Bill Text: FL S1346 | 2012 | Regular Session | Comm Sub
Bill Title: Property Insurance
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Introduced - Dead) 2012-03-09 - Laid on Table, refer to HB 1127 -SJ 1671 [S1346 Detail]
Download: Florida-2012-S1346-Comm_Sub.html
Florida Senate - 2012 CS for SB 1346 By the Committee on Budget; and Senators Oelrich and Lynn 576-04508-12 20121346c1 1 A bill to be entitled 2 An act relating to property insurance; amending s. 3 215.555, F.S.; revising the definition of “retention”; 4 providing for the calculation of an insurer’s 5 reimbursement premium and retention under the 6 reimbursement contract; revising coverage levels 7 available under the reimbursement contract; revising 8 aggregate coverage limits; providing for the phase-in 9 of changes to coverage levels and limits; amending s. 10 627.351, F.S.; conforming cross-references; reducing 11 to 2 percent from 6 percent the amount of the 12 projected deficit in the coastal account for the prior 13 calendar year which is recovered through regular 14 assessments; requiring that remaining projected 15 deficits in personal and commercial lines accounts be 16 recovered through emergency assessments after 17 accounting for the Citizens policyholder surcharge; 18 requiring the Office of Insurance Regulation of the 19 Financial Services Commission to notify assessable 20 insurers and the Florida Surplus Lines Service Office 21 of the dates assessable insurers shall collect and pay 22 emergency assessments; removing reference to 23 recoupment of residual market deficit assessments; 24 requiring the board of governors to make a 25 determination that an account has a projected deficit 26 before it levies a Citizens policyholder surcharge; 27 requiring that a limited apportionment company begin 28 collecting regular assessments within 90 days and pay 29 in full within 15 months after the assessment is 30 levied; authorizing the Office of Insurance Regulation 31 to assist the Citizens Property Insurance Corporation 32 in the collection of assessments; replacing the term 33 “market equalization surcharge” with the term 34 “policyholder surcharge”; providing effective dates. 35 36 Be It Enacted by the Legislature of the State of Florida: 37 38 Section 1. Effective upon this act becoming a law, 39 paragraph (e) of subsection (2) and paragraphs (b) and (c) of 40 subsection (4) of section 215.555, Florida Statutes, are amended 41 to read: 42 215.555 Florida Hurricane Catastrophe Fund.— 43 (2) DEFINITIONS.—As used in this section: 44 (e) “Retention” means the amount of losses below which an 45 insurer is not entitled to reimbursement from the fund. An 46 insurer’s retention shall be calculated as follows: 47 1. The board shall calculate and report to each insurer the 48 retention multiples for that year. 49 a. For the contract year beginning June 1, 2005, the 50 retention multiple shall be equal to $4.5 billion divided by the 51 total estimated reimbursement premium for the contract year; for 52 subsequent years, the retention multiple shall be equal to $4.5 53 billion, adjusted based upon the reported exposure for the 54 contract year occurring 2 years before the particular contract 55 year to reflect the percentage growth in exposure to the fund 56 for covered policies since 2004, divided by the total estimated 57 reimbursement premium for the contract year. 58 b. For the 2012-2013 contract year, the total reimbursement 59 premium for purposes of the calculation under this subparagraph 60 shall be estimated using the assumption that all insurers have 61 selected the 90-percent coverage level. 62 c. In order to implement the phase-in of reduced coverage 63 levels as provided in paragraph (4)(b), total reimbursement 64 premium for purposes of the calculation under this subparagraph 65 shall be estimated using the following assumptions: 66 (I) For the 2013-2014 contract year, the assumption is that 67 all insurers have selected the 85-percent coverage level. 68 (II) For the 2014-2015 contract year and subsequent 69 contract years, the assumption is that all insurers have 70 selected the 80-percent coverage level. 71 2. The retention multiple as determined under subparagraph 72 1. shall be adjusted to reflect the coverage level elected by 73 the insurer. 74 a. For an insurer electing the maximum coverage level 75 available under paragraph (4)(b) for a particular contract year 76For insurers electing the 90-percent coverage level, the 77 adjusted retention multiple is 100 percent of the amount 78 determined under subparagraph 1. 79 b. In order to implement the phase-in of reduced coverage 80 levels as provided in paragraph (4)(b), for an insurer electing 81 a coverage level other than the maximum coverage level, the 82 adjusted retention multiple is as follows: 83 (I) With respect to the 2012-2013 contract year, for an 84 insurerFor insurerselecting the 75-percent coverage level, the 85 retention multiple is 90/75ths120 percentof the amount 86 determined under subparagraph 1., and for an insurerFor87insurerselecting the 45-percent coverage level, the adjusted 88 retention multiple is 90/45ths200 percentof the amount 89 determined under subparagraph 1. 90 (II) With respect to the 2013-2014 contract year, for an 91 insurer electing the 75-percent coverage level, the retention 92 multiple is 85/75ths of the amount determined under subparagraph 93 1., and for an insurer electing the 45-percent coverage level, 94 the retention multiple is 85/45ths of the amount determined 95 under subparagraph 1. 96 (III) With respect to the 2014-2015 contract year and 97 subsequent contract years, for an insurer electing the 75 98 percent coverage level, the retention multiple is 80/75ths of 99 the amount determined under subparagraph 1., and for an insurer 100 electing the 45-percent coverage level, the retention multiple 101 is 80/45ths of the amount determined under subparagraph 1. 102 3. An insurer shall determine its provisional retention by 103 multiplying its provisional reimbursement premium by the 104 applicable adjusted retention multiple and shall determine its 105 actual retention by multiplying its actual reimbursement premium 106 by the applicable adjusted retention multiple. 107 4. For insurers who experience multiple covered events 108 causing loss during the contract year, beginning June 1, 2005, 109 each insurer’s full retention shall be applied to each of the 110 covered events causing the two largest losses for that insurer. 111 For each other covered event resulting in losses, the insurer’s 112 retention shall be reduced to one-third of the full retention. 113 The reimbursement contract mustshallprovide for the 114 reimbursement of losses for each covered event based on the full 115 retention with adjustments made to reflect the reduced 116 retentions on or after January 1 of the contract year provided 117 the insurer reports its losses as specified in the reimbursement 118 contract. 119 (4) REIMBURSEMENT CONTRACTS.— 120 (b)1. The contract shall contain a promise by the board to 121 reimburse the insurer for a specified percentage45 percent, 75122percent, or 90 percentof its losses from each covered event in 123 excess of the insurer’s retention, plus 5 percent of the 124 reimbursed losses to cover loss adjustment expenses. The 125 available coverage levels are as follows: 126 a. For the 2012-2013 contract year, 90 percent, 75 percent, 127 and 45 percent. 128 b. For the 2013-2014 contract year, 85 percent, 75 percent, 129 and 45 percent. 130 c. For the 2014-2015 contract year and subsequent contract 131 years, 80 percent, 75 percent, and 45 percent. 132 2.a. The insurer must elect one of the percentage coverage 133 levels specified in this paragraph and may, upon renewal of a 134 reimbursement contract, elect a lower percentage coverage level 135 if no revenue bonds issued under subsection (6) after a covered 136 event are outstanding, or elect a higher percentage coverage 137 level, regardless of whether or not revenue bonds are 138 outstanding. All members of an insurer group must elect the same 139 percentage coverage level. AAnyjoint underwriting association, 140 risk apportionment plan, or other entity created under s. 141 627.351 must elect the maximum90-percentcoverage level 142 available under subparagraph 1. 143 b. In order to implement the phase-in of reduced coverage 144 levels as provided in subparagraph 1., and notwithstanding sub 145 subparagraph a., if revenue bonds issued under subsection (6) 146 after a covered event are outstanding and the insurer has 147 elected the maximum coverage level available under subparagraph 148 1., the insurer must, upon renewal of the reimbursement 149 contract, elect the maximum coverage level available under 150 subparagraph 1. for the renewal contract year. 151 3. The contract mustshallprovide that reimbursement 152 amountsshallnot be reduced by reinsurance paid or payable to 153 the insurer from other sources. 154 4. Notwithstanding any other provisioncontainedin this 155 section, the board shall make available to insurers that 156 purchased coverage provided by this subparagraph in 2008, 157 insurers qualifying as limited apportionment companies under s. 158 627.351(6)(c), and insurers that have been approved to 159 participate in the Insurance Capital Build-Up Incentive Program 160 pursuant to s. 215.5595 a contract or contract addendum that 161 provides an additional amount of reimbursement coverage of up to 162 $10 million. The premium to be charged for this additional 163 reimbursement coverage shall be 50 percent of the additional 164 reimbursement coverage provided, which mustshallinclude one 165 prepaid reinstatement. The minimum retention level that an 166 eligible participating insurer must retain associated with this 167 additional coverage layer is 30 percent of the insurer’s surplus 168as of December 31, 2008, for the 2009-2010 contract year; as of169December 31, 2009, for the 2010-2011 contract year; andas of 170 December 31, 2010, for the 2011-2012 contract year. This 171 coverage isshall bein addition to all other coverage that may 172 be provided under this section. The coverage provided by the 173 fund under this subparagraph isshall bein addition to the 174 claims-paying capacity as defined in subparagraph (c)1., but 175 only with respect to those insurers that select the additional 176 coverage option and meet the requirements of this subparagraph. 177 The claims-paying capacity with respect to all other 178 participating insurers and limited apportionment companies that 179 do not select the additional coverage option shall be limited to 180 their reimbursement premium’s proportionate share of the actual 181 claims-paying capacity otherwise defined in subparagraph (c)1. 182 and as provided for under the terms of the reimbursement 183 contract. The optional coverage retention as specified shall be 184 accessed before the mandatory coverage under the reimbursement 185 contract, but once the limit of coverage selected under this 186 option is exhausted, the insurer’s retention under the mandatory 187 coverage applieswill apply. This coverage will apply and be 188 paid concurrently with mandatory coverage. This subparagraph 189 expires on May 31, 2012. 190 (c)1. The contract mustshallalso provide that the 191 obligation of the board with respect to all contracts covering a 192 particular contract yearshallnot exceed the actual claims 193 paying capacity of the fund up to the limit specified in this 194 subparagraph. 195 a. For the 2012-2013 contract year, the limit is $17 196 billion. 197 b. For the 2013-2014 contract year, the limit is $16 198 billion. 199 c. For the 2014-2015 contract year, the limit is $15 200 billion. 201 d. For contract years after the 2014-2015 contract year, if 202a limit of $17 billion for that contract year, unlessthe board 203 determines that there is sufficient estimated claims-paying 204 capacity to provide $15$17billion of capacity for the current 205 contract year and an additional $15$17billion of capacity for 206 subsequent contract years. If the board makes such a207determination, the estimated claims-paying capacity for the 208 particular contract year shall be determined by adding to the 209 $15$17billion limit one-half of the fund’s estimated claims 210 paying capacity in excess of $30$34billion. However, the 211 dollar growth in the limit may not increase in any year by an 212 amount greater than the dollar growth of the balance of the fund 213 as of December 31,less any premiums or interest attributable to214optional coverage,as defined by rule, which occurred over the 215 prior calendar year. 216 2. In May and October of the contract year, the board shall 217 publish in the Florida Administrative Weekly a statement of the 218 fund’s estimated borrowing capacity, the fund’s estimated 219 claims-paying capacity, and the projected balance of the fund as 220 of December 31. After the end of each calendar year, the board 221 shall notify insurers of the estimated borrowing capacity, 222 estimated claims-paying capacity, and the balance of the fund as 223 of December 31 to provide insurers with data necessary to assist 224 them in determining their retention and projected payout from 225 the fund for loss reimbursement purposes. In conjunction with 226 the development of the premium formula,as providedforin 227 subsection (5), the board shall publish factors or multiples 228 that assist insurers in determining their retention and 229 projected payout for the next contract year. For all regulatory 230 and reinsurance purposes, an insurer may calculate its projected 231 payout from the fund as its share of the total fund premium for 232 the current contract year multiplied by the sum of the projected 233 balance of the fund as of December 31 and the estimated 234 borrowing capacity for that contract year as reported under this 235 subparagraph. 236 Section 2. Paragraphs (b), (c), (q), and (w) of subsection 237 (6) of section 627.351, Florida Statutes, are amended to read: 238 627.351 Insurance risk apportionment plans.— 239 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 240 (b)1. All insurers authorized to write one or more subject 241 lines of business in this state are subject to assessment by the 242 corporation and, for the purposes of this subsection, are 243 referred to collectively as “assessable insurers.” Insurers 244 writing one or more subject lines of business in this state 245 pursuant to part VIII of chapter 626 are not assessable 246 insurers, but insureds who procure one or more subject lines of 247 business in this state pursuant to part VIII of chapter 626 are 248 subject to assessment by the corporation and are referred to 249 collectively as “assessable insureds.” An insurer’s assessment 250 liability begins on the first day of the calendar year following 251 the year in which the insurer was issued a certificate of 252 authority to transact insurance for subject lines of business in 253 this state and terminates 1 year after the end of the first 254 calendar year during which the insurer no longer holds a 255 certificate of authority to transact insurance for subject lines 256 of business in this state. 257 2.a. All revenues, assets, liabilities, losses, and 258 expenses of the corporation shall be divided into three separate 259 accounts as follows: 260 (I) A personal lines account for personal residential 261 policies issued by the corporation, or issued by the Residential 262 Property and Casualty Joint Underwriting Association and renewed 263 by the corporation, which provides comprehensive, multiperil 264 coverage on risks that are not located in areas eligible for 265 coverage by the Florida Windstorm Underwriting Association as 266 those areas were defined on January 1, 2002, and for policies 267 that do not provide coverage for the peril of wind on risks that 268 are located in such areas; 269 (II) A commercial lines account for commercial residential 270 and commercial nonresidential policies issued by the 271 corporation, or issued by the Residential Property and Casualty 272 Joint Underwriting Association and renewed by the corporation, 273 which provides coverage for basic property perils on risks that 274 are not located in areas eligible for coverage by the Florida 275 Windstorm Underwriting Association as those areas were defined 276 on January 1, 2002, and for policies that do not provide 277 coverage for the peril of wind on risks that are located in such 278 areas; and 279 (III) A coastal account for personal residential policies 280 and commercial residential and commercial nonresidential 281 property policies issued by the corporation, or transferred to 282 the corporation, which provides coverage for the peril of wind 283 on risks that are located in areas eligible for coverage by the 284 Florida Windstorm Underwriting Association as those areas were 285 defined on January 1, 2002. The corporation may offer policies 286 that provide multiperil coverage and the corporation shall 287 continue to offer policies that provide coverage only for the 288 peril of wind for risks located in areas eligible for coverage 289 in the coastal account. In issuing multiperil coverage, the 290 corporation may use its approved policy forms and rates for the 291 personal lines account. An applicant or insured who is eligible 292 to purchase a multiperil policy from the corporation may 293 purchase a multiperil policy from an authorized insurer without 294 prejudice to the applicant’s or insured’s eligibility to 295 prospectively purchase a policy that provides coverage only for 296 the peril of wind from the corporation. An applicant or insured 297 who is eligible for a corporation policy that provides coverage 298 only for the peril of wind may elect to purchase or retain such 299 policy and also purchase or retain coverage excluding wind from 300 an authorized insurer without prejudice to the applicant’s or 301 insured’s eligibility to prospectively purchase a policy that 302 provides multiperil coverage from the corporation. It is the 303 goal of the Legislature that there be an overall average savings 304 of 10 percent or more for a policyholder who currently has a 305 wind-only policy with the corporation, and an ex-wind policy 306 with a voluntary insurer or the corporation, and who obtains a 307 multiperil policy from the corporation. It is the intent of the 308 Legislature that the offer of multiperil coverage in the coastal 309 account be made and implemented in a manner that does not 310 adversely affect the tax-exempt status of the corporation or 311 creditworthiness of or security for currently outstanding 312 financing obligations or credit facilities of the coastal 313 account, the personal lines account, or the commercial lines 314 account. The coastal account must also include quota share 315 primary insurance under subparagraph (c)2. The area eligible for 316 coverage under the coastal account also includes the area within 317 Port Canaveral, which is bordered on the south by the City of 318 Cape Canaveral, bordered on the west by the Banana River, and 319 bordered on the north by Federal Government property. 320 b. The three separate accounts must be maintained as long 321 as financing obligations entered into by the Florida Windstorm 322 Underwriting Association or Residential Property and Casualty 323 Joint Underwriting Association are outstanding, in accordance 324 with the terms of the corresponding financing documents. If the 325 financing obligations are no longer outstanding, the corporation 326 may use a single account for all revenues, assets, liabilities, 327 losses, and expenses of the corporation. Consistent with this 328 subparagraph and prudent investment policies that minimize the 329 cost of carrying debt, the board shall exercise its best efforts 330 to retire existing debt or obtain the approval of necessary 331 parties to amend the terms of existing debt, so as to structure 332 the most efficient plan to consolidate the three separate 333 accounts into a single account. 334 c. Creditors of the Residential Property and Casualty Joint 335 Underwriting Association and the accounts specified in sub-sub 336 subparagraphs a.(I) and (II) may have a claim against, and 337 recourse to, those accounts and no claim against, or recourse 338 to, the account referred to in sub-sub-subparagraph a.(III). 339 Creditors of the Florida Windstorm Underwriting Association have 340 a claim against, and recourse to, the account referred to in 341 sub-sub-subparagraph a.(III) and no claim against, or recourse 342 to, the accounts referred to in sub-sub-subparagraphs a.(I) and 343 (II). 344 d. Revenues, assets, liabilities, losses, and expenses not 345 attributable to particular accounts shall be prorated among the 346 accounts. 347 e. The Legislature finds that the revenues of the 348 corporation are revenues that are necessary to meet the 349 requirements set forth in documents authorizing the issuance of 350 bonds under this subsection. 351 f.No part ofThe income of the corporation may not inure 352 to the benefit of any private person. 353 3. With respect to a deficit in an account: 354 a. After accounting for the Citizens policyholder surcharge 355 imposed under sub-subparagraph i.h., if the remaining projected 356 deficit incurred in the coastal account in a particular calendar 357 year: 358 (I) Is not greater than 26percent of the aggregate 359 statewide direct written premium for the subject lines of 360 business for the prior calendar year, the entire deficit shall 361 be recovered through regular assessments of assessable insurers 362 under paragraph (q) and assessable insureds. 363 (II) Exceeds 26percent of the aggregate statewide direct 364 written premium for the subject lines of business for the prior 365 calendar year, the corporation shall levy regular assessments on 366 assessable insurers under paragraph (q) and on assessable 367 insureds in an amount equal to the greater of 26percent of the 368 projected deficit or 26percent of the aggregate statewide 369 direct written premium for the subject lines of business for the 370 prior calendar year. Any remaining projected deficit shall be 371 recovered through emergency assessments under sub-subparagraph 372 d.c.373 b. Each assessable insurer’s share of the amount being 374 assessed under sub-subparagraph a. must be in the proportion 375 that the assessable insurer’s direct written premium for the 376 subject lines of business for the year preceding the assessment 377 bears to the aggregate statewide direct written premium for the 378 subject lines of business for that year. The assessment 379 percentage applicable to each assessable insured is the ratio of 380 the amount being assessed under sub-subparagraph a. to the 381 aggregate statewide direct written premium for the subject lines 382 of business for the prior year. Assessments levied by the 383 corporation on assessable insurers under sub-subparagraph a. 384 must be paid as required by the corporation’s plan of operation 385 and paragraph (q). Assessments levied by the corporation on 386 assessable insureds under sub-subparagraph a. shall be collected 387 by the surplus lines agent at the time the surplus lines agent 388 collects the surplus lines tax required by s. 626.932, and paid 389 to the Florida Surplus Lines Service Office at the time the 390 surplus lines agent pays the surplus lines tax to that office. 391 Upon receipt of regular assessments from surplus lines agents, 392 the Florida Surplus Lines Service Office shall transfer the 393 assessments directly to the corporation as determined by the 394 corporation. 395 c. After accounting for the Citizens policyholder surcharge 396 imposed under sub-subparagraph i., the remaining projected 397 deficits in the personal lines account and in the commercial 398 lines account in a particular calendar year shall be recovered 399 through emergency assessments under sub-subparagraph d. 400 d.c.Upon a determination by the board of governors that a 401 projected deficit in an account exceeds the amount that is 402 expected towillbe recovered through regular assessments under 403 sub-subparagraph a., plus the amount that is expected to be 404 recovered through surcharges under sub-subparagraph i.h., the 405 board, after verification by the office, shall levy emergency 406 assessments for as many years as necessary to cover the 407 deficits, to be collected by assessable insurers and the 408 corporation and collected from assessable insureds upon issuance 409 or renewal of policies for subject lines of business, excluding 410 National Flood Insurance policies. The amount collected in a 411 particular year must be a uniform percentage of that year’s 412 direct written premium for subject lines of business and all 413 accounts of the corporation, excluding National Flood Insurance 414 Program policy premiums, as annually determined by the board and 415 verified by the office. The office shall verify the arithmetic 416 calculations involved in the board’s determination within 30 417 days after receipt of the information on which the determination 418 was based. The office shall notify assessable insurers and the 419 Florida Surplus Lines Service Office of the date on which 420 assessable insurers shall begin to collect and assessable 421 insureds shall begin to pay such assessment. The date may be not 422 less than 90 days after the date the corporation levies 423 emergency assessments pursuant to this sub-subparagraph. 424 Notwithstanding any other provision of law, the corporation and 425 each assessable insurer that writes subject lines of business 426 shall collect emergency assessments from its policyholders 427 without such obligation being affected by any credit, 428 limitation, exemption, or deferment. Emergency assessments 429 levied by the corporation on assessable insureds shall be 430 collected by the surplus lines agent at the time the surplus 431 lines agent collects the surplus lines tax required by s. 432 626.932 and paid to the Florida Surplus Lines Service Office at 433 the time the surplus lines agent pays the surplus lines tax to 434 that office. The emergency assessments collected shall be 435 transferred directly to the corporation on a periodic basis as 436 determined by the corporation and held by the corporation solely 437 in the applicable account. The aggregate amount of emergency 438 assessments levied for an account under this sub-subparagraph in 439 any calendar year may be less than but not exceed the greater of 440 10 percent of the amount needed to cover the deficit, plus 441 interest, fees, commissions, required reserves, and other costs 442 associated with financing the original deficit, or 10 percent of 443 the aggregate statewide direct written premium for subject lines 444 of business and all accounts of the corporation for the prior 445 year, plus interest, fees, commissions, required reserves, and 446 other costs associated with financing the deficit. 447 e.d.The corporation may pledge the proceeds of 448 assessments, projected recoveries from the Florida Hurricane 449 Catastrophe Fund, other insurance and reinsurance recoverables, 450 policyholder surcharges and other surcharges, and other funds 451 available to the corporation as the source of revenue for and to 452 secure bonds issued under paragraph (q), bonds or other 453 indebtedness issued under subparagraph (c)3., or lines of credit 454 or other financing mechanisms issued or created under this 455 subsection, or to retire any other debt incurred as a result of 456 deficits or events giving rise to deficits, or in any other way 457 that the board determines will efficiently recover such 458 deficits. The purpose of the lines of credit or other financing 459 mechanisms is to provide additional resources to assist the 460 corporation in covering claims and expenses attributable to a 461 catastrophe. As used in this subsection, the term “assessments” 462 includes regular assessments under sub-subparagraph a. or 463 subparagraph (q)1. and emergency assessments under sub 464 subparagraph d. Emergency assessments collected under sub 465 subparagraph d. are not part of an insurer’s rates, are not 466 premium, and are not subject to premium tax, fees, or 467 commissions; however, failure to pay the emergency assessment 468 shall be treated as failure to pay premium. The emergency 469 assessments under sub-subparagraph d.c.shall continue as long 470 as any bonds issued or other indebtedness incurred with respect 471 to a deficit for which the assessment was imposed remain 472 outstanding, unless adequate provision has been made for the 473 payment of such bonds or other indebtedness pursuant to the 474 documents governing such bonds or indebtedness. 475 f.e.As used in this subsection for purposes of any deficit 476 incurred on or after January 25, 2007, the term “subject lines 477 of business” means insurance written by assessable insurers or 478 procured by assessable insureds for all property and casualty 479 lines of business in this state, but not including workers’ 480 compensation or medical malpractice. As used in this sub 481 subparagraph, the term “property and casualty lines of business” 482 includes all lines of business identified on Form 2, Exhibit of 483 Premiums and Losses, in the annual statement required of 484 authorized insurers under s. 624.424 and any rule adopted under 485 this section, except for those lines identified as accident and 486 health insurance and except for policies written under the 487 National Flood Insurance Program or the Federal Crop Insurance 488 Program. For purposes of this sub-subparagraph, the term 489 “workers’ compensation” includes both workers’ compensation 490 insurance and excess workers’ compensation insurance. 491 g.f.The Florida Surplus Lines Service Office shall 492 determine annually the aggregate statewide written premium in 493 subject lines of business procured by assessable insureds and 494 report that information to the corporation in a form and at a 495 time the corporation specifies to ensure that the corporation 496 can meet the requirements of this subsection and the 497 corporation’s financing obligations. 498 h.g.The Florida Surplus Lines Service Office shall verify 499 the proper application by surplus lines agents of assessment 500 percentages for regular assessments and emergency assessments 501 levied under this subparagraph on assessable insureds and assist 502 the corporation in ensuring the accurate, timely collection and 503 payment of assessments by surplus lines agents as required by 504 the corporation. 505 i.h.If a deficit is incurred in any accountIn 2008 or 506 thereafter, upon a determination by the board of governors that 507 an account has a projected deficit, the board shall levy a 508 Citizens policyholder surcharge against all policyholders of the 509 corporation. 510 (I) The surcharge shall be levied as a uniform percentage 511 of the premium for the policy of up to 15 percent of such 512 premium, which funds shall be used to offset the deficit. 513 (II) The surcharge is payable upon cancellation or 514 termination of the policy, upon renewal of the policy, or upon 515 issuance of a new policy by the corporation within the first 12 516 months after the date of the levy or the period of time 517 necessary to fully collect the surcharge amount. 518 (III) The corporation may not levy any regular assessments 519 under paragraph (q) pursuant to sub-subparagraph a. or sub 520 subparagraph b. with respect to a particular year’s deficit 521 until the corporation has first levied the full amount of the 522 surcharge authorized by this sub-subparagraph. 523 (IV) The surcharge is not considered premium and is not 524 subject to commissions, fees, or premium taxes. However, failure 525 to pay the surcharge shall be treated as failure to pay premium. 526 j.i.If the amount of any assessments or surcharges 527 collected from corporation policyholders, assessable insurers or 528 their policyholders, or assessable insureds exceeds the amount 529 of the deficits, such excess amounts shall be remitted to and 530 retained by the corporation in a reserve to be used by the 531 corporation, as determined by the board of governors and 532 approved by the office, to pay claims or reduce any past, 533 present, or future plan-year deficits or to reduce outstanding 534 debt. 535 (c) The corporation’s plan of operation: 536 1. Must provide for adoption of residential property and 537 casualty insurance policy forms and commercial residential and 538 nonresidential property insurance forms, which must be approved 539 by the office before use. The corporation shall adopt the 540 following policy forms: 541 a. Standard personal lines policy forms that are 542 comprehensive multiperil policies providing full coverage of a 543 residential property equivalent to the coverage provided in the 544 private insurance market under an HO-3, HO-4, or HO-6 policy. 545 b. Basic personal lines policy forms that are policies 546 similar to an HO-8 policy or a dwelling fire policy that provide 547 coverage meeting the requirements of the secondary mortgage 548 market, but which is more limited than the coverage under a 549 standard policy. 550 c. Commercial lines residential and nonresidential policy 551 forms that are generally similar to the basic perils of full 552 coverage obtainable for commercial residential structures and 553 commercial nonresidential structures in the admitted voluntary 554 market. 555 d. Personal lines and commercial lines residential property 556 insurance forms that cover the peril of wind only. The forms are 557 applicable only to residential properties located in areas 558 eligible for coverage under the coastal account referred to in 559 sub-subparagraph (b)2.a. 560 e. Commercial lines nonresidential property insurance forms 561 that cover the peril of wind only. The forms are applicable only 562 to nonresidential properties located in areas eligible for 563 coverage under the coastal account referred to in sub 564 subparagraph (b)2.a. 565 f. The corporation may adopt variations of the policy forms 566 listed in sub-subparagraphs a.-e. which contain more restrictive 567 coverage. 568 2. Must provide that the corporation adopt a program in 569 which the corporation and authorized insurers enter into quota 570 share primary insurance agreements for hurricane coverage, as 571 defined in s. 627.4025(2)(a), for eligible risks, and adopt 572 property insurance forms for eligible risks which cover the 573 peril of wind only. 574 a. As used in this subsection, the term: 575 (I) “Quota share primary insurance” means an arrangement in 576 which the primary hurricane coverage of an eligible risk is 577 provided in specified percentages by the corporation and an 578 authorized insurer. The corporation and authorized insurer are 579 each solely responsible for a specified percentage of hurricane 580 coverage of an eligible risk as set forth in a quota share 581 primary insurance agreement between the corporation and an 582 authorized insurer and the insurance contract. The 583 responsibility of the corporation or authorized insurer to pay 584 its specified percentage of hurricane losses of an eligible 585 risk, as set forth in the agreement, may not be altered by the 586 inability of the other party to pay its specified percentage of 587 losses. Eligible risks that are provided hurricane coverage 588 through a quota share primary insurance arrangement must be 589 provided policy forms that set forth the obligations of the 590 corporation and authorized insurer under the arrangement, 591 clearly specify the percentages of quota share primary insurance 592 provided by the corporation and authorized insurer, and 593 conspicuously and clearly state that the authorized insurer and 594 the corporation may not be held responsible beyond their 595 specified percentage of coverage of hurricane losses. 596 (II) “Eligible risks” means personal lines residential and 597 commercial lines residential risks that meet the underwriting 598 criteria of the corporation and are located in areas that were 599 eligible for coverage by the Florida Windstorm Underwriting 600 Association on January 1, 2002. 601 b. The corporation may enter into quota share primary 602 insurance agreements with authorized insurers at corporation 603 coverage levels of 90 percent and 50 percent. 604 c. If the corporation determines that additional coverage 605 levels are necessary to maximize participation in quota share 606 primary insurance agreements by authorized insurers, the 607 corporation may establish additional coverage levels. However, 608 the corporation’s quota share primary insurance coverage level 609 may not exceed 90 percent. 610 d. Any quota share primary insurance agreement entered into 611 between an authorized insurer and the corporation must provide 612 for a uniform specified percentage of coverage of hurricane 613 losses, by county or territory as set forth by the corporation 614 board, for all eligible risks of the authorized insurer covered 615 under the agreement. 616 e. Any quota share primary insurance agreement entered into 617 between an authorized insurer and the corporation is subject to 618 review and approval by the office. However, such agreement shall 619 be authorized only as to insurance contracts entered into 620 between an authorized insurer and an insured who is already 621 insured by the corporation for wind coverage. 622 f. For all eligible risks covered under quota share primary 623 insurance agreements, the exposure and coverage levels for both 624 the corporation and authorized insurers shall be reported by the 625 corporation to the Florida Hurricane Catastrophe Fund. For all 626 policies of eligible risks covered under such agreements, the 627 corporation and the authorized insurer must maintain complete 628 and accurate records for the purpose of exposure and loss 629 reimbursement audits as required by fund rules. The corporation 630 and the authorized insurer shall each maintain duplicate copies 631 of policy declaration pages and supporting claims documents. 632 g. The corporation board shall establish in its plan of 633 operation standards for quota share agreements which ensure that 634 there is no discriminatory application among insurers as to the 635 terms of the agreements, pricing of the agreements, incentive 636 provisions if any, and consideration paid for servicing policies 637 or adjusting claims. 638 h. The quota share primary insurance agreement between the 639 corporation and an authorized insurer must set forth the 640 specific terms under which coverage is provided, including, but 641 not limited to, the sale and servicing of policies issued under 642 the agreement by the insurance agent of the authorized insurer 643 producing the business, the reporting of information concerning 644 eligible risks, the payment of premium to the corporation, and 645 arrangements for the adjustment and payment of hurricane claims 646 incurred on eligible risks by the claims adjuster and personnel 647 of the authorized insurer. Entering into a quota sharing 648 insurance agreement between the corporation and an authorized 649 insurer is voluntary and at the discretion of the authorized 650 insurer. 651 3.a. May provide that the corporation may employ or 652 otherwise contract with individuals or other entities to provide 653 administrative or professional services that may be appropriate 654 to effectuate the plan. The corporation may borrow funds by 655 issuing bonds or by incurring other indebtedness, and shall have 656 other powers reasonably necessary to effectuate the requirements 657 of this subsection, including, without limitation, the power to 658 issue bonds and incur other indebtedness in order to refinance 659 outstanding bonds or other indebtedness. The corporation may 660 seek judicial validation of its bonds or other indebtedness 661 under chapter 75. The corporation may issue bonds or incur other 662 indebtedness, or have bonds issued on its behalf by a unit of 663 local government pursuant to subparagraph (q)2. in the absence 664 of a hurricane or other weather-related event, upon a 665 determination by the corporation, subject to approval by the 666 office, that such action would enable it to efficiently meet the 667 financial obligations of the corporation and that such 668 financings are reasonably necessary to effectuate the 669 requirements of this subsection. The corporation may take all 670 actions needed to facilitate tax-free status for such bonds or 671 indebtedness, including formation of trusts or other affiliated 672 entities. The corporation may pledge assessments, projected 673 recoveries from the Florida Hurricane Catastrophe Fund, other 674 reinsurance recoverables, policyholder surchargesmarket675equalizationand other surcharges, and other funds available to 676 the corporation as security for bonds or other indebtedness. In 677 recognition of s. 10, Art. I of the State Constitution, 678 prohibiting the impairment of obligations of contracts, it is 679 the intent of the Legislature that no action be taken whose 680 purpose is to impair any bond indenture or financing agreement 681 or any revenue source committed by contract to such bond or 682 other indebtedness. 683 b. To ensure that the corporation is operating in an 684 efficient and economic manner while providing quality service to 685 policyholders, applicants, and agents, the board shall 686 commission an independent third-party consultant having 687 expertise in insurance company management or insurance company 688 management consulting to prepare a report and make 689 recommendations on the relative costs and benefits of 690 outsourcing various policy issuance and service functions to 691 private servicing carriers or entities performing similar 692 functions in the private market for a fee, rather than 693 performing such functions in-house. In making such 694 recommendations, the consultant shall consider how other 695 residual markets, both in this state and around the country, 696 outsource appropriate functions or use servicing carriers to 697 better match expenses with revenues that fluctuate based on a 698 widely varying policy count. The report must be completed by 699 July 1, 2012. Upon receiving the report, the board shall develop 700 a plan to implement the report and submit the plan for review, 701 modification, and approval to the Financial Services Commission. 702 Upon the commission’s approval of the plan, the board shall 703 begin implementing the plan by January 1, 2013. 704 4. Must require that the corporation operate subject to the 705 supervision and approval of a board of governors consisting of 706 eight individuals who are residents of this state, from 707 different geographical areas of this state. 708 a. The Governor, the Chief Financial Officer, the President 709 of the Senate, and the Speaker of the House of Representatives 710 shall each appoint two members of the board. At least one of the 711 two members appointed by each appointing officer must have 712 demonstrated expertise in insurance and is deemed to be within 713 the scope of the exemption provided in s. 112.313(7)(b). The 714 Chief Financial Officer shall designate one of the appointees as 715 chair. All board members serve at the pleasure of the appointing 716 officer. All members of the board are subject to removal at will 717 by the officers who appointed them. All board members, including 718 the chair, must be appointed to serve for 3-year terms beginning 719 annually on a date designated by the plan. However, for the 720 first term beginning on or after July 1, 2009, each appointing 721 officer shall appoint one member of the board for a 2-year term 722 and one member for a 3-year term. A board vacancy shall be 723 filled for the unexpired term by the appointing officer. The 724 Chief Financial Officer shall appoint a technical advisory group 725 to provide information and advice to the board in connection 726 with the board’s duties under this subsection. The executive 727 director and senior managers of the corporation shall be engaged 728 by the board and serve at the pleasure of the board. Any 729 executive director appointed on or after July 1, 2006, is 730 subject to confirmation by the Senate. The executive director is 731 responsible for employing other staff as the corporation may 732 require, subject to review and concurrence by the board. 733 b. The board shall create a Market Accountability Advisory 734 Committee to assist the corporation in developing awareness of 735 its rates and its customer and agent service levels in 736 relationship to the voluntary market insurers writing similar 737 coverage. 738 (I) The members of the advisory committee consist of the 739 following 11 persons, one of whom must be elected chair by the 740 members of the committee: four representatives, one appointed by 741 the Florida Association of Insurance Agents, one by the Florida 742 Association of Insurance and Financial Advisors, one by the 743 Professional Insurance Agents of Florida, and one by the Latin 744 American Association of Insurance Agencies; three 745 representatives appointed by the insurers with the three highest 746 voluntary market share of residential property insurance 747 business in the state; one representative from the Office of 748 Insurance Regulation; one consumer appointed by the board who is 749 insured by the corporation at the time of appointment to the 750 committee; one representative appointed by the Florida 751 Association of Realtors; and one representative appointed by the 752 Florida Bankers Association. All members shall be appointed to 753 3-year terms and may serve for consecutive terms. 754 (II) The committee shall report to the corporation at each 755 board meeting on insurance market issues which may include rates 756 and rate competition with the voluntary market; service, 757 including policy issuance, claims processing, and general 758 responsiveness to policyholders, applicants, and agents; and 759 matters relating to depopulation. 760 5. Must provide a procedure for determining the eligibility 761 of a risk for coverage, as follows: 762 a. Subject to s. 627.3517, with respect to personal lines 763 residential risks, if the risk is offered coverage from an 764 authorized insurer at the insurer’s approved rate under a 765 standard policy including wind coverage or, if consistent with 766 the insurer’s underwriting rules as filed with the office, a 767 basic policy including wind coverage, for a new application to 768 the corporation for coverage, the risk is not eligible for any 769 policy issued by the corporation unless the premium for coverage 770 from the authorized insurer is more than 15 percent greater than 771 the premium for comparable coverage from the corporation. If the 772 risk is not able to obtain such offer, the risk is eligible for 773 a standard policy including wind coverage or a basic policy 774 including wind coverage issued by the corporation; however, if 775 the risk could not be insured under a standard policy including 776 wind coverage regardless of market conditions, the risk is 777 eligible for a basic policy including wind coverage unless 778 rejected under subparagraph 8. However, a policyholder of the 779 corporation or a policyholder removed from the corporation 780 through an assumption agreement until the end of the assumption 781 period remains eligible for coverage from the corporation 782 regardless of any offer of coverage from an authorized insurer 783 or surplus lines insurer. The corporation shall determine the 784 type of policy to be provided on the basis of objective 785 standards specified in the underwriting manual and based on 786 generally accepted underwriting practices. 787 (I) If the risk accepts an offer of coverage through the 788 market assistance plan or through a mechanism established by the 789 corporation before a policy is issued to the risk by the 790 corporation or during the first 30 days of coverage by the 791 corporation, and the producing agent who submitted the 792 application to the plan or to the corporation is not currently 793 appointed by the insurer, the insurer shall: 794 (A) Pay to the producing agent of record of the policy for 795 the first year, an amount that is the greater of the insurer’s 796 usual and customary commission for the type of policy written or 797 a fee equal to the usual and customary commission of the 798 corporation; or 799 (B) Offer to allow the producing agent of record of the 800 policy to continue servicing the policy for at least 1 year and 801 offer to pay the agent the greater of the insurer’s or the 802 corporation’s usual and customary commission for the type of 803 policy written. 804 805 If the producing agent is unwilling or unable to accept 806 appointment, the new insurer shall pay the agent in accordance 807 with sub-sub-sub-subparagraph (A). 808 (II) If the corporation enters into a contractual agreement 809 for a take-out plan, the producing agent of record of the 810 corporation policy is entitled to retain any unearned commission 811 on the policy, and the insurer shall: 812 (A) Pay to the producing agent of record, for the first 813 year, an amount that is the greater of the insurer’s usual and 814 customary commission for the type of policy written or a fee 815 equal to the usual and customary commission of the corporation; 816 or 817 (B) Offer to allow the producing agent of record to 818 continue servicing the policy for at least 1 year and offer to 819 pay the agent the greater of the insurer’s or the corporation’s 820 usual and customary commission for the type of policy written. 821 822 If the producing agent is unwilling or unable to accept 823 appointment, the new insurer shall pay the agent in accordance 824 with sub-sub-sub-subparagraph (A). 825 b. With respect to commercial lines residential risks, for 826 a new application to the corporation for coverage, if the risk 827 is offered coverage under a policy including wind coverage from 828 an authorized insurer at its approved rate, the risk is not 829 eligible for a policy issued by the corporation unless the 830 premium for coverage from the authorized insurer is more than 15 831 percent greater than the premium for comparable coverage from 832 the corporation. If the risk is not able to obtain any such 833 offer, the risk is eligible for a policy including wind coverage 834 issued by the corporation. However, a policyholder of the 835 corporation or a policyholder removed from the corporation 836 through an assumption agreement until the end of the assumption 837 period remains eligible for coverage from the corporation 838 regardless of an offer of coverage from an authorized insurer or 839 surplus lines insurer. 840 (I) If the risk accepts an offer of coverage through the 841 market assistance plan or through a mechanism established by the 842 corporation before a policy is issued to the risk by the 843 corporation or during the first 30 days of coverage by the 844 corporation, and the producing agent who submitted the 845 application to the plan or the corporation is not currently 846 appointed by the insurer, the insurer shall: 847 (A) Pay to the producing agent of record of the policy, for 848 the first year, an amount that is the greater of the insurer’s 849 usual and customary commission for the type of policy written or 850 a fee equal to the usual and customary commission of the 851 corporation; or 852 (B) Offer to allow the producing agent of record of the 853 policy to continue servicing the policy for at least 1 year and 854 offer to pay the agent the greater of the insurer’s or the 855 corporation’s usual and customary commission for the type of 856 policy written. 857 858 If the producing agent is unwilling or unable to accept 859 appointment, the new insurer shall pay the agent in accordance 860 with sub-sub-sub-subparagraph (A). 861 (II) If the corporation enters into a contractual agreement 862 for a take-out plan, the producing agent of record of the 863 corporation policy is entitled to retain any unearned commission 864 on the policy, and the insurer shall: 865 (A) Pay to the producing agent of record, for the first 866 year, an amount that is the greater of the insurer’s usual and 867 customary commission for the type of policy written or a fee 868 equal to the usual and customary commission of the corporation; 869 or 870 (B) Offer to allow the producing agent of record to 871 continue servicing the policy for at least 1 year and offer to 872 pay the agent the greater of the insurer’s or the corporation’s 873 usual and customary commission for the type of policy written. 874 875 If the producing agent is unwilling or unable to accept 876 appointment, the new insurer shall pay the agent in accordance 877 with sub-sub-sub-subparagraph (A). 878 c. For purposes of determining comparable coverage under 879 sub-subparagraphs a. and b., the comparison must be based on 880 those forms and coverages that are reasonably comparable. The 881 corporation may rely on a determination of comparable coverage 882 and premium made by the producing agent who submits the 883 application to the corporation, made in the agent’s capacity as 884 the corporation’s agent. A comparison may be made solely of the 885 premium with respect to the main building or structure only on 886 the following basis: the same coverage A or other building 887 limits; the same percentage hurricane deductible that applies on 888 an annual basis or that applies to each hurricane for commercial 889 residential property; the same percentage of ordinance and law 890 coverage, if the same limit is offered by both the corporation 891 and the authorized insurer; the same mitigation credits, to the 892 extent the same types of credits are offered both by the 893 corporation and the authorized insurer; the same method for loss 894 payment, such as replacement cost or actual cash value, if the 895 same method is offered both by the corporation and the 896 authorized insurer in accordance with underwriting rules; and 897 any other form or coverage that is reasonably comparable as 898 determined by the board. If an application is submitted to the 899 corporation for wind-only coverage in the coastal account, the 900 premium for the corporation’s wind-only policy plus the premium 901 for the ex-wind policy that is offered by an authorized insurer 902 to the applicant must be compared to the premium for multiperil 903 coverage offered by an authorized insurer, subject to the 904 standards for comparison specified in this subparagraph. If the 905 corporation or the applicant requests from the authorized 906 insurer a breakdown of the premium of the offer by types of 907 coverage so that a comparison may be made by the corporation or 908 its agent and the authorized insurer refuses or is unable to 909 provide such information, the corporation may treat the offer as 910 not being an offer of coverage from an authorized insurer at the 911 insurer’s approved rate. 912 6. Must include rules for classifications of risks and 913 rates. 914 7. Must provide that if premium and investment income for 915 an account attributable to a particular calendar year are in 916 excess of projected losses and expenses for the account 917 attributable to that year, such excess shall be held in surplus 918 in the account. Such surplus must be available to defray 919 deficits in that account as to future years and used for that 920 purpose before assessing assessable insurers and assessable 921 insureds as to any calendar year. 922 8. Must provide objective criteria and procedures to be 923 uniformly applied to all applicants in determining whether an 924 individual risk is so hazardous as to be uninsurable. In making 925 this determination and in establishing the criteria and 926 procedures, the following must be considered: 927 a. Whether the likelihood of a loss for the individual risk 928 is substantially higher than for other risks of the same class; 929 and 930 b. Whether the uncertainty associated with the individual 931 risk is such that an appropriate premium cannot be determined. 932 933 The acceptance or rejection of a risk by the corporation shall 934 be construed as the private placement of insurance, and the 935 provisions of chapter 120 do not apply. 936 9. Must provide that the corporation make its best efforts 937 to procure catastrophe reinsurance at reasonable rates, to cover 938 its projected 100-year probable maximum loss as determined by 939 the board of governors. 940 10. The policies issued by the corporation must provide 941 that if the corporation or the market assistance plan obtains an 942 offer from an authorized insurer to cover the risk at its 943 approved rates, the risk is no longer eligible for renewal 944 through the corporation, except as otherwise provided in this 945 subsection. 946 11. Corporation policies and applications must include a 947 notice that the corporation policy could, under this section, be 948 replaced with a policy issued by an authorized insurer which 949 does not provide coverage identical to the coverage provided by 950 the corporation. The notice must also specify that acceptance of 951 corporation coverage creates a conclusive presumption that the 952 applicant or policyholder is aware of this potential. 953 12. May establish, subject to approval by the office, 954 different eligibility requirements and operational procedures 955 for any line or type of coverage for any specified county or 956 area if the board determines that such changes are justified due 957 to the voluntary market being sufficiently stable and 958 competitive in such area or for such line or type of coverage 959 and that consumers who, in good faith, are unable to obtain 960 insurance through the voluntary market through ordinary methods 961 continue to have access to coverage from the corporation. If 962 coverage is sought in connection with a real property transfer, 963 the requirements and procedures may not provide an effective 964 date of coverage later than the date of the closing of the 965 transfer as established by the transferor, the transferee, and, 966 if applicable, the lender. 967 13. Must provide that, with respect to the coastal account, 968 any assessable insurer with a surplus as to policyholders of $25 969 million or less writing 25 percent or more of its total 970 countrywide property insurance premiums in this state may 971 petition the office, within the first 90 days of each calendar 972 year, to qualify as a limited apportionment company. A regular 973 assessment levied by the corporation on a limited apportionment 974 company for a deficit incurred by the corporation for the 975 coastal account may be paid to the corporation on a monthly 976 basis as the assessments are collected by the limited 977 apportionment company from its insuredspursuant to s.627.3512, 978 but a limited apportionment company must begin collecting the 979 regular assessments not later than 90 days after the regular 980 assessments are levied by the corporation, and the regular 981 assessmentsassessmentmust be paid in full within 1512months 982 after being levied by the corporation. A limited apportionment 983 company shall collect from its policyholders any emergency 984 assessment imposed under sub-subparagraph (b)3.d. The plan must 985 provide that, if the office determines that any regular 986 assessment will result in an impairment of the surplus of a 987 limited apportionment company, the office may direct that all or 988 part of such assessment be deferred as provided in subparagraph 989 (q)4. However, an emergency assessment to be collected from 990 policyholders under sub-subparagraph (b)3.d. may not be limited 991 or deferred. 992 14. Must provide that the corporation appoint as its 993 licensed agents only those agents who also hold an appointment 994 as defined in s. 626.015(3) with an insurer who at the time of 995 the agent’s initial appointment by the corporation is authorized 996 to write and is actually writing personal lines residential 997 property coverage, commercial residential property coverage, or 998 commercial nonresidential property coverage within the state. 999 15. Must provide a premium payment plan option to its 1000 policyholders which, at a minimum, allows for quarterly and 1001 semiannual payment of premiums. A monthly payment plan may, but 1002 is not required to, be offered. 1003 16. Must limit coverage on mobile homes or manufactured 1004 homes built before 1994 to actual cash value of the dwelling 1005 rather than replacement costs of the dwelling. 1006 17. May provide such limits of coverage as the board 1007 determines, consistent with the requirements of this subsection. 1008 18. May require commercial property to meet specified 1009 hurricane mitigation construction features as a condition of 1010 eligibility for coverage. 1011 19. Must provide that new or renewal policies issued by the 1012 corporation on or after January 1, 2012, which cover sinkhole 1013 loss do not include coverage for any loss to appurtenant 1014 structures, driveways, sidewalks, decks, or patios that are 1015 directly or indirectly caused by sinkhole activity. The 1016 corporation shall exclude such coverage using a notice of 1017 coverage change, which may be included with the policy renewal, 1018 and not by issuance of a notice of nonrenewal of the excluded 1019 coverage upon renewal of the current policy. 1020 20. As of January 1, 2012, must require that the agent 1021 obtain from an applicant for coverage from the corporation an 1022 acknowledgement signed by the applicant, which includes, at a 1023 minimum, the following statement: 1024 1025 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE 1026 AND ASSESSMENT LIABILITY: 1027 1028 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE 1029 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A 1030 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON, 1031 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 1032 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE 1033 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT 1034 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 1035 LEGISLATURE. 1036 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY 1037 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER 1038 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE 1039 FLORIDA LEGISLATURE. 1040 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE 1041 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE 1042 STATE OF FLORIDA. 1043 1044 a. The corporation shall maintain, in electronic format or 1045 otherwise, a copy of the applicant’s signed acknowledgement and 1046 provide a copy of the statement to the policyholder as part of 1047 the first renewal after the effective date of this subparagraph. 1048 b. The signed acknowledgement form creates a conclusive 1049 presumption that the policyholder understood and accepted his or 1050 her potential surcharge and assessment liability as a 1051 policyholder of the corporation. 1052 (q)1. The corporation shall certify to the office its needs 1053 for annual assessments as to a particular calendar year, and for 1054 any interim assessments that it deems to be necessary to sustain 1055 operations as to a particular year pending the receipt of annual 1056 assessments. Upon verification, the office shall approve such 1057 certification, and the corporation shall levy such annual or 1058 interim assessments. Such assessments shall be prorated as 1059 provided in paragraph (b). The corporation shall take all 1060 reasonable and prudent steps necessary to collect the amount of 1061 assessmentsassessmentdue from each assessable insurer, 1062 including, if prudent, filing suit to collect the assessments, 1063 and the office may provide such assistance to the corporation it 1064 deems appropriatesuch assessment. If the corporation is unable 1065 to collect an assessment from any assessable insurer, the 1066 uncollected assessments shall be levied as an additional 1067 assessment against the assessable insurers and any assessable 1068 insurer required to pay an additional assessment as a result of 1069 such failure to pay shall have a cause of action against such 1070 nonpaying assessable insurer. Assessments shall be included as 1071 an appropriate factor in the making of rates. The failure of a 1072 surplus lines agent to collect and remit any regular or 1073 emergency assessment levied by the corporation is considered to 1074 be a violation of s. 626.936 and subjects the surplus lines 1075 agent to the penalties provided in that section. 1076 2. The governing body of any unit of local government, any 1077 residents of which are insured by the corporation, may issue 1078 bonds as defined in s. 125.013 or s. 166.101 from time to time 1079 to fund an assistance program, in conjunction with the 1080 corporation, for the purpose of defraying deficits of the 1081 corporation. In order to avoid needless and indiscriminate 1082 proliferation, duplication, and fragmentation of such assistance 1083 programs, any unit of local government, any residents of which 1084 are insured by the corporation, may provide for the payment of 1085 losses, regardless of whether or not the losses occurred within 1086 or outside of the territorial jurisdiction of the local 1087 government. Revenue bonds under this subparagraph may not be 1088 issued until validated pursuant to chapter 75, unless a state of 1089 emergency is declared by executive order or proclamation of the 1090 Governor pursuant to s. 252.36 making such findings as are 1091 necessary to determine that it is in the best interests of, and 1092 necessary for, the protection of the public health, safety, and 1093 general welfare of residents of this state and declaring it an 1094 essential public purpose to permit certain municipalities or 1095 counties to issue such bonds as will permit relief to claimants 1096 and policyholders of the corporation. Any such unit of local 1097 government may enter into such contracts with the corporation 1098 and with any other entity created pursuant to this subsection as 1099 are necessary to carry out this paragraph. Any bonds issued 1100 under this subparagraph shall be payable from and secured by 1101 moneys received by the corporation from emergency assessments 1102 under sub-subparagraph (b)3.d., and assigned and pledged to or 1103 on behalf of the unit of local government for the benefit of the 1104 holders of such bonds. The funds, credit, property, and taxing 1105 power of the state or of the unit of local government shall not 1106 be pledged for the payment of such bonds. 1107 3.a. The corporation shall adopt one or more programs 1108 subject to approval by the office for the reduction of both new 1109 and renewal writings in the corporation. Beginning January 1, 1110 2008, any program the corporation adopts for the payment of 1111 bonuses to an insurer for each risk the insurer removes from the 1112 corporation shall comply with s. 627.3511(2) and may not exceed 1113 the amount referenced in s. 627.3511(2) for each risk removed. 1114 The corporation may consider any prudent and not unfairly 1115 discriminatory approach to reducing corporation writings, and 1116 may adopt a credit against assessment liability or other 1117 liability that provides an incentive for insurers to take risks 1118 out of the corporation and to keep risks out of the corporation 1119 by maintaining or increasing voluntary writings in counties or 1120 areas in which corporation risks are highly concentrated and a 1121 program to provide a formula under which an insurer voluntarily 1122 taking risks out of the corporation by maintaining or increasing 1123 voluntary writings will be relieved wholly or partially from 1124 assessments under sub-subparagraphs (b)3.a. and b. However, any 1125 “take-out bonus” or payment to an insurer must be conditioned on 1126 the property being insured for at least 5 years by the insurer, 1127 unless canceled or nonrenewed by the policyholder. If the policy 1128 is canceled or nonrenewed by the policyholder before the end of 1129 the 5-year period, the amount of the take-out bonus must be 1130 prorated for the time period the policy was insured. When the 1131 corporation enters into a contractual agreement for a take-out 1132 plan, the producing agent of record of the corporation policy is 1133 entitled to retain any unearned commission on such policy, and 1134 the insurer shall either: 1135 (I) Pay to the producing agent of record of the policy, for 1136 the first year, an amount which is the greater of the insurer’s 1137 usual and customary commission for the type of policy written or 1138 a policy fee equal to the usual and customary commission of the 1139 corporation; or 1140 (II) Offer to allow the producing agent of record of the 1141 policy to continue servicing the policy for a period of not less 1142 than 1 year and offer to pay the agent the insurer’s usual and 1143 customary commission for the type of policy written. If the 1144 producing agent is unwilling or unable to accept appointment by 1145 the new insurer, the new insurer shall pay the agent in 1146 accordance with sub-sub-subparagraph (I). 1147 b. Any credit or exemption from regular assessments adopted 1148 under this subparagraph shall last no longer than the 3 years 1149 following the cancellation or expiration of the policy by the 1150 corporation. With the approval of the office, the board may 1151 extend such credits for an additional year if the insurer 1152 guarantees an additional year of renewability for all policies 1153 removed from the corporation, or for 2 additional years if the 1154 insurer guarantees 2 additional years of renewability for all 1155 policies so removed. 1156 c. There shall be no credit, limitation, exemption, or 1157 deferment from emergency assessments to be collected from 1158 policyholders pursuant to sub-subparagraph (b)3.d. 1159 4. The plan shall provide for the deferment, in whole or in 1160 part, of the assessment of an assessable insurer, other than an 1161 emergency assessment collected from policyholders pursuant to 1162 sub-subparagraph (b)3.d., if the office finds that payment of 1163 the assessment would endanger or impair the solvency of the 1164 insurer. In the event an assessment against an assessable 1165 insurer is deferred in whole or in part, the amount by which 1166 such assessment is deferred may be assessed against the other 1167 assessable insurers in a manner consistent with the basis for 1168 assessments set forth in paragraph (b). 1169 5. Effective July 1, 2007, in order to evaluate the costs 1170 and benefits of approved take-out plans, if the corporation pays 1171 a bonus or other payment to an insurer for an approved take-out 1172 plan, it shall maintain a record of the address or such other 1173 identifying information on the property or risk removed in order 1174 to track if and when the property or risk is later insured by 1175 the corporation. 1176 6. Any policy taken out, assumed, or removed from the 1177 corporation is, as of the effective date of the take-out, 1178 assumption, or removal, direct insurance issued by the insurer 1179 and not by the corporation, even if the corporation continues to 1180 service the policies. This subparagraph applies to policies of 1181 the corporation and not policies taken out, assumed, or removed 1182 from any other entity. 1183 (w) Notwithstanding any other provision of law: 1184 1. The pledge or sale of, the lien upon, and the security 1185 interest in any rights, revenues, or other assets of the 1186 corporation created or purported to be created pursuant to any 1187 financing documents to secure any bonds or other indebtedness of 1188 the corporation shall be and remain valid and enforceable, 1189 notwithstanding the commencement of and during the continuation 1190 of, and after, any rehabilitation, insolvency, liquidation, 1191 bankruptcy, receivership, conservatorship, reorganization, or 1192 similar proceeding against the corporation under the laws of 1193 this state. 1194 2. TheNo suchproceeding does notshallrelieve the 1195 corporation of its obligation, or otherwise affect its ability 1196 to perform its obligation, to continue to collect, or levy and 1197 collect, assessments, policyholder surchargesmarket1198equalizationor other surcharges under sub-subparagraph (b)3.i. 1199subparagraph(c)10., or any other rights, revenues, or other 1200 assets of the corporation pledged pursuant to any financing 1201 documents. 1202 3. Each such pledge or sale of, lien upon, and security 1203 interest in, including the priority of such pledge, lien, or 1204 security interest, any such assessments, policyholder surcharges 1205market equalizationor other surcharges, or other rights, 1206 revenues, or other assets which are collected, or levied and 1207 collected, after the commencement of and during the pendency of, 1208 or after, any such proceeding shall continue unaffected by such 1209 proceeding. As used in this subsection, the term “financing 1210 documents” means any agreement or agreements, instrument or 1211 instruments, or other document or documents now existing or 1212 hereafter created evidencing any bonds or other indebtedness of 1213 the corporation or pursuant to which any such bonds or other 1214 indebtedness has been or may be issued and pursuant to which any 1215 rights, revenues, or other assets of the corporation are pledged 1216 or sold to secure the repayment of such bonds or indebtedness, 1217 together with the payment of interest on such bonds or such 1218 indebtedness, or the payment of any other obligation or 1219 financial product, as defined in the plan of operation of the 1220 corporation related to such bonds or indebtedness. 1221 4. Any such pledge or sale of assessments, revenues, 1222 contract rights, or other rights or assets of the corporation 1223 shall constitute a lien and security interest, or sale, as the 1224 case may be, that is immediately effective and attaches to such 1225 assessments, revenues, or contract rights or other rights or 1226 assets, whether or not imposed or collected at the time the 1227 pledge or sale is made. Any such pledge or sale is effective, 1228 valid, binding, and enforceable against the corporation or other 1229 entity making such pledge or sale, and valid and binding against 1230 and superior to any competing claims or obligations owed to any 1231 other person or entity, including policyholders in this state, 1232 asserting rights in any such assessments, revenues, or contract 1233 rights or other rights or assets to the extent set forth in and 1234 in accordance with the terms of the pledge or sale contained in 1235 the applicable financing documents, whether or not any such 1236 person or entity has notice of such pledge or sale and without 1237 the need for any physical delivery, recordation, filing, or 1238 other action. 1239 5. As long as the corporation has any bonds outstanding, 1240 the corporation may not file a voluntary petition under chapter 1241 9 of the federal Bankruptcy Code or such corresponding chapter 1242 or sections as may be in effect, from time to time, and a public 1243 officer or any organization, entity, or other person may not 1244 authorize the corporation to be or become a debtor under chapter 1245 9 of the federal Bankruptcy Code or such corresponding chapter 1246 or sections as may be in effect, from time to time, during any 1247 such period. 1248 6. If ordered by a court of competent jurisdiction, the 1249 corporation may assume policies or otherwise provide coverage 1250 for policyholders of an insurer placed in liquidation under 1251 chapter 631, under such forms, rates, terms, and conditions as 1252 the corporation deems appropriate, subject to approval by the 1253 office. 1254 Section 3. Except as otherwise expressly provided in this 1255 act and except for this section, which shall take effect upon 1256 this act becoming a law, this act shall take effect July 1, 1257 2012.