Florida Senate - 2022 CS for SB 186
By the Committee on Banking and Insurance; and Senator Brandes
597-02315-22 2022186c1
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.; requiring,
5 rather than authorizing, the corporation to use a
6 single account under certain circumstances; revising
7 the method for determining the amounts of potential
8 surcharges to be levied against policyholders under
9 certain circumstances; requiring the corporation to
10 annually collect a specified surcharge upon renewal on
11 certain policies; defining the term “primary
12 residence”; revising conditions for eligibility for
13 coverage with the corporation to require a certain
14 minimum premium; specifying a limit for agent
15 commission rates; requiring that policies assumed by
16 the corporation from unsound insurers be charged a
17 specified premium until certain conditions are met;
18 defining the term “unsound insurer”; providing that
19 eligible surplus lines insurers may participate, in
20 the same manner and on the same terms as an authorized
21 insurer, in depopulation, take-out, or keep-out
22 programs relating to policies removed from Citizens
23 Property Insurance Corporation; providing certain
24 exceptions, conditions, and requirements relating to
25 such participation by a surplus lines insurer in the
26 corporation’s depopulation, take-out, or keep-out
27 programs; providing thresholds for eligibility for
28 coverage by the corporation for risks that are offered
29 coverage from qualified surplus lines insurers;
30 authorizing information from underwriting files and
31 confidential claims files to be released under certain
32 circumstances by the corporation to specified entities
33 that consider writing or underwriting risks insured by
34 the corporation; specifying that only the
35 corporation’s transfer of a policy file to an insurer,
36 as opposed to the transfer of any file, changes the
37 file’s public record status; making technical changes;
38 amending s. 627.3517, F.S.; making technical changes;
39 amending s. 627.3518, F.S., and reenacting paragraphs
40 (6)(a) and (7)(a) of that section, relating to the
41 Citizens Property Insurance Corporation policyholder
42 eligibility clearinghouse program, to incorporate the
43 amendments made to s. 627.351, F.S., in references
44 thereto; conforming provisions to changes made by the
45 act; providing an effective date.
46
47 Be It Enacted by the Legislature of the State of Florida:
48
49 Section 1. Subsection (2) of section 627.021, Florida
50 Statutes, is amended to read:
51 627.021 Scope of this part.—
52 (2) This part does not apply to:
53 (a) Reinsurance, except joint reinsurance as provided in s.
54 627.311.
55 (b) Insurance against loss of or damage to aircraft, their
56 hulls, accessories, or equipment, or against liability, other
57 than workers’ compensation and employer’s liability, arising out
58 of the ownership, maintenance, or use of aircraft.
59 (c) Insurance of vessels or craft, their cargoes, marine
60 builders’ risks, marine protection and indemnity, or other risks
61 commonly insured under marine insurance policies.
62 (d) Commercial inland marine insurance.
63 (e) Except as may be specifically stated to apply, surplus
64 lines insurance placed under the provisions of ss. 626.913
65 626.937.
66 Section 2. Paragraphs (b), (c), (n), (q), and (x) of
67 subsection (6) of section 627.351, Florida Statutes, are amended
68 to read:
69 627.351 Insurance risk apportionment plans.—
70 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
71 (b)1. All insurers authorized to write one or more subject
72 lines of business in this state are subject to assessment by the
73 corporation and, for the purposes of this subsection, are
74 referred to collectively as “assessable insurers.” Insurers
75 writing one or more subject lines of business in this state
76 pursuant to part VIII of chapter 626 are not assessable
77 insurers; however, insureds who procure one or more subject
78 lines of business in this state pursuant to part VIII of chapter
79 626 are subject to assessment by the corporation and are
80 referred to collectively as “assessable insureds.” An insurer’s
81 assessment liability begins on the first day of the calendar
82 year following the year in which the insurer was issued a
83 certificate of authority to transact insurance for subject lines
84 of business in this state and terminates 1 year after the end of
85 the first calendar year during which the insurer no longer holds
86 a certificate of authority to transact insurance for subject
87 lines of business in this state.
88 2.a. All revenues, assets, liabilities, losses, and
89 expenses of the corporation shall be divided into three separate
90 accounts as follows:
91 (I) A personal lines account for personal residential
92 policies issued by the corporation which provides comprehensive,
93 multiperil coverage on risks that are not located in areas
94 eligible for coverage by the Florida Windstorm Underwriting
95 Association as those areas were defined on January 1, 2002, and
96 for policies that do not provide coverage for the peril of wind
97 on risks that are located in such areas;
98 (II) A commercial lines account for commercial residential
99 and commercial nonresidential policies issued by the corporation
100 which provides coverage for basic property perils on risks that
101 are not located in areas eligible for coverage by the Florida
102 Windstorm Underwriting Association as those areas were defined
103 on January 1, 2002, and for policies that do not provide
104 coverage for the peril of wind on risks that are located in such
105 areas; and
106 (III) A coastal account for personal residential policies
107 and commercial residential and commercial nonresidential
108 property policies issued by the corporation which provides
109 coverage for the peril of wind on risks that are located in
110 areas eligible for coverage by the Florida Windstorm
111 Underwriting Association as those areas were defined on January
112 1, 2002. The corporation may offer policies that provide
113 multiperil coverage and shall offer policies that provide
114 coverage only for the peril of wind for risks located in areas
115 eligible for coverage in the coastal account. Effective July 1,
116 2014, the corporation shall cease offering new commercial
117 residential policies providing multiperil coverage and shall
118 instead continue to offer commercial residential wind-only
119 policies, and may offer commercial residential policies
120 excluding wind. The corporation may, however, continue to renew
121 a commercial residential multiperil policy on a building that is
122 insured by the corporation on June 30, 2014, under a multiperil
123 policy. In issuing multiperil coverage, the corporation may use
124 its approved policy forms and rates for the personal lines
125 account. An applicant or insured who is eligible to purchase a
126 multiperil policy from the corporation may purchase a multiperil
127 policy from an authorized insurer without prejudice to the
128 applicant’s or insured’s eligibility to prospectively purchase a
129 policy that provides coverage only for the peril of wind from
130 the corporation. An applicant or insured who is eligible for a
131 corporation policy that provides coverage only for the peril of
132 wind may elect to purchase or retain such policy and also
133 purchase or retain coverage excluding wind from an authorized
134 insurer without prejudice to the applicant’s or insured’s
135 eligibility to prospectively purchase a policy that provides
136 multiperil coverage from the corporation. It is the goal of the
137 Legislature that there be an overall average savings of 10
138 percent or more for a policyholder who currently has a wind-only
139 policy with the corporation, and an ex-wind policy with a
140 voluntary insurer or the corporation, and who obtains a
141 multiperil policy from the corporation. It is the intent of the
142 Legislature that the offer of multiperil coverage in the coastal
143 account be made and implemented in a manner that does not
144 adversely affect the tax-exempt status of the corporation or
145 creditworthiness of or security for currently outstanding
146 financing obligations or credit facilities of the coastal
147 account, the personal lines account, or the commercial lines
148 account. The coastal account must also include quota share
149 primary insurance under subparagraph (c)2. The area eligible for
150 coverage under the coastal account also includes the area within
151 Port Canaveral, which is bordered on the south by the City of
152 Cape Canaveral, bordered on the west by the Banana River, and
153 bordered on the north by Federal Government property.
154 b. The three separate accounts must be maintained as long
155 as financing obligations entered into by the Florida Windstorm
156 Underwriting Association or Residential Property and Casualty
157 Joint Underwriting Association are outstanding, in accordance
158 with the terms of the corresponding financing documents. If the
159 financing obligations are no longer outstanding, the corporation
160 shall may use a single account for all revenues, assets,
161 liabilities, losses, and expenses of the corporation. Consistent
162 with this subparagraph and prudent investment policies that
163 minimize the cost of carrying debt, the board shall exercise its
164 best efforts to retire existing debt or obtain the approval of
165 necessary parties to amend the terms of existing debt, so as to
166 structure the most efficient plan for consolidating the three
167 separate accounts into a single account.
168 c. Creditors of the Residential Property and Casualty Joint
169 Underwriting Association and the accounts specified in sub-sub
170 subparagraphs a.(I) and (II) may have a claim against, and
171 recourse to, those accounts and no claim against, or recourse
172 to, the account referred to in sub-sub-subparagraph a.(III).
173 Creditors of the Florida Windstorm Underwriting Association have
174 a claim against, and recourse to, the account referred to in
175 sub-sub-subparagraph a.(III) and no claim against, or recourse
176 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
177 (II).
178 d. Revenues, assets, liabilities, losses, and expenses not
179 attributable to particular accounts shall be prorated among the
180 accounts.
181 e. The Legislature finds that the revenues of the
182 corporation are revenues that are necessary to meet the
183 requirements set forth in documents authorizing the issuance of
184 bonds under this subsection.
185 f. The income of the corporation may not inure to the
186 benefit of any private person.
187 3. With respect to a deficit in an account:
188 a. After accounting for the Citizens policyholder surcharge
189 imposed under sub-subparagraph i., if the remaining projected
190 deficit incurred in the coastal account in a particular calendar
191 year:
192 (I) Is not greater than 2 percent of the aggregate
193 statewide direct written premium for the subject lines of
194 business for the prior calendar year, the entire deficit shall
195 be recovered through regular assessments of assessable insurers
196 under paragraph (q) and assessable insureds.
197 (II) Exceeds 2 percent of the aggregate statewide direct
198 written premium for the subject lines of business for the prior
199 calendar year, the corporation shall levy regular assessments on
200 assessable insurers under paragraph (q) and on assessable
201 insureds in an amount equal to the greater of 2 percent of the
202 projected deficit or 2 percent of the aggregate statewide direct
203 written premium for the subject lines of business for the prior
204 calendar year. Any remaining projected deficit shall be
205 recovered through emergency assessments under sub-subparagraph
206 d.
207 b. Each assessable insurer’s share of the amount being
208 assessed under sub-subparagraph a. must be in the proportion
209 that the assessable insurer’s direct written premium for the
210 subject lines of business for the year preceding the assessment
211 bears to the aggregate statewide direct written premium for the
212 subject lines of business for that year. The assessment
213 percentage applicable to each assessable insured is the ratio of
214 the amount being assessed under sub-subparagraph a. to the
215 aggregate statewide direct written premium for the subject lines
216 of business for the prior year. Assessments levied by the
217 corporation on assessable insurers under sub-subparagraph a.
218 must be paid as required by the corporation’s plan of operation
219 and paragraph (q). Assessments levied by the corporation on
220 assessable insureds under sub-subparagraph a. shall be collected
221 by the surplus lines agent at the time the surplus lines agent
222 collects the surplus lines tax required by s. 626.932, and paid
223 to the Florida Surplus Lines Service Office at the time the
224 surplus lines agent pays the surplus lines tax to that office.
225 Upon receipt of regular assessments from surplus lines agents,
226 the Florida Surplus Lines Service Office shall transfer the
227 assessments directly to the corporation as determined by the
228 corporation.
229 c. After accounting for the Citizens policyholder surcharge
230 imposed under sub-subparagraph i., the remaining projected
231 deficits in the personal lines account and in the commercial
232 lines account in a particular calendar year shall be recovered
233 through emergency assessments under sub-subparagraph d.
234 d. Upon a determination by the board of governors that a
235 projected deficit in an account exceeds the amount that is
236 expected to be recovered through regular assessments under sub
237 subparagraph a., plus the amount that is expected to be
238 recovered through surcharges under sub-subparagraph i., the
239 board, after verification by the office, shall levy emergency
240 assessments for as many years as necessary to cover the
241 deficits, to be collected by assessable insurers and the
242 corporation and collected from assessable insureds upon issuance
243 or renewal of policies for subject lines of business, excluding
244 National Flood Insurance policies. The amount collected in a
245 particular year must be a uniform percentage of that year’s
246 direct written premium for subject lines of business and all
247 accounts of the corporation, excluding National Flood Insurance
248 Program policy premiums, as annually determined by the board and
249 verified by the office. The office shall verify the arithmetic
250 calculations involved in the board’s determination within 30
251 days after receipt of the information on which the determination
252 was based. The office shall notify assessable insurers and the
253 Florida Surplus Lines Service Office of the date on which
254 assessable insurers shall begin to collect and assessable
255 insureds shall begin to pay such assessment. The date must be at
256 least 90 days after the date the corporation levies emergency
257 assessments pursuant to this sub-subparagraph. Notwithstanding
258 any other provision of law, the corporation and each assessable
259 insurer that writes subject lines of business shall collect
260 emergency assessments from its policyholders without such
261 obligation being affected by any credit, limitation, exemption,
262 or deferment. Emergency assessments levied by the corporation on
263 assessable insureds shall be collected by the surplus lines
264 agent at the time the surplus lines agent collects the surplus
265 lines tax required by s. 626.932 and paid to the Florida Surplus
266 Lines Service Office at the time the surplus lines agent pays
267 the surplus lines tax to that office. The emergency assessments
268 collected shall be transferred directly to the corporation on a
269 periodic basis as determined by the corporation and held by the
270 corporation solely in the applicable account. The aggregate
271 amount of emergency assessments levied for an account in any
272 calendar year may be less than but may not exceed the greater of
273 10 percent of the amount needed to cover the deficit, plus
274 interest, fees, commissions, required reserves, and other costs
275 associated with financing the original deficit, or 10 percent of
276 the aggregate statewide direct written premium for subject lines
277 of business and all accounts of the corporation for the prior
278 year, plus interest, fees, commissions, required reserves, and
279 other costs associated with financing the deficit.
280 e. The corporation may pledge the proceeds of assessments,
281 projected recoveries from the Florida Hurricane Catastrophe
282 Fund, other insurance and reinsurance recoverables, policyholder
283 surcharges and other surcharges, and other funds available to
284 the corporation as the source of revenue for and to secure bonds
285 issued under paragraph (q), bonds or other indebtedness issued
286 under subparagraph (c)3., or lines of credit or other financing
287 mechanisms issued or created under this subsection, or to retire
288 any other debt incurred as a result of deficits or events giving
289 rise to deficits, or in any other way that the board determines
290 will efficiently recover such deficits. The purpose of the lines
291 of credit or other financing mechanisms is to provide additional
292 resources to assist the corporation in covering claims and
293 expenses attributable to a catastrophe. As used in this
294 subsection, the term “assessments” includes regular assessments
295 under sub-subparagraph a. or subparagraph (q)1. and emergency
296 assessments under sub-subparagraph d. Emergency assessments
297 collected under sub-subparagraph d. are not part of an insurer’s
298 rates, are not premium, and are not subject to premium tax,
299 fees, or commissions; however, failure to pay the emergency
300 assessment shall be treated as failure to pay premium. The
301 emergency assessments shall continue as long as any bonds issued
302 or other indebtedness incurred with respect to a deficit for
303 which the assessment was imposed remain outstanding, unless
304 adequate provision has been made for the payment of such bonds
305 or other indebtedness pursuant to the documents governing such
306 bonds or indebtedness.
307 f. As used in this subsection for purposes of any deficit
308 incurred on or after January 25, 2007, the term “subject lines
309 of business” means insurance written by assessable insurers or
310 procured by assessable insureds for all property and casualty
311 lines of business in this state, but not including workers’
312 compensation or medical malpractice. As used in this sub
313 subparagraph, the term “property and casualty lines of business”
314 includes all lines of business identified on Form 2, Exhibit of
315 Premiums and Losses, in the annual statement required of
316 authorized insurers under s. 624.424 and any rule adopted under
317 this section, except for those lines identified as accident and
318 health insurance and except for policies written under the
319 National Flood Insurance Program or the Federal Crop Insurance
320 Program. For purposes of this sub-subparagraph, the term
321 “workers’ compensation” includes both workers’ compensation
322 insurance and excess workers’ compensation insurance.
323 g. The Florida Surplus Lines Service Office shall determine
324 annually the aggregate statewide written premium in subject
325 lines of business procured by assessable insureds and report
326 that information to the corporation in a form and at a time the
327 corporation specifies to ensure that the corporation can meet
328 the requirements of this subsection and the corporation’s
329 financing obligations.
330 h. The Florida Surplus Lines Service Office shall verify
331 the proper application by surplus lines agents of assessment
332 percentages for regular assessments and emergency assessments
333 levied under this subparagraph on assessable insureds and assist
334 the corporation in ensuring the accurate, timely collection and
335 payment of assessments by surplus lines agents as required by
336 the corporation.
337 i. Upon determination by the board of governors that an
338 account has a projected deficit, the board shall levy a Citizens
339 policyholder surcharge against all policyholders of the
340 corporation.
341 (I) The surcharge must shall be levied as a uniform
342 percentage of the premium for the policy of up to 15 percent of
343 such premium, and must which funds shall be used to offset the
344 deficit, as follows:
345 (A) If the total number of policyholders of the corporation
346 is less than 1 million, a surcharge of 15 percent of the
347 premium.
348 (B) If the total number of policyholders of the corporation
349 is at least 1 million but less than 1.5 million, a surcharge of
350 20 percent of the premium.
351 (C) If the total number of policyholders of the corporation
352 is at least 1.5 million, a surcharge of 25 percent of the
353 premium.
354 (II) The surcharge is payable upon cancellation or
355 termination of the policy, upon renewal of the policy, or upon
356 issuance of a new policy by the corporation within the first 12
357 months after the date of the levy or the period of time
358 necessary to fully collect the surcharge amount.
359 (III) The corporation may not levy any regular assessments
360 under paragraph (q) pursuant to sub-subparagraph a. or sub
361 subparagraph b. with respect to a particular year’s deficit
362 until the corporation has first levied the full amount of the
363 surcharge authorized by this sub-subparagraph.
364 (IV) The surcharge is not considered premium and is not
365 subject to commissions, fees, or premium taxes. However, failure
366 to pay the surcharge shall be treated as failure to pay premium.
367 j. The corporation shall annually collect a surcharge of $5
368 upon renewal on all policies listed as a primary residence with
369 the corporation.
370 k. If the amount of any assessments or surcharges collected
371 from corporation policyholders, assessable insurers or their
372 policyholders, or assessable insureds exceeds the amount of the
373 deficits, such excess amounts shall be remitted to and retained
374 by the corporation in a reserve to be used by the corporation,
375 as determined by the board of governors and approved by the
376 office, to pay claims or reduce any past, present, or future
377 plan-year deficits or to reduce outstanding debt.
378 (c) The corporation’s plan of operation:
379 1. Must provide for adoption of residential property and
380 casualty insurance policy forms and commercial residential and
381 nonresidential property insurance forms, which must be approved
382 by the office before use. The corporation shall adopt the
383 following policy forms:
384 a. Standard personal lines policy forms that are
385 comprehensive multiperil policies providing full coverage of a
386 residential property equivalent to the coverage provided in the
387 private insurance market under an HO-3, HO-4, or HO-6 policy.
388 b. Basic personal lines policy forms that are policies
389 similar to an HO-8 policy or a dwelling fire policy that provide
390 coverage meeting the requirements of the secondary mortgage
391 market, but which is more limited than the coverage under a
392 standard policy.
393 c. Commercial lines residential and nonresidential policy
394 forms that are generally similar to the basic perils of full
395 coverage obtainable for commercial residential structures and
396 commercial nonresidential structures in the admitted voluntary
397 market.
398 d. Personal lines and commercial lines residential property
399 insurance forms that cover the peril of wind only. The forms are
400 applicable only to residential properties located in areas
401 eligible for coverage under the coastal account referred to in
402 sub-subparagraph (b)2.a.
403 e. Commercial lines nonresidential property insurance forms
404 that cover the peril of wind only. The forms are applicable only
405 to nonresidential properties located in areas eligible for
406 coverage under the coastal account referred to in sub
407 subparagraph (b)2.a.
408 f. The corporation may adopt variations of the policy forms
409 listed in sub-subparagraphs a.-e. which contain more restrictive
410 coverage.
411 g. Effective January 1, 2013, the corporation shall offer a
412 basic personal lines policy similar to an HO-8 policy with
413 dwelling repair based on common construction materials and
414 methods.
415 2. Must provide that the corporation adopt a program in
416 which the corporation and authorized insurers enter into quota
417 share primary insurance agreements for hurricane coverage, as
418 defined in s. 627.4025(2)(a), for eligible risks, and adopt
419 property insurance forms for eligible risks which cover the
420 peril of wind only.
421 a. As used in this subsection, the term:
422 (II) “Primary residence” means a risk that has a dwelling
423 replacement cost of less than $700,000 or a single condominium
424 unit that has a combined dwelling and contents replacement cost
425 of less than $700,000 and the insured has represented such
426 dwelling as its permanent home on the insurance application or
427 otherwise to the corporation. A policyholder and the
428 policyholder’s spouse may not collectively have more than one
429 primary residence insured with the corporation.
430 (III)(I) “Quota share primary insurance” means an
431 arrangement in which the primary hurricane coverage of an
432 eligible risk is provided in specified percentages by the
433 corporation and an authorized insurer. The corporation and
434 authorized insurer are each solely responsible for a specified
435 percentage of hurricane coverage of an eligible risk as set
436 forth in a quota share primary insurance agreement between the
437 corporation and an authorized insurer and the insurance
438 contract. The responsibility of the corporation or authorized
439 insurer to pay its specified percentage of hurricane losses of
440 an eligible risk, as set forth in the agreement, may not be
441 altered by the inability of the other party to pay its specified
442 percentage of losses. Eligible risks that are provided hurricane
443 coverage through a quota share primary insurance arrangement
444 must be provided policy forms that set forth the obligations of
445 the corporation and authorized insurer under the arrangement,
446 clearly specify the percentages of quota share primary insurance
447 provided by the corporation and authorized insurer, and
448 conspicuously and clearly state that the authorized insurer and
449 the corporation may not be held responsible beyond their
450 specified percentage of coverage of hurricane losses.
451 (I)(II) “Eligible risks” means personal lines residential
452 and commercial lines residential risks that meet the
453 underwriting criteria of the corporation and are located in
454 areas that were eligible for coverage by the Florida Windstorm
455 Underwriting Association on January 1, 2002.
456 b. The corporation may enter into quota share primary
457 insurance agreements with authorized insurers at corporation
458 coverage levels of 90 percent and 50 percent.
459 c. If the corporation determines that additional coverage
460 levels are necessary to maximize participation in quota share
461 primary insurance agreements by authorized insurers, the
462 corporation may establish additional coverage levels. However,
463 the corporation’s quota share primary insurance coverage level
464 may not exceed 90 percent.
465 d. Any quota share primary insurance agreement entered into
466 between an authorized insurer and the corporation must provide
467 for a uniform specified percentage of coverage of hurricane
468 losses, by county or territory as set forth by the corporation
469 board, for all eligible risks of the authorized insurer covered
470 under the agreement.
471 e. Any quota share primary insurance agreement entered into
472 between an authorized insurer and the corporation is subject to
473 review and approval by the office. However, such agreement shall
474 be authorized only as to insurance contracts entered into
475 between an authorized insurer and an insured who is already
476 insured by the corporation for wind coverage.
477 f. For all eligible risks covered under quota share primary
478 insurance agreements, the exposure and coverage levels for both
479 the corporation and authorized insurers shall be reported by the
480 corporation to the Florida Hurricane Catastrophe Fund. For all
481 policies of eligible risks covered under such agreements, the
482 corporation and the authorized insurer must maintain complete
483 and accurate records for the purpose of exposure and loss
484 reimbursement audits as required by fund rules. The corporation
485 and the authorized insurer shall each maintain duplicate copies
486 of policy declaration pages and supporting claims documents.
487 g. The corporation board shall establish in its plan of
488 operation standards for quota share agreements which ensure that
489 there is no discriminatory application among insurers as to the
490 terms of the agreements, pricing of the agreements, incentive
491 provisions if any, and consideration paid for servicing policies
492 or adjusting claims.
493 h. The quota share primary insurance agreement between the
494 corporation and an authorized insurer must set forth the
495 specific terms under which coverage is provided, including, but
496 not limited to, the sale and servicing of policies issued under
497 the agreement by the insurance agent of the authorized insurer
498 producing the business, the reporting of information concerning
499 eligible risks, the payment of premium to the corporation, and
500 arrangements for the adjustment and payment of hurricane claims
501 incurred on eligible risks by the claims adjuster and personnel
502 of the authorized insurer. Entering into a quota sharing
503 insurance agreement between the corporation and an authorized
504 insurer is voluntary and at the discretion of the authorized
505 insurer.
506 3. May provide that the corporation may employ or otherwise
507 contract with individuals or other entities to provide
508 administrative or professional services that may be appropriate
509 to effectuate the plan. The corporation may borrow funds by
510 issuing bonds or by incurring other indebtedness, and shall have
511 other powers reasonably necessary to effectuate the requirements
512 of this subsection, including, without limitation, the power to
513 issue bonds and incur other indebtedness in order to refinance
514 outstanding bonds or other indebtedness. The corporation may
515 seek judicial validation of its bonds or other indebtedness
516 under chapter 75. The corporation may issue bonds or incur other
517 indebtedness, or have bonds issued on its behalf by a unit of
518 local government pursuant to subparagraph (q)2. in the absence
519 of a hurricane or other weather-related event, upon a
520 determination by the corporation, subject to approval by the
521 office, that such action would enable it to efficiently meet the
522 financial obligations of the corporation and that such
523 financings are reasonably necessary to effectuate the
524 requirements of this subsection. The corporation may take all
525 actions needed to facilitate tax-free status for such bonds or
526 indebtedness, including formation of trusts or other affiliated
527 entities. The corporation may pledge assessments, projected
528 recoveries from the Florida Hurricane Catastrophe Fund, other
529 reinsurance recoverables, policyholder surcharges and other
530 surcharges, and other funds available to the corporation as
531 security for bonds or other indebtedness. In recognition of s.
532 10, Art. I of the State Constitution, prohibiting the impairment
533 of obligations of contracts, it is the intent of the Legislature
534 that no action be taken whose purpose is to impair any bond
535 indenture or financing agreement or any revenue source committed
536 by contract to such bond or other indebtedness.
537 4. Must require that the corporation operate subject to the
538 supervision and approval of a board of governors consisting of
539 nine individuals who are residents of this state and who are
540 from different geographical areas of this the state, one of whom
541 is appointed by the Governor and serves solely to advocate on
542 behalf of the consumer. The appointment of a consumer
543 representative by the Governor is deemed to be within the scope
544 of the exemption provided in s. 112.313(7)(b) and is in addition
545 to the appointments authorized under sub-subparagraph a.
546 a. The Governor, the Chief Financial Officer, the President
547 of the Senate, and the Speaker of the House of Representatives
548 shall each appoint two members of the board. At least one of the
549 two members appointed by each appointing officer must have
550 demonstrated expertise in insurance and be deemed to be within
551 the scope of the exemption provided in s. 112.313(7)(b). The
552 Chief Financial Officer shall designate one of the appointees as
553 chair. All board members serve at the pleasure of the appointing
554 officer. All members of the board are subject to removal at will
555 by the officers who appointed them. All board members, including
556 the chair, must be appointed to serve for 3-year terms beginning
557 annually on a date designated by the plan. However, for the
558 first term beginning on or after July 1, 2009, each appointing
559 officer shall appoint one member of the board for a 2-year term
560 and one member for a 3-year term. A board vacancy shall be
561 filled for the unexpired term by the appointing officer. The
562 Chief Financial Officer shall appoint a technical advisory group
563 to provide information and advice to the board in connection
564 with the board’s duties under this subsection. The executive
565 director and senior managers of the corporation shall be engaged
566 by the board and serve at the pleasure of the board. Any
567 executive director appointed on or after July 1, 2006, is
568 subject to confirmation by the Senate. The executive director is
569 responsible for employing other staff as the corporation may
570 require, subject to review and concurrence by the board.
571 b. The board shall create a Market Accountability Advisory
572 Committee to assist the corporation in developing awareness of
573 its rates and its customer and agent service levels in
574 relationship to the voluntary market insurers writing similar
575 coverage.
576 (I) The members of the advisory committee consist of the
577 following 11 persons, one of whom must be elected chair by the
578 members of the committee: four representatives, one appointed by
579 the Florida Association of Insurance Agents, one by the Florida
580 Association of Insurance and Financial Advisors, one by the
581 Professional Insurance Agents of Florida, and one by the Latin
582 American Association of Insurance Agencies; three
583 representatives appointed by the insurers with the three highest
584 voluntary market share of residential property insurance
585 business in this the state; one representative from the Office
586 of Insurance Regulation; one consumer appointed by the board who
587 is insured by the corporation at the time of appointment to the
588 committee; one representative appointed by the Florida
589 Association of Realtors; and one representative appointed by the
590 Florida Bankers Association. All members shall be appointed to
591 3-year terms and may serve for consecutive terms.
592 (II) The committee shall report to the corporation at each
593 board meeting on insurance market issues that which may include
594 rates and rate competition with the voluntary market; service,
595 including policy issuance, claims processing, and general
596 responsiveness to policyholders, applicants, and agents; and
597 matters relating to depopulation.
598 5. Must provide a procedure for determining the eligibility
599 of a risk for coverage, as follows:
600 a. Subject to s. 627.3517, with respect to personal lines
601 residential risks, if the risk is offered coverage from an
602 authorized insurer at the insurer’s approved rate under a
603 standard policy including wind coverage or, if consistent with
604 the insurer’s underwriting rules as filed with the office, a
605 basic policy including wind coverage, for a new application to
606 the corporation for coverage, the risk is not eligible for any
607 policy issued by the corporation unless the premium for coverage
608 from the authorized insurer is more than 20 percent greater than
609 the premium for comparable coverage from the corporation.
610 Whenever an offer of coverage for a personal lines residential
611 risk is received for a policyholder of the corporation at
612 renewal from an authorized insurer, if the offer is equal to or
613 less than the corporation’s renewal premium for comparable
614 coverage, the risk is not eligible for coverage with the
615 corporation unless the premium for coverage from the authorized
616 insurer is more than 20 percent greater than the renewal premium
617 for comparable coverage from the corporation. If the risk is not
618 able to obtain such offer, the risk is eligible for a standard
619 policy including wind coverage or a basic policy including wind
620 coverage issued by the corporation; however, if the risk could
621 not be insured under a standard policy including wind coverage
622 regardless of market conditions, the risk is eligible for a
623 basic policy including wind coverage unless rejected under
624 subparagraph 8. However, a policyholder removed from the
625 corporation through an assumption agreement remains eligible for
626 coverage from the corporation until the end of the assumption
627 period. The corporation shall determine the type of policy to be
628 provided on the basis of objective standards specified in the
629 underwriting manual and based on generally accepted underwriting
630 practices.
631 (I) If the risk accepts an offer of coverage through the
632 market assistance plan or through a mechanism established by the
633 corporation other than a plan established by s. 627.3518, before
634 a policy is issued to the risk by the corporation or during the
635 first 30 days of coverage by the corporation, and the producing
636 agent who submitted the application to the plan or to the
637 corporation is not currently appointed by the insurer, the
638 insurer shall:
639 (A) Pay to the producing agent of record of the policy for
640 the first year, an amount that is the greater of the insurer’s
641 usual and customary commission for the type of policy written or
642 a fee equal to the usual and customary commission of the
643 corporation; or
644 (B) Offer to allow the producing agent of record of the
645 policy to continue servicing the policy for at least 1 year and
646 offer to pay the agent the greater of the insurer’s or the
647 corporation’s usual and customary commission for the type of
648 policy written.
649
650 If the producing agent is unwilling or unable to accept
651 appointment, the new insurer shall pay the agent in accordance
652 with sub-sub-sub-subparagraph (A).
653 (II) If the corporation enters into a contractual agreement
654 for a take-out plan, the producing agent of record of the
655 corporation policy is entitled to retain any unearned commission
656 on the policy, and the insurer shall:
657 (A) Pay to the producing agent of record, for the first
658 year, an amount that is the greater of the insurer’s usual and
659 customary commission for the type of policy written or a fee
660 equal to the usual and customary commission of the corporation;
661 or
662 (B) Offer to allow the producing agent of record to
663 continue servicing the policy for at least 1 year and offer to
664 pay the agent the greater of the insurer’s or the corporation’s
665 usual and customary commission for the type of policy written.
666
667 If the producing agent is unwilling or unable to accept
668 appointment, the new insurer shall pay the agent in accordance
669 with sub-sub-sub-subparagraph (A).
670 b. With respect to commercial lines residential risks, for
671 a new application to the corporation for coverage, if the risk
672 is offered coverage under a policy including wind coverage from
673 an authorized insurer at its approved rate, the risk is not
674 eligible for a policy issued by the corporation unless the
675 premium for coverage from the authorized insurer is more than 15
676 percent greater than the premium for comparable coverage from
677 the corporation. Whenever an offer of coverage for a commercial
678 lines residential risk is received for a policyholder of the
679 corporation at renewal from an authorized insurer, if the offer
680 is equal to or less than the corporation’s renewal premium for
681 comparable coverage, the risk is not eligible for coverage with
682 the corporation. If the risk is not able to obtain any such
683 offer, the risk is eligible for a policy including wind coverage
684 issued by the corporation. However, a policyholder removed from
685 the corporation through an assumption agreement remains eligible
686 for coverage from the corporation until the end of the
687 assumption period.
688 (I) If the risk accepts an offer of coverage through the
689 market assistance plan or through a mechanism established by the
690 corporation other than a plan established by s. 627.3518, before
691 a policy is issued to the risk by the corporation or during the
692 first 30 days of coverage by the corporation, and the producing
693 agent who submitted the application to the plan or the
694 corporation is not currently appointed by the insurer, the
695 insurer shall:
696 (A) Pay to the producing agent of record of the policy, for
697 the first year, an amount that is the greater of the insurer’s
698 usual and customary commission for the type of policy written or
699 a fee equal to the usual and customary commission of the
700 corporation; or
701 (B) Offer to allow the producing agent of record of the
702 policy to continue servicing the policy for at least 1 year and
703 offer to pay the agent the greater of the insurer’s or the
704 corporation’s usual and customary commission for the type of
705 policy written.
706
707 If the producing agent is unwilling or unable to accept
708 appointment, the new insurer shall pay the agent in accordance
709 with sub-sub-sub-subparagraph (A).
710 (II) If the corporation enters into a contractual agreement
711 for a take-out plan, the producing agent of record of the
712 corporation policy is entitled to retain any unearned commission
713 on the policy, and the insurer shall:
714 (A) Pay to the producing agent of record, for the first
715 year, an amount that is the greater of the insurer’s usual and
716 customary commission for the type of policy written or a fee
717 equal to the usual and customary commission of the corporation;
718 or
719 (B) Offer to allow the producing agent of record to
720 continue servicing the policy for at least 1 year and offer to
721 pay the agent the greater of the insurer’s or the corporation’s
722 usual and customary commission for the type of policy written.
723
724 If the producing agent is unwilling or unable to accept
725 appointment, the new insurer shall pay the agent in accordance
726 with sub-sub-sub-subparagraph (A).
727 c. For purposes of determining comparable coverage under
728 sub-subparagraphs a. and b., the comparison must be based on
729 those forms and coverages that are reasonably comparable. The
730 corporation may rely on a determination of comparable coverage
731 and premium made by the producing agent who submits the
732 application to the corporation, made in the agent’s capacity as
733 the corporation’s agent. A comparison may be made solely of the
734 premium with respect to the main building or structure only on
735 the following basis: the same coverage A or other building
736 limits; the same percentage hurricane deductible that applies on
737 an annual basis or that applies to each hurricane for commercial
738 residential property; the same percentage of ordinance and law
739 coverage, if the same limit is offered by both the corporation
740 and the authorized insurer; the same mitigation credits, to the
741 extent the same types of credits are offered both by the
742 corporation and the authorized insurer; the same method for loss
743 payment, such as replacement cost or actual cash value, if the
744 same method is offered both by the corporation and the
745 authorized insurer in accordance with underwriting rules; and
746 any other form or coverage that is reasonably comparable as
747 determined by the board. If an application is submitted to the
748 corporation for wind-only coverage in the coastal account, the
749 premium for the corporation’s wind-only policy plus the premium
750 for the ex-wind policy that is offered by an authorized insurer
751 to the applicant must be compared to the premium for multiperil
752 coverage offered by an authorized insurer, subject to the
753 standards for comparison specified in this subparagraph. If the
754 corporation or the applicant requests from the authorized
755 insurer a breakdown of the premium of the offer by types of
756 coverage so that a comparison may be made by the corporation or
757 its agent and the authorized insurer refuses or is unable to
758 provide such information, the corporation may treat the offer as
759 not being an offer of coverage from an authorized insurer at the
760 insurer’s approved rate.
761 6. Must include rules for classifications of risks and
762 rates.
763 7. Must provide that if premium and investment income for
764 an account attributable to a particular calendar year are in
765 excess of projected losses and expenses for the account
766 attributable to that year, such excess shall be held in surplus
767 in the account. Such surplus must be available to defray
768 deficits in that account as to future years and used for that
769 purpose before assessing assessable insurers and assessable
770 insureds as to any calendar year.
771 8. Must provide objective criteria and procedures to be
772 uniformly applied to all applicants in determining whether an
773 individual risk is so hazardous as to be uninsurable. In making
774 this determination and in establishing the criteria and
775 procedures, the following must be considered:
776 a. Whether the likelihood of a loss for the individual risk
777 is substantially higher than for other risks of the same class;
778 and
779 b. Whether the uncertainty associated with the individual
780 risk is such that an appropriate premium cannot be determined.
781
782 The acceptance or rejection of a risk by the corporation must
783 shall be construed as the private placement of insurance, and
784 the provisions of chapter 120 does do not apply.
785 9. Must provide that the corporation make its best efforts
786 to procure catastrophe reinsurance at reasonable rates, to cover
787 its projected 100-year probable maximum loss as determined by
788 the board of governors. If catastrophe reinsurance is not
789 available at reasonable rates, the corporation need not purchase
790 it, but the corporation shall include the costs of reinsurance
791 to cover its projected 100-year probable maximum loss in its
792 rate calculations even if it does not purchase catastrophe
793 reinsurance.
794 10. The policies issued by the corporation must provide
795 that if the corporation or the market assistance plan obtains an
796 offer from an authorized insurer to cover the risk at its
797 approved rates, the risk is no longer eligible for renewal
798 through the corporation, except as otherwise provided in this
799 subsection.
800 11. Corporation policies and applications must include a
801 notice that the corporation policy could, under this section, be
802 replaced with a policy issued by an authorized insurer which
803 does not provide coverage identical to the coverage provided by
804 the corporation. The notice must also specify that acceptance of
805 corporation coverage creates a conclusive presumption that the
806 applicant or policyholder is aware of this potential.
807 12. May establish, subject to approval by the office,
808 different eligibility requirements and operational procedures
809 for any line or type of coverage for any specified county or
810 area if the board determines that such changes are justified due
811 to the voluntary market being sufficiently stable and
812 competitive in such area or for such line or type of coverage
813 and that consumers who, in good faith, are unable to obtain
814 insurance through the voluntary market through ordinary methods
815 continue to have access to coverage from the corporation. If
816 coverage is sought in connection with a real property transfer,
817 the requirements and procedures may not provide an effective
818 date of coverage later than the date of the closing of the
819 transfer as established by the transferor, the transferee, and,
820 if applicable, the lender.
821 13. Must provide that, with respect to the coastal account,
822 any assessable insurer with a surplus as to policyholders of $25
823 million or less writing 25 percent or more of its total
824 countrywide property insurance premiums in this state may
825 petition the office, within the first 90 days of each calendar
826 year, to qualify as a limited apportionment company. A regular
827 assessment levied by the corporation on a limited apportionment
828 company for a deficit incurred by the corporation for the
829 coastal account may be paid to the corporation on a monthly
830 basis as the assessments are collected by the limited
831 apportionment company from its insureds, but a limited
832 apportionment company must begin collecting the regular
833 assessments not later than 90 days after the regular assessments
834 are levied by the corporation, and the regular assessments must
835 be paid in full within 15 months after being levied by the
836 corporation. A limited apportionment company shall collect from
837 its policyholders any emergency assessment imposed under sub
838 subparagraph (b)3.d. The plan must provide that, if the office
839 determines that any regular assessment will result in an
840 impairment of the surplus of a limited apportionment company,
841 the office may direct that all or part of such assessment be
842 deferred as provided in subparagraph (q)4. However, an emergency
843 assessment to be collected from policyholders under sub
844 subparagraph (b)3.d. may not be limited or deferred.
845 14. Must provide that the corporation appoint as its
846 licensed agents only those agents who throughout such
847 appointments also hold an appointment as defined in s. 626.015
848 by an insurer who is authorized to write and is actually writing
849 or renewing personal lines residential property coverage,
850 commercial residential property coverage, or commercial
851 nonresidential property coverage within this the state.
852 15. Must provide a premium payment plan option to its
853 policyholders which, at a minimum, allows for quarterly and
854 semiannual payment of premiums. A monthly payment plan may, but
855 is not required to, be offered.
856 16. Must limit coverage on mobile homes or manufactured
857 homes built before 1994 to actual cash value of the dwelling
858 rather than replacement costs of the dwelling.
859 17. Must provide coverage for manufactured or mobile home
860 dwellings. Such coverage must also include the following
861 attached structures:
862 a. Screened enclosures that are aluminum framed or screened
863 enclosures that are not covered by the same or substantially the
864 same materials as those of the primary dwelling;
865 b. Carports that are aluminum or carports that are not
866 covered by the same or substantially the same materials as those
867 of the primary dwelling; and
868 c. Patios that have a roof covering that is constructed of
869 materials that are not the same or substantially the same
870 materials as those of the primary dwelling.
871
872 The corporation shall make available a policy for mobile homes
873 or manufactured homes for a minimum insured value of at least
874 $3,000.
875 18. May provide such limits of coverage as the board
876 determines, consistent with the requirements of this subsection.
877 19. May require commercial property to meet specified
878 hurricane mitigation construction features as a condition of
879 eligibility for coverage.
880 20. Must provide that new or renewal policies issued by the
881 corporation on or after January 1, 2012, which cover sinkhole
882 loss do not include coverage for any loss to appurtenant
883 structures, driveways, sidewalks, decks, or patios that are
884 directly or indirectly caused by sinkhole activity. The
885 corporation shall exclude such coverage using a notice of
886 coverage change, which may be included with the policy renewal,
887 and not by issuance of a notice of nonrenewal of the excluded
888 coverage upon renewal of the current policy.
889 21. As of January 1, 2012, must require that the agent
890 obtain from an applicant for coverage from the corporation an
891 acknowledgment signed by the applicant, which includes, at a
892 minimum, the following statement:
893
894 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
895 AND ASSESSMENT LIABILITY:
896
897 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
898 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
899 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
900 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
901 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
902 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
903 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
904 LEGISLATURE.
905 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
906 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
907 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
908 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN
909 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
910 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
911 ARE REGULATED AND APPROVED BY THE STATE.
912 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
913 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
914 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
915 FLORIDA LEGISLATURE.
916 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
917 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
918 STATE OF FLORIDA.
919
920 a. The corporation shall maintain, in electronic format or
921 otherwise, a copy of the applicant’s signed acknowledgment and
922 provide a copy of the statement to the policyholder as part of
923 the first renewal after the effective date of this subparagraph.
924 b. The signed acknowledgment form creates a conclusive
925 presumption that the policyholder understood and accepted his or
926 her potential surcharge and assessment liability as a
927 policyholder of the corporation.
928 22. The corporation shall pay a producing agent of record a
929 reasonable commission not to exceed the average of commissions
930 paid in the preceding year by the 20 admitted insurers writing
931 the greatest market share of property insurance in this state.
932 (n)1. Rates for coverage provided by the corporation must
933 be actuarially sound and subject to s. 627.062, except as
934 otherwise provided in this paragraph. The corporation shall file
935 its recommended rates with the office at least annually. The
936 corporation shall provide any additional information regarding
937 the rates which the office requires. The office shall consider
938 the recommendations of the board and issue a final order
939 establishing the rates for the corporation within 45 days after
940 the recommended rates are filed. The corporation may not pursue
941 an administrative challenge or judicial review of the final
942 order of the office.
943 2. In addition to the rates otherwise determined pursuant
944 to this paragraph, the corporation shall impose and collect an
945 amount equal to the premium tax provided in s. 624.509 to
946 augment the financial resources of the corporation.
947 3. If After the public hurricane loss-projection model
948 under s. 627.06281 is has been found to be accurate and reliable
949 by the Florida Commission on Hurricane Loss Projection
950 Methodology, it must the model shall be considered when
951 establishing the windstorm portion of the corporation’s rates.
952 The corporation may use the public model results in combination
953 with the results of private models to calculate rates for the
954 windstorm portion of the corporation’s rates. This subparagraph
955 does not require or allow the corporation to adopt rates lower
956 than the rates otherwise required or allowed by this paragraph.
957 4. The corporation must make a recommended actuarially
958 sound rate filing for each personal and commercial line of
959 business it writes.
960 5. Notwithstanding the board’s recommended rates and the
961 office’s final order regarding the corporation’s filed rates
962 under subparagraph 1., the corporation shall annually implement
963 a rate increase that which, except for sinkhole coverage, does
964 not exceed the following for any single policy issued by the
965 corporation, excluding coverage changes and surcharges:
966 a. Eleven percent for 2022.
967 b. Twelve percent for 2023.
968 c. Thirteen percent for 2024.
969 d. Fourteen percent for 2025.
970 e. Fifteen percent for 2026 and all subsequent years.
971 6. The corporation may also implement an increase to
972 reflect the effect on the corporation of the cash buildup factor
973 pursuant to s. 215.555(5)(b).
974 7. The corporation’s implementation of rates as prescribed
975 in subparagraph 5. must shall cease for any line of business
976 written by the corporation upon the corporation’s implementation
977 of actuarially sound rates. Thereafter, the corporation shall
978 annually make a recommended actuarially sound rate filing for
979 each commercial and personal line of business the corporation
980 writes.
981 8. Policies assumed by the corporation from an unsound
982 insurer shall be charged a premium for coverage that is the
983 higher of the last premium amount charged by the unsound insurer
984 or the premium charged by the corporation applicable to the
985 policy. Premiums established by the unsound insurer shall remain
986 unchanged until such time as the corporation’s rate exceeds this
987 amount and the policy becomes subject to the corporation’s
988 annually approved rate. For purposes of this subparagraph, the
989 term “unsound insurer” means an insurer determined by the Office
990 of Insurance Regulation to be in unsound condition as defined in
991 s. 624.80(2) or an insurer placed in receivership under chapter
992 631.
993 (q)1. The corporation shall certify to the office its needs
994 for annual assessments as to a particular calendar year, and for
995 any interim assessments that it deems to be necessary to sustain
996 operations as to a particular year pending the receipt of annual
997 assessments. Upon verification, the office shall approve such
998 certification, and the corporation shall levy such annual or
999 interim assessments. Such assessments shall be prorated as
1000 provided in paragraph (b). The corporation shall take all
1001 reasonable and prudent steps necessary to collect the amount of
1002 assessments due from each assessable insurer, including, if
1003 prudent, filing suit to collect the assessments, and the office
1004 may provide such assistance to the corporation it deems
1005 appropriate. If the corporation is unable to collect an
1006 assessment from any assessable insurer, the uncollected
1007 assessments shall be levied as an additional assessment against
1008 the assessable insurers and any assessable insurer required to
1009 pay an additional assessment as a result of such failure to pay
1010 shall have a cause of action against such nonpaying assessable
1011 insurer. Assessments shall be included as an appropriate factor
1012 in the making of rates. The failure of a surplus lines agent to
1013 collect and remit any regular or emergency assessment levied by
1014 the corporation is considered to be a violation of s. 626.936
1015 and subjects the surplus lines agent to the penalties provided
1016 in that section.
1017 2. The governing body of any unit of local government, any
1018 residents of which are insured by the corporation, may issue
1019 bonds as defined in s. 125.013 or s. 166.101 from time to time
1020 to fund an assistance program, in conjunction with the
1021 corporation, for the purpose of defraying deficits of the
1022 corporation. In order to avoid needless and indiscriminate
1023 proliferation, duplication, and fragmentation of such assistance
1024 programs, any unit of local government, any residents of which
1025 are insured by the corporation, may provide for the payment of
1026 losses, regardless of whether or not the losses occurred within
1027 or outside of the territorial jurisdiction of the local
1028 government. Revenue bonds under this subparagraph may not be
1029 issued until validated pursuant to chapter 75, unless a state of
1030 emergency is declared by executive order or proclamation of the
1031 Governor pursuant to s. 252.36 making such findings as are
1032 necessary to determine that it is in the best interests of, and
1033 necessary for, the protection of the public health, safety, and
1034 general welfare of residents of this state and declaring it an
1035 essential public purpose to permit certain municipalities or
1036 counties to issue such bonds as will permit relief to claimants
1037 and policyholders of the corporation. Any such unit of local
1038 government may enter into such contracts with the corporation
1039 and with any other entity created pursuant to this subsection as
1040 are necessary to carry out this paragraph. Any bonds issued
1041 under this subparagraph shall be payable from and secured by
1042 moneys received by the corporation from emergency assessments
1043 under sub-subparagraph (b)3.d., and assigned and pledged to or
1044 on behalf of the unit of local government for the benefit of the
1045 holders of such bonds. The funds, credit, property, and taxing
1046 power of the state or of the unit of local government may shall
1047 not be pledged for the payment of such bonds.
1048 3.a. The corporation shall adopt one or more programs
1049 subject to approval by the office for the reduction of both new
1050 and renewal writings in the corporation. Beginning January 1,
1051 2008, any program the corporation adopts for the payment of
1052 bonuses to an insurer for each risk the insurer removes from the
1053 corporation shall comply with s. 627.3511(2) and may not exceed
1054 the amount referenced in s. 627.3511(2) for each risk removed.
1055 The corporation may consider any prudent and not unfairly
1056 discriminatory approach to reducing corporation writings, and
1057 may adopt a credit against assessment liability or other
1058 liability that provides an incentive for insurers to take risks
1059 out of the corporation and to keep risks out of the corporation
1060 by maintaining or increasing voluntary writings in counties or
1061 areas in which corporation risks are highly concentrated and a
1062 program to provide a formula under which an insurer voluntarily
1063 taking risks out of the corporation by maintaining or increasing
1064 voluntary writings will be relieved wholly or partially from
1065 assessments under sub-subparagraph (b)3.a. However, any “take
1066 out bonus” or payment to an insurer must be conditioned on the
1067 property being insured for at least 5 years by the insurer,
1068 unless canceled or nonrenewed by the policyholder. If the policy
1069 is canceled or nonrenewed by the policyholder before the end of
1070 the 5-year period, the amount of the take-out bonus must be
1071 prorated for the time period the policy was insured. When the
1072 corporation enters into a contractual agreement for a take-out
1073 plan, the producing agent of record of the corporation policy is
1074 entitled to retain any unearned commission on such policy, and
1075 the insurer shall either:
1076 (I) Pay to the producing agent of record of the policy, for
1077 the first year, an amount which is the greater of the insurer’s
1078 usual and customary commission for the type of policy written or
1079 a policy fee equal to the usual and customary commission of the
1080 corporation; or
1081 (II) Offer to allow the producing agent of record of the
1082 policy to continue servicing the policy for a period of not less
1083 than 1 year and offer to pay the agent the insurer’s usual and
1084 customary commission for the type of policy written. If the
1085 producing agent is unwilling or unable to accept appointment by
1086 the new insurer, the new insurer shall pay the agent in
1087 accordance with sub-sub-subparagraph (I).
1088 b. Any credit or exemption from regular assessments adopted
1089 under this subparagraph shall last no longer than the 3 years
1090 following the cancellation or expiration of the policy by the
1091 corporation. With the approval of the office, the board may
1092 extend such credits for an additional year if the insurer
1093 guarantees an additional year of renewability for all policies
1094 removed from the corporation, or for 2 additional years if the
1095 insurer guarantees 2 additional years of renewability for all
1096 policies so removed.
1097 c. There shall be no credit, limitation, exemption, or
1098 deferment from emergency assessments to be collected from
1099 policyholders pursuant to sub-subparagraph (b)3.d.
1100 d. Notwithstanding any other law, for purposes of a
1101 depopulation, take-out, or keep-out program adopted by the
1102 corporation, including an initial or renewal offer of coverage
1103 made to a policyholder removed from the corporation pursuant to
1104 such program, an eligible surplus lines insurer may participate
1105 in the program in the same manner and on the same terms as an
1106 authorized insurer, except as provided under this sub
1107 subparagraph.
1108 (I) The policy count of the corporation must be more than
1109 700,000 within the 30 days before the time a takeout offer is
1110 made by a surplus lines insurer.
1111 (II) To qualify for participation, the surplus lines
1112 insurer must first obtain approval from the office for its
1113 depopulation, take-out, or keep-out plan and then comply with
1114 all of the corporation’s requirements for the plan applicable to
1115 admitted insurers and with all statutory provisions applicable
1116 to the removal of policies from the corporation.
1117 (III) In considering a surplus lines insurer’s request for
1118 approval for its plan, the office shall determine whether the
1119 surplus lines insurer meets the following requirements:
1120 (A) Maintains a surplus of $50 million on a company or
1121 pooled basis;
1122 (B) Has a superior, excellent, exceptional, or equally
1123 comparable financial strength rating by a rating agency
1124 acceptable to the office;
1125 (C) Maintains reserves, surplus, reinsurance, and
1126 reinsurance equivalents sufficient to cover the insurer’s 100
1127 year probable maximum hurricane loss at least twice in a single
1128 hurricane season and submits such reinsurance to the office to
1129 review for purposes of the take-out;
1130 (D) Provides prominent notice to the policyholder before
1131 the assumption of the policy that surplus lines policies are not
1132 provided coverage by the Florida Insurance Guaranty Association
1133 and provides an outline of any substantial differences in
1134 coverage between the existing policy and the policy being
1135 offered to the insured; and
1136 (E) Provides policy coverage similar to that provided by
1137 the corporation.
1138 (IV) To obtain approval for a plan, the surplus lines
1139 insurer must file the following with the office:
1140 (A) Information requested by the office to demonstrate
1141 compliance with s. 624.404(3), including biographical
1142 affidavits, fingerprints processed pursuant to s. 624.34, and
1143 the results of criminal history records checks for officers and
1144 directors of the insurer and its parent or holding company;
1145 (B) A service-of-process consent and agreement form
1146 executed by the insurer;
1147 (C) Proof that the insurer has been an eligible or
1148 authorized insurer for at least 3 years;
1149 (D) A duly authenticated copy of the insurer’s current
1150 audited financial statement, in English, which, in the case of
1151 statements originally made in the currencies of other countries,
1152 expresses all monetary values in United States dollars, at an
1153 exchange rate then current and shown in the statement, and
1154 including any additional information relative to the insurer as
1155 the office may request;
1156 (E) A complete certified copy of the latest official
1157 financial statement required by the insurer’s domiciliary state,
1158 if different from the statement required by sub-sub-sub
1159 subparagraph (D); and
1160 (F) If applicable, a copy of the United States trust
1161 account agreement.
1162
1163 This sub-sub-subparagraph does not subject any surplus lines
1164 insurer to requirements in addition to part VIII of chapter 626.
1165 Surplus lines brokers making an offer of coverage under this
1166 sub-subparagraph are not required to comply with s.
1167 626.916(1)(a), (b), (c), or (e).
1168 (V) Within 10 days after the date of assumption, the
1169 surplus lines insurer assuming policies from the corporation
1170 shall remit to the Bureau of Collateral Management within the
1171 Department of Financial Services a special deposit equal to the
1172 unearned premium net of unearned commissions on the assumed
1173 block of business. The surplus lines insurer shall submit to the
1174 office, along with the special deposit, an accounting of the
1175 policies assumed and the amount of unearned premium for such
1176 policies and a sworn affidavit attesting to the accuracy of the
1177 accounting by an officer of the surplus lines insurer.
1178 Thereafter, the surplus lines insurer shall make a filing within
1179 10 days after the end of each calendar quarter attesting to the
1180 unearned premium in force for the previous quarter on policies
1181 assumed from the corporation and shall submit additional funds
1182 with that filing if the special deposit is insufficient to cover
1183 the unearned premium on assumed policies, or shall receive a
1184 return of funds within 60 days if the special deposit exceeds
1185 the amount of unearned premium required for assumed policies.
1186 The special deposit is an asset of the surplus lines insurer
1187 which is held by the department for the benefit of state
1188 policyholders of the surplus lines insurer in the event of the
1189 insolvency of the surplus lines insurer. If an order of
1190 liquidation is entered in any state against the surplus lines
1191 insurer, the department may use the special deposit for payment
1192 of unearned premium or policy claims, return all or part of the
1193 deposit to the domiciliary receiver, or use the funds in
1194 accordance with any action authorized under part I of chapter
1195 631 or in compliance with any order of a court having
1196 jurisdiction over the insolvency.
1197 (VI) In advance of a surplus lines insurer assuming a
1198 policy, surplus lines brokers representing a surplus lines
1199 insurer on a take-out program shall obtain confirmation, in
1200 written or e-mail form, from each producing agent stating that
1201 the agent is willing to participate in the take-out program with
1202 the surplus lines insurer engaging in the take-out program. The
1203 take-out program is also subject to s. 627.3517. If a
1204 policyholder is selected for removal from the corporation by a
1205 surplus lines insurer and an authorized insurer, the corporation
1206 must give priority to the offer of coverage from the authorized
1207 insurer.
1208 (VII)(A) A risk that has a dwelling replacement cost of
1209 $700,000 or more or a single condominium unit that has a
1210 combined dwelling and contents replacement cost of $700,000 or
1211 more is not eligible for coverage by the corporation if it is
1212 offered comparable coverage from a qualified surplus lines
1213 insurer at a premium no greater than the premium charged by the
1214 corporation.
1215 (B) A risk that has a dwelling replacement cost below
1216 $700,000 or a single condominium unit that has a combined
1217 dwelling and contents replacement cost below $700,000 remains
1218 eligible for coverage by the corporation if it is offered
1219 coverage from a qualified surplus lines insurer.
1220 4. The plan shall provide for the deferment, in whole or in
1221 part, of the assessment of an assessable insurer, other than an
1222 emergency assessment collected from policyholders pursuant to
1223 sub-subparagraph (b)3.d., if the office finds that payment of
1224 the assessment would endanger or impair the solvency of the
1225 insurer. In the event an assessment against an assessable
1226 insurer is deferred in whole or in part, the amount by which
1227 such assessment is deferred may be assessed against the other
1228 assessable insurers in a manner consistent with the basis for
1229 assessments set forth in paragraph (b).
1230 5. Effective July 1, 2007, in order to evaluate the costs
1231 and benefits of approved take-out plans, if the corporation pays
1232 a bonus or other payment to an insurer for an approved take-out
1233 plan, it shall maintain a record of the address or such other
1234 identifying information on the property or risk removed in order
1235 to track if and when the property or risk is later insured by
1236 the corporation.
1237 6. Any policy taken out, assumed, or removed from the
1238 corporation is, as of the effective date of the take-out,
1239 assumption, or removal, direct insurance issued by the insurer
1240 and not by the corporation, even if the corporation continues to
1241 service the policies. This subparagraph applies to policies of
1242 the corporation and not policies taken out, assumed, or removed
1243 from any other entity.
1244 7. For a policy taken out, assumed, or removed from the
1245 corporation, the insurer may, for a period of no more than 3
1246 years, continue to use any of the corporation’s policy forms or
1247 endorsements that apply to the policy taken out, removed, or
1248 assumed without obtaining approval from the office for use of
1249 such policy form or endorsement.
1250 (x)1. The following records of the corporation are
1251 confidential and exempt from the provisions of s. 119.07(1) and
1252 s. 24(a), Art. I of the State Constitution:
1253 a. Underwriting files, except that a policyholder or an
1254 applicant shall have access to his or her own underwriting
1255 files. Confidential and exempt underwriting file records may
1256 also be released to other governmental agencies upon written
1257 request and demonstration of need; such records held by the
1258 receiving agency remain confidential and exempt as provided
1259 herein.
1260 b. Claims files, until termination of all litigation and
1261 settlement of all claims arising out of the same incident,
1262 although portions of the claims files may remain exempt, as
1263 otherwise provided by law. Confidential and exempt claims file
1264 records may be released to other governmental agencies upon
1265 written request and demonstration of need; such records held by
1266 the receiving agency remain confidential and exempt as provided
1267 herein.
1268 c. Records obtained or generated by an internal auditor
1269 pursuant to a routine audit, until the audit is completed, or if
1270 the audit is conducted as part of an investigation, until the
1271 investigation is closed or ceases to be active. An investigation
1272 is considered “active” while the investigation is being
1273 conducted with a reasonable, good faith belief that it could
1274 lead to the filing of administrative, civil, or criminal
1275 proceedings.
1276 d. Matters reasonably encompassed in privileged attorney
1277 client communications.
1278 e. Proprietary information licensed to the corporation
1279 under contract and the contract provides for the confidentiality
1280 of such proprietary information.
1281 f. All information relating to the medical condition or
1282 medical status of a corporation employee which is not relevant
1283 to the employee’s capacity to perform his or her duties, except
1284 as otherwise provided in this paragraph. Information that is
1285 exempt includes shall include, but is not limited to,
1286 information relating to workers’ compensation, insurance
1287 benefits, and retirement or disability benefits.
1288 g. Upon an employee’s entrance into the employee assistance
1289 program, a program to assist any employee who has a behavioral
1290 or medical disorder, substance abuse problem, or emotional
1291 difficulty that affects the employee’s job performance, all
1292 records relative to that participation are shall be confidential
1293 and exempt from the provisions of s. 119.07(1) and s. 24(a),
1294 Art. I of the State Constitution, except as otherwise provided
1295 in s. 112.0455(11).
1296 h. Information relating to negotiations for financing,
1297 reinsurance, depopulation, or contractual services, until the
1298 conclusion of the negotiations.
1299 i. Minutes of closed meetings regarding underwriting files,
1300 and minutes of closed meetings regarding an open claims file
1301 until termination of all litigation and settlement of all claims
1302 with regard to that claim, except that information otherwise
1303 confidential or exempt by law must shall be redacted.
1304 2. If an authorized insurer, a reinsurance intermediary, an
1305 eligible surplus lines insurer, or an entity that has filed an
1306 application with the office for licensure as a property and
1307 casualty insurer in this state is considering writing or
1308 assisting in the underwriting of a risk insured by the
1309 corporation, relevant information from both the underwriting
1310 files and confidential claims files may be released to the
1311 insurer, reinsurance intermediary, eligible surplus lines
1312 insurer, or entity that has been created to seek authority to
1313 write property insurance in this state, provided that the
1314 recipient insurer agrees in writing, notarized and under oath,
1315 to maintain the confidentiality of such files. If a policy file
1316 is transferred to an insurer, that policy file is no longer a
1317 public record because it is not held by an agency subject to the
1318 provisions of the public records law. Underwriting files and
1319 confidential claims files may also be released to staff and the
1320 board of governors of the market assistance plan established
1321 pursuant to s. 627.3515, who must retain the confidentiality of
1322 such files, except such files may be released to authorized
1323 insurers that are considering assuming the risks to which the
1324 files apply, provided the insurer agrees in writing, notarized
1325 and under oath, to maintain the confidentiality of such files.
1326 Finally, the corporation or the board or staff of the market
1327 assistance plan may make the following information obtained from
1328 underwriting files and confidential claims files available to an
1329 entity that has obtained a permit to become an authorized
1330 insurer, a reinsurer that may provide reinsurance under s.
1331 624.610, a licensed reinsurance broker, a licensed rating
1332 organization, a modeling company, or a licensed general lines
1333 insurance agent: name, address, and telephone number of the
1334 residential property owner or insured; location of the risk;
1335 rating information; loss history; and policy type. The receiving
1336 person must retain the confidentiality of the information
1337 received and may use the information only for the purposes of
1338 developing a take-out plan or a rating plan to be submitted to
1339 the office for approval or otherwise analyzing the underwriting
1340 of a risk or risks insured by the corporation on behalf of the
1341 private insurance market. A licensed general lines insurance
1342 agent may not use such information for the direct solicitation
1343 of policyholders.
1344 3. A policyholder who has filed suit against the
1345 corporation has the right to discover the contents of his or her
1346 own claims file to the same extent that discovery of such
1347 contents would be available from a private insurer in litigation
1348 as provided by the Florida Rules of Civil Procedure, the Florida
1349 Evidence Code, and other applicable law. Pursuant to subpoena, a
1350 third party has the right to discover the contents of an
1351 insured’s or applicant’s underwriting or claims file to the same
1352 extent that discovery of such contents would be available from a
1353 private insurer by subpoena as provided by the Florida Rules of
1354 Civil Procedure, the Florida Evidence Code, and other applicable
1355 law, and subject to any confidentiality protections requested by
1356 the corporation and agreed to by the seeking party or ordered by
1357 the court. The corporation may release confidential underwriting
1358 and claims file contents and information as it deems necessary
1359 and appropriate to underwrite or service insurance policies and
1360 claims, subject to any confidentiality protections deemed
1361 necessary and appropriate by the corporation.
1362 4. Portions of meetings of the corporation are exempt from
1363 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1364 Constitution wherein confidential underwriting files or
1365 confidential open claims files are discussed. All portions of
1366 corporation meetings which are closed to the public shall be
1367 recorded by a court reporter. The court reporter shall record
1368 the times of commencement and termination of the meeting, all
1369 discussion and proceedings, the names of all persons present at
1370 any time, and the names of all persons speaking. No portion of
1371 any closed meeting shall be off the record. Subject to the
1372 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1373 notes of any closed meeting shall be retained by the corporation
1374 for a minimum of 5 years. A copy of the transcript, less any
1375 exempt matters, of any closed meeting wherein claims are
1376 discussed shall become public as to individual claims after
1377 settlement of the claim.
1378 Section 3. Section 627.3517, Florida Statutes, is amended
1379 to read:
1380 627.3517 Consumer choice.—No provision of s. 627.351, s.
1381 627.3511, or s. 627.3515 shall be construed to impair the right
1382 of any insurance risk apportionment plan policyholder, upon
1383 receipt of any keep-out keepout or take-out offer, to retain his
1384 or her current agent, so long as that agent is duly licensed and
1385 appointed by the insurance risk apportionment plan or otherwise
1386 authorized to place business with the insurance risk
1387 apportionment plan. This right may shall not be canceled,
1388 suspended, impeded, abridged, or otherwise compromised by any
1389 rule, plan of operation, or depopulation plan, whether through
1390 keep-out keepout, take-out, midterm assumption, or any other
1391 means, of any insurance risk apportionment plan or depopulation
1392 plan, including, but not limited to, those described in s.
1393 627.351, s. 627.3511, or s. 627.3515. The commission shall adopt
1394 any rules necessary to cause any insurance risk apportionment
1395 plan or market assistance plan under such sections to
1396 demonstrate that the operations of the plan do not interfere
1397 with, promote, or allow interference with the rights created
1398 under this section. If the policyholder’s current agent is
1399 unable or unwilling to be appointed with the insurer making the
1400 take-out or keep-out keepout offer, the policyholder is shall
1401 not be disqualified from participation in the appropriate
1402 insurance risk apportionment plan because of an offer of
1403 coverage in the voluntary market. An offer of full property
1404 insurance coverage by the insurer currently insuring either the
1405 ex-wind or wind-only coverage on the policy to which the offer
1406 applies is shall not be considered a take-out or keep-out
1407 keepout offer. Any rule, plan of operation, or plan of
1408 depopulation, through keep-out keepout, take-out, midterm
1409 assumption, or any other means, of any property insurance risk
1410 apportionment plan under s. 627.351(2) or (6) is subject to ss.
1411 627.351(2)(b) and (6)(c) and 627.3511(4).
1412 Section 4. Subsection (5) of section 627.3518, Florida
1413 Statutes, is amended, and paragraph (a) of subsection (6) and
1414 paragraph (a) of subsection (7) of that section are reenacted,
1415 to read:
1416 627.3518 Citizens Property Insurance Corporation
1417 policyholder eligibility clearinghouse program.—The purpose of
1418 this section is to provide a framework for the corporation to
1419 implement a clearinghouse program by January 1, 2014.
1420 (5) Notwithstanding s. 627.3517, any applicant for new
1421 coverage from the corporation is not eligible for coverage from
1422 the corporation if provided an offer of coverage from an
1423 authorized insurer through the program at a premium that is at
1424 or below the eligibility threshold established in s.
1425 627.351(6)(c)5.a. Whenever an offer of coverage for a personal
1426 lines risk is received for a policyholder of the corporation at
1427 renewal from an authorized insurer through the program, if the
1428 offer is at or below the eligibility threshold specified in s.
1429 627.351(6)(c)5.a. equal to or less than the corporation’s
1430 renewal premium for comparable coverage, the risk is not
1431 eligible for coverage with the corporation. In the event that an
1432 offer of coverage for a new applicant or a personal lines risk
1433 at renewal is received from an authorized insurer through the
1434 program, and the premium offered exceeds the eligibility
1435 thresholds specified threshold contained in s.
1436 627.351(6)(c)5.a., the applicant or insured may elect to accept
1437 such coverage, or may elect to accept or continue coverage with
1438 the corporation. In the event an offer of coverage for a
1439 personal lines risk is received from an authorized insurer at
1440 renewal through the program, and the premium offered is more
1441 than the corporation’s renewal premium for comparable coverage,
1442 the insured may elect to accept such coverage, or may elect to
1443 accept or continue coverage with the corporation. Section
1444 627.351(6)(c)5.a.(I) does not apply to an offer of coverage from
1445 an authorized insurer obtained through the program. An applicant
1446 for coverage from the corporation who was declared ineligible
1447 for coverage at renewal by the corporation in the previous 36
1448 months due to an offer of coverage pursuant to this subsection
1449 shall be considered a renewal under this section if the
1450 corporation determines that the authorized insurer making the
1451 offer of coverage pursuant to this subsection continues to
1452 insure the applicant and increased the rate on the policy in
1453 excess of the increase allowed for the corporation under s.
1454 627.351(6)(n)5.
1455 (6) Independent insurance agents submitting new
1456 applications for coverage or that are the agent of record on a
1457 renewal policy submitted to the program:
1458 (a) Are granted and must maintain ownership and the
1459 exclusive use of expirations, records, or other written or
1460 electronic information directly related to such applications or
1461 renewals written through the corporation or through an insurer
1462 participating in the program, notwithstanding s.
1463 627.351(6)(c)5.a.(I)(B) and (II)(B). Such ownership is granted
1464 for as long as the insured remains with the agency or until sold
1465 or surrendered in writing by the agent. Contracts with the
1466 corporation or required by the corporation must not amend,
1467 modify, interfere with, or limit such rights of ownership. Such
1468 expirations, records, or other written or electronic information
1469 may be used to review an application, issue a policy, or for any
1470 other purpose necessary for placing such business through the
1471 program.
1472
1473 Applicants ineligible for coverage in accordance with subsection
1474 (5) remain ineligible if their independent agent is unwilling or
1475 unable to enter into a standard or limited agency agreement with
1476 an insurer participating in the program.
1477 (7) Exclusive agents submitting new applications for
1478 coverage or that are the agent of record on a renewal policy
1479 submitted to the program:
1480 (a) Must maintain ownership and the exclusive use of
1481 expirations, records, or other written or electronic information
1482 directly related to such applications or renewals written
1483 through the corporation or through an insurer participating in
1484 the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
1485 (II)(B). Contracts with the corporation or required by the
1486 corporation must not amend, modify, interfere with, or limit
1487 such rights of ownership. Such expirations, records, or other
1488 written or electronic information may be used to review an
1489 application, issue a policy, or for any other purpose necessary
1490 for placing such business through the program.
1491
1492 Applicants ineligible for coverage in accordance with subsection
1493 (5) remain ineligible if their exclusive agent is unwilling or
1494 unable to enter into a standard or limited agency agreement with
1495 an insurer making an offer of coverage to that applicant.
1496 Section 5. This act shall take effect January 1, 2023.