Florida Senate - 2021 CS for SB 1574
By the Committee on Banking and Insurance; and Senator Brandes
597-02917-21 20211574c1
1 A bill to be entitled
2 An act relating to Citizens Property Insurance
3 Corporation; amending s. 627.021, F.S.; revising
4 applicability; amending s. 627.351, F.S.; revising the
5 method for determining the amounts of potential
6 surcharges to be levied against policyholders under
7 certain circumstances; requiring the corporation to
8 levy an annual legal expenses surcharge; revising
9 conditions for eligibility for coverage with the
10 corporation to require a certain minimum premium;
11 specifying a limit for agent commission rates;
12 revising the application of annual rate increase
13 limits to certain policies issued by the corporation;
14 providing that eligible surplus lines insurers may
15 participate, in the same manner and on the same terms
16 as an authorized insurer, in depopulation, take-out,
17 or keep-out programs relating to policies removed from
18 Citizens Property Insurance Corporation; providing
19 certain exceptions, conditions, and requirements
20 relating to such participation by a surplus lines
21 insurer in the corporation’s depopulation, take-out,
22 or keep-out programs; providing thresholds for
23 eligibility for coverage by the corporation for risks
24 offered coverage from qualified surplus lines
25 insurers; authorizing information from underwriting
26 files and confidential claims files to be released by
27 the corporation to specified entities considering
28 writing or underwriting risks insured by the
29 corporation under certain circumstances; specifying
30 that only the corporation’s transfer of a policy file
31 to an insurer, as opposed to the transfer of any file,
32 changes the file’s public record status; making
33 technical changes; amending s. 627.3517, F.S.; making
34 technical changes; amending s. 627.3518, F.S., and
35 reenacting subsections (6) and (7), relating to the
36 Citizens Property Insurance Corporation policyholder
37 eligibility clearinghouse program, to incorporate the
38 amendments made to s. 627.351, F.S., in references
39 thereto; conforming provisions to changes made by the
40 act; providing an effective date.
41
42 Be It Enacted by the Legislature of the State of Florida:
43
44 Section 1. Subsection (2) of section 627.021, Florida
45 Statutes, is amended to read:
46 627.021 Scope of this part.—
47 (2) This part does not apply to:
48 (a) Reinsurance, except joint reinsurance as provided in s.
49 627.311.
50 (b) Insurance against loss of or damage to aircraft, their
51 hulls, accessories, or equipment, or against liability, other
52 than workers’ compensation and employer’s liability, arising out
53 of the ownership, maintenance, or use of aircraft.
54 (c) Insurance of vessels or craft, their cargoes, marine
55 builders’ risks, marine protection and indemnity, or other risks
56 commonly insured under marine insurance policies.
57 (d) Commercial inland marine insurance.
58 (e) Except as may be specifically stated to apply, surplus
59 lines insurance placed under the provisions of ss. 626.913
60 626.937.
61 Section 2. Paragraphs (b), (c), (n), (q), and (x) of
62 subsection (6) of section 627.351, Florida Statutes, are amended
63 to read:
64 627.351 Insurance risk apportionment plans.—
65 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
66 (b)1. All insurers authorized to write one or more subject
67 lines of business in this state are subject to assessment by the
68 corporation and, for the purposes of this subsection, are
69 referred to collectively as “assessable insurers.” Insurers
70 writing one or more subject lines of business in this state
71 pursuant to part VIII of chapter 626 are not assessable
72 insurers; however, insureds who procure one or more subject
73 lines of business in this state pursuant to part VIII of chapter
74 626 are subject to assessment by the corporation and are
75 referred to collectively as “assessable insureds.” An insurer’s
76 assessment liability begins on the first day of the calendar
77 year following the year in which the insurer was issued a
78 certificate of authority to transact insurance for subject lines
79 of business in this state and terminates 1 year after the end of
80 the first calendar year during which the insurer no longer holds
81 a certificate of authority to transact insurance for subject
82 lines of business in this state.
83 2.a. All revenues, assets, liabilities, losses, and
84 expenses of the corporation shall be divided into three separate
85 accounts as follows:
86 (I) A personal lines account for personal residential
87 policies issued by the corporation which provides comprehensive,
88 multiperil coverage on risks that are not located in areas
89 eligible for coverage by the Florida Windstorm Underwriting
90 Association as those areas were defined on January 1, 2002, and
91 for policies that do not provide coverage for the peril of wind
92 on risks that are located in such areas;
93 (II) A commercial lines account for commercial residential
94 and commercial nonresidential policies issued by the corporation
95 which provides coverage for basic property perils on risks that
96 are not located in areas eligible for coverage by the Florida
97 Windstorm Underwriting Association as those areas were defined
98 on January 1, 2002, and for policies that do not provide
99 coverage for the peril of wind on risks that are located in such
100 areas; and
101 (III) A coastal account for personal residential policies
102 and commercial residential and commercial nonresidential
103 property policies issued by the corporation which provides
104 coverage for the peril of wind on risks that are located in
105 areas eligible for coverage by the Florida Windstorm
106 Underwriting Association as those areas were defined on January
107 1, 2002. The corporation may offer policies that provide
108 multiperil coverage and shall offer policies that provide
109 coverage only for the peril of wind for risks located in areas
110 eligible for coverage in the coastal account. Effective July 1,
111 2014, the corporation shall cease offering new commercial
112 residential policies providing multiperil coverage and shall
113 instead continue to offer commercial residential wind-only
114 policies, and may offer commercial residential policies
115 excluding wind. The corporation may, however, continue to renew
116 a commercial residential multiperil policy on a building that is
117 insured by the corporation on June 30, 2014, under a multiperil
118 policy. In issuing multiperil coverage, the corporation may use
119 its approved policy forms and rates for the personal lines
120 account. An applicant or insured who is eligible to purchase a
121 multiperil policy from the corporation may purchase a multiperil
122 policy from an authorized insurer without prejudice to the
123 applicant’s or insured’s eligibility to prospectively purchase a
124 policy that provides coverage only for the peril of wind from
125 the corporation. An applicant or insured who is eligible for a
126 corporation policy that provides coverage only for the peril of
127 wind may elect to purchase or retain such policy and also
128 purchase or retain coverage excluding wind from an authorized
129 insurer without prejudice to the applicant’s or insured’s
130 eligibility to prospectively purchase a policy that provides
131 multiperil coverage from the corporation. It is the goal of the
132 Legislature that there be an overall average savings of 10
133 percent or more for a policyholder who currently has a wind-only
134 policy with the corporation, and an ex-wind policy with a
135 voluntary insurer or the corporation, and who obtains a
136 multiperil policy from the corporation. It is the intent of the
137 Legislature that the offer of multiperil coverage in the coastal
138 account be made and implemented in a manner that does not
139 adversely affect the tax-exempt status of the corporation or
140 creditworthiness of or security for currently outstanding
141 financing obligations or credit facilities of the coastal
142 account, the personal lines account, or the commercial lines
143 account. The coastal account must also include quota share
144 primary insurance under subparagraph (c)2. The area eligible for
145 coverage under the coastal account also includes the area within
146 Port Canaveral, which is bordered on the south by the City of
147 Cape Canaveral, bordered on the west by the Banana River, and
148 bordered on the north by Federal Government property.
149 b. The three separate accounts must be maintained as long
150 as financing obligations entered into by the Florida Windstorm
151 Underwriting Association or Residential Property and Casualty
152 Joint Underwriting Association are outstanding, in accordance
153 with the terms of the corresponding financing documents. If the
154 financing obligations are no longer outstanding, the corporation
155 may use a single account for all revenues, assets, liabilities,
156 losses, and expenses of the corporation. Consistent with this
157 subparagraph and prudent investment policies that minimize the
158 cost of carrying debt, the board shall exercise its best efforts
159 to retire existing debt or obtain the approval of necessary
160 parties to amend the terms of existing debt, so as to structure
161 the most efficient plan for consolidating the three separate
162 accounts into a single account.
163 c. Creditors of the Residential Property and Casualty Joint
164 Underwriting Association and the accounts specified in sub-sub
165 subparagraphs a.(I) and (II) may have a claim against, and
166 recourse to, those accounts and no claim against, or recourse
167 to, the account referred to in sub-sub-subparagraph a.(III).
168 Creditors of the Florida Windstorm Underwriting Association have
169 a claim against, and recourse to, the account referred to in
170 sub-sub-subparagraph a.(III) and no claim against, or recourse
171 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
172 (II).
173 d. Revenues, assets, liabilities, losses, and expenses not
174 attributable to particular accounts shall be prorated among the
175 accounts.
176 e. The Legislature finds that the revenues of the
177 corporation are revenues that are necessary to meet the
178 requirements set forth in documents authorizing the issuance of
179 bonds under this subsection.
180 f. The income of the corporation may not inure to the
181 benefit of any private person.
182 3. With respect to a deficit in an account:
183 a. After accounting for the Citizens policyholder surcharge
184 imposed under sub-subparagraph i., if the remaining projected
185 deficit incurred in the coastal account in a particular calendar
186 year:
187 (I) Is not greater than 2 percent of the aggregate
188 statewide direct written premium for the subject lines of
189 business for the prior calendar year, the entire deficit shall
190 be recovered through regular assessments of assessable insurers
191 under paragraph (q) and assessable insureds.
192 (II) Exceeds 2 percent of the aggregate statewide direct
193 written premium for the subject lines of business for the prior
194 calendar year, the corporation shall levy regular assessments on
195 assessable insurers under paragraph (q) and on assessable
196 insureds in an amount equal to the greater of 2 percent of the
197 projected deficit or 2 percent of the aggregate statewide direct
198 written premium for the subject lines of business for the prior
199 calendar year. Any remaining projected deficit shall be
200 recovered through emergency assessments under sub-subparagraph
201 d.
202 b. Each assessable insurer’s share of the amount being
203 assessed under sub-subparagraph a. must be in the proportion
204 that the assessable insurer’s direct written premium for the
205 subject lines of business for the year preceding the assessment
206 bears to the aggregate statewide direct written premium for the
207 subject lines of business for that year. The assessment
208 percentage applicable to each assessable insured is the ratio of
209 the amount being assessed under sub-subparagraph a. to the
210 aggregate statewide direct written premium for the subject lines
211 of business for the prior year. Assessments levied by the
212 corporation on assessable insurers under sub-subparagraph a.
213 must be paid as required by the corporation’s plan of operation
214 and paragraph (q). Assessments levied by the corporation on
215 assessable insureds under sub-subparagraph a. shall be collected
216 by the surplus lines agent at the time the surplus lines agent
217 collects the surplus lines tax required by s. 626.932, and paid
218 to the Florida Surplus Lines Service Office at the time the
219 surplus lines agent pays the surplus lines tax to that office.
220 Upon receipt of regular assessments from surplus lines agents,
221 the Florida Surplus Lines Service Office shall transfer the
222 assessments directly to the corporation as determined by the
223 corporation.
224 c. After accounting for the Citizens policyholder surcharge
225 imposed under sub-subparagraph i., the remaining projected
226 deficits in the personal lines account and in the commercial
227 lines account in a particular calendar year shall be recovered
228 through emergency assessments under sub-subparagraph d.
229 d. Upon a determination by the board of governors that a
230 projected deficit in an account exceeds the amount that is
231 expected to be recovered through regular assessments under sub
232 subparagraph a., plus the amount that is expected to be
233 recovered through surcharges under sub-subparagraph i., the
234 board, after verification by the office, shall levy emergency
235 assessments for as many years as necessary to cover the
236 deficits, to be collected by assessable insurers and the
237 corporation and collected from assessable insureds upon issuance
238 or renewal of policies for subject lines of business, excluding
239 National Flood Insurance policies. The amount collected in a
240 particular year must be a uniform percentage of that year’s
241 direct written premium for subject lines of business and all
242 accounts of the corporation, excluding National Flood Insurance
243 Program policy premiums, as annually determined by the board and
244 verified by the office. The office shall verify the arithmetic
245 calculations involved in the board’s determination within 30
246 days after receipt of the information on which the determination
247 was based. The office shall notify assessable insurers and the
248 Florida Surplus Lines Service Office of the date on which
249 assessable insurers shall begin to collect and assessable
250 insureds shall begin to pay such assessment. The date must be at
251 least 90 days after the date the corporation levies emergency
252 assessments pursuant to this sub-subparagraph. Notwithstanding
253 any other provision of law, the corporation and each assessable
254 insurer that writes subject lines of business shall collect
255 emergency assessments from its policyholders without such
256 obligation being affected by any credit, limitation, exemption,
257 or deferment. Emergency assessments levied by the corporation on
258 assessable insureds shall be collected by the surplus lines
259 agent at the time the surplus lines agent collects the surplus
260 lines tax required by s. 626.932 and paid to the Florida Surplus
261 Lines Service Office at the time the surplus lines agent pays
262 the surplus lines tax to that office. The emergency assessments
263 collected shall be transferred directly to the corporation on a
264 periodic basis as determined by the corporation and held by the
265 corporation solely in the applicable account. The aggregate
266 amount of emergency assessments levied for an account in any
267 calendar year may be less than but may not exceed the greater of
268 10 percent of the amount needed to cover the deficit, plus
269 interest, fees, commissions, required reserves, and other costs
270 associated with financing the original deficit, or 10 percent of
271 the aggregate statewide direct written premium for subject lines
272 of business and all accounts of the corporation for the prior
273 year, plus interest, fees, commissions, required reserves, and
274 other costs associated with financing the deficit.
275 e. The corporation may pledge the proceeds of assessments,
276 projected recoveries from the Florida Hurricane Catastrophe
277 Fund, other insurance and reinsurance recoverables, policyholder
278 surcharges and other surcharges, and other funds available to
279 the corporation as the source of revenue for and to secure bonds
280 issued under paragraph (q), bonds or other indebtedness issued
281 under subparagraph (c)3., or lines of credit or other financing
282 mechanisms issued or created under this subsection, or to retire
283 any other debt incurred as a result of deficits or events giving
284 rise to deficits, or in any other way that the board determines
285 will efficiently recover such deficits. The purpose of the lines
286 of credit or other financing mechanisms is to provide additional
287 resources to assist the corporation in covering claims and
288 expenses attributable to a catastrophe. As used in this
289 subsection, the term “assessments” includes regular assessments
290 under sub-subparagraph a. or subparagraph (q)1. and emergency
291 assessments under sub-subparagraph d. Emergency assessments
292 collected under sub-subparagraph d. are not part of an insurer’s
293 rates, are not premium, and are not subject to premium tax,
294 fees, or commissions; however, failure to pay the emergency
295 assessment shall be treated as failure to pay premium. The
296 emergency assessments shall continue as long as any bonds issued
297 or other indebtedness incurred with respect to a deficit for
298 which the assessment was imposed remain outstanding, unless
299 adequate provision has been made for the payment of such bonds
300 or other indebtedness pursuant to the documents governing such
301 bonds or indebtedness.
302 f. As used in this subsection for purposes of any deficit
303 incurred on or after January 25, 2007, the term “subject lines
304 of business” means insurance written by assessable insurers or
305 procured by assessable insureds for all property and casualty
306 lines of business in this state, but not including workers’
307 compensation or medical malpractice. As used in this sub
308 subparagraph, the term “property and casualty lines of business”
309 includes all lines of business identified on Form 2, Exhibit of
310 Premiums and Losses, in the annual statement required of
311 authorized insurers under s. 624.424 and any rule adopted under
312 this section, except for those lines identified as accident and
313 health insurance and except for policies written under the
314 National Flood Insurance Program or the Federal Crop Insurance
315 Program. For purposes of this sub-subparagraph, the term
316 “workers’ compensation” includes both workers’ compensation
317 insurance and excess workers’ compensation insurance.
318 g. The Florida Surplus Lines Service Office shall determine
319 annually the aggregate statewide written premium in subject
320 lines of business procured by assessable insureds and report
321 that information to the corporation in a form and at a time the
322 corporation specifies to ensure that the corporation can meet
323 the requirements of this subsection and the corporation’s
324 financing obligations.
325 h. The Florida Surplus Lines Service Office shall verify
326 the proper application by surplus lines agents of assessment
327 percentages for regular assessments and emergency assessments
328 levied under this subparagraph on assessable insureds and assist
329 the corporation in ensuring the accurate, timely collection and
330 payment of assessments by surplus lines agents as required by
331 the corporation.
332 i. Upon determination by the board of governors that an
333 account has a projected deficit, the board shall levy a Citizens
334 policyholder surcharge against all policyholders of the
335 corporation.
336 (I) The surcharge shall be levied as a uniform percentage
337 of the premium for the policy of up to 15 percent of such
338 premium, which funds shall be used to offset the deficit, as
339 follows:
340 (A) If the total number of policyholders of the corporation
341 is less than 1 million, a surcharge of 15 percent of the premium
342 shall be levied.
343 (B) If the total number of policyholders of the corporation
344 is at least 1 million but less than 1.5 million policyholders, a
345 surcharge of 20 percent of the premium shall be levied.
346 (C) If the total number of policyholders of the corporation
347 is at least 1.5 million, a surcharge of 25 percent of the
348 premium shall be levied.
349 (II) The surcharge is payable upon cancellation or
350 termination of the policy, upon renewal of the policy, or upon
351 issuance of a new policy by the corporation within the first 12
352 months after the date of the levy or the period of time
353 necessary to fully collect the surcharge amount.
354 (III) The corporation may not levy any regular assessments
355 under paragraph (q) pursuant to sub-subparagraph a. or sub
356 subparagraph b. with respect to a particular year’s deficit
357 until the corporation has first levied the full amount of the
358 surcharge authorized by this sub-subparagraph.
359 (IV) The surcharge is not considered premium and is not
360 subject to commissions, fees, or premium taxes. However, failure
361 to pay the surcharge shall be treated as failure to pay premium.
362 j. If the amount of any assessments or surcharges collected
363 from corporation policyholders, assessable insurers or their
364 policyholders, or assessable insureds exceeds the amount of the
365 deficits, such excess amounts shall be remitted to and retained
366 by the corporation in a reserve to be used by the corporation,
367 as determined by the board of governors and approved by the
368 office, to pay claims or reduce any past, present, or future
369 plan-year deficits or to reduce outstanding debt.
370 4. After accounting for the rate limitations specified in
371 subparagraph (n)6., any remaining deficit in legal expenses must
372 be recovered through an annual Citizens policyholder legal
373 expenses surcharge against all policyholders of the corporation.
374 The surcharge must be levied as a uniform percentage of the
375 premium for the policy. The surcharge is payable upon issuance
376 of a new policy by the corporation and upon each subsequent
377 renewal of the policy. The surcharge is not considered premium
378 and is not subject to commissions, fees, or premium taxes.
379 However, failure to pay the surcharge must be treated as failure
380 to pay premium.
381 (c) The corporation’s plan of operation:
382 1. Must provide for adoption of residential property and
383 casualty insurance policy forms and commercial residential and
384 nonresidential property insurance forms, which must be approved
385 by the office before use. The corporation shall adopt the
386 following policy forms:
387 a. Standard personal lines policy forms that are
388 comprehensive multiperil policies providing full coverage of a
389 residential property equivalent to the coverage provided in the
390 private insurance market under an HO-3, HO-4, or HO-6 policy.
391 b. Basic personal lines policy forms that are policies
392 similar to an HO-8 policy or a dwelling fire policy that provide
393 coverage meeting the requirements of the secondary mortgage
394 market, but which is more limited than the coverage under a
395 standard policy.
396 c. Commercial lines residential and nonresidential policy
397 forms that are generally similar to the basic perils of full
398 coverage obtainable for commercial residential structures and
399 commercial nonresidential structures in the admitted voluntary
400 market.
401 d. Personal lines and commercial lines residential property
402 insurance forms that cover the peril of wind only. The forms are
403 applicable only to residential properties located in areas
404 eligible for coverage under the coastal account referred to in
405 sub-subparagraph (b)2.a.
406 e. Commercial lines nonresidential property insurance forms
407 that cover the peril of wind only. The forms are applicable only
408 to nonresidential properties located in areas eligible for
409 coverage under the coastal account referred to in sub
410 subparagraph (b)2.a.
411 f. The corporation may adopt variations of the policy forms
412 listed in sub-subparagraphs a.-e. which contain more restrictive
413 coverage.
414 g. Effective January 1, 2013, the corporation shall offer a
415 basic personal lines policy similar to an HO-8 policy with
416 dwelling repair based on common construction materials and
417 methods.
418 2. Must provide that the corporation adopt a program in
419 which the corporation and authorized insurers enter into quota
420 share primary insurance agreements for hurricane coverage, as
421 defined in s. 627.4025(2)(a), for eligible risks, and adopt
422 property insurance forms for eligible risks which cover the
423 peril of wind only.
424 a. As used in this subsection, the term:
425 (I) “Quota share primary insurance” means an arrangement in
426 which the primary hurricane coverage of an eligible risk is
427 provided in specified percentages by the corporation and an
428 authorized insurer. The corporation and authorized insurer are
429 each solely responsible for a specified percentage of hurricane
430 coverage of an eligible risk as set forth in a quota share
431 primary insurance agreement between the corporation and an
432 authorized insurer and the insurance contract. The
433 responsibility of the corporation or authorized insurer to pay
434 its specified percentage of hurricane losses of an eligible
435 risk, as set forth in the agreement, may not be altered by the
436 inability of the other party to pay its specified percentage of
437 losses. Eligible risks that are provided hurricane coverage
438 through a quota share primary insurance arrangement must be
439 provided policy forms that set forth the obligations of the
440 corporation and authorized insurer under the arrangement,
441 clearly specify the percentages of quota share primary insurance
442 provided by the corporation and authorized insurer, and
443 conspicuously and clearly state that the authorized insurer and
444 the corporation may not be held responsible beyond their
445 specified percentage of coverage of hurricane losses.
446 (II) “Eligible risks” means personal lines residential and
447 commercial lines residential risks that meet the underwriting
448 criteria of the corporation and are located in areas that were
449 eligible for coverage by the Florida Windstorm Underwriting
450 Association on January 1, 2002.
451 b. The corporation may enter into quota share primary
452 insurance agreements with authorized insurers at corporation
453 coverage levels of 90 percent and 50 percent.
454 c. If the corporation determines that additional coverage
455 levels are necessary to maximize participation in quota share
456 primary insurance agreements by authorized insurers, the
457 corporation may establish additional coverage levels. However,
458 the corporation’s quota share primary insurance coverage level
459 may not exceed 90 percent.
460 d. Any quota share primary insurance agreement entered into
461 between an authorized insurer and the corporation must provide
462 for a uniform specified percentage of coverage of hurricane
463 losses, by county or territory as set forth by the corporation
464 board, for all eligible risks of the authorized insurer covered
465 under the agreement.
466 e. Any quota share primary insurance agreement entered into
467 between an authorized insurer and the corporation is subject to
468 review and approval by the office. However, such agreement shall
469 be authorized only as to insurance contracts entered into
470 between an authorized insurer and an insured who is already
471 insured by the corporation for wind coverage.
472 f. For all eligible risks covered under quota share primary
473 insurance agreements, the exposure and coverage levels for both
474 the corporation and authorized insurers shall be reported by the
475 corporation to the Florida Hurricane Catastrophe Fund. For all
476 policies of eligible risks covered under such agreements, the
477 corporation and the authorized insurer must maintain complete
478 and accurate records for the purpose of exposure and loss
479 reimbursement audits as required by fund rules. The corporation
480 and the authorized insurer shall each maintain duplicate copies
481 of policy declaration pages and supporting claims documents.
482 g. The corporation board shall establish in its plan of
483 operation standards for quota share agreements which ensure that
484 there is no discriminatory application among insurers as to the
485 terms of the agreements, pricing of the agreements, incentive
486 provisions if any, and consideration paid for servicing policies
487 or adjusting claims.
488 h. The quota share primary insurance agreement between the
489 corporation and an authorized insurer must set forth the
490 specific terms under which coverage is provided, including, but
491 not limited to, the sale and servicing of policies issued under
492 the agreement by the insurance agent of the authorized insurer
493 producing the business, the reporting of information concerning
494 eligible risks, the payment of premium to the corporation, and
495 arrangements for the adjustment and payment of hurricane claims
496 incurred on eligible risks by the claims adjuster and personnel
497 of the authorized insurer. Entering into a quota sharing
498 insurance agreement between the corporation and an authorized
499 insurer is voluntary and at the discretion of the authorized
500 insurer.
501 3. May provide that the corporation may employ or otherwise
502 contract with individuals or other entities to provide
503 administrative or professional services that may be appropriate
504 to effectuate the plan. The corporation may borrow funds by
505 issuing bonds or by incurring other indebtedness, and shall have
506 other powers reasonably necessary to effectuate the requirements
507 of this subsection, including, without limitation, the power to
508 issue bonds and incur other indebtedness in order to refinance
509 outstanding bonds or other indebtedness. The corporation may
510 seek judicial validation of its bonds or other indebtedness
511 under chapter 75. The corporation may issue bonds or incur other
512 indebtedness, or have bonds issued on its behalf by a unit of
513 local government pursuant to subparagraph (q)2. in the absence
514 of a hurricane or other weather-related event, upon a
515 determination by the corporation, subject to approval by the
516 office, that such action would enable it to efficiently meet the
517 financial obligations of the corporation and that such
518 financings are reasonably necessary to effectuate the
519 requirements of this subsection. The corporation may take all
520 actions needed to facilitate tax-free status for such bonds or
521 indebtedness, including formation of trusts or other affiliated
522 entities. The corporation may pledge assessments, projected
523 recoveries from the Florida Hurricane Catastrophe Fund, other
524 reinsurance recoverables, policyholder surcharges and other
525 surcharges, and other funds available to the corporation as
526 security for bonds or other indebtedness. In recognition of s.
527 10, Art. I of the State Constitution, prohibiting the impairment
528 of obligations of contracts, it is the intent of the Legislature
529 that no action be taken whose purpose is to impair any bond
530 indenture or financing agreement or any revenue source committed
531 by contract to such bond or other indebtedness.
532 4. Must require that the corporation operate subject to the
533 supervision and approval of a board of governors consisting of
534 nine individuals who are residents of this state and who are
535 from different geographical areas of this the state, one of whom
536 is appointed by the Governor and serves solely to advocate on
537 behalf of the consumer. The appointment of a consumer
538 representative by the Governor is deemed to be within the scope
539 of the exemption provided in s. 112.313(7)(b) and is in addition
540 to the appointments authorized under sub-subparagraph a.
541 a. The Governor, the Chief Financial Officer, the President
542 of the Senate, and the Speaker of the House of Representatives
543 shall each appoint two members of the board. At least one of the
544 two members appointed by each appointing officer must have
545 demonstrated expertise in insurance and be deemed to be within
546 the scope of the exemption provided in s. 112.313(7)(b). The
547 Chief Financial Officer shall designate one of the appointees as
548 chair. All board members serve at the pleasure of the appointing
549 officer. All members of the board are subject to removal at will
550 by the officers who appointed them. All board members, including
551 the chair, must be appointed to serve for 3-year terms beginning
552 annually on a date designated by the plan. However, for the
553 first term beginning on or after July 1, 2009, each appointing
554 officer shall appoint one member of the board for a 2-year term
555 and one member for a 3-year term. A board vacancy shall be
556 filled for the unexpired term by the appointing officer. The
557 Chief Financial Officer shall appoint a technical advisory group
558 to provide information and advice to the board in connection
559 with the board’s duties under this subsection. The executive
560 director and senior managers of the corporation shall be engaged
561 by the board and serve at the pleasure of the board. Any
562 executive director appointed on or after July 1, 2006, is
563 subject to confirmation by the Senate. The executive director is
564 responsible for employing other staff as the corporation may
565 require, subject to review and concurrence by the board.
566 b. The board shall create a Market Accountability Advisory
567 Committee to assist the corporation in developing awareness of
568 its rates and its customer and agent service levels in
569 relationship to the voluntary market insurers writing similar
570 coverage.
571 (I) The members of the advisory committee consist of the
572 following 11 persons, one of whom must be elected chair by the
573 members of the committee: four representatives, one appointed by
574 the Florida Association of Insurance Agents, one by the Florida
575 Association of Insurance and Financial Advisors, one by the
576 Professional Insurance Agents of Florida, and one by the Latin
577 American Association of Insurance Agencies; three
578 representatives appointed by the insurers with the three highest
579 voluntary market share of residential property insurance
580 business in this the state; one representative from the Office
581 of Insurance Regulation; one consumer appointed by the board who
582 is insured by the corporation at the time of appointment to the
583 committee; one representative appointed by the Florida
584 Association of Realtors; and one representative appointed by the
585 Florida Bankers Association. All members shall be appointed to
586 3-year terms and may serve for consecutive terms.
587 (II) The committee shall report to the corporation at each
588 board meeting on insurance market issues that which may include
589 rates and rate competition with the voluntary market; service,
590 including policy issuance, claims processing, and general
591 responsiveness to policyholders, applicants, and agents; and
592 matters relating to depopulation.
593 5. Must provide a procedure for determining the eligibility
594 of a risk for coverage, as follows:
595 a. Subject to s. 627.3517, with respect to personal lines
596 residential risks, if the risk is offered coverage from an
597 authorized insurer at the insurer’s approved rate under a
598 standard policy including wind coverage or, if consistent with
599 the insurer’s underwriting rules as filed with the office, a
600 basic policy including wind coverage, for a new application to
601 the corporation for coverage, the risk is not eligible for any
602 policy issued by the corporation unless the premium for coverage
603 from the authorized insurer is more than 15 percent greater than
604 the premium for comparable coverage from the corporation.
605 Whenever an offer of coverage for a personal lines residential
606 risk is received for a policyholder of the corporation at
607 renewal from an authorized insurer, if the offer is equal to or
608 less than the corporation’s renewal premium for comparable
609 coverage, the risk is not eligible for coverage with the
610 corporation unless the premium for comparable coverage from the
611 authorized insurer is more than 15 percent greater than the
612 premium under subparagraph (n)1. for personal residential
613 properties that are not owner-occupied. If the risk is not able
614 to obtain such offer, the risk is eligible for a standard policy
615 including wind coverage or a basic policy including wind
616 coverage issued by the corporation; however, if the risk could
617 not be insured under a standard policy including wind coverage
618 regardless of market conditions, the risk is eligible for a
619 basic policy including wind coverage unless rejected under
620 subparagraph 8. However, a policyholder removed from the
621 corporation through an assumption agreement remains eligible for
622 coverage from the corporation until the end of the assumption
623 period. The corporation shall determine the type of policy to be
624 provided on the basis of objective standards specified in the
625 underwriting manual and based on generally accepted underwriting
626 practices.
627 (I) If the risk accepts an offer of coverage through the
628 market assistance plan or through a mechanism established by the
629 corporation other than a plan established by s. 627.3518, before
630 a policy is issued to the risk by the corporation or during the
631 first 30 days of coverage by the corporation, and the producing
632 agent who submitted the application to the plan or to the
633 corporation is not currently appointed by the insurer, the
634 insurer shall:
635 (A) Pay to the producing agent of record of the policy for
636 the first year, an amount that is the greater of the insurer’s
637 usual and customary commission for the type of policy written or
638 a fee equal to the usual and customary commission of the
639 corporation; or
640 (B) Offer to allow the producing agent of record of the
641 policy to continue servicing the policy for at least 1 year and
642 offer to pay the agent the greater of the insurer’s or the
643 corporation’s usual and customary commission for the type of
644 policy written.
645
646 If the producing agent is unwilling or unable to accept
647 appointment, the new insurer shall pay the agent in accordance
648 with sub-sub-sub-subparagraph (A).
649 (II) If the corporation enters into a contractual agreement
650 for a take-out plan, the producing agent of record of the
651 corporation policy is entitled to retain any unearned commission
652 on the policy, and the insurer shall:
653 (A) Pay to the producing agent of record, for the first
654 year, an amount that is the greater of the insurer’s usual and
655 customary commission for the type of policy written or a fee
656 equal to the usual and customary commission of the corporation;
657 or
658 (B) Offer to allow the producing agent of record to
659 continue servicing the policy for at least 1 year and offer to
660 pay the agent the greater of the insurer’s or the corporation’s
661 usual and customary commission for the type of policy written.
662
663 If the producing agent is unwilling or unable to accept
664 appointment, the new insurer shall pay the agent in accordance
665 with sub-sub-sub-subparagraph (A).
666 b. With respect to commercial lines residential risks, for
667 a new application to the corporation for coverage, if the risk
668 is offered coverage under a policy including wind coverage from
669 an authorized insurer at its approved rate, the risk is not
670 eligible for a policy issued by the corporation unless the
671 premium for coverage from the authorized insurer is more than 15
672 percent greater than the premium for comparable coverage from
673 the corporation. Whenever an offer of coverage for a commercial
674 lines residential risk is received for a policyholder of the
675 corporation at renewal from an authorized insurer, if the offer
676 is equal to or less than the corporation’s renewal premium for
677 comparable coverage, the risk is not eligible for coverage with
678 the corporation. If the risk is not able to obtain any such
679 offer, the risk is eligible for a policy including wind coverage
680 issued by the corporation. However, a policyholder removed from
681 the corporation through an assumption agreement remains eligible
682 for coverage from the corporation until the end of the
683 assumption period.
684 (I) If the risk accepts an offer of coverage through the
685 market assistance plan or through a mechanism established by the
686 corporation other than a plan established by s. 627.3518, before
687 a policy is issued to the risk by the corporation or during the
688 first 30 days of coverage by the corporation, and the producing
689 agent who submitted the application to the plan or the
690 corporation is not currently appointed by the insurer, the
691 insurer shall:
692 (A) Pay to the producing agent of record of the policy, for
693 the first year, an amount that is the greater of the insurer’s
694 usual and customary commission for the type of policy written or
695 a fee equal to the usual and customary commission of the
696 corporation; or
697 (B) Offer to allow the producing agent of record of the
698 policy to continue servicing the policy for at least 1 year and
699 offer to pay the agent the greater of the insurer’s or the
700 corporation’s usual and customary commission for the type of
701 policy written.
702
703 If the producing agent is unwilling or unable to accept
704 appointment, the new insurer shall pay the agent in accordance
705 with sub-sub-sub-subparagraph (A).
706 (II) If the corporation enters into a contractual agreement
707 for a take-out plan, the producing agent of record of the
708 corporation policy is entitled to retain any unearned commission
709 on the policy, and the insurer shall:
710 (A) Pay to the producing agent of record, for the first
711 year, an amount that is the greater of the insurer’s usual and
712 customary commission for the type of policy written or a fee
713 equal to the usual and customary commission of the corporation;
714 or
715 (B) Offer to allow the producing agent of record to
716 continue servicing the policy for at least 1 year and offer to
717 pay the agent the greater of the insurer’s or the corporation’s
718 usual and customary commission for the type of policy written.
719
720 If the producing agent is unwilling or unable to accept
721 appointment, the new insurer shall pay the agent in accordance
722 with sub-sub-sub-subparagraph (A).
723 c. For purposes of determining comparable coverage under
724 sub-subparagraphs a. and b., the comparison must be based on
725 those forms and coverages that are reasonably comparable. The
726 corporation may rely on a determination of comparable coverage
727 and premium made by the producing agent who submits the
728 application to the corporation, made in the agent’s capacity as
729 the corporation’s agent. A comparison may be made solely of the
730 premium with respect to the main building or structure only on
731 the following basis: the same coverage A or other building
732 limits; the same percentage hurricane deductible that applies on
733 an annual basis or that applies to each hurricane for commercial
734 residential property; the same percentage of ordinance and law
735 coverage, if the same limit is offered by both the corporation
736 and the authorized insurer; the same mitigation credits, to the
737 extent the same types of credits are offered both by the
738 corporation and the authorized insurer; the same method for loss
739 payment, such as replacement cost or actual cash value, if the
740 same method is offered both by the corporation and the
741 authorized insurer in accordance with underwriting rules; and
742 any other form or coverage that is reasonably comparable as
743 determined by the board. If an application is submitted to the
744 corporation for wind-only coverage in the coastal account, the
745 premium for the corporation’s wind-only policy plus the premium
746 for the ex-wind policy that is offered by an authorized insurer
747 to the applicant must be compared to the premium for multiperil
748 coverage offered by an authorized insurer, subject to the
749 standards for comparison specified in this subparagraph. If the
750 corporation or the applicant requests from the authorized
751 insurer a breakdown of the premium of the offer by types of
752 coverage so that a comparison may be made by the corporation or
753 its agent and the authorized insurer refuses or is unable to
754 provide such information, the corporation may treat the offer as
755 not being an offer of coverage from an authorized insurer at the
756 insurer’s approved rate.
757 6. Must include rules for classifications of risks and
758 rates.
759 7. Must provide that if premium and investment income for
760 an account attributable to a particular calendar year are in
761 excess of projected losses and expenses for the account
762 attributable to that year, such excess shall be held in surplus
763 in the account. Such surplus must be available to defray
764 deficits in that account as to future years and used for that
765 purpose before assessing assessable insurers and assessable
766 insureds as to any calendar year.
767 8. Must provide objective criteria and procedures to be
768 uniformly applied to all applicants in determining whether an
769 individual risk is so hazardous as to be uninsurable. In making
770 this determination and in establishing the criteria and
771 procedures, the following must be considered:
772 a. Whether the likelihood of a loss for the individual risk
773 is substantially higher than for other risks of the same class;
774 and
775 b. Whether the uncertainty associated with the individual
776 risk is such that an appropriate premium cannot be determined.
777
778 The acceptance or rejection of a risk by the corporation shall
779 be construed as the private placement of insurance, and the
780 provisions of chapter 120 does do not apply.
781 9. Must provide that the corporation make its best efforts
782 to procure catastrophe reinsurance at reasonable rates, to cover
783 its projected 100-year probable maximum loss as determined by
784 the board of governors.
785 10. The policies issued by the corporation must provide
786 that if the corporation or the market assistance plan obtains an
787 offer from an authorized insurer to cover the risk at its
788 approved rates, the risk is no longer eligible for renewal
789 through the corporation, except as otherwise provided in this
790 subsection.
791 11. Corporation policies and applications must include a
792 notice that the corporation policy could, under this section, be
793 replaced with a policy issued by an authorized insurer which
794 does not provide coverage identical to the coverage provided by
795 the corporation. The notice must also specify that acceptance of
796 corporation coverage creates a conclusive presumption that the
797 applicant or policyholder is aware of this potential.
798 12. May establish, subject to approval by the office,
799 different eligibility requirements and operational procedures
800 for any line or type of coverage for any specified county or
801 area if the board determines that such changes are justified due
802 to the voluntary market being sufficiently stable and
803 competitive in such area or for such line or type of coverage
804 and that consumers who, in good faith, are unable to obtain
805 insurance through the voluntary market through ordinary methods
806 continue to have access to coverage from the corporation. If
807 coverage is sought in connection with a real property transfer,
808 the requirements and procedures may not provide an effective
809 date of coverage later than the date of the closing of the
810 transfer as established by the transferor, the transferee, and,
811 if applicable, the lender.
812 13. Must provide that, with respect to the coastal account,
813 any assessable insurer with a surplus as to policyholders of $25
814 million or less writing 25 percent or more of its total
815 countrywide property insurance premiums in this state may
816 petition the office, within the first 90 days of each calendar
817 year, to qualify as a limited apportionment company. A regular
818 assessment levied by the corporation on a limited apportionment
819 company for a deficit incurred by the corporation for the
820 coastal account may be paid to the corporation on a monthly
821 basis as the assessments are collected by the limited
822 apportionment company from its insureds, but a limited
823 apportionment company must begin collecting the regular
824 assessments not later than 90 days after the regular assessments
825 are levied by the corporation, and the regular assessments must
826 be paid in full within 15 months after being levied by the
827 corporation. A limited apportionment company shall collect from
828 its policyholders any emergency assessment imposed under sub
829 subparagraph (b)3.d. The plan must provide that, if the office
830 determines that any regular assessment will result in an
831 impairment of the surplus of a limited apportionment company,
832 the office may direct that all or part of such assessment be
833 deferred as provided in subparagraph (q)4. However, an emergency
834 assessment to be collected from policyholders under sub
835 subparagraph (b)3.d. may not be limited or deferred.
836 14. Must provide that the corporation appoint as its
837 licensed agents only those agents who throughout such
838 appointments also hold an appointment as defined in s. 626.015
839 by an insurer who is authorized to write and is actually writing
840 or renewing personal lines residential property coverage,
841 commercial residential property coverage, or commercial
842 nonresidential property coverage within this the state.
843 15. Must provide a premium payment plan option to its
844 policyholders which, at a minimum, allows for quarterly and
845 semiannual payment of premiums. A monthly payment plan may, but
846 is not required to, be offered.
847 16. Must limit coverage on mobile homes or manufactured
848 homes built before 1994 to actual cash value of the dwelling
849 rather than replacement costs of the dwelling.
850 17. Must provide coverage for manufactured or mobile home
851 dwellings. Such coverage must also include the following
852 attached structures:
853 a. Screened enclosures that are aluminum framed or screened
854 enclosures that are not covered by the same or substantially the
855 same materials as those of the primary dwelling;
856 b. Carports that are aluminum or carports that are not
857 covered by the same or substantially the same materials as those
858 of the primary dwelling; and
859 c. Patios that have a roof covering that is constructed of
860 materials that are not the same or substantially the same
861 materials as those of the primary dwelling.
862
863 The corporation shall make available a policy for mobile homes
864 or manufactured homes for a minimum insured value of at least
865 $3,000.
866 18. May provide such limits of coverage as the board
867 determines, consistent with the requirements of this subsection.
868 19. May require commercial property to meet specified
869 hurricane mitigation construction features as a condition of
870 eligibility for coverage.
871 20. Must provide that new or renewal policies issued by the
872 corporation on or after January 1, 2012, which cover sinkhole
873 loss do not include coverage for any loss to appurtenant
874 structures, driveways, sidewalks, decks, or patios that are
875 directly or indirectly caused by sinkhole activity. The
876 corporation shall exclude such coverage using a notice of
877 coverage change, which may be included with the policy renewal,
878 and not by issuance of a notice of nonrenewal of the excluded
879 coverage upon renewal of the current policy.
880 21. As of January 1, 2012, must require that the agent
881 obtain from an applicant for coverage from the corporation an
882 acknowledgment signed by the applicant, which includes, at a
883 minimum, the following statement:
884
885 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
886 AND ASSESSMENT LIABILITY:
887
888 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
889 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
890 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
891 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
892 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
893 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
894 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
895 LEGISLATURE.
896 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
897 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
898 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
899 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN
900 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
901 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
902 ARE REGULATED AND APPROVED BY THE STATE.
903 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
904 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
905 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
906 FLORIDA LEGISLATURE.
907 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
908 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
909 STATE OF FLORIDA.
910
911 a. The corporation shall maintain, in electronic format or
912 otherwise, a copy of the applicant’s signed acknowledgment and
913 provide a copy of the statement to the policyholder as part of
914 the first renewal after the effective date of this subparagraph.
915 b. The signed acknowledgment form creates a conclusive
916 presumption that the policyholder understood and accepted his or
917 her potential surcharge and assessment liability as a
918 policyholder of the corporation.
919 22. The corporation shall pay a producing agent of record a
920 reasonable commission not to exceed the average of commissions
921 paid in the preceding year by the 20 admitted insurers writing
922 the greatest market share of property insurance in this state.
923 (n)1. Rates for coverage provided by the corporation must
924 be actuarially sound and subject to s. 627.062, except as
925 otherwise provided in this paragraph. The corporation shall file
926 its recommended rates with the office at least annually. The
927 corporation shall provide any additional information regarding
928 the rates which the office requires. The office shall consider
929 the recommendations of the board and issue a final order
930 establishing the rates for the corporation within 45 days after
931 the recommended rates are filed. The corporation may not pursue
932 an administrative challenge or judicial review of the final
933 order of the office.
934 2. In addition to the rates otherwise determined pursuant
935 to this paragraph, the corporation shall impose and collect an
936 amount equal to the premium tax provided in s. 624.509 to
937 augment the financial resources of the corporation.
938 3. After The public hurricane loss-projection model under
939 s. 627.06281, if has been found to be accurate and reliable by
940 the Florida Commission on Hurricane Loss Projection Methodology,
941 the model shall be considered when establishing the windstorm
942 portion of the corporation’s rates. The corporation may use the
943 public model results in combination with the results of private
944 models to calculate rates for the windstorm portion of the
945 corporation’s rates. This subparagraph does not require or allow
946 the corporation to adopt rates lower than the rates otherwise
947 required or allowed by this paragraph.
948 4. The rate filings for the corporation which were approved
949 by the office and took effect January 1, 2007, are rescinded,
950 except for those rates that were lowered. As soon as possible,
951 the corporation shall begin using the lower rates that were in
952 effect on December 31, 2006, and provide refunds to
953 policyholders who paid higher rates as a result of that rate
954 filing. The rates in effect on December 31, 2006, remain in
955 effect for the 2007 and 2008 calendar years except for any rate
956 change that results in a lower rate. The next rate change that
957 may increase rates shall take effect pursuant to a new rate
958 filing recommended by the corporation and established by the
959 office, subject to this paragraph.
960 5. Beginning on July 15, 2009, and annually thereafter, the
961 corporation must make a recommended actuarially sound rate
962 filing for each personal and commercial line of business it
963 writes, to be effective no earlier than January 1, 2010.
964 6. Beginning on or after January 1, 2022 January 1, 2010,
965 and notwithstanding the board’s recommended rates and the
966 office’s final order regarding the corporation’s filed rates
967 under subparagraph 1., the corporation shall annually implement
968 a rate increase which, except for sinkhole coverage, does not
969 exceed 10 percent for any single policy renewed issued by the
970 corporation covering an owner-occupied personal residential
971 property that has a dwelling replacement cost less than $700,000
972 or that is a single condominium unit that has a combined
973 dwelling and contents replacement cost less than $700,000,
974 excluding coverage changes and surcharges, if the policy was
975 initially issued by the corporation and the dwelling was
976 determined by the corporation to be owner-occupied before July
977 1, 2021.
978 7. The corporation may also implement an increase to
979 reflect the effect on the corporation of the cash buildup factor
980 pursuant to s. 215.555(5)(b).
981 8. The corporation’s implementation of rates as prescribed
982 in subparagraph 6. shall cease for any line of business written
983 by the corporation upon the corporation’s implementation of
984 actuarially sound rates. Thereafter, the corporation shall
985 annually make a recommended actuarially sound rate filing for
986 each commercial and personal line of business the corporation
987 writes.
988 (q)1. The corporation shall certify to the office its needs
989 for annual assessments as to a particular calendar year, and for
990 any interim assessments that it deems to be necessary to sustain
991 operations as to a particular year pending the receipt of annual
992 assessments. Upon verification, the office shall approve such
993 certification, and the corporation shall levy such annual or
994 interim assessments. Such assessments shall be prorated as
995 provided in paragraph (b). The corporation shall take all
996 reasonable and prudent steps necessary to collect the amount of
997 assessments due from each assessable insurer, including, if
998 prudent, filing suit to collect the assessments, and the office
999 may provide such assistance to the corporation it deems
1000 appropriate. If the corporation is unable to collect an
1001 assessment from any assessable insurer, the uncollected
1002 assessments shall be levied as an additional assessment against
1003 the assessable insurers and any assessable insurer required to
1004 pay an additional assessment as a result of such failure to pay
1005 shall have a cause of action against such nonpaying assessable
1006 insurer. Assessments shall be included as an appropriate factor
1007 in the making of rates. The failure of a surplus lines agent to
1008 collect and remit any regular or emergency assessment levied by
1009 the corporation is considered to be a violation of s. 626.936
1010 and subjects the surplus lines agent to the penalties provided
1011 in that section.
1012 2. The governing body of any unit of local government, any
1013 residents of which are insured by the corporation, may issue
1014 bonds as defined in s. 125.013 or s. 166.101 from time to time
1015 to fund an assistance program, in conjunction with the
1016 corporation, for the purpose of defraying deficits of the
1017 corporation. In order to avoid needless and indiscriminate
1018 proliferation, duplication, and fragmentation of such assistance
1019 programs, any unit of local government, any residents of which
1020 are insured by the corporation, may provide for the payment of
1021 losses, regardless of whether or not the losses occurred within
1022 or outside of the territorial jurisdiction of the local
1023 government. Revenue bonds under this subparagraph may not be
1024 issued until validated pursuant to chapter 75, unless a state of
1025 emergency is declared by executive order or proclamation of the
1026 Governor pursuant to s. 252.36 making such findings as are
1027 necessary to determine that it is in the best interests of, and
1028 necessary for, the protection of the public health, safety, and
1029 general welfare of residents of this state and declaring it an
1030 essential public purpose to permit certain municipalities or
1031 counties to issue such bonds as will permit relief to claimants
1032 and policyholders of the corporation. Any such unit of local
1033 government may enter into such contracts with the corporation
1034 and with any other entity created pursuant to this subsection as
1035 are necessary to carry out this paragraph. Any bonds issued
1036 under this subparagraph shall be payable from and secured by
1037 moneys received by the corporation from emergency assessments
1038 under sub-subparagraph (b)3.d., and assigned and pledged to or
1039 on behalf of the unit of local government for the benefit of the
1040 holders of such bonds. The funds, credit, property, and taxing
1041 power of the state or of the unit of local government may shall
1042 not be pledged for the payment of such bonds.
1043 3.a. The corporation shall adopt one or more programs
1044 subject to approval by the office for the reduction of both new
1045 and renewal writings in the corporation. Beginning January 1,
1046 2008, any program the corporation adopts for the payment of
1047 bonuses to an insurer for each risk the insurer removes from the
1048 corporation shall comply with s. 627.3511(2) and may not exceed
1049 the amount referenced in s. 627.3511(2) for each risk removed.
1050 The corporation may consider any prudent and not unfairly
1051 discriminatory approach to reducing corporation writings, and
1052 may adopt a credit against assessment liability or other
1053 liability that provides an incentive for insurers to take risks
1054 out of the corporation and to keep risks out of the corporation
1055 by maintaining or increasing voluntary writings in counties or
1056 areas in which corporation risks are highly concentrated and a
1057 program to provide a formula under which an insurer voluntarily
1058 taking risks out of the corporation by maintaining or increasing
1059 voluntary writings will be relieved wholly or partially from
1060 assessments under sub-subparagraph (b)3.a. However, any “take
1061 out bonus” or payment to an insurer must be conditioned on the
1062 property being insured for at least 5 years by the insurer,
1063 unless canceled or nonrenewed by the policyholder. If the policy
1064 is canceled or nonrenewed by the policyholder before the end of
1065 the 5-year period, the amount of the take-out bonus must be
1066 prorated for the time period the policy was insured. When the
1067 corporation enters into a contractual agreement for a take-out
1068 plan, the producing agent of record of the corporation policy is
1069 entitled to retain any unearned commission on such policy, and
1070 the insurer shall either:
1071 (I) Pay to the producing agent of record of the policy, for
1072 the first year, an amount which is the greater of the insurer’s
1073 usual and customary commission for the type of policy written or
1074 a policy fee equal to the usual and customary commission of the
1075 corporation; or
1076 (II) Offer to allow the producing agent of record of the
1077 policy to continue servicing the policy for a period of not less
1078 than 1 year and offer to pay the agent the insurer’s usual and
1079 customary commission for the type of policy written. If the
1080 producing agent is unwilling or unable to accept appointment by
1081 the new insurer, the new insurer shall pay the agent in
1082 accordance with sub-sub-subparagraph (I).
1083 b. Any credit or exemption from regular assessments adopted
1084 under this subparagraph shall last no longer than the 3 years
1085 following the cancellation or expiration of the policy by the
1086 corporation. With the approval of the office, the board may
1087 extend such credits for an additional year if the insurer
1088 guarantees an additional year of renewability for all policies
1089 removed from the corporation, or for 2 additional years if the
1090 insurer guarantees 2 additional years of renewability for all
1091 policies so removed.
1092 c. There shall be no credit, limitation, exemption, or
1093 deferment from emergency assessments to be collected from
1094 policyholders pursuant to sub-subparagraph (b)3.d.
1095 d. Notwithstanding any other provision of law, for purposes
1096 of a depopulation, take-out, or keep-out program adopted by the
1097 corporation, including an initial or renewal offer of coverage
1098 made to a policyholder removed from the corporation pursuant to
1099 such program, an eligible surplus lines insurer may participate
1100 in the program in the same manner and on the same terms as an
1101 authorized insurer, except as provided under this sub
1102 subparagraph.
1103 (I) To qualify for participation, the surplus lines insurer
1104 must first obtain approval from the office for its depopulation,
1105 take-out, or keep-out plan and then comply with all of the
1106 corporation’s requirements for the plan applicable to admitted
1107 insurers and with all statutory provisions applicable to the
1108 removal of policies from the corporation.
1109 (II) In considering a surplus lines insurer’s request for
1110 approval for its plan, the office shall determine that the
1111 surplus lines insurer meets the following requirements:
1112 (A) Maintains surplus of $50 million on a company or pooled
1113 basis;
1114 (B) Has a superior, excellent, exceptional, or equally
1115 comparable financial strength rating by a rating agency
1116 acceptable to the office;
1117 (C) Maintains reserves, surplus, reinsurance, and
1118 reinsurance equivalents sufficient to cover the insurer’s 100
1119 year probable maximum hurricane loss at least twice in a single
1120 hurricane season, and submits such reinsurance to the office to
1121 review for purposes of the take-out;
1122 (D) Provides prominent notice to the policyholder before
1123 the assumption of the policy that surplus lines policies are not
1124 provided coverage by the Florida Insurance Guaranty Association,
1125 and an outline of any substantial differences in coverage
1126 between the existing policy and the policy being offered to the
1127 insured; and
1128 (E) Provides policy coverage similar to that provided by
1129 the corporation.
1130 (III) To obtain approval for a plan, the surplus lines
1131 insurer must file the following with the office:
1132 (A) Information requested by the office to demonstrate
1133 compliance with s. 624.404(3), including biographical
1134 affidavits, fingerprints processed pursuant to s. 624.34, and
1135 the results of criminal history records checks for officers and
1136 directors of the insurer and its parent or holding company;
1137 (B) A service-of-process consent and agreement form
1138 executed by the insurer;
1139 (C) Proof that the insurer has been an eligible or
1140 authorized insurer for at least 3 years;
1141 (D) A duly authenticated copy of the insurer’s current
1142 audited financial statement, in English, expressing all monetary
1143 values in United States dollars, at an exchange rate then
1144 current and shown in the statement, in the case of statements
1145 originally made in the currencies of other countries, and
1146 including any additional information relative to the insurer as
1147 the office may request;
1148 (E) A complete certified copy of the latest official
1149 financial statement required by the insurer’s domiciliary state,
1150 if different from sub-sub-sub-subparagraph (D); and
1151 (F) A copy of the United States trust account agreement, if
1152 applicable.
1153
1154 This sub-subparagraph does not subject any surplus lines insurer
1155 to requirements in addition to part VIII of chapter 626. Surplus
1156 lines brokers making an offer of coverage under this sub
1157 subparagraph are not required to comply with s. 626.916(1)(a),
1158 (b), (c), and (e).
1159 (IV) Within 10 days after the date of assumption, the
1160 surplus lines insurer assuming policies from the corporation
1161 shall remit a special deposit equal to the unearned premium net
1162 of unearned commissions on the assumed block of business to the
1163 Bureau of Collateral Management within the Department of
1164 Financial Services. The surplus lines insurer shall submit to
1165 the office, along with the initial deposit, an accounting of the
1166 policies assumed and the amount of unearned premium for such
1167 policies and a sworn affidavit attesting to its accuracy by an
1168 officer of the surplus lines insurer. Thereafter, the surplus
1169 lines insurer shall make a filing within 10 days after each
1170 calendar quarter attesting to the unearned premium in force for
1171 the previous quarter on policies assumed from the corporation,
1172 and shall submit additional funds with that filing if the
1173 special deposit is insufficient to cover the unearned premium on
1174 assumed policies, or shall receive a return of funds within 60
1175 days if the special deposit exceeds the amount of unearned
1176 premium required for assumed policies. The special deposit is an
1177 asset of the surplus lines insurer which is held by the
1178 department for the benefit of state policyholders of the surplus
1179 lines insurer in the event of the insolvency of the surplus
1180 lines insurer. If an order of liquidation is entered in any
1181 state against the surplus lines insurer, the department may use
1182 the special deposit for payment of unearned premium or policy
1183 claims, return all or part of the deposit to the domiciliary
1184 receiver, or use the funds in accordance with any action
1185 authorized under part I of chapter 631 or in compliance with any
1186 order of a court having jurisdiction over the insolvency.
1187 (V) Surplus lines brokers representing a surplus lines
1188 insurer on a take-out program shall obtain confirmation, in
1189 written or e-mail form, from each producing agent in advance
1190 stating that the agent is willing to participate in the take-out
1191 program with the surplus lines insurer engaging in the take-out
1192 program. The take-out program is also subject to s. 627.3517. If
1193 a policyholder is selected for removal from the corporation by a
1194 surplus lines insurer and an authorized insurer, the corporation
1195 shall give the offer of coverage from the authorized insurer
1196 priority.
1197 (VI)(A) When offered comparable coverage from a qualified
1198 surplus lines insurer no greater than 15 percent higher than the
1199 premium charged by the corporation, a risk that has a dwelling
1200 replacement cost of $700,000 or more or a single condominium
1201 unit that has a combined dwelling and contents replacement cost
1202 of $700,000 or more is not eligible for coverage by the
1203 corporation.
1204 (B) When offered coverage from a qualified surplus lines
1205 insurer, a risk that has a dwelling replacement cost below
1206 $700,000 or a single condominium unit that has a combined
1207 dwelling and contents replacement cost below $700,000 remains
1208 eligible for coverage by the corporation.
1209 4. The plan shall provide for the deferment, in whole or in
1210 part, of the assessment of an assessable insurer, other than an
1211 emergency assessment collected from policyholders pursuant to
1212 sub-subparagraph (b)3.d., if the office finds that payment of
1213 the assessment would endanger or impair the solvency of the
1214 insurer. In the event an assessment against an assessable
1215 insurer is deferred in whole or in part, the amount by which
1216 such assessment is deferred may be assessed against the other
1217 assessable insurers in a manner consistent with the basis for
1218 assessments set forth in paragraph (b).
1219 5. Effective July 1, 2007, in order to evaluate the costs
1220 and benefits of approved take-out plans, if the corporation pays
1221 a bonus or other payment to an insurer for an approved take-out
1222 plan, it shall maintain a record of the address or such other
1223 identifying information on the property or risk removed in order
1224 to track if and when the property or risk is later insured by
1225 the corporation.
1226 6. Any policy taken out, assumed, or removed from the
1227 corporation is, as of the effective date of the take-out,
1228 assumption, or removal, direct insurance issued by the insurer
1229 and not by the corporation, even if the corporation continues to
1230 service the policies. This subparagraph applies to policies of
1231 the corporation and not policies taken out, assumed, or removed
1232 from any other entity.
1233 7. For a policy taken out, assumed, or removed from the
1234 corporation, the insurer may, for a period of no more than 3
1235 years, continue to use any of the corporation’s policy forms or
1236 endorsements that apply to the policy taken out, removed, or
1237 assumed without obtaining approval from the office for use of
1238 such policy form or endorsement.
1239 (x)1. The following records of the corporation are
1240 confidential and exempt from the provisions of s. 119.07(1) and
1241 s. 24(a), Art. I of the State Constitution:
1242 a. Underwriting files, except that a policyholder or an
1243 applicant shall have access to his or her own underwriting
1244 files. Confidential and exempt underwriting file records may
1245 also be released to other governmental agencies upon written
1246 request and demonstration of need; such records held by the
1247 receiving agency remain confidential and exempt as provided
1248 herein.
1249 b. Claims files, until termination of all litigation and
1250 settlement of all claims arising out of the same incident,
1251 although portions of the claims files may remain exempt, as
1252 otherwise provided by law. Confidential and exempt claims file
1253 records may be released to other governmental agencies upon
1254 written request and demonstration of need; such records held by
1255 the receiving agency remain confidential and exempt as provided
1256 herein.
1257 c. Records obtained or generated by an internal auditor
1258 pursuant to a routine audit, until the audit is completed, or if
1259 the audit is conducted as part of an investigation, until the
1260 investigation is closed or ceases to be active. An investigation
1261 is considered “active” while the investigation is being
1262 conducted with a reasonable, good faith belief that it could
1263 lead to the filing of administrative, civil, or criminal
1264 proceedings.
1265 d. Matters reasonably encompassed in privileged attorney
1266 client communications.
1267 e. Proprietary information licensed to the corporation
1268 under contract and the contract provides for the confidentiality
1269 of such proprietary information.
1270 f. All information relating to the medical condition or
1271 medical status of a corporation employee which is not relevant
1272 to the employee’s capacity to perform his or her duties, except
1273 as otherwise provided in this paragraph. Information that is
1274 exempt includes shall include, but is not limited to,
1275 information relating to workers’ compensation, insurance
1276 benefits, and retirement or disability benefits.
1277 g. Upon an employee’s entrance into the employee assistance
1278 program, a program to assist any employee who has a behavioral
1279 or medical disorder, substance abuse problem, or emotional
1280 difficulty that affects the employee’s job performance, all
1281 records relative to that participation are shall be confidential
1282 and exempt from the provisions of s. 119.07(1) and s. 24(a),
1283 Art. I of the State Constitution, except as otherwise provided
1284 in s. 112.0455(11).
1285 h. Information relating to negotiations for financing,
1286 reinsurance, depopulation, or contractual services, until the
1287 conclusion of the negotiations.
1288 i. Minutes of closed meetings regarding underwriting files,
1289 and minutes of closed meetings regarding an open claims file
1290 until termination of all litigation and settlement of all claims
1291 with regard to that claim, except that information otherwise
1292 confidential or exempt by law shall be redacted.
1293 2. If an authorized insurer, a reinsurance intermediary, an
1294 eligible surplus lines insurer, or an entity that has filed an
1295 application with the office for licensure as a property and
1296 casualty insurer in this state is considering writing or
1297 assisting in the underwriting of a risk insured by the
1298 corporation, relevant information from both the underwriting
1299 files and confidential claims files may be released to the
1300 insurer, reinsurance intermediary, eligible surplus lines
1301 insurer, or entity that has been created to seek authority to
1302 write property insurance in this state, provided the recipient
1303 insurer agrees in writing, notarized and under oath, to maintain
1304 the confidentiality of such files. If a policy file is
1305 transferred to an insurer, that policy file is no longer a
1306 public record because it is not held by an agency subject to the
1307 provisions of the public records law. Underwriting files and
1308 confidential claims files may also be released to staff and the
1309 board of governors of the market assistance plan established
1310 pursuant to s. 627.3515, who must retain the confidentiality of
1311 such files, except such files may be released to authorized
1312 insurers that are considering assuming the risks to which the
1313 files apply, provided the insurer agrees in writing, notarized
1314 and under oath, to maintain the confidentiality of such files.
1315 Finally, the corporation or the board or staff of the market
1316 assistance plan may make the following information obtained from
1317 underwriting files and confidential claims files available to an
1318 entity that has obtained a permit to become an authorized
1319 insurer, a reinsurer that may provide reinsurance under s.
1320 624.610, a licensed reinsurance broker, a licensed rating
1321 organization, a modeling company, or a licensed general lines
1322 insurance agent: name, address, and telephone number of the
1323 residential property owner or insured; location of the risk;
1324 rating information; loss history; and policy type. The receiving
1325 person must retain the confidentiality of the information
1326 received and may use the information only for the purposes of
1327 developing a take-out plan or a rating plan to be submitted to
1328 the office for approval or otherwise analyzing the underwriting
1329 of a risk or risks insured by the corporation on behalf of the
1330 private insurance market. A licensed general lines insurance
1331 agent may not use such information for the direct solicitation
1332 of policyholders.
1333 3. A policyholder who has filed suit against the
1334 corporation has the right to discover the contents of his or her
1335 own claims file to the same extent that discovery of such
1336 contents would be available from a private insurer in litigation
1337 as provided by the Florida Rules of Civil Procedure, the Florida
1338 Evidence Code, and other applicable law. Pursuant to subpoena, a
1339 third party has the right to discover the contents of an
1340 insured’s or applicant’s underwriting or claims file to the same
1341 extent that discovery of such contents would be available from a
1342 private insurer by subpoena as provided by the Florida Rules of
1343 Civil Procedure, the Florida Evidence Code, and other applicable
1344 law, and subject to any confidentiality protections requested by
1345 the corporation and agreed to by the seeking party or ordered by
1346 the court. The corporation may release confidential underwriting
1347 and claims file contents and information as it deems necessary
1348 and appropriate to underwrite or service insurance policies and
1349 claims, subject to any confidentiality protections deemed
1350 necessary and appropriate by the corporation.
1351 4. Portions of meetings of the corporation are exempt from
1352 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1353 Constitution wherein confidential underwriting files or
1354 confidential open claims files are discussed. All portions of
1355 corporation meetings which are closed to the public shall be
1356 recorded by a court reporter. The court reporter shall record
1357 the times of commencement and termination of the meeting, all
1358 discussion and proceedings, the names of all persons present at
1359 any time, and the names of all persons speaking. No portion of
1360 any closed meeting shall be off the record. Subject to the
1361 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1362 notes of any closed meeting shall be retained by the corporation
1363 for a minimum of 5 years. A copy of the transcript, less any
1364 exempt matters, of any closed meeting wherein claims are
1365 discussed shall become public as to individual claims after
1366 settlement of the claim.
1367 Section 3. Section 627.3517, Florida Statutes, is amended
1368 to read:
1369 627.3517 Consumer choice.—No provision of s. 627.351, s.
1370 627.3511, or s. 627.3515 shall be construed to impair the right
1371 of any insurance risk apportionment plan policyholder, upon
1372 receipt of any keep-out keepout or take-out offer, to retain his
1373 or her current agent, so long as that agent is duly licensed and
1374 appointed by the insurance risk apportionment plan or otherwise
1375 authorized to place business with the insurance risk
1376 apportionment plan. This right may shall not be canceled,
1377 suspended, impeded, abridged, or otherwise compromised by any
1378 rule, plan of operation, or depopulation plan, whether through
1379 keep-out keepout, take-out, midterm assumption, or any other
1380 means, of any insurance risk apportionment plan or depopulation
1381 plan, including, but not limited to, those described in s.
1382 627.351, s. 627.3511, or s. 627.3515. The commission shall adopt
1383 any rules necessary to cause any insurance risk apportionment
1384 plan or market assistance plan under such sections to
1385 demonstrate that the operations of the plan do not interfere
1386 with, promote, or allow interference with the rights created
1387 under this section. If the policyholder’s current agent is
1388 unable or unwilling to be appointed with the insurer making the
1389 take-out or keep-out keepout offer, the policyholder is shall
1390 not be disqualified from participation in the appropriate
1391 insurance risk apportionment plan because of an offer of
1392 coverage in the voluntary market. An offer of full property
1393 insurance coverage by the insurer currently insuring either the
1394 ex-wind or wind-only coverage on the policy to which the offer
1395 applies is shall not be considered a take-out or keep-out
1396 keepout offer. Any rule, plan of operation, or plan of
1397 depopulation, through keep-out keepout, take-out, midterm
1398 assumption, or any other means, of any property insurance risk
1399 apportionment plan under s. 627.351(2) or (6) is subject to ss.
1400 627.351(2)(b) and (6)(c) and 627.3511(4).
1401 Section 4. Subsection (5) of section 627.3518, Florida
1402 Statutes, is amended, and paragraph (a) of subsection (6) and
1403 paragraph (a) of subsection (7) of that section are reenacted,
1404 to read:
1405 627.3518 Citizens Property Insurance Corporation
1406 policyholder eligibility clearinghouse program.—The purpose of
1407 this section is to provide a framework for the corporation to
1408 implement a clearinghouse program by January 1, 2014.
1409 (5) Notwithstanding s. 627.3517, any applicant for new
1410 coverage from the corporation is not eligible for coverage from
1411 the corporation if provided an offer of coverage from an
1412 authorized insurer through the program at a premium that is at
1413 or below the eligibility threshold established in s.
1414 627.351(6)(c)5.a. Whenever an offer of coverage for a personal
1415 lines risk is received for a policyholder of the corporation at
1416 renewal from an authorized insurer through the program, if the
1417 offer is at or below the eligibility threshold established in s.
1418 627.351(6)(c)5.a. equal to or less than the corporation’s
1419 renewal premium for comparable coverage, the risk is not
1420 eligible for coverage with the corporation. In the event an
1421 offer of coverage for a new applicant or a personal lines risk
1422 at renewal is received from an authorized insurer through the
1423 program, and the premium offered exceeds the eligibility
1424 thresholds specified threshold contained in s.
1425 627.351(6)(c)5.a., the applicant or insured may elect to accept
1426 such coverage, or may elect to accept or continue coverage with
1427 the corporation. In the event an offer of coverage for a
1428 personal lines risk is received from an authorized insurer at
1429 renewal through the program, and the premium offered is more
1430 than the corporation’s renewal premium for comparable coverage,
1431 the insured may elect to accept such coverage, or may elect to
1432 accept or continue coverage with the corporation. Section
1433 627.351(6)(c)5.a.(I) does not apply to an offer of coverage from
1434 an authorized insurer obtained through the program. An applicant
1435 for coverage from the corporation who was declared ineligible
1436 for coverage at renewal by the corporation in the previous 36
1437 months due to an offer of coverage pursuant to this subsection
1438 shall be considered a renewal under this section if the
1439 corporation determines that the authorized insurer making the
1440 offer of coverage pursuant to this subsection continues to
1441 insure the applicant and increased the rate on the policy in
1442 excess of the increase allowed for the corporation under s.
1443 627.351(6)(n)6.
1444 (6) Independent insurance agents submitting new
1445 applications for coverage or that are the agent of record on a
1446 renewal policy submitted to the program:
1447 (a) Are granted and must maintain ownership and the
1448 exclusive use of expirations, records, or other written or
1449 electronic information directly related to such applications or
1450 renewals written through the corporation or through an insurer
1451 participating in the program, notwithstanding s.
1452 627.351(6)(c)5.a.(I)(B) and (II)(B). Such ownership is granted
1453 for as long as the insured remains with the agency or until sold
1454 or surrendered in writing by the agent. Contracts with the
1455 corporation or required by the corporation must not amend,
1456 modify, interfere with, or limit such rights of ownership. Such
1457 expirations, records, or other written or electronic information
1458 may be used to review an application, issue a policy, or for any
1459 other purpose necessary for placing such business through the
1460 program.
1461
1462 Applicants ineligible for coverage in accordance with subsection
1463 (5) remain ineligible if their independent agent is unwilling or
1464 unable to enter into a standard or limited agency agreement with
1465 an insurer participating in the program.
1466 (7) Exclusive agents submitting new applications for
1467 coverage or that are the agent of record on a renewal policy
1468 submitted to the program:
1469 (a) Must maintain ownership and the exclusive use of
1470 expirations, records, or other written or electronic information
1471 directly related to such applications or renewals written
1472 through the corporation or through an insurer participating in
1473 the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
1474 (II)(B). Contracts with the corporation or required by the
1475 corporation must not amend, modify, interfere with, or limit
1476 such rights of ownership. Such expirations, records, or other
1477 written or electronic information may be used to review an
1478 application, issue a policy, or for any other purpose necessary
1479 for placing such business through the program.
1480
1481 Applicants ineligible for coverage in accordance with subsection
1482 (5) remain ineligible if their exclusive agent is unwilling or
1483 unable to enter into a standard or limited agency agreement with
1484 an insurer making an offer of coverage to that applicant.
1485 Section 5. This act shall take effect January 1, 2022.