Florida Senate - 2012                                     SB 578
       
       
       
       By Senator Richter
       
       
       
       
       37-00216A-12                                           2012578__
    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 needs
   30  for annual assessments as to a particular calendar year, and for
   31  any interim assessments that it deems to be necessary to sustain
   32  operations as to a particular year pending the receipt of annual
   33  assessments. Upon verification, the office shall approve such
   34  certification, and the corporation shall levy such annual or
   35  interim assessments. Such assessments shall be prorated as
   36  provided in paragraph (b). The corporation shall take all
   37  reasonable and prudent steps necessary to collect the amount of
   38  assessment due from each assessable insurer, including, if
   39  prudent, filing suit to collect such assessment. If the
   40  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.c. (b)3.d., and assigned and pledged
   78  to or on behalf of the unit of local government for the benefit
   79  of the holders of such bonds. The funds, credit, property, and
   80  taxing power of the state or of the unit of local government
   81  shall not 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-subparagraph sub-subparagraphs (b)3.a. and
  100  b. However, any “take-out bonus” or payment to an insurer must
  101  be conditioned on the property being insured for at least 5
  102  years by the insurer, unless canceled or nonrenewed by the
  103  policyholder. If the policy is canceled or nonrenewed by the
  104  policyholder before the end of the 5-year period, the amount of
  105  the take-out bonus must be prorated for the time period the
  106  policy was insured. When the corporation enters into a
  107  contractual agreement for a take-out plan, the producing agent
  108  of record of the corporation policy is entitled to retain any
  109  unearned commission on such policy, and the insurer shall
  110  either:
  111         (I) Pay to the producing agent of record of the policy, for
  112  the first year, an amount which is the greater of the insurer’s
  113  usual and customary commission for the type of policy written or
  114  a policy fee equal to the usual and customary commission of the
  115  corporation; or
  116         (II) Offer to allow the producing agent of record of the
  117  policy to continue servicing the policy for a period of not less
  118  than 1 year and offer to pay the agent the insurer’s usual and
  119  customary commission for the type of policy written. If the
  120  producing agent is unwilling or unable to accept appointment by
  121  the new insurer, the new insurer shall pay the agent in
  122  accordance with sub-sub-subparagraph (I).
  123         b. Any credit or exemption from regular assessments adopted
  124  under this subparagraph shall last no longer than the 3 years
  125  following the cancellation or expiration of the policy by the
  126  corporation. With the approval of the office, the board may
  127  extend such credits for an additional year if the insurer
  128  guarantees an additional year of renewability for all policies
  129  removed from the corporation, or for 2 additional years if the
  130  insurer guarantees 2 additional years of renewability for all
  131  policies so removed.
  132         c. There shall be no credit, limitation, exemption, or
  133  deferment from emergency assessments to be collected from
  134  policyholders pursuant to sub-subparagraph (b)3.c. (b)3.d.
  135         d. Notwithstanding any other provision of law, for purposes
  136  of a depopulation, take-out, or keep-out program adopted by the
  137  corporation, including an initial or renewal offer of coverage
  138  made to a policyholder removed from the corporation pursuant to
  139  such program, an eligible surplus lines insurer may participate
  140  in the program in the same manner and on the same terms as an
  141  authorized insurer, except as provided under this sub
  142  subparagraph.
  143         (I) To qualify for participation, the surplus lines insurer
  144  must first obtain approval from the office for its depopulation,
  145  take-out, or keep-out plan and then comply with all of the
  146  corporation’s requirements for the plan applicable to admitted
  147  insurers and with all statutory provisions applicable to the
  148  removal of policies from the corporation.
  149         (II) In considering a surplus lines insurer’s request for
  150  approval for its plan, the office must determine that the
  151  surplus lines insurer meets the following requirements:
  152         (A) Maintains surplus of $50 million on a company or pooled
  153  basis;
  154         (B) Maintains an A.M. Best Financial Strength Rating of A-
  155  or better;
  156         (C) Maintains reserves, surplus, reinsurance, and
  157  reinsurance equivalents sufficient to cover the insurer’s 100
  158  year probable maximum hurricane loss at least twice in a single
  159  hurricane season, and submits such reinsurance to the office to
  160  review for purposes of the take-out;
  161         (D) Provides prominent notice to the policyholder before
  162  the assumption of the policy that surplus lines policies are not
  163  provided coverage by the Florida Insurance Guaranty Association,
  164  and an outline of any substantial differences in coverage
  165  between the existing policy and the policy being offered to the
  166  insured; and
  167         (E) Provides similar policy coverage.
  168  
  169  This sub-sub-subparagraph does not subject any surplus lines
  170  insurer to requirements in addition to part VIII of chapter 626.
  171  Surplus lines brokers making an offer of coverage under this
  172  sub-subparagraph are not required to comply with s.
  173  626.916(1)(a), (b), (c), and (e).
  174         (III) Within 10 days after the date of assumption, the
  175  surplus lines insurer assuming policies from the corporation
  176  must remit a special deposit equal to the unearned premium net
  177  of unearned commissions on the assumed block of business to the
  178  Department of Financial Services, Bureau of Collateral
  179  Securities. The surplus lines insurer must submit to the office
  180  with the initial deposit an accounting of the policies assumed
  181  and the amount of unearned premium for such policies along with
  182  a sworn affidavit attesting to its accuracy by an officer of the
  183  surplus lines insurer. Thereafter, the surplus lines insurer
  184  must make a filing within 10 days after each calendar quarter,
  185  attesting to the unearned premium in force for the previous
  186  quarter on policies assumed from the corporation, and must
  187  submit additional funds if the special deposit is insufficient
  188  to cover the unearned premium on assumed policies, or must
  189  receive a return of funds within 60 days if the special deposit
  190  exceeds the amount of unearned premium required for assumed
  191  policies. The special deposit is an asset of the surplus lines
  192  insurer which is held by the department for the benefit of state
  193  policyholders of the surplus lines insurer in the event of the
  194  insolvency of the surplus lines insurer. If an order of
  195  liquidation is entered in any state against the surplus lines
  196  insurer, the department may use the special deposit for payment
  197  of unearned premium or policy claims, return all or part of the
  198  deposit to the domiciliary receiver, or use the funds in
  199  accordance with any action authorized under part I of chapter
  200  631 or in compliance with any order of a court with jurisdiction
  201  over the insolvency.
  202         (IV) Surplus lines brokers representing a surplus lines
  203  insurer on a take-out program must obtain confirmation, in
  204  written or e-mail form, from each producing agent in advance
  205  stating that the agent is willing to participate in the take-out
  206  program with the surplus lines insurer engaging in the take-out
  207  program. The take-out program is also subject to s. 627.3517. If
  208  a policyholder is selected for removal from the corporation by a
  209  surplus lines insurer and an admitted carrier, the offer of
  210  coverage from the admitted carrier shall be given priority by
  211  the corporation.
  212         4. The plan shall provide for the deferment, in whole or in
  213  part, of the assessment of an assessable insurer, other than an
  214  emergency assessment collected from policyholders pursuant to
  215  sub-subparagraph (b)3.c. (b)3.d., if the office finds that
  216  payment of the assessment would endanger or impair the solvency
  217  of the insurer. In the event an assessment against an assessable
  218  insurer is deferred in whole or in part, the amount by which
  219  such assessment is deferred may be assessed against the other
  220  assessable insurers in a manner consistent with the basis for
  221  assessments set forth in paragraph (b).
  222         5. Effective July 1, 2007, in order to evaluate the costs
  223  and benefits of approved take-out plans, if the corporation pays
  224  a bonus or other payment to an insurer for an approved take-out
  225  plan, it shall maintain a record of the address or such other
  226  identifying information on the property or risk removed in order
  227  to track if and when the property or risk is later insured by
  228  the corporation.
  229         6. Any policy taken out, assumed, or removed from the
  230  corporation is, as of the effective date of the take-out,
  231  assumption, or removal, direct insurance issued by the insurer
  232  and not by the corporation, even if the corporation continues to
  233  service the policies. This subparagraph applies to policies of
  234  the corporation and not policies taken out, assumed, or removed
  235  from any other entity.
  236         (x)1. The following records of the corporation are
  237  confidential and exempt from the provisions of s. 119.07(1) and
  238  s. 24(a), Art. I of the State Constitution:
  239         a. Underwriting files, except that a policyholder or an
  240  applicant shall have access to his or her own underwriting
  241  files. Confidential and exempt underwriting file records may
  242  also be released to other governmental agencies upon written
  243  request and demonstration of need; such records held by the
  244  receiving agency remain confidential and exempt as provided
  245  herein.
  246         b. Claims files, until termination of all litigation and
  247  settlement of all claims arising out of the same incident,
  248  although portions of the claims files may remain exempt, as
  249  otherwise provided by law. Confidential and exempt claims file
  250  records may be released to other governmental agencies upon
  251  written request and demonstration of need; such records held by
  252  the receiving agency remain confidential and exempt as provided
  253  herein.
  254         c. Records obtained or generated by an internal auditor
  255  pursuant to a routine audit, until the audit is completed, or if
  256  the audit is conducted as part of an investigation, until the
  257  investigation is closed or ceases to be active. An investigation
  258  is considered “active” while the investigation is being
  259  conducted with a reasonable, good faith belief that it could
  260  lead to the filing of administrative, civil, or criminal
  261  proceedings.
  262         d. Matters reasonably encompassed in privileged attorney
  263  client communications.
  264         e. Proprietary information licensed to the corporation
  265  under contract and the contract provides for the confidentiality
  266  of such proprietary information.
  267         f. All information relating to the medical condition or
  268  medical status of a corporation employee which is not relevant
  269  to the employee’s capacity to perform his or her duties, except
  270  as otherwise provided in this paragraph. Information that is
  271  exempt shall include, but is not limited to, information
  272  relating to workers’ compensation, insurance benefits, and
  273  retirement or disability benefits.
  274         g. Upon an employee’s entrance into the employee assistance
  275  program, a program to assist any employee who has a behavioral
  276  or medical disorder, substance abuse problem, or emotional
  277  difficulty which affects the employee’s job performance, all
  278  records relative to that participation shall be confidential and
  279  exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
  280  of the State Constitution, except as otherwise provided in s.
  281  112.0455(11).
  282         h. Information relating to negotiations for financing,
  283  reinsurance, depopulation, or contractual services, until the
  284  conclusion of the negotiations.
  285         i. Minutes of closed meetings regarding underwriting files,
  286  and minutes of closed meetings regarding an open claims file
  287  until termination of all litigation and settlement of all claims
  288  with regard to that claim, except that information otherwise
  289  confidential or exempt by law shall be redacted.
  290         2. If an authorized insurer, reinsurance intermediary,
  291  eligible surplus lines insurer, or entity that has been created
  292  to seek authority to write property insurance in this state is
  293  considering writing or assisting in the underwriting of a risk
  294  insured by the corporation, relevant information from both the
  295  underwriting files and confidential claims files may be released
  296  to the insurer, reinsurance intermediary, eligible surplus lines
  297  insurer, or entity that has been created to seek authority to
  298  write property insurance in this state provided the recipient
  299  insurer agrees in writing, notarized and under oath, to maintain
  300  the confidentiality of such files. If a policy file is
  301  transferred to an insurer, that policy file is no longer a
  302  public record because it is not held by an agency subject to the
  303  provisions of the public records law. Underwriting files and
  304  confidential claims files may also be released to staff and the
  305  board of governors of the market assistance plan established
  306  pursuant to s. 627.3515, who must retain the confidentiality of
  307  such files, except such files may be released to authorized
  308  insurers that are considering assuming the risks to which the
  309  files apply, provided the insurer agrees in writing, notarized
  310  and under oath, to maintain the confidentiality of such files.
  311  Finally, the corporation or the board or staff of the market
  312  assistance plan may make the following information obtained from
  313  underwriting files and confidential claims files available to
  314  licensed general lines insurance agents: name, address, and
  315  telephone number of the residential property owner or insured;
  316  location of the risk; rating information; loss history; and
  317  policy type. The receiving licensed general lines insurance
  318  agent must retain the confidentiality of the information
  319  received.
  320         3. A policyholder who has filed suit against the
  321  corporation has the right to discover the contents of his or her
  322  own claims file to the same extent that discovery of such
  323  contents would be available from a private insurer in litigation
  324  as provided by the Florida Rules of Civil Procedure, the Florida
  325  Evidence Code, and other applicable law. Pursuant to subpoena, a
  326  third party has the right to discover the contents of an
  327  insured’s or applicant’s underwriting or claims file to the same
  328  extent that discovery of such contents would be available from a
  329  private insurer by subpoena as provided by the Florida Rules of
  330  Civil Procedure, the Florida Evidence Code, and other applicable
  331  law, and subject to any confidentiality protections requested by
  332  the corporation and agreed to by the seeking party or ordered by
  333  the court. The corporation may release confidential underwriting
  334  and claims file contents and information as it deems necessary
  335  and appropriate to underwrite or service insurance policies and
  336  claims, subject to any confidentiality protections deemed
  337  necessary and appropriate by the corporation.
  338         4. Portions of meetings of the corporation are exempt from
  339  the provisions of s. 286.011 and s. 24(b), Art. I of the State
  340  Constitution wherein confidential underwriting files or
  341  confidential open claims files are discussed. All portions of
  342  corporation meetings which are closed to the public shall be
  343  recorded by a court reporter. The court reporter shall record
  344  the times of commencement and termination of the meeting, all
  345  discussion and proceedings, the names of all persons present at
  346  any time, and the names of all persons speaking. No portion of
  347  any closed meeting shall be off the record. Subject to the
  348  provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
  349  notes of any closed meeting shall be retained by the corporation
  350  for a minimum of 5 years. A copy of the transcript, less any
  351  exempt matters, of any closed meeting wherein claims are
  352  discussed shall become public as to individual claims after
  353  settlement of the claim.
  354         Section 2. This act shall take effect July 1, 2012.