385  provided policy forms that set forth the obligations of the
  386  corporation and authorized insurer under the arrangement,
  387  clearly specify the percentages of quota share primary insurance
  388  provided by the corporation and authorized insurer, and
  389  conspicuously and clearly state that the authorized insurer and
  390  the corporation may not be held responsible beyond their
  391  specified percentage of coverage of hurricane losses.
  392         (II) “Eligible risks” means personal lines residential and
  393  commercial lines residential risks that meet the underwriting
  394  criteria of the corporation and are located in areas that were
  395  eligible for coverage by the Florida Windstorm Underwriting
  396  Association on January 1, 2002.
  397         b. The corporation may enter into quota share primary
  398  insurance agreements with authorized insurers at corporation
  399  coverage levels of 90 percent and 50 percent.
  400         c. If the corporation determines that additional coverage
  401  levels are necessary to maximize participation in quota share
  402  primary insurance agreements by authorized insurers, the
  403  corporation may establish additional coverage levels. However,
  404  the corporation’s quota share primary insurance coverage level
  405  may not exceed 90 percent.
  406         d. Any quota share primary insurance agreement entered into
  407  between an authorized insurer and the corporation must provide
  408  for a uniform specified percentage of coverage of hurricane
  409  losses, by county or territory as set forth by the corporation
  410  board, for all eligible risks of the authorized insurer covered
  411  under the agreement.
  412         e. Any quota share primary insurance agreement entered into
  413  between an authorized insurer and the corporation is subject to
  414  review and approval by the office. However, such agreement shall
  415  be authorized only as to insurance contracts entered into
  416  between an authorized insurer and an insured who is already
  417  insured by the corporation for wind coverage.
  418         f. For all eligible risks covered under quota share primary
  419  insurance agreements, the exposure and coverage levels for both
  420  the corporation and authorized insurers shall be reported by the
  421  corporation to the Florida Hurricane Catastrophe Fund. For all
  422  policies of eligible risks covered under such agreements, the
  423  corporation and the authorized insurer must maintain complete
  424  and accurate records for the purpose of exposure and loss
  425  reimbursement audits as required by fund rules. The corporation
  426  and the authorized insurer shall each maintain duplicate copies
  427  of policy declaration pages and supporting claims documents.
  428         g. The corporation board shall establish in its plan of
  429  operation standards for quota share agreements which ensure that
  430  there is no discriminatory application among insurers as to the
  431  terms of the agreements, pricing of the agreements, incentive
  432  provisions if any, and consideration paid for servicing policies
  433  or adjusting claims.
  434         h. The quota share primary insurance agreement between the
  435  corporation and an authorized insurer must set forth the
  436  specific terms under which coverage is provided, including, but
  437  not limited to, the sale and servicing of policies issued under
  438  the agreement by the insurance agent of the authorized insurer
  439  producing the business, the reporting of information concerning
  440  eligible risks, the payment of premium to the corporation, and
  441  arrangements for the adjustment and payment of hurricane claims
  442  incurred on eligible risks by the claims adjuster and personnel
  443  of the authorized insurer. Entering into a quota sharing
  444  insurance agreement between the corporation and an authorized
  445  insurer is voluntary and at the discretion of the authorized
  446  insurer.
  447         3.a. May provide that the corporation may employ or
  448  otherwise contract with individuals or other entities to provide
  449  administrative or professional services that may be appropriate
  450  to effectuate the plan. The corporation may borrow funds by
  451  issuing bonds or by incurring other indebtedness, and shall have
  452  other powers reasonably necessary to effectuate the requirements
  453  of this subsection, including, without limitation, the power to
  454  issue bonds and incur other indebtedness in order to refinance
  455  outstanding bonds or other indebtedness. The corporation may
  456  seek judicial validation of its bonds or other indebtedness
  457  under chapter 75. The corporation may issue bonds or incur other
  458  indebtedness, or have bonds issued on its behalf by a unit of
  459  local government pursuant to subparagraph (q)2. in the absence
  460  of a hurricane or other weather-related event, upon a
  461  determination by the corporation, subject to approval by the
  462  office, that such action would enable it to efficiently meet the
  463  financial obligations of the corporation and that such
  464  financings are reasonably necessary to effectuate the
  465  requirements of this subsection. The corporation may take all
  466  actions needed to facilitate tax-free status for such bonds or
  467  indebtedness, including formation of trusts or other affiliated
  468  entities. The corporation may pledge assessments, projected
  469  recoveries from the Florida Hurricane Catastrophe Fund, other
  470  reinsurance recoverables, policyholder surcharges market
  471  equalization and other surcharges, and other funds available to
  472  the corporation as security for bonds or other indebtedness. In
  473  recognition of s. 10, Art. I of the State Constitution,
  474  prohibiting the impairment of obligations of contracts, it is
  475  the intent of the Legislature that no action be taken whose
  476  purpose is to impair any bond indenture or financing agreement
  477  or any revenue source committed by contract to such bond or
  478  other indebtedness.
  479         b. To ensure that the corporation is operating in an
  480  efficient and economic manner while providing quality service to
  481  policyholders, applicants, and agents, the board shall
  482  commission an independent third-party consultant having
  483  expertise in insurance company management or insurance company
  484  management consulting to prepare a report and make
  485  recommendations on the relative costs and benefits of
  486  outsourcing various policy issuance and service functions to
  487  private servicing carriers or entities performing similar
  488  functions in the private market for a fee, rather than
  489  performing such functions in-house. In making such
  490  recommendations, the consultant shall consider how other
  491  residual markets, both in this state and around the country,
  492  outsource appropriate functions or use servicing carriers to
  493  better match expenses with revenues that fluctuate based on a
  494  widely varying policy count. The report must be completed by
  495  July 1, 2012. Upon receiving the report, the board shall develop
  496  a plan to implement the report and submit the plan for review,
  497  modification, and approval to the Financial Services Commission.
  498  Upon the commission’s approval of the plan, the board shall
  499  begin implementing the plan by January 1, 2013.
  500         4. Must require that the corporation operate subject to the
  501  supervision and approval of a board of governors consisting of
  502  eight individuals who are residents of this state, from
  503  different geographical areas of this state.
  504         a. The Governor, the Chief Financial Officer, the President
  505  of the Senate, and the Speaker of the House of Representatives
  506  shall each appoint two members of the board. At least one of the
  507  two members appointed by each appointing officer must have
  508  demonstrated expertise in insurance and is deemed to be within
  509  the scope of the exemption provided in s. 112.313(7)(b). The
  510  Chief Financial Officer shall designate one of the appointees as
  511  chair. All board members serve at the pleasure of the appointing
  512  officer. All members of the board are subject to removal at will
  513  by the officers who appointed them. All board members, including
  514  the chair, must be appointed to serve for 3-year terms beginning
  515  annually on a date designated by the plan. However, for the
  516  first term beginning on or after July 1, 2009, each appointing
  517  officer shall appoint one member of the board for a 2-year term
  518  and one member for a 3-year term. A board vacancy shall be
  519  filled for the unexpired term by the appointing officer. The
  520  Chief Financial Officer shall appoint a technical advisory group
  521  to provide information and advice to the board in connection
  522  with the board’s duties under this subsection. The executive
  523  director and senior managers of the corporation shall be engaged
  524  by the board and serve at the pleasure of the board. Any
  525  executive director appointed on or after July 1, 2006, is
  526  subject to confirmation by the Senate. The executive director is
  527  responsible for employing other staff as the corporation may
  528  require, subject to review and concurrence by the board.
  529         b. The board shall create a Market Accountability Advisory
  530  Committee to assist the corporation in developing awareness of
  531  its rates and its customer and agent service levels in
  532  relationship to the voluntary market insurers writing similar
  533  coverage.
  534         (I) The members of the advisory committee consist of the
  535  following 11 persons, one of whom must be elected chair by the
  536  members of the committee: four representatives, one appointed by
  537  the Florida Association of Insurance Agents, one by the Florida
  538  Association of Insurance and Financial Advisors, one by the
  539  Professional Insurance Agents of Florida, and one by the Latin
  540  American Association of Insurance Agencies; three
  541  representatives appointed by the insurers with the three highest
  542  voluntary market share of residential property insurance
  543  business in the state; one representative from the Office of
  544  Insurance Regulation; one consumer appointed by the board who is
  545  insured by the corporation at the time of appointment to the
  546  committee; one representative appointed by the Florida
  547  Association of Realtors; and one representative appointed by the
  548  Florida Bankers Association. All members shall be appointed to
  549  3-year terms and may serve for consecutive terms.
  550         (II) The committee shall report to the corporation at each
  551  board meeting on insurance market issues which may include rates
  552  and rate competition with the voluntary market; service,
  553  including policy issuance, claims processing, and general
  554  responsiveness to policyholders, applicants, and agents; and
  555  matters relating to depopulation.
  556         5. Must provide a procedure for determining the eligibility
  557  of a risk for coverage, as follows:
  558         a. Subject to s. 627.3517, with respect to personal lines
  559  residential risks, if the risk is offered coverage from an
  560  authorized insurer at the insurer’s approved rate under a
  561  standard policy including wind coverage or, if consistent with
  562  the insurer’s underwriting rules as filed with the office, a
  563  basic policy including wind coverage, for a new application to
  564  the corporation for coverage, the risk is not eligible for any
  565  policy issued by the corporation unless the premium for coverage
  566  from the authorized insurer is more than 15 percent greater than
  567  the premium for comparable coverage from the corporation. If the
  568  risk is not able to obtain such offer, the risk is eligible for
  569  a standard policy including wind coverage or a basic policy
  570  including wind coverage issued by the corporation; however, if
  571  the risk could not be insured under a standard policy including
  572  wind coverage regardless of market conditions, the risk is
  573  eligible for a basic policy including wind coverage unless
  574  rejected under subparagraph 8. However, a policyholder of the
  575  corporation or a policyholder removed from the corporation
  576  through an assumption agreement until the end of the assumption
  577  period remains eligible for coverage from the corporation
  578  regardless of any offer of coverage from an authorized insurer
  579  or surplus lines insurer. The corporation shall determine the
  580  type of policy to be provided on the basis of objective
  581  standards specified in the underwriting manual and based on
  582  generally accepted underwriting practices.
  583         (I) If the risk accepts an offer of coverage through the
  584  market assistance plan or through a mechanism established by the
  585  corporation before a policy is issued to the risk by the
  586  corporation or during the first 30 days of coverage by the
  587  corporation, and the producing agent who submitted the
  588  application to the plan or to the corporation is not currently
  589  appointed by the insurer, the insurer shall:
  590         (A) Pay to the producing agent of record of the policy for
  591  the first year, an amount that is the greater of the insurer’s
  592  usual and customary commission for the type of policy written or
  593  a fee equal to the usual and customary commission of the
  594  corporation; or
  595         (B) Offer to allow the producing agent of record of the
  596  policy to continue servicing the policy for at least 1 year and
  597  offer to pay the agent the greater of the insurer’s or the
  598  corporation’s usual and customary commission for the type of
  599  policy written.
  600  
  601  If the producing agent is unwilling or unable to accept
  602  appointment, the new insurer shall pay the agent in accordance
  603  with sub-sub-sub-subparagraph (A).
  604         (II) If the corporation enters into a contractual agreement
  605  for a take-out plan, the producing agent of record of the
  606  corporation policy is entitled to retain any unearned commission
  607  on the policy, and the insurer shall:
  608         (A) Pay to the producing agent of record, for the first
  609  year, an amount that is the greater of the insurer’s usual and
  610  customary commission for the type of policy written or a fee
  611  equal to the usual and customary commission of the corporation;
  612  or
  613         (B) Offer to allow the producing agent of record to
  614  continue servicing the policy for at least 1 year and offer to
  615  pay the agent the greater of the insurer’s or the corporation’s
  616  usual and customary commission for the type of policy written.
  617  
  618  If the producing agent is unwilling or unable to accept
  619  appointment, the new insurer shall pay the agent in accordance
  620  with sub-sub-sub-subparagraph (A).
  621         b. With respect to commercial lines residential risks, for
  622  a new application to the corporation for coverage, if the risk
  623  is offered coverage under a policy including wind coverage from
  624  an authorized insurer at its approved rate, the risk is not
  625  eligible for a policy issued by the corporation unless the
  626  premium for coverage from the authorized insurer is more than 15
  627  percent greater than the premium for comparable coverage from
  628  the corporation. If the risk is not able to obtain any such
  629  offer, the risk is eligible for a policy including wind coverage
  630  issued by the corporation. However, a policyholder of the
  631  corporation or a policyholder removed from the corporation
  632  through an assumption agreement until the end of the assumption
  633  period remains eligible for coverage from the corporation
  634  regardless of an offer of coverage from an authorized insurer or
  635  surplus lines insurer.
  636         (I) If the risk accepts an offer of coverage through the
  637  market assistance plan or through a mechanism established by the
  638  corporation before a policy is issued to the risk by the
  639  corporation or during the first 30 days of coverage by the
  640  corporation, and the producing agent who submitted the
  641  application to the plan or the corporation is not currently
  642  appointed by the insurer, the insurer shall:
  643         (A) Pay to the producing agent of record of the policy, for
  644  the first year, an amount that is the greater of the insurer’s
  645  usual and customary commission for the type of policy written or
  646  a fee equal to the usual and customary commission of the
  647  corporation; or
  648         (B) Offer to allow the producing agent of record of the
  649  policy to continue servicing the policy for at least 1 year and
  650  offer to pay the agent the greater of the insurer’s or the
  651  corporation’s usual and customary commission for the type of
  652  policy written.
  653  
  654  If the producing agent is unwilling or unable to accept
  655  appointment, the new insurer shall pay the agent in accordance
  656  with sub-sub-sub-subparagraph (A).
  657         (II) If the corporation enters into a contractual agreement
  658  for a take-out plan, the producing agent of record of the
  659  corporation policy is entitled to retain any unearned commission
  660  on the policy, and the insurer shall:
  661         (A) Pay to the producing agent of record, for the first
  662  year, an amount that is the greater of the insurer’s usual and
  663  customary commission for the type of policy written or a fee
  664  equal to the usual and customary commission of the corporation;
  665  or
  666         (B) Offer to allow the producing agent of record to
  667  continue servicing the policy for at least 1 year and offer to
  668  pay the agent the greater of the insurer’s or the corporation’s
  669  usual and customary commission for the type of policy written.
  670  
  671  If the producing agent is unwilling or unable to accept
  672  appointment, the new insurer shall pay the agent in accordance
  673  with sub-sub-sub-subparagraph (A).
  674         c. For purposes of determining comparable coverage under
  675  sub-subparagraphs a. and b., the comparison must be based on
  676  those forms and coverages that are reasonably comparable. The
  677  corporation may rely on a determination of comparable coverage
  678  and premium made by the producing agent who submits the
  679  application to the corporation, made in the agent’s capacity as
  680  the corporation’s agent. A comparison may be made solely of the
  681  premium with respect to the main building or structure only on
  682  the following basis: the same coverage A or other building
  683  limits; the same percentage hurricane deductible that applies on
  684  an annual basis or that applies to each hurricane for commercial
  685  residential property; the same percentage of ordinance and law
  686  coverage, if the same limit is offered by both the corporation
  687  and the authorized insurer; the same mitigation credits, to the
  688  extent the same types of credits are offered both by the
  689  corporation and the authorized insurer; the same method for loss
  690  payment, such as replacement cost or actual cash value, if the
  691  same method is offered both by the corporation and the
  692  authorized insurer in accordance with underwriting rules; and
  693  any other form or coverage that is reasonably comparable as
  694  determined by the board. If an application is submitted to the
  695  corporation for wind-only coverage in the coastal account, the
  696  premium for the corporation’s wind-only policy plus the premium
  697  for the ex-wind policy that is offered by an authorized insurer
  698  to the applicant must be compared to the premium for multiperil
  699  coverage offered by an authorized insurer, subject to the
  700  standards for comparison specified in this subparagraph. If the
  701  corporation or the applicant requests from the authorized
  702  insurer a breakdown of the premium of the offer by types of
  703  coverage so that a comparison may be made by the corporation or
  704  its agent and the authorized insurer refuses or is unable to
  705  provide such information, the corporation may treat the offer as
  706  not being an offer of coverage from an authorized insurer at the
  707  insurer’s approved rate.
  708         6. Must include rules for classifications of risks and
  709  rates.
  710         7. Must provide that if premium and investment income for
  711  an account attributable to a particular calendar year are in
  712  excess of projected losses and expenses for the account
  713  attributable to that year, such excess shall be held in surplus
  714  in the account. Such surplus must be available to defray
  715  deficits in that account as to future years and used for that
  716  purpose before assessing assessable insurers and assessable
  717  insureds as to any calendar year.
  718         8. Must provide objective criteria and procedures to be
  719  uniformly applied to all applicants in determining whether an
  720  individual risk is so hazardous as to be uninsurable. In making
  721  this determination and in establishing the criteria and
  722  procedures, the following must be considered:
  723         a. Whether the likelihood of a loss for the individual risk
  724  is substantially higher than for other risks of the same class;
  725  and
  726         b. Whether the uncertainty associated with the individual
  727  risk is such that an appropriate premium cannot be determined.
  728  
  729  The acceptance or rejection of a risk by the corporation shall
  730  be construed as the private placement of insurance, and the
  731  provisions of chapter 120 do not apply.
  732         9. Must provide that the corporation make its best efforts
  733  to procure catastrophe reinsurance at reasonable rates, to cover
  734  its projected 100-year probable maximum loss as determined by
  735  the board of governors.
  736         10. The policies issued by the corporation must provide
  737  that if the corporation or the market assistance plan obtains an
  738  offer from an authorized insurer to cover the risk at its
  739  approved rates, the risk is no longer eligible for renewal
  740  through the corporation, except as otherwise provided in this
  741  subsection.
  742         11. Corporation policies and applications must include a
  743  notice that the corporation policy could, under this section, be
  744  replaced with a policy issued by an authorized insurer which
  745  does not provide coverage identical to the coverage provided by
  746  the corporation. The notice must also specify that acceptance of
  747  corporation coverage creates a conclusive presumption that the
  748  applicant or policyholder is aware of this potential.
  749         12. May establish, subject to approval by the office,
  750  different eligibility requirements and operational procedures
  751  for any line or type of coverage for any specified county or
  752  area if the board determines that such changes are justified due
  753  to the voluntary market being sufficiently stable and
  754  competitive in such area or for such line or type of coverage
  755  and that consumers who, in good faith, are unable to obtain
  756  insurance through the voluntary market through ordinary methods
  757  continue to have access to coverage from the corporation. If
  758  coverage is sought in connection with a real property transfer,
  759  the requirements and procedures may not provide an effective
  760  date of coverage later than the date of the closing of the
  761  transfer as established by the transferor, the transferee, and,
  762  if applicable, the lender.
  763         13. Must provide that, with respect to the coastal account,
  764  any assessable insurer with a surplus as to policyholders of $25
  765  million or less writing 25 percent or more of its total
  766  countrywide property insurance premiums in this state may
  767  petition the office, within the first 90 days of each calendar
  768  year, to qualify as a limited apportionment company. A regular
  769  assessment levied by the corporation on a limited apportionment
  770  company for a deficit incurred by the corporation for the
  771  coastal account may be paid to the corporation on a monthly
  772  basis as the assessments are collected by the limited
  773  apportionment company from its insureds pursuant to s. 627.3512,
  774  but a limited apportionment company must begin collecting the
  775  regular assessments not later than 90 days after the regular
  776  assessments are levied by the corporation, and the regular
  777  assessments assessment must be paid in full within 15 12 months
  778  after being levied by the corporation. A limited apportionment
  779  company shall collect from its policyholders any emergency
  780  assessment imposed under sub-subparagraph (b)3.d. The plan must
  781  provide that, if the office determines that any regular
  782  assessment will result in an impairment of the surplus of a
  783  limited apportionment company, the office may direct that all or
  784  part of such assessment be deferred as provided in subparagraph
  785  (q)4. However, an emergency assessment to be collected from
  786  policyholders under sub-subparagraph (b)3.d. may not be limited
  787  or deferred.
  788         14. Must provide that the corporation appoint as its
  789  licensed agents only those agents who also hold an appointment
  790  as defined in s. 626.015(3) with an insurer who at the time of
  791  the agent’s initial appointment by the corporation is authorized
  792  to write and is actually writing personal lines residential
  793  property coverage, commercial residential property coverage, or
  794  commercial nonresidential property coverage within the state.
  795         15. Must provide a premium payment plan option to its
  796  policyholders which, at a minimum, allows for quarterly and
  797  semiannual payment of premiums. A monthly payment plan may, but
  798  is not required to, be offered.
  799         16. Must limit coverage on mobile homes or manufactured
  800  homes built before 1994 to actual cash value of the dwelling
  801  rather than replacement costs of the dwelling.
  802         17. May provide such limits of coverage as the board
  803  determines, consistent with the requirements of this subsection.
  804         18. May require commercial property to meet specified
  805  hurricane mitigation construction features as a condition of
  806  eligibility for coverage.
  807         19. Must provide that new or renewal policies issued by the
  808  corporation on or after January 1, 2012, which cover sinkhole
  809  loss do not include coverage for any loss to appurtenant
  810  structures, driveways, sidewalks, decks, or patios that are
  811  directly or indirectly caused by sinkhole activity. The
  812  corporation shall exclude such coverage using a notice of
  813  coverage change, which may be included with the policy renewal,
  814  and not by issuance of a notice of nonrenewal of the excluded
  815  coverage upon renewal of the current policy.
  816         20. As of January 1, 2012, must require that the agent
  817  obtain from an applicant for coverage from the corporation an
  818  acknowledgement signed by the applicant, which includes, at a
  819  minimum, the following statement:
  820  
  821               ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE              
  822                      AND ASSESSMENT LIABILITY:                    
  823  
  824         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
  825  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
  826  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
  827  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
  828  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
  829  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
  830  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
  831  LEGISLATURE.
  832         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
  833  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
  834  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
  835  FLORIDA LEGISLATURE.
  836         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
  837  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
  838  STATE OF FLORIDA.
  839  
  840         a. The corporation shall maintain, in electronic format or
  841  otherwise, a copy of the applicant’s signed acknowledgement and
  842  provide a copy of the statement to the policyholder as part of
  843  the first renewal after the effective date of this subparagraph.
  844         b. The signed acknowledgement form creates a conclusive
  845  presumption that the policyholder understood and accepted his or
  846  her potential surcharge and assessment liability as a
  847  policyholder of the corporation.
  848         (q)1. The corporation shall certify to the office its needs
  849  for annual assessments as to a particular calendar year, and for
  850  any interim assessments that it deems to be necessary to sustain
  851  operations as to a particular year pending the receipt of annual
  852  assessments. Upon verification, the office shall approve such
  853  certification, and the corporation shall levy such annual or
  854  interim assessments. Such assessments shall be prorated as
  855  provided in paragraph (b). The corporation shall take all
  856  reasonable and prudent steps necessary to collect the amount of
  857  assessments assessment due from each assessable insurer,
  858  including, if prudent, filing suit to collect the assessments,
  859  and the office may provide such assistance to the corporation it
  860  deems appropriate such assessment. If the corporation is unable
  861  to collect an assessment from any assessable insurer, the
  862  uncollected assessments shall be levied as an additional
  863  assessment against the assessable insurers and any assessable
  864  insurer required to pay an additional assessment as a result of
  865  such failure to pay shall have a cause of action against such
  866  nonpaying assessable insurer. Assessments shall be included as
  867  an appropriate factor in the making of rates. The failure of a
  868  surplus lines agent to collect and remit any regular or
  869  emergency assessment levied by the corporation is considered to
  870  be a violation of s. 626.936 and subjects the surplus lines
  871  agent to the penalties provided in that section.
  872         2. The governing body of any unit of local government, any
  873  residents of which are insured by the corporation, may issue
  874  bonds as defined in s. 125.013 or s. 166.101 from time to time
  875  to fund an assistance program, in conjunction with the
  876  corporation, for the purpose of defraying deficits of the
  877  corporation. In order to avoid needless and indiscriminate
  878  proliferation, duplication, and fragmentation of such assistance
  879  programs, any unit of local government, any residents of which
  880  are insured by the corporation, may provide for the payment of
  881  losses, regardless of whether or not the losses occurred within
  882  or outside of the territorial jurisdiction of the local
  883  government. Revenue bonds under this subparagraph may not be
  884  issued until validated pursuant to chapter 75, unless a state of
  885  emergency is declared by executive order or proclamation of the
  886  Governor pursuant to s. 252.36 making such findings as are
  887  necessary to determine that it is in the best interests of, and
  888  necessary for, the protection of the public health, safety, and
  889  general welfare of residents of this state and declaring it an
  890  essential public purpose to permit certain municipalities or
  891  counties to issue such bonds as will permit relief to claimants
  892  and policyholders of the corporation. Any such unit of local
  893  government may enter into such contracts with the corporation
  894  and with any other entity created pursuant to this subsection as
  895  are necessary to carry out this paragraph. Any bonds issued
  896  under this subparagraph shall be payable from and secured by
  897  moneys received by the corporation from emergency assessments
  898  under sub-subparagraph (b)3.d., and assigned and pledged to or
  899  on behalf of the unit of local government for the benefit of the
  900  holders of such bonds. The funds, credit, property, and taxing
  901  power of the state or of the unit of local government shall not
  902  be pledged for the payment of such bonds.
  903         3.a. The corporation shall adopt one or more programs
  904  subject to approval by the office for the reduction of both new
  905  and renewal writings in the corporation. Beginning January 1,
  906  2008, any program the corporation adopts for the payment of
  907  bonuses to an insurer for each risk the insurer removes from the
  908  corporation shall comply with s. 627.3511(2) and may not exceed
  909  the amount referenced in s. 627.3511(2) for each risk removed.
  910  The corporation may consider any prudent and not unfairly
  911  discriminatory approach to reducing corporation writings, and
  912  may adopt a credit against assessment liability or other
  913  liability that provides an incentive for insurers to take risks
  914  out of the corporation and to keep risks out of the corporation
  915  by maintaining or increasing voluntary writings in counties or
  916  areas in which corporation risks are highly concentrated and a
  917  program to provide a formula under which an insurer voluntarily
  918  taking risks out of the corporation by maintaining or increasing
  919  voluntary writings will be relieved wholly or partially from
  920  assessments under sub-subparagraphs (b)3.a. and b. However, any
  921  “take-out bonus” or payment to an insurer must be conditioned on
  922  the property being insured for at least 5 years by the insurer,
  923  unless canceled or nonrenewed by the policyholder. If the policy
  924  is canceled or nonrenewed by the policyholder before the end of
  925  the 5-year period, the amount of the take-out bonus must be
  926  prorated for the time period the policy was insured. When the
  927  corporation enters into a contractual agreement for a take-out
  928  plan, the producing agent of record of the corporation policy is
  929  entitled to retain any unearned commission on such policy, and
  930  the insurer shall either:
  931         (I) Pay to the producing agent of record of the policy, for
  932  the first year, an amount which is the greater of the insurer’s
  933  usual and customary commission for the type of policy written or
  934  a policy fee equal to the usual and customary commission of the
  935  corporation; or
  936         (II) Offer to allow the producing agent of record of the
  937  policy to continue servicing the policy for a period of not less
  938  than 1 year and offer to pay the agent the insurer’s usual and
  939  customary commission for the type of policy written. If the
  940  producing agent is unwilling or unable to accept appointment by
  941  the new insurer, the new insurer shall pay the agent in
  942  accordance with sub-sub-subparagraph (I).
  943         b. Any credit or exemption from regular assessments adopted
  944  under this subparagraph shall last no longer than the 3 years
  945  following the cancellation or expiration of the policy by the
  946  corporation. With the approval of the office, the board may
  947  extend such credits for an additional year if the insurer
  948  guarantees an additional year of renewability for all policies
  949  removed from the corporation, or for 2 additional years if the
  950  insurer guarantees 2 additional years of renewability for all
  951  policies so removed.
  952         c. There shall be no credit, limitation, exemption, or
  953  deferment from emergency assessments to be collected from
  954  policyholders pursuant to sub-subparagraph (b)3.d.
  955         4. The plan shall provide for the deferment, in whole or in
  956  part, of the assessment of an assessable insurer, other than an
  957  emergency assessment collected from policyholders pursuant to
  958  sub-subparagraph (b)3.d., if the office finds that payment of
  959  the assessment would endanger or impair the solvency of the
  960  insurer. In the event an assessment against an assessable
  961  insurer is deferred in whole or in part, the amount by which
  962  such assessment is deferred may be assessed against the other
  963  assessable insurers in a manner consistent with the basis for
  964  assessments set forth in paragraph (b).
  965         5. Effective July 1, 2007, in order to evaluate the costs
  966  and benefits of approved take-out plans, if the corporation pays
  967  a bonus or other payment to an insurer for an approved take-out
  968  plan, it shall maintain a record of the address or such other
  969  identifying information on the property or risk removed in order
  970  to track if and when the property or risk is later insured by
  971  the corporation.
  972         6. Any policy taken out, assumed, or removed from the
  973  corporation is, as of the effective date of the take-out,
  974  assumption, or removal, direct insurance issued by the insurer
  975  and not by the corporation, even if the corporation continues to
  976  service the policies. This subparagraph applies to policies of
  977  the corporation and not policies taken out, assumed, or removed
  978  from any other entity.
  979         (w) Notwithstanding any other provision of law:
  980         1. The pledge or sale of, the lien upon, and the security
  981  interest in any rights, revenues, or other assets of the
  982  corporation created or purported to be created pursuant to any
  983  financing documents to secure any bonds or other indebtedness of
  984  the corporation shall be and remain valid and enforceable,
  985  notwithstanding the commencement of and during the continuation
  986  of, and after, any rehabilitation, insolvency, liquidation,
  987  bankruptcy, receivership, conservatorship, reorganization, or
  988  similar proceeding against the corporation under the laws of
  989  this state.
  990         2. The No such proceeding does not shall relieve the
  991  corporation of its obligation, or otherwise affect its ability
  992  to perform its obligation, to continue to collect, or levy and
  993  collect, assessments, policyholder surcharges market
  994  equalization or other surcharges under sub-subparagraph (b)3.i.
  995  subparagraph (c)10., or any other rights, revenues, or other
  996  assets of the corporation pledged pursuant to any financing
  997  documents.
  998         3. Each such pledge or sale of, lien upon, and security
  999  interest in, including the priority of such pledge, lien, or
 1000  security interest, any such assessments, policyholder surcharges
 1001  market equalization or other surcharges, or other rights,
 1002  revenues, or other assets which are collected, or levied and
 1003  collected, after the commencement of and during the pendency of,
 1004  or after, any such proceeding shall continue unaffected by such
 1005  proceeding. As used in this subsection, the term “financing
 1006  documents” means any agreement or agreements, instrument or
 1007  instruments, or other document or documents now existing or
 1008  hereafter created evidencing any bonds or other indebtedness of
 1009  the corporation or pursuant to which any such bonds or other
 1010  indebtedness has been or may be issued and pursuant to which any
 1011  rights, revenues, or other assets of the corporation are pledged
 1012  or sold to secure the repayment of such bonds or indebtedness,
 1013  together with the payment of interest on such bonds or such
 1014  indebtedness, or the payment of any other obligation or
 1015  financial product, as defined in the plan of operation of the
 1016  corporation related to such bonds or indebtedness.
 1017         4. Any such pledge or sale of assessments, revenues,
 1018  contract rights, or other rights or assets of the corporation
 1019  shall constitute a lien and security interest, or sale, as the
 1020  case may be, that is immediately effective and attaches to such
 1021  assessments, revenues, or contract rights or other rights or
 1022  assets, whether or not imposed or collected at the time the
 1023  pledge or sale is made. Any such pledge or sale is effective,
 1024  valid, binding, and enforceable against the corporation or other
 1025  entity making such pledge or sale, and valid and binding against
 1026  and superior to any competing claims or obligations owed to any
 1027  other person or entity, including policyholders in this state,
 1028  asserting rights in any such assessments, revenues, or contract
 1029  rights or other rights or assets to the extent set forth in and
 1030  in accordance with the terms of the pledge or sale contained in
 1031  the applicable financing documents, whether or not any such
 1032  person or entity has notice of such pledge or sale and without
 1033  the need for any physical delivery, recordation, filing, or
 1034  other action.
 1035         5. As long as the corporation has any bonds outstanding,
 1036  the corporation may not file a voluntary petition under chapter
 1037  9 of the federal Bankruptcy Code or such corresponding chapter
 1038  or sections as may be in effect, from time to time, and a public
 1039  officer or any organization, entity, or other person may not
 1040  authorize the corporation to be or become a debtor under chapter
 1041  9 of the federal Bankruptcy Code or such corresponding chapter
 1042  or sections as may be in effect, from time to time, during any
 1043  such period.
 1044         6. If ordered by a court of competent jurisdiction, the
 1045  corporation may assume policies or otherwise provide coverage
 1046  for policyholders of an insurer placed in liquidation under
 1047  chapter 631, under such forms, rates, terms, and conditions as
 1048  the corporation deems appropriate, subject to approval by the
 1049  office.
 1050         Section 2. This act shall take effect July 1, 2012.