Florida Senate - 2012                              CS for SB 578
       
       
       
       By the Committee on Budget Subcommittee on General Government
       Appropriations; and Senator Richter
       
       
       
       601-01879-12                                           2012578c1
    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         (III) In order to obtain approval for a plan, the surplus
  169  lines insurer must file the following with the office:
  170         (A) Information requested by the office to demonstrate
  171  compliance with s. 624.404(3), including biographical
  172  affidavits, fingerprints processed pursuant to s. 624.34, and
  173  the results of a criminal history records checks for officers
  174  and directors of the insurer and its parent or holding company;
  175         (B) A service-of-process consent and agreement form
  176  executed by the insurer;
  177         (C) Proof that the insurer has been an eligible or
  178  authorized insurer for not less than 3 years;
  179         (D) A duly authenticated copy of the insurer’s current
  180  audited financial statement, in English, with all monetary
  181  values therein expressed in United States dollars, at an
  182  exchange rate then current and shown in the statement, in the
  183  case of statements originally made in the currencies of other
  184  countries, and with such any additional information relative to
  185  the insurer as the office may request;
  186         (E) A complete certified copy of the latest official
  187  financial statement required by the insurer’s domiciliary state,
  188  if different from sub-sub-sub-subparagraph (D); and
  189         (F) A copy of the United States trust account agreement, if
  190  applicable.
  191  
  192  This sub-sub-subparagraph does not subject any surplus lines
  193  insurer to requirements in addition to part VIII of chapter 626.
  194  Surplus lines brokers making an offer of coverage under this
  195  sub-subparagraph are not required to comply with s.
  196  626.916(1)(a), (b), (c), and (e).
  197         (IV) Within 10 days after the date of assumption, the
  198  surplus lines insurer assuming policies from the corporation
  199  must remit a special deposit equal to the unearned premium net
  200  of unearned commissions on the assumed block of business to the
  201  Bureau of Collateral Securities within the Department of
  202  Financial Services. The surplus lines insurer must submit to the
  203  office, along with the initial deposit, an accounting of the
  204  policies assumed and the amount of unearned premium for such
  205  policies and a sworn affidavit attesting to its accuracy by an
  206  officer of the surplus lines insurer. Thereafter, the surplus
  207  lines insurer must make a filing within 10 days after each
  208  calendar quarter attesting to the unearned premium in force for
  209  the previous quarter on policies assumed from the corporation,
  210  and must submit additional funds with that filing if the special
  211  deposit is insufficient to cover the unearned premium on assumed
  212  policies, or must receive a return of funds within 60 days if
  213  the special deposit exceeds the amount of unearned premium
  214  required for assumed policies. The special deposit is an asset
  215  of the surplus lines insurer which is held by the department for
  216  the benefit of state policyholders of the surplus lines insurer
  217  in the event of the insolvency of the surplus lines insurer. If
  218  an order of liquidation is entered in any state against the
  219  surplus lines insurer, the department may use the special
  220  deposit for payment of unearned premium or policy claims, return
  221  all or part of the deposit to the domiciliary receiver, or use
  222  the funds in accordance with any action authorized under part I
  223  of chapter 631 or in compliance with any order of a court having
  224  jurisdiction over the insolvency.
  225         (V) Surplus lines brokers representing a surplus lines
  226  insurer on a take-out program must obtain confirmation, in
  227  written or e-mail form, from each producing agent in advance
  228  stating that the agent is willing to participate in the take-out
  229  program with the surplus lines insurer engaging in the take-out
  230  program. The take-out program is also subject to s. 627.3517. If
  231  a policyholder is selected for removal from the corporation by a
  232  surplus lines insurer and an authorized insurer, the offer of
  233  coverage from the authorized insurer shall be given priority by
  234  the corporation.
  235         4. The plan shall provide for the deferment, in whole or in
  236  part, of the assessment of an assessable insurer, other than an
  237  emergency assessment collected from policyholders pursuant to
  238  sub-subparagraph (b)3.c. (b)3.d., if the office finds that
  239  payment of the assessment would endanger or impair the solvency
  240  of the insurer. In the event an assessment against an assessable
  241  insurer is deferred in whole or in part, the amount by which
  242  such assessment is deferred may be assessed against the other
  243  assessable insurers in a manner consistent with the basis for
  244  assessments set forth in paragraph (b).
  245         5. Effective July 1, 2007, in order to evaluate the costs
  246  and benefits of approved take-out plans, if the corporation pays
  247  a bonus or other payment to an insurer for an approved take-out
  248  plan, it shall maintain a record of the address or such other
  249  identifying information on the property or risk removed in order
  250  to track if and when the property or risk is later insured by
  251  the corporation.
  252         6. Any policy taken out, assumed, or removed from the
  253  corporation is, as of the effective date of the take-out,
  254  assumption, or removal, direct insurance issued by the insurer
  255  and not by the corporation, even if the corporation continues to
  256  service the policies. This subparagraph applies to policies of
  257  the corporation and not policies taken out, assumed, or removed
  258  from any other entity.
  259         (x)1. The following records of the corporation are
  260  confidential and exempt from the provisions of s. 119.07(1) and
  261  s. 24(a), Art. I of the State Constitution:
  262         a. Underwriting files, except that a policyholder or an
  263  applicant shall have access to his or her own underwriting
  264  files. Confidential and exempt underwriting file records may
  265  also be released to other governmental agencies upon written
  266  request and demonstration of need; such records held by the
  267  receiving agency remain confidential and exempt as provided
  268  herein.
  269         b. Claims files, until termination of all litigation and
  270  settlement of all claims arising out of the same incident,
  271  although portions of the claims files may remain exempt, as
  272  otherwise provided by law. Confidential and exempt claims file
  273  records may be released to other governmental agencies upon
  274  written request and demonstration of need; such records held by
  275  the receiving agency remain confidential and exempt as provided
  276  herein.
  277         c. Records obtained or generated by an internal auditor
  278  pursuant to a routine audit, until the audit is completed, or if
  279  the audit is conducted as part of an investigation, until the
  280  investigation is closed or ceases to be active. An investigation
  281  is considered “active” while the investigation is being
  282  conducted with a reasonable, good faith belief that it could
  283  lead to the filing of administrative, civil, or criminal
  284  proceedings.
  285         d. Matters reasonably encompassed in privileged attorney
  286  client communications.
  287         e. Proprietary information licensed to the corporation
  288  under contract and the contract provides for the confidentiality
  289  of such proprietary information.
  290         f. All information relating to the medical condition or
  291  medical status of a corporation employee which is not relevant
  292  to the employee’s capacity to perform his or her duties, except
  293  as otherwise provided in this paragraph. Information that is
  294  exempt shall include, but is not limited to, information
  295  relating to workers’ compensation, insurance benefits, and
  296  retirement or disability benefits.
  297         g. Upon an employee’s entrance into the employee assistance
  298  program, a program to assist any employee who has a behavioral
  299  or medical disorder, substance abuse problem, or emotional
  300  difficulty which affects the employee’s job performance, all
  301  records relative to that participation shall be confidential and
  302  exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
  303  of the State Constitution, except as otherwise provided in s.
  304  112.0455(11).
  305         h. Information relating to negotiations for financing,
  306  reinsurance, depopulation, or contractual services, until the
  307  conclusion of the negotiations.
  308         i. Minutes of closed meetings regarding underwriting files,
  309  and minutes of closed meetings regarding an open claims file
  310  until termination of all litigation and settlement of all claims
  311  with regard to that claim, except that information otherwise
  312  confidential or exempt by law shall be redacted.
  313         2. If an authorized insurer, reinsurance intermediary,
  314  eligible surplus lines insurer, or entity that has filed an
  315  application with the office for licensure as a property and
  316  casualty insurer in this state is considering writing or
  317  assisting in the underwriting of a risk insured by the
  318  corporation, relevant information from both the underwriting
  319  files and confidential claims files may be released to the
  320  insurer, reinsurance intermediary, eligible surplus lines
  321  insurer, or entity that has been created to seek authority to
  322  write property insurance in this state provided the recipient
  323  insurer agrees in writing, notarized and under oath, to maintain
  324  the confidentiality of such files. If a policy file is
  325  transferred to an insurer, that policy file is no longer a
  326  public record because it is not held by an agency subject to the
  327  provisions of the public records law. Underwriting files and
  328  confidential claims files may also be released to staff and the
  329  board of governors of the market assistance plan established
  330  pursuant to s. 627.3515, who must retain the confidentiality of
  331  such files, except such files may be released to authorized
  332  insurers that are considering assuming the risks to which the
  333  files apply, provided the insurer agrees in writing, notarized
  334  and under oath, to maintain the confidentiality of such files.
  335  Finally, the corporation or the board or staff of the market
  336  assistance plan may make the following information obtained from
  337  underwriting files and confidential claims files available to
  338  licensed general lines insurance agents: name, address, and
  339  telephone number of the residential property owner or insured;
  340  location of the risk; rating information; loss history; and
  341  policy type. The receiving licensed general lines insurance
  342  agent must retain the confidentiality of the information
  343  received.
  344         3. A policyholder who has filed suit against the
  345  corporation has the right to discover the contents of his or her
  346  own claims file to the same extent that discovery of such
  347  contents would be available from a private insurer in litigation
  348  as provided by the Florida Rules of Civil Procedure, the Florida
  349  Evidence Code, and other applicable law. Pursuant to subpoena, a
  350  third party has the right to discover the contents of an
  351  insured’s or applicant’s underwriting or claims file to the same
  352  extent that discovery of such contents would be available from a
  353  private insurer by subpoena as provided by the Florida Rules of
  354  Civil Procedure, the Florida Evidence Code, and other applicable
  355  law, and subject to any confidentiality protections requested by
  356  the corporation and agreed to by the seeking party or ordered by
  357  the court. The corporation may release confidential underwriting
  358  and claims file contents and information as it deems necessary
  359  and appropriate to underwrite or service insurance policies and
  360  claims, subject to any confidentiality protections deemed
  361  necessary and appropriate by the corporation.
  362         4. Portions of meetings of the corporation are exempt from
  363  the provisions of s. 286.011 and s. 24(b), Art. I of the State
  364  Constitution wherein confidential underwriting files or
  365  confidential open claims files are discussed. All portions of
  366  corporation meetings which are closed to the public shall be
  367  recorded by a court reporter. The court reporter shall record
  368  the times of commencement and termination of the meeting, all
  369  discussion and proceedings, the names of all persons present at
  370  any time, and the names of all persons speaking. No portion of
  371  any closed meeting shall be off the record. Subject to the
  372  provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
  373  notes of any closed meeting shall be retained by the corporation
  374  for a minimum of 5 years. A copy of the transcript, less any
  375  exempt matters, of any closed meeting wherein claims are
  376  discussed shall become public as to individual claims after
  377  settlement of the claim.
  378         Section 2. This act shall take effect upon becoming a law.