Bill Text: FL S1106 | 2024 | Regular Session | Comm Sub


Bill Title: Coverage by Citizens Property Insurance Corporation

Spectrum: Bipartisan Bill

Status: (Failed) 2024-03-08 - Died in Appropriations [S1106 Detail]

Download: Florida-2024-S1106-Comm_Sub.html
       Florida Senate - 2024                             CS for SB 1106
       
       
        
       By the Committee on Banking and Insurance; and Senator Hooper
       
       
       
       
       
       597-02154-24                                          20241106c1
    1                        A bill to be entitled                      
    2         An act relating to coverage by Citizens Property
    3         Insurance Corporation; amending s. 627.351, F.S.;
    4         revising certain minimum replacement costs as risk
    5         amounts ineligible for coverage by Citizens Property
    6         Insurance Corporation for personal lines residential
    7         structures; providing exceptions to rate increase
    8         limitations on single policies issued by the
    9         corporation; requiring surcharges for a specified
   10         purpose for policies covering certain personal lines
   11         residential structures; prohibiting coverage for
   12         certain dwelling structures and single condominium
   13         units under certain circumstances; providing an
   14         effective date.
   15          
   16  Be It Enacted by the Legislature of the State of Florida:
   17  
   18         Section 1. Paragraphs (a) and (n) of subsection (6) of
   19  section 627.351, Florida Statutes, are amended to read:
   20         627.351 Insurance risk apportionment plans.—
   21         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   22         (a) The public purpose of this subsection is to ensure that
   23  there is an orderly market for property insurance for residents
   24  and businesses of this state.
   25         1. The Legislature finds that private insurers are
   26  unwilling or unable to provide affordable property insurance
   27  coverage in this state to the extent sought and needed. The
   28  absence of affordable property insurance threatens the public
   29  health, safety, and welfare and likewise threatens the economic
   30  health of the state. The state therefore has a compelling public
   31  interest and a public purpose to assist in assuring that
   32  property in the state is insured and that it is insured at
   33  affordable rates so as to facilitate the remediation,
   34  reconstruction, and replacement of damaged or destroyed property
   35  in order to reduce or avoid the negative effects otherwise
   36  resulting to the public health, safety, and welfare, to the
   37  economy of the state, and to the revenues of the state and local
   38  governments which are needed to provide for the public welfare.
   39  It is necessary, therefore, to provide affordable property
   40  insurance to applicants who are in good faith entitled to
   41  procure insurance through the voluntary market but are unable to
   42  do so. The Legislature intends, therefore, that affordable
   43  property insurance be provided and that it continue to be
   44  provided, as long as necessary, through Citizens Property
   45  Insurance Corporation, a government entity that is an integral
   46  part of the state, and that is not a private insurance company.
   47  To that end, the corporation shall strive to increase the
   48  availability of affordable property insurance in this state,
   49  while achieving efficiencies and economies, and while providing
   50  service to policyholders, applicants, and agents which is no
   51  less than the quality generally provided in the voluntary
   52  market, for the achievement of the foregoing public purposes.
   53  Because it is essential for this government entity to have the
   54  maximum financial resources to pay claims following a
   55  catastrophic hurricane, it is the intent of the Legislature that
   56  the corporation continue to be an integral part of the state and
   57  that the income of the corporation be exempt from federal income
   58  taxation and that interest on the debt obligations issued by the
   59  corporation be exempt from federal income taxation.
   60         2. The Residential Property and Casualty Joint Underwriting
   61  Association originally created by this statute shall be known as
   62  the Citizens Property Insurance Corporation. The corporation
   63  shall provide insurance for residential and commercial property,
   64  for applicants who are entitled, but, in good faith, are unable
   65  to procure insurance through the voluntary market. The
   66  corporation shall operate pursuant to a plan of operation
   67  approved by order of the Financial Services Commission. The plan
   68  is subject to continuous review by the commission. The
   69  commission may, by order, withdraw approval of all or part of a
   70  plan if the commission determines that conditions have changed
   71  since approval was granted and that the purposes of the plan
   72  require changes in the plan. For the purposes of this
   73  subsection, residential coverage includes both personal lines
   74  residential coverage, which consists of the type of coverage
   75  provided by homeowner, mobile home owner, dwelling, tenant,
   76  condominium unit owner, and similar policies; and commercial
   77  lines residential coverage, which consists of the type of
   78  coverage provided by condominium association, apartment
   79  building, and similar policies.
   80         3. With respect to coverage for personal lines residential
   81  structures,:
   82         a. effective July 1, 2024 January 1, 2014, a structure that
   83  has a dwelling replacement cost of $1 million or more, or a
   84  single condominium unit that has a combined dwelling and
   85  contents replacement cost of $1 million or more, is not eligible
   86  for coverage by the corporation. Such dwellings insured by the
   87  corporation on December 31, 2013, may continue to be covered by
   88  the corporation until the end of the policy term. The office
   89  shall approve the method used by the corporation for valuing the
   90  dwelling replacement cost for the purposes of this subparagraph.
   91  If a policyholder is insured by the corporation before being
   92  determined to be ineligible pursuant to this subparagraph and
   93  such policyholder files a lawsuit challenging the determination,
   94  the policyholder may remain insured by the corporation until the
   95  conclusion of the litigation.
   96         b.Effective January 1, 2015, a structure that has a
   97  dwelling replacement cost of $900,000 or more, or a single
   98  condominium unit that has a combined dwelling and contents
   99  replacement cost of $900,000 or more, is not eligible for
  100  coverage by the corporation. Such dwellings insured by the
  101  corporation on December 31, 2014, may continue to be covered by
  102  the corporation only until the end of the policy term.
  103         c.Effective January 1, 2016, a structure that has a
  104  dwelling replacement cost of $800,000 or more, or a single
  105  condominium unit that has a combined dwelling and contents
  106  replacement cost of $800,000 or more, is not eligible for
  107  coverage by the corporation. Such dwellings insured by the
  108  corporation on December 31, 2015, may continue to be covered by
  109  the corporation until the end of the policy term.
  110         d.Effective January 1, 2017, a structure that has a
  111  dwelling replacement cost of $700,000 or more, or a single
  112  condominium unit that has a combined dwelling and contents
  113  replacement cost of $700,000 or more, is not eligible for
  114  coverage by the corporation. Such dwellings insured by the
  115  corporation on December 31, 2016, may continue to be covered by
  116  the corporation until the end of the policy term.
  117  
  118  The requirements of sub-subparagraphs b.-d. do not apply in
  119  counties where the office determines there is not a reasonable
  120  degree of competition. In such counties a personal lines
  121  residential structure that has a dwelling replacement cost of
  122  less than $1 million, or a single condominium unit that has a
  123  combined dwelling and contents replacement cost of less than $1
  124  million, is eligible for coverage by the corporation.
  125         4. It is the intent of the Legislature that policyholders,
  126  applicants, and agents of the corporation receive service and
  127  treatment of the highest possible level but never less than that
  128  generally provided in the voluntary market. It is also intended
  129  that the corporation be held to service standards no less than
  130  those applied to insurers in the voluntary market by the office
  131  with respect to responsiveness, timeliness, customer courtesy,
  132  and overall dealings with policyholders, applicants, or agents
  133  of the corporation.
  134         5.a. Effective January 1, 2009, a personal lines
  135  residential structure that is located in the “wind-borne debris
  136  region,” as defined in s. 1609.2, International Building Code
  137  (2006), and that has an insured value on the structure of
  138  $750,000 or more is not eligible for coverage by the corporation
  139  unless the structure has opening protections as required under
  140  the Florida Building Code for a newly constructed residential
  141  structure in that area. A residential structure is deemed to
  142  comply with this sub-subparagraph if it has shutters or opening
  143  protections on all openings and if such opening protections
  144  complied with the Florida Building Code at the time they were
  145  installed.
  146         b. Any major structure, as defined in s. 161.54(6)(a), that
  147  is newly constructed, or rebuilt, repaired, restored, or
  148  remodeled to increase the total square footage of finished area
  149  by more than 25 percent, pursuant to a permit applied for after
  150  July 1, 2015, is not eligible for coverage by the corporation if
  151  the structure is seaward of the coastal construction control
  152  line established pursuant to s. 161.053 or is within the Coastal
  153  Barrier Resources System as designated by 16 U.S.C. ss. 3501
  154  3510.
  155         6. With respect to wind-only coverage for commercial lines
  156  residential condominiums, effective July 1, 2014, a condominium
  157  shall be deemed ineligible for coverage if 50 percent or more of
  158  the units are rented more than eight times in a calendar year
  159  for a rental agreement period of less than 30 days.
  160         (n)1. Rates for coverage provided by the corporation must
  161  be actuarially sound pursuant to s. 627.062 and not competitive
  162  with approved rates charged in the admitted voluntary market so
  163  that the corporation functions as a residual market mechanism to
  164  provide insurance only when insurance cannot be procured in the
  165  voluntary market, except as otherwise provided in this
  166  paragraph. The office shall provide the corporation such
  167  information as would be necessary to determine whether rates are
  168  competitive. The corporation shall file its recommended rates
  169  with the office at least annually. The corporation shall provide
  170  any additional information regarding the rates which the office
  171  requires. The office shall consider the recommendations of the
  172  board and issue a final order establishing the rates for the
  173  corporation within 45 days after the recommended rates are
  174  filed. The corporation may not pursue an administrative
  175  challenge or judicial review of the final order of the office.
  176         2. In addition to the rates otherwise determined pursuant
  177  to this paragraph, the corporation shall impose and collect an
  178  amount equal to the premium tax provided in s. 624.509 to
  179  augment the financial resources of the corporation.
  180         3. After the public hurricane loss-projection model under
  181  s. 627.06281 has been found to be accurate and reliable by the
  182  Florida Commission on Hurricane Loss Projection Methodology, the
  183  model shall be considered when establishing the windstorm
  184  portion of the corporation’s rates. The corporation may use the
  185  public model results in combination with the results of private
  186  models to calculate rates for the windstorm portion of the
  187  corporation’s rates. This subparagraph does not require or allow
  188  the corporation to adopt rates lower than the rates otherwise
  189  required or allowed by this paragraph.
  190         4. The corporation must make a recommended actuarially
  191  sound rate filing for each personal and commercial line of
  192  business it writes.
  193         5. Notwithstanding the board’s recommended rates and the
  194  office’s final order regarding the corporation’s filed rates
  195  under subparagraph 1., the corporation shall annually implement
  196  a rate increase which, except for sinkhole coverage, does not
  197  exceed the following for any single policy issued by the
  198  corporation, excluding coverage changes and surcharges:
  199         a. Twelve percent for 2023.
  200         b. Thirteen percent for 2024.
  201         c. Fourteen percent for 2025.
  202         d. Fifteen percent for 2026 and all subsequent years.
  203  
  204  Beginning with the implementation of the corporation’s next
  205  annual rate change on or after August 1, 2024, this subparagraph
  206  does not apply to a personal lines residential structure that
  207  has a dwelling replacement cost of $700,000 or more or a single
  208  condominium unit that has a combined dwelling and contents
  209  replacement cost of $700,000 or more.
  210         6. The corporation may also implement an increase to
  211  reflect the effect on the corporation of the cash buildup factor
  212  pursuant to s. 215.555(5)(b).
  213         7. The corporation’s implementation of rates as prescribed
  214  in subparagraphs 5. and 9. 8. shall cease for any line of
  215  business written by the corporation upon the corporation’s
  216  implementation of actuarially sound rates. Thereafter, the
  217  corporation shall annually make a recommended actuarially sound
  218  rate filing that is not competitive with approved rates in the
  219  admitted voluntary market for each commercial and personal line
  220  of business the corporation writes.
  221         8.Effective upon implementation of the corporation’s next
  222  annual rate change on or after August 1, 2024, for the purpose
  223  of ensuring that the corporation’s rates are not competitive
  224  with approved rates charged in the admitted voluntary market as
  225  required by subparagraph 1., a surcharge equal to the lesser of
  226  $2,500 or 25 percent of the uncapped premium calculated using
  227  the corporation’s approved rates applies to each personal lines
  228  residential policy insuring a structure that has a dwelling
  229  replacement cost of $700,000 or more and to each policy insuring
  230  a single condominium unit that has a combined dwelling and
  231  contents replacement cost of $700,000 or more. Notwithstanding
  232  this subsection, effective August 1, 2024, a personal lines
  233  residential structure that has a dwelling replacement cost of
  234  $700,000 or more and a single condominium unit that has a
  235  combined dwelling and contents replacement cost of $700,000 or
  236  more are not eligible for coverage by the corporation if the
  237  risk is offered comparable coverage from an authorized insurer
  238  at the insurer’s approved rate under a standard policy including
  239  wind coverage.
  240         9.8. The following new or renewal personal lines policies
  241  written on or after November 1, 2023, are not subject to the
  242  rate increase limitations in subparagraph 5., but may not be
  243  charged more than 50 percent above, nor less than, the prior
  244  year’s established rate for the corporation:
  245         a. Policies that do not cover a primary residence;
  246         b. New policies under which the coverage for the insured
  247  risk, before the date of application with the corporation, was
  248  last provided by an insurer determined by the office to be
  249  unsound or an insurer placed in receivership under chapter 631;
  250  or
  251         c. Subsequent renewals of those policies, including the new
  252  policies in sub-subparagraph b., under which the coverage for
  253  the insured risk, before the date of application with the
  254  corporation, was last provided by an insurer determined by the
  255  office to be unsound or an insurer placed in receivership under
  256  chapter 631.
  257         10.9. As used in this paragraph, the term “primary
  258  residence” means the dwelling that is the policyholder’s primary
  259  home or is a rental property that is the primary home of the
  260  tenant, and which the policyholder or tenant occupies for more
  261  than 9 months of each year.
  262         Section 2. This act shall take effect August 1, 2024.

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