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.