Florida Senate - 2014                             CS for SB 1274
       By the Committee on Banking and Insurance; and Senator Hays
       597-03202-14                                          20141274c1
    1                        A bill to be entitled                      
    2         An act relating to Citizens Property Insurance
    3         Corporation; amending s. 627.351, F.S.; providing
    4         exemptions from the restriction on obtaining coverage
    5         from the corporation for substantial improvement to
    6         major structures under certain conditions; requiring
    7         the corporation to submit any alternate study relating
    8         to windstorm mitigation discounts to the office and,
    9         if approved, including the discounts in its next rate
   10         filing; amending s. 627.711, F.S.; authorizing the
   11         corporation to create an addendum to the uniform
   12         mitigation verification form for use by counties under
   13         certain circumstances; prohibiting a mitigation
   14         inspector from paying for referrals from an insurance
   15         broker, insurance agent, or employee of an insurance
   16         agency and a broker, agent, or employee from receiving
   17         such compensation; providing an effective date.
   19  Be It Enacted by the Legislature of the State of Florida:
   21         Section 1. Paragraphs (a) and (n) of subsection (6) of
   22  section 627.351, Florida Statutes, are amended to read:
   23         627.351 Insurance risk apportionment plans.—
   25         (a) The public purpose of this subsection is to ensure that
   26  there is an orderly market for property insurance for residents
   27  and businesses of this state.
   28         1. The Legislature finds that private insurers are
   29  unwilling or unable to provide affordable property insurance
   30  coverage in this state to the extent sought and needed. The
   31  absence of affordable property insurance threatens the public
   32  health, safety, and welfare and likewise threatens the economic
   33  health of the state. The state therefore has a compelling public
   34  interest and a public purpose to assist in assuring that
   35  property in the state is insured and that it is insured at
   36  affordable rates so as to facilitate the remediation,
   37  reconstruction, and replacement of damaged or destroyed property
   38  in order to reduce or avoid the negative effects on otherwise
   39  resulting to the public health, safety, and welfare, to the
   40  economy of the state, and to the revenues of the state and local
   41  governments which are needed to provide for the public welfare.
   42  It is necessary, therefore, to provide affordable property
   43  insurance to applicants who are in good faith entitled to
   44  procure insurance through the voluntary market but are unable to
   45  do so. The Legislature intends, therefore, that affordable
   46  property insurance be provided and that it continue to be
   47  provided, as long as necessary, through Citizens Property
   48  Insurance Corporation, a government entity that is an integral
   49  part of the state, and that is not a private insurance company.
   50  To that end, the corporation shall strive to increase the
   51  availability of affordable property insurance in this state,
   52  while achieving efficiencies and economies, and while providing
   53  service to policyholders, applicants, and agents which is no
   54  less than the quality generally provided in the voluntary
   55  market, for the achievement of the foregoing public purposes.
   56  Because it is essential for this government entity to have the
   57  maximum financial resources to pay claims following a
   58  catastrophic hurricane, it is further the intent of the
   59  Legislature that the corporation continue to be an integral part
   60  of the state, and that the income of the corporation be exempt
   61  from federal income taxation, and that interest on the debt
   62  obligations issued by the corporation be exempt from federal
   63  income taxation.
   64         2. The Residential Property and Casualty Joint Underwriting
   65  Association originally created by this statute shall be known as
   66  the Citizens Property Insurance Corporation. The corporation
   67  shall provide insurance for residential and commercial property,
   68  for applicants who are entitled, but, in good faith, are unable
   69  to procure insurance through the voluntary market. The
   70  corporation shall operate pursuant to a plan of operation
   71  approved by order of the Financial Services Commission. The plan
   72  is subject to continuous review by the commission. The
   73  commission may, by order, withdraw approval of all or part of a
   74  plan if the commission determines that conditions have changed
   75  since approval was granted and that the purposes of the plan
   76  require changes in the plan. For the purposes of this
   77  subsection, residential coverage includes both personal lines
   78  residential coverage, which consists of the type of coverage
   79  provided by homeowner’s, mobile home owner’s, dwelling,
   80  tenant’s, condominium unit owner’s, and similar policies; and
   81  commercial lines residential coverage, which consists of the
   82  type of coverage provided by condominium association, apartment
   83  building, and similar policies.
   84         3. With respect to coverage for personal lines residential
   85  structures:
   86         a. Effective January 1, 2014, a structure that has a
   87  dwelling replacement cost of $1 million or more, or a single
   88  condominium unit that has a combined dwelling and contents
   89  replacement cost of $1 million or more is not eligible for
   90  coverage by the corporation. Such dwellings insured by the
   91  corporation on December 31, 2013, may continue to be covered by
   92  the corporation until the end of the policy term. The office
   93  shall approve the method used by the corporation for valuing the
   94  dwelling replacement costs under cost for the purposes of this
   95  subparagraph. If a policyholder is insured by the corporation
   96  before being determined to be ineligible pursuant to this
   97  subparagraph and such policyholder files a lawsuit challenging
   98  the determination, the policyholder may remain insured by the
   99  corporation until the conclusion of the litigation.
  100         b. Effective January 1, 2015, a structure that has a
  101  dwelling replacement cost of $900,000 or more, or a single
  102  condominium unit that has a combined dwelling and contents
  103  replacement cost of $900,000 or more, is not eligible for
  104  coverage by the corporation. Such dwellings insured by the
  105  corporation on December 31, 2014, may continue to be covered by
  106  the corporation only until the end of the policy term.
  107         c. Effective January 1, 2016, a structure that has a
  108  dwelling replacement cost of $800,000 or more, or a single
  109  condominium unit that has a combined dwelling and contents
  110  replacement cost of $800,000 or more, is not eligible for
  111  coverage by the corporation. Such dwellings insured by the
  112  corporation on December 31, 2015, may continue to be covered by
  113  the corporation until the end of the policy term.
  114         d. Effective January 1, 2017, a structure that has a
  115  dwelling replacement cost of $700,000 or more, or a single
  116  condominium unit that has a combined dwelling and contents
  117  replacement cost of $700,000 or more, is not eligible for
  118  coverage by the corporation. Such dwellings insured by the
  119  corporation on December 31, 2016, may continue to be covered by
  120  the corporation until the end of the policy term.
  122  The requirements of sub-subparagraphs b.-d. do not apply in
  123  counties where the office determines there is not a reasonable
  124  degree of competition. In such counties a personal lines
  125  residential structure that has a dwelling replacement cost of
  126  less than $1 million, or a single condominium unit that has a
  127  combined dwelling and contents replacement cost of less than $1
  128  million, is eligible for coverage by the corporation.
  129         4. It is the intent of the Legislature that policyholders,
  130  applicants, and agents of the corporation receive service and
  131  treatment of the highest possible level but never less than that
  132  generally provided in the voluntary market. It is also intended
  133  that the corporation be held to service standards no less than
  134  those applied to insurers in the voluntary market by the office
  135  with respect to responsiveness, timeliness, customer courtesy,
  136  and overall dealings with policyholders, applicants, or agents
  137  of the corporation.
  138         5.a. Effective January 1, 2009, a personal lines
  139  residential structure that is located in the “wind-borne debris
  140  region,” as defined in s. 1609.2, International Building Code
  141  (2006), and that has an insured value on the structure of
  142  $750,000 or more is not eligible for coverage by the corporation
  143  unless the structure has opening protections as required under
  144  the Florida Building Code for a newly constructed residential
  145  structure in that area. A residential structure is deemed to
  146  comply with this sub-subparagraph subparagraph if it has
  147  shutters or opening protections on all openings and if such
  148  opening protections complied with the Florida Building Code at
  149  the time they were installed.
  150         b. Any major structure as defined in s. 161.54(6)(a) for
  151  which a permit is applied on or after July 1, 2014, for new
  152  construction or substantial improvement as defined in s.
  153  161.54(12) is not eligible for coverage by the corporation if
  154  the structure is seaward of the coastal construction control
  155  line established pursuant to s. 161.053 or is within the Coastal
  156  Barrier Resources System as designated by 16 U.S.C. ss. 3501
  157  3510. This sub-subparagraph does not apply to substantial
  158  improvement of major structures located in a county where the
  159  office determines that the corporation issues 75 percent or more
  160  of the total of the number of policies for each line of personal
  161  residential, commercial residential, and commercial
  162  nonresidential insurance.
  163         (n)1. Rates for coverage provided by the corporation must
  164  be actuarially sound and subject to s. 627.062, except as
  165  otherwise provided in this paragraph.
  166         1. The corporation shall file its recommended rates with
  167  the office at least annually. The corporation shall provide any
  168  additional information regarding the rates which the office
  169  requires. The office shall consider the recommendations of the
  170  board and issue a final order establishing the rates for the
  171  corporation within 45 days after the recommended rates are
  172  filed. The corporation may not pursue an administrative
  173  challenge or judicial review of the final order of the office.
  174         2. In addition to the rates otherwise determined pursuant
  175  to this paragraph, the corporation shall impose and collect an
  176  amount equal to the premium tax provided in s. 624.509 to
  177  augment the financial resources of the corporation.
  178         3. After the public hurricane loss-projection model under
  179  s. 627.06281 has been found to be accurate and reliable by the
  180  Florida Commission on Hurricane Loss Projection Methodology, the
  181  model shall serve as the minimum benchmark for determining the
  182  windstorm portion of the corporation’s rates. This subparagraph
  183  does not require or allow the corporation to adopt rates lower
  184  than the rates otherwise required or allowed by this paragraph.
  185         4. The rate filings for the corporation which were approved
  186  by the office and took effect January 1, 2007, are rescinded,
  187  except for those rates that were lowered. As soon as possible,
  188  the corporation shall begin using the lower rates that were in
  189  effect on December 31, 2006, and provide refunds to
  190  policyholders who paid higher rates as a result of that rate
  191  filing. The rates in effect on December 31, 2006, remain in
  192  effect for the 2007 and 2008 calendar years except for any rate
  193  change that results in a lower rate. The next rate change that
  194  may increase rates shall take effect pursuant to a new rate
  195  filing recommended by the corporation and established by the
  196  office, subject to this paragraph.
  197         5. Beginning on July 15, 2009, and annually thereafter, the
  198  corporation must make a recommended actuarially sound rate
  199  filing for each personal and commercial line of business it
  200  writes, to be effective no earlier than January 1, 2010.
  201         6. Beginning on or after January 1, 2010, and
  202  notwithstanding the board’s recommended rates and the office’s
  203  final order regarding the corporation’s filed rates under
  204  subparagraph 1., the corporation shall annually implement a rate
  205  increase which, except for sinkhole coverage, does not exceed 10
  206  percent for any single policy issued by the corporation,
  207  excluding coverage changes and surcharges.
  208         7. The corporation may also implement an increase to
  209  reflect the effect on the corporation of the cash buildup factor
  210  pursuant to s. 215.555(5)(b).
  211         8. The corporation’s implementation of rates as prescribed
  212  in subparagraph 6. shall cease for any line of business written
  213  by the corporation upon the corporation’s implementation of
  214  actuarially sound rates. Thereafter, the corporation shall
  215  annually make a recommended actuarially sound rate filing for
  216  each commercial and personal line of business the corporation
  217  writes.
  218         9. The corporation must submit any alternate study relating
  219  to windstorm mitigation discounts to the office. Upon the
  220  office’s approval of the alternate study, the corporation must
  221  include the discounts provided by the study in the next filing
  222  of its recommended rates.
  223         Section 2. Subsection (2) of section 627.711, Florida
  224  Statutes, is amended, present subsections (6), (7), and (8) of
  225  that section are renumbered as subsections (7), (8), and (9),
  226  respectively, and a new subsection (6) is added to that section,
  227  to read:
  228         627.711 Notice of premium discounts for hurricane loss
  229  mitigation; uniform mitigation verification inspection form.—
  230         (2)(a) The Financial Services Commission shall, by rule,
  231  develop by rule a uniform mitigation verification inspection
  232  form that shall be used by all insurers when submitted by
  233  policyholders for the purpose of factoring discounts for wind
  234  insurance. The commission may develop an addendum to the form
  235  for use in a county that has adopted a building code that is
  236  stricter than the building code recognized by the uniform
  237  mitigation form. In developing the form, the commission shall
  238  seek input from insurance, construction, and building code
  239  representatives. Further, The commission shall also provide
  240  guidance as to the length of time the inspection results are
  241  valid. An insurer shall accept as valid a uniform mitigation
  242  verification form signed by the following authorized mitigation
  243  inspectors:
  244         1. A home inspector licensed under s. 468.8314 who has
  245  completed at least 3 hours of hurricane mitigation training
  246  approved by the Construction Industry Licensing Board, which
  247  includes hurricane mitigation techniques and compliance with the
  248  uniform mitigation verification form and completion of a
  249  proficiency exam;
  250         2. A building code inspector certified under s. 468.607;
  251         3. A general, building, or residential contractor licensed
  252  under s. 489.111;
  253         4. A professional engineer licensed under s. 471.015;
  254         5. A professional architect licensed under s. 481.213; or
  255         6. Any other individual or entity recognized by the insurer
  256  as possessing the necessary qualifications to properly complete
  257  a uniform mitigation verification form.
  258         (b) An insurer may, but is not required to, accept a form
  259  from any other person possessing qualifications and experience
  260  acceptable to the insurer.
  261         (6)(a) An authorized mitigation inspector may not directly
  262  or indirectly offer or deliver any compensation, inducement, or
  263  reward to an insurance broker, an insurance agent, or an
  264  employee of an insurance agency for the referral of the owner of
  265  the inspected property to the inspector or the inspection
  266  company. Section 455.227(1)(k) applies to licensees in violation
  267  of this paragraph.
  268         (b) An insurance broker, insurance agent, or employee of an
  269  insurance agency may not directly or indirectly receive or
  270  accept any compensation, inducement, or reward from an
  271  authorized mitigation inspector for the referral of the owner of
  272  the inspected property to the inspector or the inspection
  273  company. Section 626.6215(5)(d) applies to a violation of this
  274  paragraph
  275         Section 3. This act shall take effect July 1, 2014.