CS/HB 245

1	A bill to be entitled
2	An act relating to the depopulation programs of
3	Citizens Property Insurance Corporation; amending s.
4	627.351, F.S.; providing that eligible surplus lines
5	insurers may participate, in the same manner and on
6	the same terms as an authorized insurer, in
7	depopulation, take-out, or keep-out programs relating
8	to policies removed from Citizens Property Insurance
9	Corporation; providing certain exceptions, conditions,
10	and requirements relating to such participation by a
11	surplus lines insurer in the corporation's
12	depopulation, take-out, or keep-out programs;
13	authorizing information from underwriting files and
14	confidential files to be released by the corporation
15	to specified entities that are considering writing or
16	underwriting risks insured by the corporation under
17	certain circumstances; specifying that only the
18	corporation's transfer of a policy file to an insurer,
19	as opposed to the transfer of any file, changes the
20	file's public record status; providing an effective
21	date.
22
23	Be It Enacted by the Legislature of the State of Florida:
24
25	Section 1.  Paragraphs (q) and (x) of subsection (6) of
26	section 627.351, Florida Statutes, are amended to read:
27	627.351  Insurance risk apportionment plans.-
28	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
29	(q)1.  The corporation shall certify to the office its
30	needs for annual assessments as to a particular calendar year,
31	and for any interim assessments that it deems to be necessary to
32	sustain operations as to a particular year pending the receipt
33	of annual assessments. Upon verification, the office shall
34	approve such certification, and the corporation shall levy such
35	annual or interim assessments. Such assessments shall be
36	prorated as provided in paragraph (b). The corporation shall
37	take all reasonable and prudent steps necessary to collect the
38	amount of assessment due from each assessable insurer,
39	including, if prudent, filing suit to collect such assessment.
40	If the corporation is unable to collect an assessment from any
41	assessable insurer, the uncollected assessments shall be levied
42	as an additional assessment against the assessable insurers and
43	any assessable insurer required to pay an additional assessment
44	as a result of such failure to pay shall have a cause of action
45	against such nonpaying assessable insurer. Assessments shall be
46	included as an appropriate factor in the making of rates. The
47	failure of a surplus lines agent to collect and remit any
48	regular or emergency assessment levied by the corporation is
49	considered to be a violation of s. 626.936 and subjects the
50	surplus lines agent to the penalties provided in that section.
51	2.  The governing body of any unit of local government, any
52	residents of which are insured by the corporation, may issue
53	bonds as defined in s. 125.013 or s. 166.101 from time to time
54	to fund an assistance program, in conjunction with the
55	corporation, for the purpose of defraying deficits of the
56	corporation. In order to avoid needless and indiscriminate
57	proliferation, duplication, and fragmentation of such assistance
58	programs, any unit of local government, any residents of which
59	are insured by the corporation, may provide for the payment of
60	losses, regardless of whether or not the losses occurred within
61	or outside of the territorial jurisdiction of the local
62	government. Revenue bonds under this subparagraph may not be
63	issued until validated pursuant to chapter 75, unless a state of
64	emergency is declared by executive order or proclamation of the
65	Governor pursuant to s. 252.36 making such findings as are
66	necessary to determine that it is in the best interests of, and
67	necessary for, the protection of the public health, safety, and
68	general welfare of residents of this state and declaring it an
69	essential public purpose to permit certain municipalities or
70	counties to issue such bonds as will permit relief to claimants
71	and policyholders of the corporation. Any such unit of local
72	government may enter into such contracts with the corporation
73	and with any other entity created pursuant to this subsection as
74	are necessary to carry out this paragraph. Any bonds issued
75	under this subparagraph shall be payable from and secured by
76	moneys received by the corporation from emergency assessments
77	under sub-subparagraph (b)3.d., and assigned and pledged to or
78	on behalf of the unit of local government for the benefit of the
79	holders of such bonds. The funds, credit, property, and taxing
80	power of the state or of the unit of local government shall not
81	be pledged for the payment of such bonds.
82	3.a.  The corporation shall adopt one or more programs
83	subject to approval by the office for the reduction of both new
84	and renewal writings in the corporation. Beginning January 1,
85	2008, any program the corporation adopts for the payment of
86	bonuses to an insurer for each risk the insurer removes from the
87	corporation shall comply with s. 627.3511(2) and may not exceed
88	the amount referenced in s. 627.3511(2) for each risk removed.
89	The corporation may consider any prudent and not unfairly
90	discriminatory approach to reducing corporation writings, and
91	may adopt a credit against assessment liability or other
92	liability that provides an incentive for insurers to take risks
93	out of the corporation and to keep risks out of the corporation
94	by maintaining or increasing voluntary writings in counties or
95	areas in which corporation risks are highly concentrated and a
96	program to provide a formula under which an insurer voluntarily
97	taking risks out of the corporation by maintaining or increasing
98	voluntary writings will be relieved wholly or partially from
99	assessments under sub-subparagraphs (b)3.a. and b. However, any
100	"take-out bonus" or payment to an insurer must be conditioned on
101	the property being insured for at least 5 years by the insurer,
102	unless canceled or nonrenewed by the policyholder. If the policy
103	is canceled or nonrenewed by the policyholder before the end of
104	the 5-year period, the amount of the take-out bonus must be
105	prorated for the time period the policy was insured. When the
106	corporation enters into a contractual agreement for a take-out
107	plan, the producing agent of record of the corporation policy is
108	entitled to retain any unearned commission on such policy, and
109	the insurer shall either:
110	(I)  Pay to the producing agent of record of the policy,
111	for the first year, an amount which is the greater of the
112	insurer's usual and customary commission for the type of policy
113	written or a policy fee equal to the usual and customary
114	commission of the corporation; or
115	(II)  Offer to allow the producing agent of record of the
116	policy to continue servicing the policy for a period of not less
117	than 1 year and offer to pay the agent the insurer's usual and
118	customary commission for the type of policy written. If the
119	producing agent is unwilling or unable to accept appointment by
120	the new insurer, the new insurer shall pay the agent in
121	accordance with sub-sub-subparagraph (I).
122	b.  Any credit or exemption from regular assessments
123	adopted under this subparagraph shall last no longer than the 3
124	years following the cancellation or expiration of the policy by
125	the corporation. With the approval of the office, the board may
126	extend such credits for an additional year if the insurer
127	guarantees an additional year of renewability for all policies
128	removed from the corporation, or for 2 additional years if the
129	insurer guarantees 2 additional years of renewability for all
130	policies so removed.
131	c.  There shall be no credit, limitation, exemption, or
132	deferment from emergency assessments to be collected from
133	policyholders pursuant to sub-subparagraph (b)3.d.
134	d.  Notwithstanding any other provision of law, for
135	purposes of a depopulation, take-out, or keep-out program
136	adopted by the corporation, including an initial or renewal
137	offer of coverage made to a policyholder removed from the
138	corporation pursuant to such program, an eligible surplus lines
139	insurer may participate in the program in the same manner and on
140	the same terms as an authorized insurer, except as provided
141	under this sub-subparagraph.
142	(I)  To qualify for participation, the surplus lines
143	insurer must first obtain approval from the office for its
144	depopulation, take-out, or keep-out plan and then comply with
145	all of the corporation's requirements for the plan applicable to
146	admitted insurers and with all statutory provisions applicable
147	to the removal of policies from the corporation.
148	(II)  In considering a surplus lines insurer's request for
149	approval for its plan, the office must determine that the
150	surplus lines insurer meets the following requirements:
151	(A)  Maintains surplus of $50 million on a company or
152	pooled basis;
153	(B)  Maintains an A.M. Best Financial Strength Rating of A-
154	or better;
155	(C)  Maintains reserves, surplus, reinsurance, and
156	reinsurance equivalents sufficient to cover the insurer's 100-
157	year probable maximum hurricane loss at least twice in a single
158	hurricane season, and submits such reinsurance to the office to
159	review for purposes of the take-out;
160	(D)  Provides prominent notice to the policyholder before
161	the assumption of the policy that surplus lines policies are not
162	provided coverage by the Florida Insurance Guaranty Association,
163	and an outline of any substantial differences in coverage
164	between the existing policy and the policy being offered to the
165	insured; and
166	(E)  Provides similar policy coverage.
167
168	This sub-sub-subparagraph does not subject any surplus lines
169	insurer to requirements in addition to part VIII of chapter 626.
170	Surplus lines brokers making an offer of coverage under this
171	sub-subparagraph are not required to comply with s.
172	626.916(1)(a), (b), (c), and (e).
173	(III)  Within 10 days after the date of assumption, the
174	surplus lines insurer assuming policies from the corporation
175	must remit a special deposit equal to the unearned premium net
176	of unearned commissions on the assumed block of business to the
177	Department of Financial Services, Bureau of Collateral
178	Management. The surplus lines insurer must submit to the office
179	with the initial deposit an accounting of the policies assumed
180	and the amount of unearned premium for such policies along with
181	a sworn affidavit attesting to its accuracy by an officer of the
182	surplus lines insurer. Thereafter, the surplus lines insurer
183	must make a filing within 10 days after each calendar quarter,
184	attesting to the unearned premium in force for the previous
185	quarter on policies assumed from the corporation, and must
186	submit additional funds with that filing if the special deposit
187	is insufficient to cover the unearned premium on assumed
188	policies, or must receive a return of funds within 60 days if
189	the special deposit exceeds the amount of unearned premium
190	required for assumed policies. The special deposit is an asset
191	of the surplus lines insurer which is held by the department for
192	the benefit of state policyholders of the surplus lines insurer
193	in the event of the insolvency of the surplus lines insurer. If
194	an order of liquidation is entered in any state against the
195	surplus lines insurer, the department may use the special
196	deposit for payment of unearned premium or policy claims, return
197	all or part of the deposit to the domiciliary receiver, or use
198	the funds in accordance with any action authorized under part I
199	of chapter 631 or in compliance with any order of a court with
200	jurisdiction over the insolvency.
201	(IV)  Surplus lines brokers representing a surplus lines
202	insurer on a take-out program must obtain confirmation, in
203	written or e-mail form, from each producing agent in advance
204	stating that the agent is willing to participate in the take-out
205	program with the surplus lines insurer engaging in the take-out
206	program. The take-out program is also subject to s. 627.3517. If
207	a policyholder is selected for removal from the corporation by a
208	surplus lines insurer and an authorized insurer, the offer of
209	coverage from the authorized insurer shall be given priority by
210	the corporation.
211	4.  The plan shall provide for the deferment, in whole or
212	in part, of the assessment of an assessable insurer, other than
213	an emergency assessment collected from policyholders pursuant to
214	sub-subparagraph (b)3.d., if the office finds that payment of
215	the assessment would endanger or impair the solvency of the
216	insurer. In the event an assessment against an assessable
217	insurer is deferred in whole or in part, the amount by which
218	such assessment is deferred may be assessed against the other
219	assessable insurers in a manner consistent with the basis for
220	assessments set forth in paragraph (b).
221	5.  Effective July 1, 2007, in order to evaluate the costs
222	and benefits of approved take-out plans, if the corporation pays
223	a bonus or other payment to an insurer for an approved take-out
224	plan, it shall maintain a record of the address or such other
225	identifying information on the property or risk removed in order
226	to track if and when the property or risk is later insured by
227	the corporation.
228	6.  Any policy taken out, assumed, or removed from the
229	corporation is, as of the effective date of the take-out,
230	assumption, or removal, direct insurance issued by the insurer
231	and not by the corporation, even if the corporation continues to
232	service the policies. This subparagraph applies to policies of
233	the corporation and not policies taken out, assumed, or removed
234	from any other entity.
235	(x)1.  The following records of the corporation are
236	confidential and exempt from the provisions of s. 119.07(1) and
237	s. 24(a), Art. I of the State Constitution:
238	a.  Underwriting files, except that a policyholder or an
239	applicant shall have access to his or her own underwriting
240	files. Confidential and exempt underwriting file records may
241	also be released to other governmental agencies upon written
242	request and demonstration of need; such records held by the
243	receiving agency remain confidential and exempt as provided
244	herein.
245	b.  Claims files, until termination of all litigation and
246	settlement of all claims arising out of the same incident,
247	although portions of the claims files may remain exempt, as
248	otherwise provided by law. Confidential and exempt claims file
249	records may be released to other governmental agencies upon
250	written request and demonstration of need; such records held by
251	the receiving agency remain confidential and exempt as provided
252	herein.
253	c.  Records obtained or generated by an internal auditor
254	pursuant to a routine audit, until the audit is completed, or if
255	the audit is conducted as part of an investigation, until the
256	investigation is closed or ceases to be active. An investigation
257	is considered "active" while the investigation is being
258	conducted with a reasonable, good faith belief that it could
259	lead to the filing of administrative, civil, or criminal
260	proceedings.
261	d.  Matters reasonably encompassed in privileged attorney-
262	client communications.
263	e.  Proprietary information licensed to the corporation
264	under contract and the contract provides for the confidentiality
265	of such proprietary information.
266	f.  All information relating to the medical condition or
267	medical status of a corporation employee which is not relevant
268	to the employee's capacity to perform his or her duties, except
269	as otherwise provided in this paragraph. Information that is
270	exempt shall include, but is not limited to, information
271	relating to workers' compensation, insurance benefits, and
272	retirement or disability benefits.
273	g.  Upon an employee's entrance into the employee
274	assistance program, a program to assist any employee who has a
275	behavioral or medical disorder, substance abuse problem, or
276	emotional difficulty which affects the employee's job
277	performance, all records relative to that participation shall be
278	confidential and exempt from the provisions of s. 119.07(1) and
279	s. 24(a), Art. I of the State Constitution, except as otherwise
280	provided in s. 112.0455(11).
281	h.  Information relating to negotiations for financing,
282	reinsurance, depopulation, or contractual services, until the
283	conclusion of the negotiations.
284	i.  Minutes of closed meetings regarding underwriting
285	files, and minutes of closed meetings regarding an open claims
286	file until termination of all litigation and settlement of all
287	claims with regard to that claim, except that information
288	otherwise confidential or exempt by law shall be redacted.
289	2.  If an authorized insurer, reinsurance intermediary,
290	eligible surplus lines insurer, or entity that has been created
291	to seek authority to write property insurance in this state is
292	considering writing or assisting in the underwriting of a risk
293	insured by the corporation, relevant information from both the
294	underwriting files and confidential claims files may be released
295	to the insurer, reinsurance intermediary, eligible surplus lines
296	insurer, or entity that has been created to seek authority to
297	write property insurance in this state provided the recipient
298	insurer agrees in writing, notarized and under oath, to maintain
299	the confidentiality of such files. If a policy file is
300	transferred to an insurer, that policy file is no longer a
301	public record because it is not held by an agency subject to the
302	provisions of the public records law. Underwriting files and
303	confidential claims files may also be released to staff and the
304	board of governors of the market assistance plan established
305	pursuant to s. 627.3515, who must retain the confidentiality of
306	such files, except such files may be released to authorized
307	insurers that are considering assuming the risks to which the
308	files apply, provided the insurer agrees in writing, notarized
309	and under oath, to maintain the confidentiality of such files.
310	Finally, the corporation or the board or staff of the market
311	assistance plan may make the following information obtained from
312	underwriting files and confidential claims files available to
313	licensed general lines insurance agents: name, address, and
314	telephone number of the residential property owner or insured;
315	location of the risk; rating information; loss history; and
316	policy type. The receiving licensed general lines insurance
317	agent must retain the confidentiality of the information
318	received.
319	3.  A policyholder who has filed suit against the
320	corporation has the right to discover the contents of his or her
321	own claims file to the same extent that discovery of such
322	contents would be available from a private insurer in litigation
323	as provided by the Florida Rules of Civil Procedure, the Florida
324	Evidence Code, and other applicable law. Pursuant to subpoena, a
325	third party has the right to discover the contents of an
326	insured's or applicant's underwriting or claims file to the same
327	extent that discovery of such contents would be available from a
328	private insurer by subpoena as provided by the Florida Rules of
329	Civil Procedure, the Florida Evidence Code, and other applicable
330	law, and subject to any confidentiality protections requested by
331	the corporation and agreed to by the seeking party or ordered by
332	the court. The corporation may release confidential underwriting
333	and claims file contents and information as it deems necessary
334	and appropriate to underwrite or service insurance policies and
335	claims, subject to any confidentiality protections deemed
336	necessary and appropriate by the corporation.
337	4.  Portions of meetings of the corporation are exempt from
338	the provisions of s. 286.011 and s. 24(b), Art. I of the State
339	Constitution wherein confidential underwriting files or
340	confidential open claims files are discussed. All portions of
341	corporation meetings which are closed to the public shall be
342	recorded by a court reporter. The court reporter shall record
343	the times of commencement and termination of the meeting, all
344	discussion and proceedings, the names of all persons present at
345	any time, and the names of all persons speaking. No portion of
346	any closed meeting shall be off the record. Subject to the
347	provisions hereof and s. 119.07(1)(d)-(f), the court reporter's
348	notes of any closed meeting shall be retained by the corporation
349	for a minimum of 5 years. A copy of the transcript, less any
350	exempt matters, of any closed meeting wherein claims are
351	discussed shall become public as to individual claims after
352	settlement of the claim.
353	Section 2.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.