Bill Text: FL H1081 | 2010 | Regular Session | Introduced


Bill Title: Citizens Property Insurance Corporation

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2010-04-30 - Died in Committee on Insurance, Business, & Financial Affairs Policy (GGPC) [H1081 Detail]

Download: Florida-2010-H1081-Introduced.html
HB 1081
1
A bill to be entitled
2An act relating to Citizens Property Insurance
3Corporation; amending s. 627.351, F.S.; revising
4legislative intent; requiring that the corporation achieve
5actuarially sound rates on or before a specified date;
6requiring that the corporation take certain actions to
7achieve actuarially sound rates; providing requirements
8for the determination of actuarially sound rates;
9requiring that the corporation file a plan of withdrawal
10on or before a specified date if it does not achieve
11actuarially sound rates by a specified deadline;
12establishing criteria for actuarially sound rates;
13prohibiting the Office of Insurance Regulation from having
14authority with respect to the corporation's rates;
15authorizing a policyholder to challenge his or her premium
16in accordance with specified provisions of state law;
17prohibiting a challenge to the rates of the corporation;
18amending s. 624.430, F.S.; prohibiting the Office of
19Insurance Regulation from denying the corporation's plan
20of withdrawal; providing an effective date.
21
22Be It Enacted by the Legislature of the State of Florida:
23
24 Section 1. Paragraphs (a) and (n) of subsection (6) of
25section 627.351, Florida Statutes, are amended to read:
26 627.351 Insurance risk apportionment plans.-
27 (6) CITIZENS PROPERTY INSURANCE CORPORATION.-
28 (a)1. It is the public purpose of this subsection to
29ensure the existence of an orderly market for property insurance
30for Floridians and Florida businesses. The Legislature finds
31that private insurers are unwilling or unable to provide
32affordable property insurance coverage in this state to the
33extent sought and needed. The absence of affordable property
34insurance threatens the public health, safety, and welfare and
35likewise threatens the economic health of the state. The state
36therefore has a compelling public interest and a public purpose
37to assist in assuring that property in the state is insured and
38that it is insured at affordable rates so as to facilitate the
39remediation, reconstruction, and replacement of damaged or
40destroyed property in order to reduce or avoid the negative
41effects otherwise resulting to the public health, safety, and
42welfare, to the economy of the state, and to the revenues of the
43state and local governments which are needed to provide for the
44public welfare. It is necessary, therefore, to allow the
45Citizens Property Insurance Corporation to be restored to its
46prior status as an insurer of last resort and to allow the
47corporation to develop actuarially sound rates over a period of
48time so that it can pay claims promptly and fulfill its
49statutory obligations. To that end, Citizens Property Insurance
50Corporation shall achieve actuarially sound rates within the
51time period specified in this subsection or must file a plan to
52withdraw from the state pursuant to the requirements in s.
53624.430 provide affordable property insurance to applicants who
54are in good faith entitled to procure insurance through the
55voluntary market but are unable to do so. The Legislature
56intends by this subsection that affordable property insurance be
57provided and that it continue to be provided, as long as
58necessary, through Citizens Property Insurance Corporation, a
59government entity that is an integral part of the state, and
60that is not a private insurance company. To that end, Citizens
61Property Insurance Corporation shall strive to increase the
62availability of affordable property insurance in this state,
63while achieving efficiencies and economies, and while providing
64service to policyholders, applicants, and agents which is no
65less than the quality generally provided in the voluntary
66market, for the achievement of the foregoing public purposes.
67Because it is essential for this government entity to have the
68maximum financial resources to pay claims following a
69catastrophic hurricane, it is the intent of the Legislature that
70Citizens Property Insurance Corporation be allowed to achieve
71actuarially sound rates so that it can continue to be an
72integral part of the state and that the income of the
73corporation be exempt from federal income taxation and that
74interest on the debt obligations issued by the corporation be
75exempt from federal income taxation.
76 2. The Residential Property and Casualty Joint
77Underwriting Association originally created by this statute
78shall be known, as of July 1, 2002, as the Citizens Property
79Insurance Corporation. The corporation shall provide insurance
80for residential and commercial property, for applicants who are
81in good faith entitled, but are unable, to procure insurance
82through the voluntary market. The corporation shall operate
83pursuant to a plan of operation approved by order of the
84Financial Services Commission. The plan is subject to continuous
85review by the commission. The commission may, by order, withdraw
86approval of all or part of a plan if the commission determines
87that conditions have changed since approval was granted and that
88the purposes of the plan require changes in the plan. The
89corporation shall continue to operate pursuant to the plan of
90operation approved by the Office of Insurance Regulation until
91October 1, 2006. For the purposes of this subsection,
92residential coverage includes both personal lines residential
93coverage, which consists of the type of coverage provided by
94homeowner's, mobile home owner's, dwelling, tenant's,
95condominium unit owner's, and similar policies, and commercial
96lines residential coverage, which consists of the type of
97coverage provided by condominium association, apartment
98building, and similar policies.
99 3. Effective January 1, 2009, a personal lines residential
100structure that has a dwelling replacement cost of $2 million or
101more, or a single condominium unit that has a combined dwelling
102and content replacement cost of $2 million or more is not
103eligible for coverage by the corporation. Such dwellings insured
104by the corporation on December 31, 2008, may continue to be
105covered by the corporation until the end of the policy term.
106However, such dwellings that are insured by the corporation and
107become ineligible for coverage due to the provisions of this
108subparagraph may reapply and obtain coverage if the property
109owner provides the corporation with a sworn affidavit from one
110or more insurance agents, on a form provided by the corporation,
111stating that the agents have made their best efforts to obtain
112coverage and that the property has been rejected for coverage by
113at least one authorized insurer and at least three surplus lines
114insurers. If such conditions are met, the dwelling may be
115insured by the corporation for up to 3 years, after which time
116the dwelling is ineligible for coverage. The office shall
117approve the method used by the corporation for valuing the
118dwelling replacement cost for the purposes of this subparagraph.
119If a policyholder is insured by the corporation prior to being
120determined to be ineligible pursuant to this subparagraph and
121such policyholder files a lawsuit challenging the determination,
122the policyholder may remain insured by the corporation until the
123conclusion of the litigation.
124 4. It is the intent of the Legislature that policyholders,
125applicants, and agents of the corporation receive service and
126treatment of the highest possible level but never less than that
127generally provided in the voluntary market. It also is intended
128that the corporation be held to service standards no less than
129those applied to insurers in the voluntary market by the office
130with respect to responsiveness, timeliness, customer courtesy,
131and overall dealings with policyholders, applicants, or agents
132of the corporation.
133 5. Effective January 1, 2009, a personal lines residential
134structure that is located in the "wind-borne debris region," as
135defined in s. 1609.2, International Building Code (2006), and
136that has an insured value on the structure of $750,000 or more
137is not eligible for coverage by the corporation unless the
138structure has opening protections as required under the Florida
139Building Code for a newly constructed residential structure in
140that area. A residential structure shall be deemed to comply
141with the requirements of this subparagraph if it has shutters or
142opening protections on all openings and if such opening
143protections complied with the Florida Building Code at the time
144they were installed.
145 (n)1. As of January 1, 2016, the rates of the corporation
146shall be actuarially sound as provided in this paragraph. If the
147corporation does not achieve actuarially sound rates on or
148before January 1, 2016, it must file a plan of withdrawal
149pursuant to s. 624.430 by July 1, 2016.
150 2. In order to achieve actuarially sound rates by January
1511, 2016, the corporation shall phase in rate changes over a 5-
152year period beginning January 1, 2011, such that the gap between
153the then-current rates and the rates required to achieve
154actuarial soundness decreases by approximately 20 percent each
155year over the 5-year period. During the 5-year period, rate
156decreases are permitted to the extent that they are actuarially
157sound and phased in during that period.
158 3. In determining the actuarial soundness of its rates,
159the corporation:
160 a. May consider the applicable generally accepted and
161reasonable actuarial techniques as enumerated in s.
162627.062(2)(b)1., 2., 4., 5., 7., 9., 10., 11., 12., and 14.,
163(e)1., 3., 4., 5., and 6., (j), and (5).
164 b. Shall include in its rates the following factors for
165the cost of reinsurance to cover its projected 100-year probable
166maximum loss:
167 (I) The actual cost of reinsurance purchased from the
168Florida Hurricane Catastrophe Fund or in the private reinsurance
169market; and
170 (II) The presumed cost of reinsurance not purchased which
171reflects the market value of future corporation assessments
172against corporation and noncorporation policyholders.
173 c. May use one or more models found to be accurate and
174reliable by the Florida Commission on Hurricane Loss Projection
175Methodology.
176 4. The office shall have no authority with respect to the
177rates of the corporation.
178 5. A policyholder may challenge his or her premium as
179provided in s. 627.371. The rates of the corporation may not be
180challenged. Rates for coverage provided by the corporation shall
181be actuarially sound and subject to the requirements of s.
182627.062, except as otherwise provided in this paragraph. The
183corporation shall file its recommended rates with the office at
184least annually. The corporation shall provide any additional
185information regarding the rates which the office requires. The
186office shall consider the recommendations of the board and issue
187a final order establishing the rates for the corporation within
18845 days after the recommended rates are filed. The corporation
189may not pursue an administrative challenge or judicial review of
190the final order of the office.
191 6.2. In addition to the rates otherwise determined
192pursuant to this paragraph, the corporation shall impose and
193collect an amount equal to the premium tax provided for in s.
194624.509 to augment the financial resources of the corporation.
195 3. After the public hurricane loss-projection model under
196s. 627.06281 has been found to be accurate and reliable by the
197Florida Commission on Hurricane Loss Projection Methodology,
198that model shall serve as the minimum benchmark for determining
199the windstorm portion of the corporation's rates. This
200subparagraph does not require or allow the corporation to adopt
201rates lower than the rates otherwise required or allowed by this
202paragraph.
203 4. The rate filings for the corporation which were
204approved by the office and which took effect January 1, 2007,
205are rescinded, except for those rates that were lowered. As soon
206as possible, the corporation shall begin using the lower rates
207that were in effect on December 31, 2006, and shall provide
208refunds to policyholders who have paid higher rates as a result
209of that rate filing. The rates in effect on December 31, 2006,
210shall remain in effect for the 2007 and 2008 calendar years
211except for any rate change that results in a lower rate. The
212next rate change that may increase rates shall take effect
213pursuant to a new rate filing recommended by the corporation and
214established by the office, subject to the requirements of this
215paragraph.
216 5. Beginning on July 15, 2009, and each year thereafter,
217the corporation must make a recommended actuarially sound rate
218filing for each personal and commercial line of business it
219writes, to be effective no earlier than January 1, 2010.
220 6. Beginning on or after January 1, 2010, and
221notwithstanding the board's recommended rates and the office's
222final order regarding the corporation's filed rates under
223subparagraph 1., the corporation shall implement a rate increase
224each year which does not exceed 10 percent for any single policy
225issued by the corporation, excluding coverage changes and
226surcharges.
227 7. The corporation may also implement an increase to
228reflect the effect on the corporation of the cash buildup factor
229pursuant to s. 215.555(5)(b).
230 8. The corporation's implementation of rates as prescribed
231in subparagraph 6. shall cease for any line of business written
232by the corporation upon the corporation's implementation of
233actuarially sound rates. Thereafter, the corporation shall
234annually make a recommended actuarially sound rate filing for
235each commercial and personal line of business the corporation
236writes.
237 Section 2. Present subsection (9) of section 624.430,
238Florida Statutes, is renumbered as subsection (10), and a new
239subsection (9) is added to that section, to read:
240 624.430 Withdrawal of insurer or discontinuance of writing
241certain kinds or lines of insurance.-
242 (9) The office may not deny Citizens Property Insurance
243Corporation's plan of withdrawal as described in s.
244627.351(6)(n).
245 Section 3. This act shall take effect July 1, 2010.
CODING: Words stricken are deletions; words underlined are additions.
feedback