Florida Senate - 2022 SB 186
By Senator Brandes
24-00069B-22 2022186__
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; defining the term “primary
8 residence”; revising conditions for eligibility for
9 coverage with the corporation to require a certain
10 minimum premium; specifying a limit for agent
11 commission rates; providing that eligible surplus
12 lines insurers may participate, in the same manner and
13 on the same terms as an authorized insurer, in
14 depopulation, take-out, or keep-out programs relating
15 to policies removed from Citizens Property Insurance
16 Corporation; providing certain exceptions, conditions,
17 and requirements relating to such participation by a
18 surplus lines insurer in the corporation’s
19 depopulation, take-out, or keep-out programs;
20 providing thresholds for eligibility for coverage by
21 the corporation for risks that are offered coverage
22 from qualified surplus lines insurers; authorizing
23 information from underwriting files and confidential
24 claims files to be released under certain
25 circumstances by the corporation to specified entities
26 that consider writing or underwriting risks insured by
27 the corporation; specifying that only the
28 corporation’s transfer of a policy file to an insurer,
29 as opposed to the transfer of any file, changes the
30 file’s public record status; making technical changes;
31 amending s. 627.3517, F.S.; making technical changes;
32 amending s. 627.3518, F.S., and reenacting paragraphs
33 (6)(a) and (7)(a) of that section, relating to the
34 Citizens Property Insurance Corporation policyholder
35 eligibility clearinghouse program, to incorporate the
36 amendments made to s. 627.351, F.S., in references
37 thereto; conforming provisions to changes made by the
38 act; providing an effective date.
39
40 Be It Enacted by the Legislature of the State of Florida:
41
42 Section 1. Subsection (2) of section 627.021, Florida
43 Statutes, is amended to read:
44 627.021 Scope of this part.—
45 (2) This part does not apply to:
46 (a) Reinsurance, except joint reinsurance as provided in s.
47 627.311.
48 (b) Insurance against loss of or damage to aircraft, their
49 hulls, accessories, or equipment, or against liability, other
50 than workers’ compensation and employer’s liability, arising out
51 of the ownership, maintenance, or use of aircraft.
52 (c) Insurance of vessels or craft, their cargoes, marine
53 builders’ risks, marine protection and indemnity, or other risks
54 commonly insured under marine insurance policies.
55 (d) Commercial inland marine insurance.
56 (e) Except as may be specifically stated to apply, surplus
57 lines insurance placed under the provisions of ss. 626.913
58 626.937.
59 Section 2. Paragraphs (b), (c), (n), (q), and (x) of
60 subsection (6) of section 627.351, Florida Statutes, are amended
61 to read:
62 627.351 Insurance risk apportionment plans.—
63 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
64 (b)1. All insurers authorized to write one or more subject
65 lines of business in this state are subject to assessment by the
66 corporation and, for the purposes of this subsection, are
67 referred to collectively as “assessable insurers.” Insurers
68 writing one or more subject lines of business in this state
69 pursuant to part VIII of chapter 626 are not assessable
70 insurers; however, insureds who procure one or more subject
71 lines of business in this state pursuant to part VIII of chapter
72 626 are subject to assessment by the corporation and are
73 referred to collectively as “assessable insureds.” An insurer’s
74 assessment liability begins on the first day of the calendar
75 year following the year in which the insurer was issued a
76 certificate of authority to transact insurance for subject lines
77 of business in this state and terminates 1 year after the end of
78 the first calendar year during which the insurer no longer holds
79 a certificate of authority to transact insurance for subject
80 lines of business in this state.
81 2.a. All revenues, assets, liabilities, losses, and
82 expenses of the corporation shall be divided into three separate
83 accounts as follows:
84 (I) A personal lines account for personal residential
85 policies issued by the corporation which provides comprehensive,
86 multiperil coverage on risks that are not located in areas
87 eligible for coverage by the Florida Windstorm Underwriting
88 Association as those areas were defined on January 1, 2002, and
89 for policies that do not provide coverage for the peril of wind
90 on risks that are located in such areas;
91 (II) A commercial lines account for commercial residential
92 and commercial nonresidential policies issued by the corporation
93 which provides coverage for basic property perils on risks that
94 are not located in areas eligible for coverage by the Florida
95 Windstorm Underwriting Association as those areas were defined
96 on January 1, 2002, and for policies that do not provide
97 coverage for the peril of wind on risks that are located in such
98 areas; and
99 (III) A coastal account for personal residential policies
100 and commercial residential and commercial nonresidential
101 property policies issued by the corporation which provides
102 coverage for the peril of wind on risks that are located in
103 areas eligible for coverage by the Florida Windstorm
104 Underwriting Association as those areas were defined on January
105 1, 2002. The corporation may offer policies that provide
106 multiperil coverage and shall offer policies that provide
107 coverage only for the peril of wind for risks located in areas
108 eligible for coverage in the coastal account. Effective July 1,
109 2014, the corporation shall cease offering new commercial
110 residential policies providing multiperil coverage and shall
111 instead continue to offer commercial residential wind-only
112 policies, and may offer commercial residential policies
113 excluding wind. The corporation may, however, continue to renew
114 a commercial residential multiperil policy on a building that is
115 insured by the corporation on June 30, 2014, under a multiperil
116 policy. In issuing multiperil coverage, the corporation may use
117 its approved policy forms and rates for the personal lines
118 account. An applicant or insured who is eligible to purchase a
119 multiperil policy from the corporation may purchase a multiperil
120 policy from an authorized insurer without prejudice to the
121 applicant’s or insured’s eligibility to prospectively purchase a
122 policy that provides coverage only for the peril of wind from
123 the corporation. An applicant or insured who is eligible for a
124 corporation policy that provides coverage only for the peril of
125 wind may elect to purchase or retain such policy and also
126 purchase or retain coverage excluding wind from an authorized
127 insurer without prejudice to the applicant’s or insured’s
128 eligibility to prospectively purchase a policy that provides
129 multiperil coverage from the corporation. It is the goal of the
130 Legislature that there be an overall average savings of 10
131 percent or more for a policyholder who currently has a wind-only
132 policy with the corporation, and an ex-wind policy with a
133 voluntary insurer or the corporation, and who obtains a
134 multiperil policy from the corporation. It is the intent of the
135 Legislature that the offer of multiperil coverage in the coastal
136 account be made and implemented in a manner that does not
137 adversely affect the tax-exempt status of the corporation or
138 creditworthiness of or security for currently outstanding
139 financing obligations or credit facilities of the coastal
140 account, the personal lines account, or the commercial lines
141 account. The coastal account must also include quota share
142 primary insurance under subparagraph (c)2. The area eligible for
143 coverage under the coastal account also includes the area within
144 Port Canaveral, which is bordered on the south by the City of
145 Cape Canaveral, bordered on the west by the Banana River, and
146 bordered on the north by Federal Government property.
147 b. The three separate accounts must be maintained as long
148 as financing obligations entered into by the Florida Windstorm
149 Underwriting Association or Residential Property and Casualty
150 Joint Underwriting Association are outstanding, in accordance
151 with the terms of the corresponding financing documents. If the
152 financing obligations are no longer outstanding, the corporation
153 may use a single account for all revenues, assets, liabilities,
154 losses, and expenses of the corporation. Consistent with this
155 subparagraph and prudent investment policies that minimize the
156 cost of carrying debt, the board shall exercise its best efforts
157 to retire existing debt or obtain the approval of necessary
158 parties to amend the terms of existing debt, so as to structure
159 the most efficient plan for consolidating the three separate
160 accounts into a single account.
161 c. Creditors of the Residential Property and Casualty Joint
162 Underwriting Association and the accounts specified in sub-sub
163 subparagraphs a.(I) and (II) may have a claim against, and
164 recourse to, those accounts and no claim against, or recourse
165 to, the account referred to in sub-sub-subparagraph a.(III).
166 Creditors of the Florida Windstorm Underwriting Association have
167 a claim against, and recourse to, the account referred to in
168 sub-sub-subparagraph a.(III) and no claim against, or recourse
169 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
170 (II).
171 d. Revenues, assets, liabilities, losses, and expenses not
172 attributable to particular accounts shall be prorated among the
173 accounts.
174 e. The Legislature finds that the revenues of the
175 corporation are revenues that are necessary to meet the
176 requirements set forth in documents authorizing the issuance of
177 bonds under this subsection.
178 f. The income of the corporation may not inure to the
179 benefit of any private person.
180 3. With respect to a deficit in an account:
181 a. After accounting for the Citizens policyholder surcharge
182 imposed under sub-subparagraph i., if the remaining projected
183 deficit incurred in the coastal account in a particular calendar
184 year:
185 (I) Is not greater than 2 percent of the aggregate
186 statewide direct written premium for the subject lines of
187 business for the prior calendar year, the entire deficit shall
188 be recovered through regular assessments of assessable insurers
189 under paragraph (q) and assessable insureds.
190 (II) Exceeds 2 percent of the aggregate statewide direct
191 written premium for the subject lines of business for the prior
192 calendar year, the corporation shall levy regular assessments on
193 assessable insurers under paragraph (q) and on assessable
194 insureds in an amount equal to the greater of 2 percent of the
195 projected deficit or 2 percent of the aggregate statewide direct
196 written premium for the subject lines of business for the prior
197 calendar year. Any remaining projected deficit shall be
198 recovered through emergency assessments under sub-subparagraph
199 d.
200 b. Each assessable insurer’s share of the amount being
201 assessed under sub-subparagraph a. must be in the proportion
202 that the assessable insurer’s direct written premium for the
203 subject lines of business for the year preceding the assessment
204 bears to the aggregate statewide direct written premium for the
205 subject lines of business for that year. The assessment
206 percentage applicable to each assessable insured is the ratio of
207 the amount being assessed under sub-subparagraph a. to the
208 aggregate statewide direct written premium for the subject lines
209 of business for the prior year. Assessments levied by the
210 corporation on assessable insurers under sub-subparagraph a.
211 must be paid as required by the corporation’s plan of operation
212 and paragraph (q). Assessments levied by the corporation on
213 assessable insureds under sub-subparagraph a. shall be collected
214 by the surplus lines agent at the time the surplus lines agent
215 collects the surplus lines tax required by s. 626.932, and paid
216 to the Florida Surplus Lines Service Office at the time the
217 surplus lines agent pays the surplus lines tax to that office.
218 Upon receipt of regular assessments from surplus lines agents,
219 the Florida Surplus Lines Service Office shall transfer the
220 assessments directly to the corporation as determined by the
221 corporation.
222 c. After accounting for the Citizens policyholder surcharge
223 imposed under sub-subparagraph i., the remaining projected
224 deficits in the personal lines account and in the commercial
225 lines account in a particular calendar year shall be recovered
226 through emergency assessments under sub-subparagraph d.
227 d. Upon a determination by the board of governors that a
228 projected deficit in an account exceeds the amount that is
229 expected to be recovered through regular assessments under sub
230 subparagraph a., plus the amount that is expected to be
231 recovered through surcharges under sub-subparagraph i., the
232 board, after verification by the office, shall levy emergency
233 assessments for as many years as necessary to cover the
234 deficits, to be collected by assessable insurers and the
235 corporation and collected from assessable insureds upon issuance
236 or renewal of policies for subject lines of business, excluding
237 National Flood Insurance policies. The amount collected in a
238 particular year must be a uniform percentage of that year’s
239 direct written premium for subject lines of business and all
240 accounts of the corporation, excluding National Flood Insurance
241 Program policy premiums, as annually determined by the board and
242 verified by the office. The office shall verify the arithmetic
243 calculations involved in the board’s determination within 30
244 days after receipt of the information on which the determination
245 was based. The office shall notify assessable insurers and the
246 Florida Surplus Lines Service Office of the date on which
247 assessable insurers shall begin to collect and assessable
248 insureds shall begin to pay such assessment. The date must be at
249 least 90 days after the date the corporation levies emergency
250 assessments pursuant to this sub-subparagraph. Notwithstanding
251 any other provision of law, the corporation and each assessable
252 insurer that writes subject lines of business shall collect
253 emergency assessments from its policyholders without such
254 obligation being affected by any credit, limitation, exemption,
255 or deferment. Emergency assessments levied by the corporation on
256 assessable insureds shall be collected by the surplus lines
257 agent at the time the surplus lines agent collects the surplus
258 lines tax required by s. 626.932 and paid to the Florida Surplus
259 Lines Service Office at the time the surplus lines agent pays
260 the surplus lines tax to that office. The emergency assessments
261 collected shall be transferred directly to the corporation on a
262 periodic basis as determined by the corporation and held by the
263 corporation solely in the applicable account. The aggregate
264 amount of emergency assessments levied for an account in any
265 calendar year may be less than but may not exceed the greater of
266 10 percent of the amount needed to cover the deficit, plus
267 interest, fees, commissions, required reserves, and other costs
268 associated with financing the original deficit, or 10 percent of
269 the aggregate statewide direct written premium for subject lines
270 of business and all accounts of the corporation for the prior
271 year, plus interest, fees, commissions, required reserves, and
272 other costs associated with financing the deficit.
273 e. The corporation may pledge the proceeds of assessments,
274 projected recoveries from the Florida Hurricane Catastrophe
275 Fund, other insurance and reinsurance recoverables, policyholder
276 surcharges and other surcharges, and other funds available to
277 the corporation as the source of revenue for and to secure bonds
278 issued under paragraph (q), bonds or other indebtedness issued
279 under subparagraph (c)3., or lines of credit or other financing
280 mechanisms issued or created under this subsection, or to retire
281 any other debt incurred as a result of deficits or events giving
282 rise to deficits, or in any other way that the board determines
283 will efficiently recover such deficits. The purpose of the lines
284 of credit or other financing mechanisms is to provide additional
285 resources to assist the corporation in covering claims and
286 expenses attributable to a catastrophe. As used in this
287 subsection, the term “assessments” includes regular assessments
288 under sub-subparagraph a. or subparagraph (q)1. and emergency
289 assessments under sub-subparagraph d. Emergency assessments
290 collected under sub-subparagraph d. are not part of an insurer’s
291 rates, are not premium, and are not subject to premium tax,
292 fees, or commissions; however, failure to pay the emergency
293 assessment shall be treated as failure to pay premium. The
294 emergency assessments shall continue as long as any bonds issued
295 or other indebtedness incurred with respect to a deficit for
296 which the assessment was imposed remain outstanding, unless
297 adequate provision has been made for the payment of such bonds
298 or other indebtedness pursuant to the documents governing such
299 bonds or indebtedness.
300 f. As used in this subsection for purposes of any deficit
301 incurred on or after January 25, 2007, the term “subject lines
302 of business” means insurance written by assessable insurers or
303 procured by assessable insureds for all property and casualty
304 lines of business in this state, but not including workers’
305 compensation or medical malpractice. As used in this sub
306 subparagraph, the term “property and casualty lines of business”
307 includes all lines of business identified on Form 2, Exhibit of
308 Premiums and Losses, in the annual statement required of
309 authorized insurers under s. 624.424 and any rule adopted under
310 this section, except for those lines identified as accident and
311 health insurance and except for policies written under the
312 National Flood Insurance Program or the Federal Crop Insurance
313 Program. For purposes of this sub-subparagraph, the term
314 “workers’ compensation” includes both workers’ compensation
315 insurance and excess workers’ compensation insurance.
316 g. The Florida Surplus Lines Service Office shall determine
317 annually the aggregate statewide written premium in subject
318 lines of business procured by assessable insureds and report
319 that information to the corporation in a form and at a time the
320 corporation specifies to ensure that the corporation can meet
321 the requirements of this subsection and the corporation’s
322 financing obligations.
323 h. The Florida Surplus Lines Service Office shall verify
324 the proper application by surplus lines agents of assessment
325 percentages for regular assessments and emergency assessments
326 levied under this subparagraph on assessable insureds and assist
327 the corporation in ensuring the accurate, timely collection and
328 payment of assessments by surplus lines agents as required by
329 the corporation.
330 i. Upon determination by the board of governors that an
331 account has a projected deficit, the board shall levy a Citizens
332 policyholder surcharge against all policyholders of the
333 corporation.
334 (I) The surcharge must shall be levied as a uniform
335 percentage of the premium for the policy of up to 15 percent of
336 such premium, and must which funds shall be used to offset the
337 deficit, as follows:
338 (A) If the total number of policyholders of the corporation
339 is less than 1 million, a surcharge of 15 percent of the
340 premium.
341 (B) If the total number of policyholders of the corporation
342 is at least 1 million but less than 1.5 million, a surcharge of
343 20 percent of the premium.
344 (C) If the total number of policyholders of the corporation
345 is at least 1.5 million, a surcharge of 25 percent of the
346 premium.
347 (II) The surcharge is payable upon cancellation or
348 termination of the policy, upon renewal of the policy, or upon
349 issuance of a new policy by the corporation within the first 12
350 months after the date of the levy or the period of time
351 necessary to fully collect the surcharge amount.
352 (III) The corporation may not levy any regular assessments
353 under paragraph (q) pursuant to sub-subparagraph a. or sub
354 subparagraph b. with respect to a particular year’s deficit
355 until the corporation has first levied the full amount of the
356 surcharge authorized by this sub-subparagraph.
357 (IV) The surcharge is not considered premium and is not
358 subject to commissions, fees, or premium taxes. However, failure
359 to pay the surcharge shall be treated as failure to pay premium.
360 j. If the amount of any assessments or surcharges collected
361 from corporation policyholders, assessable insurers or their
362 policyholders, or assessable insureds exceeds the amount of the
363 deficits, such excess amounts shall be remitted to and retained
364 by the corporation in a reserve to be used by the corporation,
365 as determined by the board of governors and approved by the
366 office, to pay claims or reduce any past, present, or future
367 plan-year deficits or to reduce outstanding debt.
368 (c) The corporation’s plan of operation:
369 1. Must provide for adoption of residential property and
370 casualty insurance policy forms and commercial residential and
371 nonresidential property insurance forms, which must be approved
372 by the office before use. The corporation shall adopt the
373 following policy forms:
374 a. Standard personal lines policy forms that are
375 comprehensive multiperil policies providing full coverage of a
376 residential property equivalent to the coverage provided in the
377 private insurance market under an HO-3, HO-4, or HO-6 policy.
378 b. Basic personal lines policy forms that are policies
379 similar to an HO-8 policy or a dwelling fire policy that provide
380 coverage meeting the requirements of the secondary mortgage
381 market, but which is more limited than the coverage under a
382 standard policy.
383 c. Commercial lines residential and nonresidential policy
384 forms that are generally similar to the basic perils of full
385 coverage obtainable for commercial residential structures and
386 commercial nonresidential structures in the admitted voluntary
387 market.
388 d. Personal lines and commercial lines residential property
389 insurance forms that cover the peril of wind only. The forms are
390 applicable only to residential properties located in areas
391 eligible for coverage under the coastal account referred to in
392 sub-subparagraph (b)2.a.
393 e. Commercial lines nonresidential property insurance forms
394 that cover the peril of wind only. The forms are applicable only
395 to nonresidential properties located in areas eligible for
396 coverage under the coastal account referred to in sub
397 subparagraph (b)2.a.
398 f. The corporation may adopt variations of the policy forms
399 listed in sub-subparagraphs a.-e. which contain more restrictive
400 coverage.
401 g. Effective January 1, 2013, the corporation shall offer a
402 basic personal lines policy similar to an HO-8 policy with
403 dwelling repair based on common construction materials and
404 methods.
405 2. Must provide that the corporation adopt a program in
406 which the corporation and authorized insurers enter into quota
407 share primary insurance agreements for hurricane coverage, as
408 defined in s. 627.4025(2)(a), for eligible risks, and adopt
409 property insurance forms for eligible risks which cover the
410 peril of wind only.
411 a. As used in this subsection, the term:
412 (II) “Primary residence” means the dwelling that the
413 insured has represented as their permanent home on the insurance
414 application or otherwise to the corporation.
415 (III)(I) “Quota share primary insurance” means an
416 arrangement in which the primary hurricane coverage of an
417 eligible risk is provided in specified percentages by the
418 corporation and an authorized insurer. The corporation and
419 authorized insurer are each solely responsible for a specified
420 percentage of hurricane coverage of an eligible risk as set
421 forth in a quota share primary insurance agreement between the
422 corporation and an authorized insurer and the insurance
423 contract. The responsibility of the corporation or authorized
424 insurer to pay its specified percentage of hurricane losses of
425 an eligible risk, as set forth in the agreement, may not be
426 altered by the inability of the other party to pay its specified
427 percentage of losses. Eligible risks that are provided hurricane
428 coverage through a quota share primary insurance arrangement
429 must be provided policy forms that set forth the obligations of
430 the corporation and authorized insurer under the arrangement,
431 clearly specify the percentages of quota share primary insurance
432 provided by the corporation and authorized insurer, and
433 conspicuously and clearly state that the authorized insurer and
434 the corporation may not be held responsible beyond their
435 specified percentage of coverage of hurricane losses.
436 (I)(II) “Eligible risks” means personal lines residential
437 and commercial lines residential risks that meet the
438 underwriting criteria of the corporation and are located in
439 areas that were eligible for coverage by the Florida Windstorm
440 Underwriting Association on January 1, 2002.
441 b. The corporation may enter into quota share primary
442 insurance agreements with authorized insurers at corporation
443 coverage levels of 90 percent and 50 percent.
444 c. If the corporation determines that additional coverage
445 levels are necessary to maximize participation in quota share
446 primary insurance agreements by authorized insurers, the
447 corporation may establish additional coverage levels. However,
448 the corporation’s quota share primary insurance coverage level
449 may not exceed 90 percent.
450 d. Any quota share primary insurance agreement entered into
451 between an authorized insurer and the corporation must provide
452 for a uniform specified percentage of coverage of hurricane
453 losses, by county or territory as set forth by the corporation
454 board, for all eligible risks of the authorized insurer covered
455 under the agreement.
456 e. Any quota share primary insurance agreement entered into
457 between an authorized insurer and the corporation is subject to
458 review and approval by the office. However, such agreement shall
459 be authorized only as to insurance contracts entered into
460 between an authorized insurer and an insured who is already
461 insured by the corporation for wind coverage.
462 f. For all eligible risks covered under quota share primary
463 insurance agreements, the exposure and coverage levels for both
464 the corporation and authorized insurers shall be reported by the
465 corporation to the Florida Hurricane Catastrophe Fund. For all
466 policies of eligible risks covered under such agreements, the
467 corporation and the authorized insurer must maintain complete
468 and accurate records for the purpose of exposure and loss
469 reimbursement audits as required by fund rules. The corporation
470 and the authorized insurer shall each maintain duplicate copies
471 of policy declaration pages and supporting claims documents.
472 g. The corporation board shall establish in its plan of
473 operation standards for quota share agreements which ensure that
474 there is no discriminatory application among insurers as to the
475 terms of the agreements, pricing of the agreements, incentive
476 provisions if any, and consideration paid for servicing policies
477 or adjusting claims.
478 h. The quota share primary insurance agreement between the
479 corporation and an authorized insurer must set forth the
480 specific terms under which coverage is provided, including, but
481 not limited to, the sale and servicing of policies issued under
482 the agreement by the insurance agent of the authorized insurer
483 producing the business, the reporting of information concerning
484 eligible risks, the payment of premium to the corporation, and
485 arrangements for the adjustment and payment of hurricane claims
486 incurred on eligible risks by the claims adjuster and personnel
487 of the authorized insurer. Entering into a quota sharing
488 insurance agreement between the corporation and an authorized
489 insurer is voluntary and at the discretion of the authorized
490 insurer.
491 3. May provide that the corporation may employ or otherwise
492 contract with individuals or other entities to provide
493 administrative or professional services that may be appropriate
494 to effectuate the plan. The corporation may borrow funds by
495 issuing bonds or by incurring other indebtedness, and shall have
496 other powers reasonably necessary to effectuate the requirements
497 of this subsection, including, without limitation, the power to
498 issue bonds and incur other indebtedness in order to refinance
499 outstanding bonds or other indebtedness. The corporation may
500 seek judicial validation of its bonds or other indebtedness
501 under chapter 75. The corporation may issue bonds or incur other
502 indebtedness, or have bonds issued on its behalf by a unit of
503 local government pursuant to subparagraph (q)2. in the absence
504 of a hurricane or other weather-related event, upon a
505 determination by the corporation, subject to approval by the
506 office, that such action would enable it to efficiently meet the
507 financial obligations of the corporation and that such
508 financings are reasonably necessary to effectuate the
509 requirements of this subsection. The corporation may take all
510 actions needed to facilitate tax-free status for such bonds or
511 indebtedness, including formation of trusts or other affiliated
512 entities. The corporation may pledge assessments, projected
513 recoveries from the Florida Hurricane Catastrophe Fund, other
514 reinsurance recoverables, policyholder surcharges and other
515 surcharges, and other funds available to the corporation as
516 security for bonds or other indebtedness. In recognition of s.
517 10, Art. I of the State Constitution, prohibiting the impairment
518 of obligations of contracts, it is the intent of the Legislature
519 that no action be taken whose purpose is to impair any bond
520 indenture or financing agreement or any revenue source committed
521 by contract to such bond or other indebtedness.
522 4. Must require that the corporation operate subject to the
523 supervision and approval of a board of governors consisting of
524 nine individuals who are residents of this state and who are
525 from different geographical areas of this the state, one of whom
526 is appointed by the Governor and serves solely to advocate on
527 behalf of the consumer. The appointment of a consumer
528 representative by the Governor is deemed to be within the scope
529 of the exemption provided in s. 112.313(7)(b) and is in addition
530 to the appointments authorized under sub-subparagraph a.
531 a. The Governor, the Chief Financial Officer, the President
532 of the Senate, and the Speaker of the House of Representatives
533 shall each appoint two members of the board. At least one of the
534 two members appointed by each appointing officer must have
535 demonstrated expertise in insurance and be deemed to be within
536 the scope of the exemption provided in s. 112.313(7)(b). The
537 Chief Financial Officer shall designate one of the appointees as
538 chair. All board members serve at the pleasure of the appointing
539 officer. All members of the board are subject to removal at will
540 by the officers who appointed them. All board members, including
541 the chair, must be appointed to serve for 3-year terms beginning
542 annually on a date designated by the plan. However, for the
543 first term beginning on or after July 1, 2009, each appointing
544 officer shall appoint one member of the board for a 2-year term
545 and one member for a 3-year term. A board vacancy shall be
546 filled for the unexpired term by the appointing officer. The
547 Chief Financial Officer shall appoint a technical advisory group
548 to provide information and advice to the board in connection
549 with the board’s duties under this subsection. The executive
550 director and senior managers of the corporation shall be engaged
551 by the board and serve at the pleasure of the board. Any
552 executive director appointed on or after July 1, 2006, is
553 subject to confirmation by the Senate. The executive director is
554 responsible for employing other staff as the corporation may
555 require, subject to review and concurrence by the board.
556 b. The board shall create a Market Accountability Advisory
557 Committee to assist the corporation in developing awareness of
558 its rates and its customer and agent service levels in
559 relationship to the voluntary market insurers writing similar
560 coverage.
561 (I) The members of the advisory committee consist of the
562 following 11 persons, one of whom must be elected chair by the
563 members of the committee: four representatives, one appointed by
564 the Florida Association of Insurance Agents, one by the Florida
565 Association of Insurance and Financial Advisors, one by the
566 Professional Insurance Agents of Florida, and one by the Latin
567 American Association of Insurance Agencies; three
568 representatives appointed by the insurers with the three highest
569 voluntary market share of residential property insurance
570 business in this the state; one representative from the Office
571 of Insurance Regulation; one consumer appointed by the board who
572 is insured by the corporation at the time of appointment to the
573 committee; one representative appointed by the Florida
574 Association of Realtors; and one representative appointed by the
575 Florida Bankers Association. All members shall be appointed to
576 3-year terms and may serve for consecutive terms.
577 (II) The committee shall report to the corporation at each
578 board meeting on insurance market issues that which may include
579 rates and rate competition with the voluntary market; service,
580 including policy issuance, claims processing, and general
581 responsiveness to policyholders, applicants, and agents; and
582 matters relating to depopulation.
583 5. Must provide a procedure for determining the eligibility
584 of a risk for coverage, as follows:
585 a. Subject to s. 627.3517, with respect to personal lines
586 residential risks, if the risk is offered coverage from an
587 authorized insurer at the insurer’s approved rate under a
588 standard policy including wind coverage or, if consistent with
589 the insurer’s underwriting rules as filed with the office, a
590 basic policy including wind coverage, for a new application to
591 the corporation for coverage, the risk is not eligible for any
592 policy issued by the corporation unless the premium for coverage
593 from the authorized insurer is more than 20 percent greater than
594 the premium for comparable coverage from the corporation.
595 Whenever an offer of coverage for a personal lines residential
596 risk is received for a policyholder of the corporation at
597 renewal from an authorized insurer, if the offer is equal to or
598 less than the corporation’s renewal premium for comparable
599 coverage, the risk is not eligible for coverage with the
600 corporation unless the premium for comparable coverage from the
601 authorized insurer is more than 20 percent greater than the
602 premium under subparagraph (n)1. for personal residential
603 properties that are not the insured’s primary residence. If the
604 risk is not able to obtain such offer, the risk is eligible for
605 a standard policy including wind coverage or a basic policy
606 including wind coverage issued by the corporation; however, if
607 the risk could not be insured under a standard policy including
608 wind coverage regardless of market conditions, the risk is
609 eligible for a basic policy including wind coverage unless
610 rejected under subparagraph 8. However, a policyholder removed
611 from the corporation through an assumption agreement remains
612 eligible for coverage from the corporation until the end of the
613 assumption period. The corporation shall determine the type of
614 policy to be provided on the basis of objective standards
615 specified in the underwriting manual and based on generally
616 accepted underwriting practices.
617 (I) If the risk accepts an offer of coverage through the
618 market assistance plan or through a mechanism established by the
619 corporation other than a plan established by s. 627.3518, before
620 a policy is issued to the risk by the corporation or during the
621 first 30 days of coverage by the corporation, and the producing
622 agent who submitted the application to the plan or to the
623 corporation is not currently appointed by the insurer, the
624 insurer shall:
625 (A) Pay to the producing agent of record of the policy for
626 the first year, an amount that is the greater of the insurer’s
627 usual and customary commission for the type of policy written or
628 a fee equal to the usual and customary commission of the
629 corporation; or
630 (B) Offer to allow the producing agent of record of the
631 policy to continue servicing the policy for at least 1 year and
632 offer to pay the agent the greater of the insurer’s or the
633 corporation’s usual and customary commission for the type of
634 policy written.
635
636 If the producing agent is unwilling or unable to accept
637 appointment, the new insurer shall pay the agent in accordance
638 with sub-sub-sub-subparagraph (A).
639 (II) If the corporation enters into a contractual agreement
640 for a take-out plan, the producing agent of record of the
641 corporation policy is entitled to retain any unearned commission
642 on the policy, and the insurer shall:
643 (A) Pay to the producing agent of record, for the first
644 year, an amount that is the greater of the insurer’s usual and
645 customary commission for the type of policy written or a fee
646 equal to the usual and customary commission of the corporation;
647 or
648 (B) Offer to allow the producing agent of record to
649 continue servicing the policy for at least 1 year and offer to
650 pay the agent the greater of the insurer’s or the corporation’s
651 usual and customary commission for the type of policy written.
652
653 If the producing agent is unwilling or unable to accept
654 appointment, the new insurer shall pay the agent in accordance
655 with sub-sub-sub-subparagraph (A).
656 b. With respect to commercial lines residential risks, for
657 a new application to the corporation for coverage, if the risk
658 is offered coverage under a policy including wind coverage from
659 an authorized insurer at its approved rate, the risk is not
660 eligible for a policy issued by the corporation unless the
661 premium for coverage from the authorized insurer is more than 15
662 percent greater than the premium for comparable coverage from
663 the corporation. Whenever an offer of coverage for a commercial
664 lines residential risk is received for a policyholder of the
665 corporation at renewal from an authorized insurer, if the offer
666 is equal to or less than the corporation’s renewal premium for
667 comparable coverage, the risk is not eligible for coverage with
668 the corporation. If the risk is not able to obtain any such
669 offer, the risk is eligible for a policy including wind coverage
670 issued by the corporation. However, a policyholder removed from
671 the corporation through an assumption agreement remains eligible
672 for coverage from the corporation until the end of the
673 assumption period.
674 (I) If the risk accepts an offer of coverage through the
675 market assistance plan or through a mechanism established by the
676 corporation other than a plan established by s. 627.3518, before
677 a policy is issued to the risk by the corporation or during the
678 first 30 days of coverage by the corporation, and the producing
679 agent who submitted the application to the plan or the
680 corporation is not currently appointed by the insurer, the
681 insurer shall:
682 (A) Pay to the producing agent of record of the policy, for
683 the first year, an amount that is the greater of the insurer’s
684 usual and customary commission for the type of policy written or
685 a fee equal to the usual and customary commission of the
686 corporation; or
687 (B) Offer to allow the producing agent of record of the
688 policy to continue servicing the policy for at least 1 year and
689 offer to pay the agent the greater of the insurer’s or the
690 corporation’s usual and customary commission for the type of
691 policy written.
692
693 If the producing agent is unwilling or unable to accept
694 appointment, the new insurer shall pay the agent in accordance
695 with sub-sub-sub-subparagraph (A).
696 (II) If the corporation enters into a contractual agreement
697 for a take-out plan, the producing agent of record of the
698 corporation policy is entitled to retain any unearned commission
699 on the policy, and the insurer shall:
700 (A) Pay to the producing agent of record, for the first
701 year, an amount that is the greater of the insurer’s usual and
702 customary commission for the type of policy written or a fee
703 equal to the usual and customary commission of the corporation;
704 or
705 (B) Offer to allow the producing agent of record to
706 continue servicing the policy for at least 1 year and offer to
707 pay the agent the greater of the insurer’s or the corporation’s
708 usual and customary commission for the type of policy written.
709
710 If the producing agent is unwilling or unable to accept
711 appointment, the new insurer shall pay the agent in accordance
712 with sub-sub-sub-subparagraph (A).
713 c. For purposes of determining comparable coverage under
714 sub-subparagraphs a. and b., the comparison must be based on
715 those forms and coverages that are reasonably comparable. The
716 corporation may rely on a determination of comparable coverage
717 and premium made by the producing agent who submits the
718 application to the corporation, made in the agent’s capacity as
719 the corporation’s agent. A comparison may be made solely of the
720 premium with respect to the main building or structure only on
721 the following basis: the same coverage A or other building
722 limits; the same percentage hurricane deductible that applies on
723 an annual basis or that applies to each hurricane for commercial
724 residential property; the same percentage of ordinance and law
725 coverage, if the same limit is offered by both the corporation
726 and the authorized insurer; the same mitigation credits, to the
727 extent the same types of credits are offered both by the
728 corporation and the authorized insurer; the same method for loss
729 payment, such as replacement cost or actual cash value, if the
730 same method is offered both by the corporation and the
731 authorized insurer in accordance with underwriting rules; and
732 any other form or coverage that is reasonably comparable as
733 determined by the board. If an application is submitted to the
734 corporation for wind-only coverage in the coastal account, the
735 premium for the corporation’s wind-only policy plus the premium
736 for the ex-wind policy that is offered by an authorized insurer
737 to the applicant must be compared to the premium for multiperil
738 coverage offered by an authorized insurer, subject to the
739 standards for comparison specified in this subparagraph. If the
740 corporation or the applicant requests from the authorized
741 insurer a breakdown of the premium of the offer by types of
742 coverage so that a comparison may be made by the corporation or
743 its agent and the authorized insurer refuses or is unable to
744 provide such information, the corporation may treat the offer as
745 not being an offer of coverage from an authorized insurer at the
746 insurer’s approved rate.
747 6. Must include rules for classifications of risks and
748 rates.
749 7. Must provide that if premium and investment income for
750 an account attributable to a particular calendar year are in
751 excess of projected losses and expenses for the account
752 attributable to that year, such excess shall be held in surplus
753 in the account. Such surplus must be available to defray
754 deficits in that account as to future years and used for that
755 purpose before assessing assessable insurers and assessable
756 insureds as to any calendar year.
757 8. Must provide objective criteria and procedures to be
758 uniformly applied to all applicants in determining whether an
759 individual risk is so hazardous as to be uninsurable. In making
760 this determination and in establishing the criteria and
761 procedures, the following must be considered:
762 a. Whether the likelihood of a loss for the individual risk
763 is substantially higher than for other risks of the same class;
764 and
765 b. Whether the uncertainty associated with the individual
766 risk is such that an appropriate premium cannot be determined.
767
768 The acceptance or rejection of a risk by the corporation must
769 shall be construed as the private placement of insurance, and
770 the provisions of chapter 120 does do not apply.
771 9. Must provide that the corporation make its best efforts
772 to procure catastrophe reinsurance at reasonable rates, to cover
773 its projected 100-year probable maximum loss as determined by
774 the board of governors. If catastrophe reinsurance is not
775 available at reasonable rates, the corporation need not purchase
776 it, but the corporation shall include the costs of reinsurance
777 to cover its projected 100-year probable maximum loss in its
778 rate calculations even if it does not purchase catastrophe
779 reinsurance.
780 10. The policies issued by the corporation must provide
781 that if the corporation or the market assistance plan obtains an
782 offer from an authorized insurer to cover the risk at its
783 approved rates, the risk is no longer eligible for renewal
784 through the corporation, except as otherwise provided in this
785 subsection.
786 11. Corporation policies and applications must include a
787 notice that the corporation policy could, under this section, be
788 replaced with a policy issued by an authorized insurer which
789 does not provide coverage identical to the coverage provided by
790 the corporation. The notice must also specify that acceptance of
791 corporation coverage creates a conclusive presumption that the
792 applicant or policyholder is aware of this potential.
793 12. May establish, subject to approval by the office,
794 different eligibility requirements and operational procedures
795 for any line or type of coverage for any specified county or
796 area if the board determines that such changes are justified due
797 to the voluntary market being sufficiently stable and
798 competitive in such area or for such line or type of coverage
799 and that consumers who, in good faith, are unable to obtain
800 insurance through the voluntary market through ordinary methods
801 continue to have access to coverage from the corporation. If
802 coverage is sought in connection with a real property transfer,
803 the requirements and procedures may not provide an effective
804 date of coverage later than the date of the closing of the
805 transfer as established by the transferor, the transferee, and,
806 if applicable, the lender.
807 13. Must provide that, with respect to the coastal account,
808 any assessable insurer with a surplus as to policyholders of $25
809 million or less writing 25 percent or more of its total
810 countrywide property insurance premiums in this state may
811 petition the office, within the first 90 days of each calendar
812 year, to qualify as a limited apportionment company. A regular
813 assessment levied by the corporation on a limited apportionment
814 company for a deficit incurred by the corporation for the
815 coastal account may be paid to the corporation on a monthly
816 basis as the assessments are collected by the limited
817 apportionment company from its insureds, but a limited
818 apportionment company must begin collecting the regular
819 assessments not later than 90 days after the regular assessments
820 are levied by the corporation, and the regular assessments must
821 be paid in full within 15 months after being levied by the
822 corporation. A limited apportionment company shall collect from
823 its policyholders any emergency assessment imposed under sub
824 subparagraph (b)3.d. The plan must provide that, if the office
825 determines that any regular assessment will result in an
826 impairment of the surplus of a limited apportionment company,
827 the office may direct that all or part of such assessment be
828 deferred as provided in subparagraph (q)4. However, an emergency
829 assessment to be collected from policyholders under sub
830 subparagraph (b)3.d. may not be limited or deferred.
831 14. Must provide that the corporation appoint as its
832 licensed agents only those agents who throughout such
833 appointments also hold an appointment as defined in s. 626.015
834 by an insurer who is authorized to write and is actually writing
835 or renewing personal lines residential property coverage,
836 commercial residential property coverage, or commercial
837 nonresidential property coverage within this the state.
838 15. Must provide a premium payment plan option to its
839 policyholders which, at a minimum, allows for quarterly and
840 semiannual payment of premiums. A monthly payment plan may, but
841 is not required to, be offered.
842 16. Must limit coverage on mobile homes or manufactured
843 homes built before 1994 to actual cash value of the dwelling
844 rather than replacement costs of the dwelling.
845 17. Must provide coverage for manufactured or mobile home
846 dwellings. Such coverage must also include the following
847 attached structures:
848 a. Screened enclosures that are aluminum framed or screened
849 enclosures that are not covered by the same or substantially the
850 same materials as those of the primary dwelling;
851 b. Carports that are aluminum or carports that are not
852 covered by the same or substantially the same materials as those
853 of the primary dwelling; and
854 c. Patios that have a roof covering that is constructed of
855 materials that are not the same or substantially the same
856 materials as those of the primary dwelling.
857
858 The corporation shall make available a policy for mobile homes
859 or manufactured homes for a minimum insured value of at least
860 $3,000.
861 18. May provide such limits of coverage as the board
862 determines, consistent with the requirements of this subsection.
863 19. May require commercial property to meet specified
864 hurricane mitigation construction features as a condition of
865 eligibility for coverage.
866 20. Must provide that new or renewal policies issued by the
867 corporation on or after January 1, 2012, which cover sinkhole
868 loss do not include coverage for any loss to appurtenant
869 structures, driveways, sidewalks, decks, or patios that are
870 directly or indirectly caused by sinkhole activity. The
871 corporation shall exclude such coverage using a notice of
872 coverage change, which may be included with the policy renewal,
873 and not by issuance of a notice of nonrenewal of the excluded
874 coverage upon renewal of the current policy.
875 21. As of January 1, 2012, must require that the agent
876 obtain from an applicant for coverage from the corporation an
877 acknowledgment signed by the applicant, which includes, at a
878 minimum, the following statement:
879
880 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
881 AND ASSESSMENT LIABILITY:
882
883 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
884 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
885 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
886 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
887 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
888 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
889 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
890 LEGISLATURE.
891 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
892 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
893 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
894 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN
895 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
896 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
897 ARE REGULATED AND APPROVED BY THE STATE.
898 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
899 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
900 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
901 FLORIDA LEGISLATURE.
902 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
903 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
904 STATE OF FLORIDA.
905
906 a. The corporation shall maintain, in electronic format or
907 otherwise, a copy of the applicant’s signed acknowledgment and
908 provide a copy of the statement to the policyholder as part of
909 the first renewal after the effective date of this subparagraph.
910 b. The signed acknowledgment form creates a conclusive
911 presumption that the policyholder understood and accepted his or
912 her potential surcharge and assessment liability as a
913 policyholder of the corporation.
914 22. The corporation shall pay a producing agent of record a
915 reasonable commission not to exceed the average of commissions
916 paid in the preceding year by the 20 admitted insurers writing
917 the greatest market share of property insurance in this state.
918 (n)1. Rates for coverage provided by the corporation must
919 be actuarially sound and subject to s. 627.062, except as
920 otherwise provided in this paragraph. The corporation shall file
921 its recommended rates with the office at least annually. The
922 corporation shall provide any additional information regarding
923 the rates which the office requires. The office shall consider
924 the recommendations of the board and issue a final order
925 establishing the rates for the corporation within 45 days after
926 the recommended rates are filed. The corporation may not pursue
927 an administrative challenge or judicial review of the final
928 order of the office.
929 2. In addition to the rates otherwise determined pursuant
930 to this paragraph, the corporation shall impose and collect an
931 amount equal to the premium tax provided in s. 624.509 to
932 augment the financial resources of the corporation.
933 3. If After the public hurricane loss-projection model
934 under s. 627.06281 is has been found to be accurate and reliable
935 by the Florida Commission on Hurricane Loss Projection
936 Methodology, it must the model shall be considered when
937 establishing the windstorm portion of the corporation’s rates.
938 The corporation may use the public model results in combination
939 with the results of private models to calculate rates for the
940 windstorm portion of the corporation’s rates. This subparagraph
941 does not require or allow the corporation to adopt rates lower
942 than the rates otherwise required or allowed by this paragraph.
943 4. The corporation must make a recommended actuarially
944 sound rate filing for each personal and commercial line of
945 business it writes.
946 5. Notwithstanding the board’s recommended rates and the
947 office’s final order regarding the corporation’s filed rates
948 under subparagraph 1., the corporation shall annually implement
949 a rate increase that which, except for sinkhole coverage, does
950 not exceed the following for any single policy issued by the
951 corporation, excluding coverage changes and surcharges:
952 a. Eleven percent for 2022.
953 b. Twelve percent for 2023.
954 c. Thirteen percent for 2024.
955 d. Fourteen percent for 2025.
956 e. Fifteen percent for 2026 and all subsequent years.
957 6. The corporation may also implement an increase to
958 reflect the effect on the corporation of the cash buildup factor
959 pursuant to s. 215.555(5)(b).
960 7. The corporation’s implementation of rates as prescribed
961 in subparagraph 5. must shall cease for any line of business
962 written by the corporation upon the corporation’s implementation
963 of actuarially sound rates. Thereafter, the corporation shall
964 annually make a recommended actuarially sound rate filing for
965 each commercial and personal line of business the corporation
966 writes.
967 (q)1. The corporation shall certify to the office its needs
968 for annual assessments as to a particular calendar year, and for
969 any interim assessments that it deems to be necessary to sustain
970 operations as to a particular year pending the receipt of annual
971 assessments. Upon verification, the office shall approve such
972 certification, and the corporation shall levy such annual or
973 interim assessments. Such assessments shall be prorated as
974 provided in paragraph (b). The corporation shall take all
975 reasonable and prudent steps necessary to collect the amount of
976 assessments due from each assessable insurer, including, if
977 prudent, filing suit to collect the assessments, and the office
978 may provide such assistance to the corporation it deems
979 appropriate. If the corporation is unable to collect an
980 assessment from any assessable insurer, the uncollected
981 assessments shall be levied as an additional assessment against
982 the assessable insurers and any assessable insurer required to
983 pay an additional assessment as a result of such failure to pay
984 shall have a cause of action against such nonpaying assessable
985 insurer. Assessments shall be included as an appropriate factor
986 in the making of rates. The failure of a surplus lines agent to
987 collect and remit any regular or emergency assessment levied by
988 the corporation is considered to be a violation of s. 626.936
989 and subjects the surplus lines agent to the penalties provided
990 in that section.
991 2. The governing body of any unit of local government, any
992 residents of which are insured by the corporation, may issue
993 bonds as defined in s. 125.013 or s. 166.101 from time to time
994 to fund an assistance program, in conjunction with the
995 corporation, for the purpose of defraying deficits of the
996 corporation. In order to avoid needless and indiscriminate
997 proliferation, duplication, and fragmentation of such assistance
998 programs, any unit of local government, any residents of which
999 are insured by the corporation, may provide for the payment of
1000 losses, regardless of whether or not the losses occurred within
1001 or outside of the territorial jurisdiction of the local
1002 government. Revenue bonds under this subparagraph may not be
1003 issued until validated pursuant to chapter 75, unless a state of
1004 emergency is declared by executive order or proclamation of the
1005 Governor pursuant to s. 252.36 making such findings as are
1006 necessary to determine that it is in the best interests of, and
1007 necessary for, the protection of the public health, safety, and
1008 general welfare of residents of this state and declaring it an
1009 essential public purpose to permit certain municipalities or
1010 counties to issue such bonds as will permit relief to claimants
1011 and policyholders of the corporation. Any such unit of local
1012 government may enter into such contracts with the corporation
1013 and with any other entity created pursuant to this subsection as
1014 are necessary to carry out this paragraph. Any bonds issued
1015 under this subparagraph shall be payable from and secured by
1016 moneys received by the corporation from emergency assessments
1017 under sub-subparagraph (b)3.d., and assigned and pledged to or
1018 on behalf of the unit of local government for the benefit of the
1019 holders of such bonds. The funds, credit, property, and taxing
1020 power of the state or of the unit of local government may shall
1021 not be pledged for the payment of such bonds.
1022 3.a. The corporation shall adopt one or more programs
1023 subject to approval by the office for the reduction of both new
1024 and renewal writings in the corporation. Beginning January 1,
1025 2008, any program the corporation adopts for the payment of
1026 bonuses to an insurer for each risk the insurer removes from the
1027 corporation shall comply with s. 627.3511(2) and may not exceed
1028 the amount referenced in s. 627.3511(2) for each risk removed.
1029 The corporation may consider any prudent and not unfairly
1030 discriminatory approach to reducing corporation writings, and
1031 may adopt a credit against assessment liability or other
1032 liability that provides an incentive for insurers to take risks
1033 out of the corporation and to keep risks out of the corporation
1034 by maintaining or increasing voluntary writings in counties or
1035 areas in which corporation risks are highly concentrated and a
1036 program to provide a formula under which an insurer voluntarily
1037 taking risks out of the corporation by maintaining or increasing
1038 voluntary writings will be relieved wholly or partially from
1039 assessments under sub-subparagraph (b)3.a. However, any “take
1040 out bonus” or payment to an insurer must be conditioned on the
1041 property being insured for at least 5 years by the insurer,
1042 unless canceled or nonrenewed by the policyholder. If the policy
1043 is canceled or nonrenewed by the policyholder before the end of
1044 the 5-year period, the amount of the take-out bonus must be
1045 prorated for the time period the policy was insured. When the
1046 corporation enters into a contractual agreement for a take-out
1047 plan, the producing agent of record of the corporation policy is
1048 entitled to retain any unearned commission on such policy, and
1049 the insurer shall either:
1050 (I) Pay to the producing agent of record of the policy, for
1051 the first year, an amount which is the greater of the insurer’s
1052 usual and customary commission for the type of policy written or
1053 a policy fee equal to the usual and customary commission of the
1054 corporation; or
1055 (II) Offer to allow the producing agent of record of the
1056 policy to continue servicing the policy for a period of not less
1057 than 1 year and offer to pay the agent the insurer’s usual and
1058 customary commission for the type of policy written. If the
1059 producing agent is unwilling or unable to accept appointment by
1060 the new insurer, the new insurer shall pay the agent in
1061 accordance with sub-sub-subparagraph (I).
1062 b. Any credit or exemption from regular assessments adopted
1063 under this subparagraph shall last no longer than the 3 years
1064 following the cancellation or expiration of the policy by the
1065 corporation. With the approval of the office, the board may
1066 extend such credits for an additional year if the insurer
1067 guarantees an additional year of renewability for all policies
1068 removed from the corporation, or for 2 additional years if the
1069 insurer guarantees 2 additional years of renewability for all
1070 policies so removed.
1071 c. There shall be no credit, limitation, exemption, or
1072 deferment from emergency assessments to be collected from
1073 policyholders pursuant to sub-subparagraph (b)3.d.
1074 d. Notwithstanding any other law, for purposes of a
1075 depopulation, take-out, or keep-out program adopted by the
1076 corporation, including an initial or renewal offer of coverage
1077 made to a policyholder removed from the corporation pursuant to
1078 such program, an eligible surplus lines insurer may participate
1079 in the program in the same manner and on the same terms as an
1080 authorized insurer, except as provided under this sub
1081 subparagraph.
1082 (I) To qualify for participation, the surplus lines insurer
1083 must first obtain approval from the office for its depopulation,
1084 take-out, or keep-out plan and then comply with all of the
1085 corporation’s requirements for the plan applicable to admitted
1086 insurers and with all statutory provisions applicable to the
1087 removal of policies from the corporation.
1088 (II) In considering a surplus lines insurer’s request for
1089 approval for its plan, the office shall determine whether the
1090 surplus lines insurer meets the following requirements:
1091 (A) Maintains a surplus of $50 million on a company or
1092 pooled basis;
1093 (B) Has a superior, excellent, exceptional, or equally
1094 comparable financial strength rating by a rating agency
1095 acceptable to the office;
1096 (C) Maintains reserves, surplus, reinsurance, and
1097 reinsurance equivalents sufficient to cover the insurer’s 100
1098 year probable maximum hurricane loss at least twice in a single
1099 hurricane season and submits such reinsurance to the office to
1100 review for purposes of the take-out;
1101 (D) Provides prominent notice to the policyholder before
1102 the assumption of the policy that surplus lines policies are not
1103 provided coverage by the Florida Insurance Guaranty Association
1104 and provides an outline of any substantial differences in
1105 coverage between the existing policy and the policy being
1106 offered to the insured; and
1107 (E) Provides policy coverage similar to that provided by
1108 the corporation.
1109 (III) To obtain approval for a plan, the surplus lines
1110 insurer must file the following with the office:
1111 (A) Information requested by the office to demonstrate
1112 compliance with s. 624.404(3), including biographical
1113 affidavits, fingerprints processed pursuant to s. 624.34, and
1114 the results of criminal history records checks for officers and
1115 directors of the insurer and its parent or holding company;
1116 (B) A service-of-process consent and agreement form
1117 executed by the insurer;
1118 (C) Proof that the insurer has been an eligible or
1119 authorized insurer for at least 3 years;
1120 (D) A duly authenticated copy of the insurer’s current
1121 audited financial statement, in English, which, in the case of
1122 statements originally made in the currencies of other countries,
1123 expresses all monetary values in United States dollars, at an
1124 exchange rate then current and shown in the statement, and
1125 including any additional information relative to the insurer as
1126 the office may request;
1127 (E) A complete certified copy of the latest official
1128 financial statement required by the insurer’s domiciliary state,
1129 if different from the statement required by sub-sub-sub
1130 subparagraph (D); and
1131 (F) If applicable, a copy of the United States trust
1132 account agreement.
1133
1134 This sub-sub-subparagraph does not subject any surplus lines
1135 insurer to requirements in addition to part VIII of chapter 626.
1136 Surplus lines brokers making an offer of coverage under this
1137 sub-subparagraph are not required to comply with s.
1138 626.916(1)(a), (b), (c), or (e).
1139 (IV) Within 10 days after the date of assumption, the
1140 surplus lines insurer assuming policies from the corporation
1141 shall remit to the Bureau of Collateral Management within the
1142 Department of Financial Services a special deposit equal to the
1143 unearned premium net of unearned commissions on the assumed
1144 block of business. The surplus lines insurer shall submit to the
1145 office, along with the special deposit, an accounting of the
1146 policies assumed and the amount of unearned premium for such
1147 policies and a sworn affidavit attesting to the accuracy of the
1148 accounting by an officer of the surplus lines insurer.
1149 Thereafter, the surplus lines insurer shall make a filing within
1150 10 days after the end of each calendar quarter attesting to the
1151 unearned premium in force for the previous quarter on policies
1152 assumed from the corporation and shall submit additional funds
1153 with that filing if the special deposit is insufficient to cover
1154 the unearned premium on assumed policies, or shall receive a
1155 return of funds within 60 days if the special deposit exceeds
1156 the amount of unearned premium required for assumed policies.
1157 The special deposit is an asset of the surplus lines insurer
1158 which is held by the department for the benefit of state
1159 policyholders of the surplus lines insurer in the event of the
1160 insolvency of the surplus lines insurer. If an order of
1161 liquidation is entered in any state against the surplus lines
1162 insurer, the department may use the special deposit for payment
1163 of unearned premium or policy claims, return all or part of the
1164 deposit to the domiciliary receiver, or use the funds in
1165 accordance with any action authorized under part I of chapter
1166 631 or in compliance with any order of a court having
1167 jurisdiction over the insolvency.
1168 (V) In advance of a surplus lines insurer assuming a
1169 policy, surplus lines brokers representing a surplus lines
1170 insurer on a take-out program shall obtain confirmation, in
1171 written or e-mail form, from each producing agent stating that
1172 the agent is willing to participate in the take-out program with
1173 the surplus lines insurer engaging in the take-out program. The
1174 take-out program is also subject to s. 627.3517. If a
1175 policyholder is selected for removal from the corporation by a
1176 surplus lines insurer and an authorized insurer, the corporation
1177 must give priority to the offer of coverage from the authorized
1178 insurer.
1179 (VI)(A) A risk that has a dwelling replacement cost of
1180 $700,000 or more or a single condominium unit that has a
1181 combined dwelling and contents replacement cost of $700,000 or
1182 more is not eligible for coverage by the corporation if it is
1183 offered comparable coverage from a qualified surplus lines
1184 insurer at a premium no greater than 15 percent above the
1185 premium charged by the corporation.
1186 (B) A risk that has a dwelling replacement cost below
1187 $700,000 or a single condominium unit that has a combined
1188 dwelling and contents replacement cost below $700,000 remains
1189 eligible for coverage by the corporation if it is offered
1190 coverage from a qualified surplus lines insurer.
1191 4. The plan shall provide for the deferment, in whole or in
1192 part, of the assessment of an assessable insurer, other than an
1193 emergency assessment collected from policyholders pursuant to
1194 sub-subparagraph (b)3.d., if the office finds that payment of
1195 the assessment would endanger or impair the solvency of the
1196 insurer. In the event an assessment against an assessable
1197 insurer is deferred in whole or in part, the amount by which
1198 such assessment is deferred may be assessed against the other
1199 assessable insurers in a manner consistent with the basis for
1200 assessments set forth in paragraph (b).
1201 5. Effective July 1, 2007, in order to evaluate the costs
1202 and benefits of approved take-out plans, if the corporation pays
1203 a bonus or other payment to an insurer for an approved take-out
1204 plan, it shall maintain a record of the address or such other
1205 identifying information on the property or risk removed in order
1206 to track if and when the property or risk is later insured by
1207 the corporation.
1208 6. Any policy taken out, assumed, or removed from the
1209 corporation is, as of the effective date of the take-out,
1210 assumption, or removal, direct insurance issued by the insurer
1211 and not by the corporation, even if the corporation continues to
1212 service the policies. This subparagraph applies to policies of
1213 the corporation and not policies taken out, assumed, or removed
1214 from any other entity.
1215 7. For a policy taken out, assumed, or removed from the
1216 corporation, the insurer may, for a period of no more than 3
1217 years, continue to use any of the corporation’s policy forms or
1218 endorsements that apply to the policy taken out, removed, or
1219 assumed without obtaining approval from the office for use of
1220 such policy form or endorsement.
1221 (x)1. The following records of the corporation are
1222 confidential and exempt from the provisions of s. 119.07(1) and
1223 s. 24(a), Art. I of the State Constitution:
1224 a. Underwriting files, except that a policyholder or an
1225 applicant shall have access to his or her own underwriting
1226 files. Confidential and exempt underwriting file records may
1227 also be released to other governmental agencies upon written
1228 request and demonstration of need; such records held by the
1229 receiving agency remain confidential and exempt as provided
1230 herein.
1231 b. Claims files, until termination of all litigation and
1232 settlement of all claims arising out of the same incident,
1233 although portions of the claims files may remain exempt, as
1234 otherwise provided by law. Confidential and exempt claims file
1235 records may be released to other governmental agencies upon
1236 written request and demonstration of need; such records held by
1237 the receiving agency remain confidential and exempt as provided
1238 herein.
1239 c. Records obtained or generated by an internal auditor
1240 pursuant to a routine audit, until the audit is completed, or if
1241 the audit is conducted as part of an investigation, until the
1242 investigation is closed or ceases to be active. An investigation
1243 is considered “active” while the investigation is being
1244 conducted with a reasonable, good faith belief that it could
1245 lead to the filing of administrative, civil, or criminal
1246 proceedings.
1247 d. Matters reasonably encompassed in privileged attorney
1248 client communications.
1249 e. Proprietary information licensed to the corporation
1250 under contract and the contract provides for the confidentiality
1251 of such proprietary information.
1252 f. All information relating to the medical condition or
1253 medical status of a corporation employee which is not relevant
1254 to the employee’s capacity to perform his or her duties, except
1255 as otherwise provided in this paragraph. Information that is
1256 exempt includes shall include, but is not limited to,
1257 information relating to workers’ compensation, insurance
1258 benefits, and retirement or disability benefits.
1259 g. Upon an employee’s entrance into the employee assistance
1260 program, a program to assist any employee who has a behavioral
1261 or medical disorder, substance abuse problem, or emotional
1262 difficulty that affects the employee’s job performance, all
1263 records relative to that participation are shall be confidential
1264 and exempt from the provisions of s. 119.07(1) and s. 24(a),
1265 Art. I of the State Constitution, except as otherwise provided
1266 in s. 112.0455(11).
1267 h. Information relating to negotiations for financing,
1268 reinsurance, depopulation, or contractual services, until the
1269 conclusion of the negotiations.
1270 i. Minutes of closed meetings regarding underwriting files,
1271 and minutes of closed meetings regarding an open claims file
1272 until termination of all litigation and settlement of all claims
1273 with regard to that claim, except that information otherwise
1274 confidential or exempt by law must shall be redacted.
1275 2. If an authorized insurer, a reinsurance intermediary, an
1276 eligible surplus lines insurer, or an entity that has filed an
1277 application with the office for licensure as a property and
1278 casualty insurer in this state is considering writing or
1279 assisting in the underwriting of a risk insured by the
1280 corporation, relevant information from both the underwriting
1281 files and confidential claims files may be released to the
1282 insurer, reinsurance intermediary, eligible surplus lines
1283 insurer, or entity that has been created to seek authority to
1284 write property insurance in this state, provided that the
1285 recipient insurer agrees in writing, notarized and under oath,
1286 to maintain the confidentiality of such files. If a policy file
1287 is transferred to an insurer, that policy file is no longer a
1288 public record because it is not held by an agency subject to the
1289 provisions of the public records law. Underwriting files and
1290 confidential claims files may also be released to staff and the
1291 board of governors of the market assistance plan established
1292 pursuant to s. 627.3515, who must retain the confidentiality of
1293 such files, except such files may be released to authorized
1294 insurers that are considering assuming the risks to which the
1295 files apply, provided the insurer agrees in writing, notarized
1296 and under oath, to maintain the confidentiality of such files.
1297 Finally, the corporation or the board or staff of the market
1298 assistance plan may make the following information obtained from
1299 underwriting files and confidential claims files available to an
1300 entity that has obtained a permit to become an authorized
1301 insurer, a reinsurer that may provide reinsurance under s.
1302 624.610, a licensed reinsurance broker, a licensed rating
1303 organization, a modeling company, or a licensed general lines
1304 insurance agent: name, address, and telephone number of the
1305 residential property owner or insured; location of the risk;
1306 rating information; loss history; and policy type. The receiving
1307 person must retain the confidentiality of the information
1308 received and may use the information only for the purposes of
1309 developing a take-out plan or a rating plan to be submitted to
1310 the office for approval or otherwise analyzing the underwriting
1311 of a risk or risks insured by the corporation on behalf of the
1312 private insurance market. A licensed general lines insurance
1313 agent may not use such information for the direct solicitation
1314 of policyholders.
1315 3. A policyholder who has filed suit against the
1316 corporation has the right to discover the contents of his or her
1317 own claims file to the same extent that discovery of such
1318 contents would be available from a private insurer in litigation
1319 as provided by the Florida Rules of Civil Procedure, the Florida
1320 Evidence Code, and other applicable law. Pursuant to subpoena, a
1321 third party has the right to discover the contents of an
1322 insured’s or applicant’s underwriting or claims file to the same
1323 extent that discovery of such contents would be available from a
1324 private insurer by subpoena as provided by the Florida Rules of
1325 Civil Procedure, the Florida Evidence Code, and other applicable
1326 law, and subject to any confidentiality protections requested by
1327 the corporation and agreed to by the seeking party or ordered by
1328 the court. The corporation may release confidential underwriting
1329 and claims file contents and information as it deems necessary
1330 and appropriate to underwrite or service insurance policies and
1331 claims, subject to any confidentiality protections deemed
1332 necessary and appropriate by the corporation.
1333 4. Portions of meetings of the corporation are exempt from
1334 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1335 Constitution wherein confidential underwriting files or
1336 confidential open claims files are discussed. All portions of
1337 corporation meetings which are closed to the public shall be
1338 recorded by a court reporter. The court reporter shall record
1339 the times of commencement and termination of the meeting, all
1340 discussion and proceedings, the names of all persons present at
1341 any time, and the names of all persons speaking. No portion of
1342 any closed meeting shall be off the record. Subject to the
1343 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1344 notes of any closed meeting shall be retained by the corporation
1345 for a minimum of 5 years. A copy of the transcript, less any
1346 exempt matters, of any closed meeting wherein claims are
1347 discussed shall become public as to individual claims after
1348 settlement of the claim.
1349 Section 3. Section 627.3517, Florida Statutes, is amended
1350 to read:
1351 627.3517 Consumer choice.—No provision of s. 627.351, s.
1352 627.3511, or s. 627.3515 shall be construed to impair the right
1353 of any insurance risk apportionment plan policyholder, upon
1354 receipt of any keep-out keepout or take-out offer, to retain his
1355 or her current agent, so long as that agent is duly licensed and
1356 appointed by the insurance risk apportionment plan or otherwise
1357 authorized to place business with the insurance risk
1358 apportionment plan. This right may shall not be canceled,
1359 suspended, impeded, abridged, or otherwise compromised by any
1360 rule, plan of operation, or depopulation plan, whether through
1361 keep-out keepout, take-out, midterm assumption, or any other
1362 means, of any insurance risk apportionment plan or depopulation
1363 plan, including, but not limited to, those described in s.
1364 627.351, s. 627.3511, or s. 627.3515. The commission shall adopt
1365 any rules necessary to cause any insurance risk apportionment
1366 plan or market assistance plan under such sections to
1367 demonstrate that the operations of the plan do not interfere
1368 with, promote, or allow interference with the rights created
1369 under this section. If the policyholder’s current agent is
1370 unable or unwilling to be appointed with the insurer making the
1371 take-out or keep-out keepout offer, the policyholder is shall
1372 not be disqualified from participation in the appropriate
1373 insurance risk apportionment plan because of an offer of
1374 coverage in the voluntary market. An offer of full property
1375 insurance coverage by the insurer currently insuring either the
1376 ex-wind or wind-only coverage on the policy to which the offer
1377 applies is shall not be considered a take-out or keep-out
1378 keepout offer. Any rule, plan of operation, or plan of
1379 depopulation, through keep-out keepout, take-out, midterm
1380 assumption, or any other means, of any property insurance risk
1381 apportionment plan under s. 627.351(2) or (6) is subject to ss.
1382 627.351(2)(b) and (6)(c) and 627.3511(4).
1383 Section 4. Subsection (5) of section 627.3518, Florida
1384 Statutes, is amended, and paragraph (a) of subsection (6) and
1385 paragraph (a) of subsection (7) of that section are reenacted,
1386 to read:
1387 627.3518 Citizens Property Insurance Corporation
1388 policyholder eligibility clearinghouse program.—The purpose of
1389 this section is to provide a framework for the corporation to
1390 implement a clearinghouse program by January 1, 2014.
1391 (5) Notwithstanding s. 627.3517, any applicant for new
1392 coverage from the corporation is not eligible for coverage from
1393 the corporation if provided an offer of coverage from an
1394 authorized insurer through the program at a premium that is at
1395 or below the eligibility threshold established in s.
1396 627.351(6)(c)5.a. Whenever an offer of coverage for a personal
1397 lines risk is received for a policyholder of the corporation at
1398 renewal from an authorized insurer through the program, if the
1399 offer is at or below the eligibility threshold specified in s.
1400 627.351(6)(c)5.a. equal to or less than the corporation’s
1401 renewal premium for comparable coverage, the risk is not
1402 eligible for coverage with the corporation. In the event that an
1403 offer of coverage for a new applicant or a personal lines risk
1404 at renewal is received from an authorized insurer through the
1405 program, and the premium offered exceeds the eligibility
1406 thresholds specified threshold contained in s.
1407 627.351(6)(c)5.a., the applicant or insured may elect to accept
1408 such coverage, or may elect to accept or continue coverage with
1409 the corporation. In the event an offer of coverage for a
1410 personal lines risk is received from an authorized insurer at
1411 renewal through the program, and the premium offered is more
1412 than the corporation’s renewal premium for comparable coverage,
1413 the insured may elect to accept such coverage, or may elect to
1414 accept or continue coverage with the corporation. Section
1415 627.351(6)(c)5.a.(I) does not apply to an offer of coverage from
1416 an authorized insurer obtained through the program. An applicant
1417 for coverage from the corporation who was declared ineligible
1418 for coverage at renewal by the corporation in the previous 36
1419 months due to an offer of coverage pursuant to this subsection
1420 shall be considered a renewal under this section if the
1421 corporation determines that the authorized insurer making the
1422 offer of coverage pursuant to this subsection continues to
1423 insure the applicant and increased the rate on the policy in
1424 excess of the increase allowed for the corporation under s.
1425 627.351(6)(n)5.
1426 (6) Independent insurance agents submitting new
1427 applications for coverage or that are the agent of record on a
1428 renewal policy submitted to the program:
1429 (a) Are granted and must maintain ownership and the
1430 exclusive use of expirations, records, or other written or
1431 electronic information directly related to such applications or
1432 renewals written through the corporation or through an insurer
1433 participating in the program, notwithstanding s.
1434 627.351(6)(c)5.a.(I)(B) and (II)(B). Such ownership is granted
1435 for as long as the insured remains with the agency or until sold
1436 or surrendered in writing by the agent. Contracts with the
1437 corporation or required by the corporation must not amend,
1438 modify, interfere with, or limit such rights of ownership. Such
1439 expirations, records, or other written or electronic information
1440 may be used to review an application, issue a policy, or for any
1441 other purpose necessary for placing such business through the
1442 program.
1443
1444 Applicants ineligible for coverage in accordance with subsection
1445 (5) remain ineligible if their independent agent is unwilling or
1446 unable to enter into a standard or limited agency agreement with
1447 an insurer participating in the program.
1448 (7) Exclusive agents submitting new applications for
1449 coverage or that are the agent of record on a renewal policy
1450 submitted to the program:
1451 (a) Must maintain ownership and the exclusive use of
1452 expirations, records, or other written or electronic information
1453 directly related to such applications or renewals written
1454 through the corporation or through an insurer participating in
1455 the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
1456 (II)(B). Contracts with the corporation or required by the
1457 corporation must not amend, modify, interfere with, or limit
1458 such rights of ownership. Such expirations, records, or other
1459 written or electronic information may be used to review an
1460 application, issue a policy, or for any other purpose necessary
1461 for placing such business through the program.
1462
1463 Applicants ineligible for coverage in accordance with subsection
1464 (5) remain ineligible if their exclusive agent is unwilling or
1465 unable to enter into a standard or limited agency agreement with
1466 an insurer making an offer of coverage to that applicant.
1467 Section 5. This act shall take effect January 1, 2023.