Bill Text: FL S1714 | 2011 | Regular Session | Comm Sub
Bill Title: Citizens Property Insurance Corporation
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S1714 Detail]
Download: Florida-2011-S1714-Comm_Sub.html
Florida Senate - 2011 CS for SB 1714 By the Committee on Banking and Insurance; and Senator Hays 597-03336-11 20111714c1 1 A bill to be entitled 2 An act relating to the Citizens Property Insurance 3 Corporation; amending s. 627.0655, F.S.; discontinuing 4 policy discounts relating to the Citizens Property 5 Insurance Corporation after a certain date; amending 6 s. 627.351, F.S.; revising legislative intent; 7 deleting obsolete provisions relating to the 8 corporation’s plan of operation; directing the 9 corporation to provide coverage to certain excluded 10 residential structures but at rates deemed appropriate 11 by the corporation; providing that certain residential 12 structures are not eligible for coverage by the 13 corporation after a certain date; requiring policies 14 issued by the corporation to include a provision that 15 prohibits policyholders from engaging the services of 16 a public adjuster until after the corporation has 17 tendered an offer; limiting an adjuster’s fee for a 18 claim against the corporation; specifying the 19 percentage amount of emergency assessments; revising 20 provisions relating to policyholder surcharges; 21 prohibiting the corporation from levying certain 22 assessments with respect to a year’s deficit until the 23 corporation has first levied a specified surcharge; 24 requiring the corporation to commission a consultant 25 to prepare a report on outsourcing various functions 26 and submit such report to the Financial Services 27 Commission by a certain date; revising provisions 28 relating to wind coverage; prohibiting the corporation 29 from accepting applications for commercial 30 nonresidential risks; requiring the policyholders to 31 sign a statement acknowledging that they may be 32 assessed surcharges to cover corporate deficits; 33 providing that policies do not include coverage for 34 screen enclosures or any structure detached from the 35 house; providing that the corporation does not cover 36 specified personal property; limiting coverage for 37 damage from sinkholes after a certain date and 38 providing that the corporation must require repair of 39 the property as a condition of any payment; requiring 40 members of the board of governors to abstain from 41 voting on issues on which they have a personal 42 interest; requiring such members to disclose the 43 nature of their interest as a public record; providing 44 that the corporation operates as a residual market 45 mechanism; revising provisions relating to corporation 46 rates; providing that eligible surplus lines insurers 47 may participate in take-out programs under certain 48 conditions; clarifying that the corporation is immune 49 from certain liabilities; revising requirements 50 relating to confidential records released by an 51 insurer; deleting a requirement for an annual report 52 to the Legislature on losses attributable to wind-only 53 coverages; requiring owners of properties in Special 54 Flood Hazard Areas to maintain a separate flood 55 insurance policy after a certain date; providing 56 exceptions; amending s. 627.3511, F.S.; conforming a 57 cross-reference; providing an effective date. 58 59 Be It Enacted by the Legislature of the State of Florida: 60 61 Section 1. Section 627.0655, Florida Statutes, is amended 62 to read: 63 627.0655 Policyholderloss or expense-relatedpremium 64 discounts.—An insurer or person authorized to engage in the 65 business of insurance in this state may include a discount,in 66 the premium charged an insured for any policy, contract, or 67 certificate of insurance if, a discount based on the fact that68 another policy, contract, or certificate of any type has been 69 purchased by the insured: 70 (1) From the same insurer or insurer group;,71 (2) For policies issued or renewed before January 1, 2013, 72 from the Citizens Property Insurance Corporation created under 73 s. 627.351(6) if the same insurance agent is servicing both 74 policies;,or 75 (3) For policies issued or renewed before January 1, 2013, 76 from an insurer that has removed the policy from the Citizens 77 Property Insurance Corporation if the same insurance agent is 78 servicing both policies. 79 Section 2. Paragraphs (a), (b), (c), (d), (n), (o), (q), 80 (s), (w), (x), (y), (aa), and (ee) of subsection (6) of section 81 627.351, Florida Statutes, are amended to read: 82 627.351 Insurance risk apportionment plans.— 83 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 84 (a)1.It isThe public purpose of this subsection is to 85 ensure that there isthe existence ofan orderly market for 86 property insurance for residentsFloridiansandFlorida87 businesses of this state. 88 1. The Legislature finds that actual and threatened 89 catastrophic losses to property from hurricanes in this state 90 have caused insurers to be unwilling or unable to provide 91 property insurance coverage to the extent sought and needed. The 92 Legislature declares that it is in the public interest and 93 serves a public purpose that property in this state be 94 adequately insured in order to facilitate the remediation, 95 reconstruction, and replacement of damaged or destroyed 96 property. Such efforts are necessary in order to avoid or reduce 97 negative effects to the public health, safety, and welfare; the 98 economy of the state; and the revenues of state and local 99 governments. It is necessary, therefore, to provide property 100 insurance to applicants who are entitled to procure insurance 101 through the voluntary market but who, in good faith, are unable 102 to do so.The Legislature finds that private insurers are103unwilling or unable to provide affordable property insurance104coverage in this state to the extent sought and needed. The105absence of affordable property insurance threatens the public106health, safety, and welfare and likewise threatens the economic107health of the state. The state therefore has a compelling public108interest and a public purpose to assist in assuring that109property in the state is insured and that it is insured at110affordable rates so as to facilitate the remediation,111reconstruction, and replacement of damaged or destroyed property112in order to reduce or avoid the negative effects otherwise113resulting to the public health, safety, and welfare, to the114economy of the state, and to the revenues of the state and local115governments which are needed to provide for the public welfare.116It is necessary, therefore, to provide affordable property117insurance to applicants who are in good faith entitled to118procure insurance through the voluntary market but are unable to119do so.The Legislature intends, therefore,by this subsection120 thataffordableproperty insurance be provided and that it 121 continue to be provided, as long as necessary, through Citizens 122 Property Insurance Corporation, a government entity that is an 123 integral part of the state, and that is not a private insurance 124 company.To that end, Citizens Property Insurance Corporation125shall strive to increase the availability of affordable property126insurance in this state, while achieving efficiencies and127economies, and while providing service to policyholders,128applicants, and agents which is no less than the quality129generally provided in the voluntary market, for the achievement130of the foregoing public purposes. Because it is essential for131this government entity to have the maximum financial resources132to pay claims following a catastrophic hurricane, it is the133intent of the Legislature that Citizens Property Insurance134Corporation continue to be an integral part of the state and135that the income of the corporation be exempt from federal income136taxation and that interest on the debt obligations issued by the137corporation be exempt from federal income taxation.138 a. It is also the intent of the Legislature that 139 policyholders, applicants, and agents of the corporation receive 140 service and treatment of the highest possible level and never 141 less than that generally provided in the voluntary market. The 142 corporation must be held to service standards no less than those 143 applied to insurers in the voluntary market by the office with 144 respect to responsiveness, timeliness, customer courtesy, and 145 overall dealings with policyholders, applicants, or agents of 146 the corporation. It is also the intent of the Legislature that 147 the corporation operate efficiently and economically. 148 b. Because it is essential that the corporation have the 149 maximum financial resources necessary to pay claims following a 150 catastrophic hurricane, the Legislature also intends that the 151 income of the corporation and interest on the debt obligations 152 issued by the corporation be exempt from federal income 153 taxation. 154 2. The Residential Property and Casualty Joint Underwriting 155 Association originally created by this statute shall be known,156as of July 1, 2002,as the Citizens Property Insurance 157 Corporation. The corporation shall provide insurance for 158 residential and commercial property, for applicants who arein159good faithentitled, but, in good faith, are unable,to procure 160 insurance through the voluntary market. The corporation shall 161 operate pursuant to a plan of operation approved by order of the 162 Financial Services Commission. The plan is subject to continuous 163 review by the commission. The commission may, by order, withdraw 164 approval of all or part of a plan if the commission determines 165 that conditions have changed since approval was granted and that 166 the purposes of the plan require changes in the plan.The167corporation shall continue to operate pursuant to the plan of168operation approved by the Office of Insurance Regulation until169October 1, 2006.For the purposes of this subsection, 170 residential coverage includes both personal lines residential 171 coverage, which consists of the type of coverage provided by 172 homeowner’s, mobile home owner’s, dwelling, tenant’s, 173 condominium unit owner’s, and similar policies;,and commercial 174 lines residential coverage, which consists of the type of 175 coverage provided by condominium association, apartment 176 building, and similar policies. 177 3. With respect to coverage for personal lines residential 178 structures: 179 a. Effective January 1, 2009, apersonal lines residential180 structure that has a dwelling replacement cost of $2 million or 181 more, or a single condominium unit that has a combined dwelling 182 and contentscontentreplacement cost of $2 million or more is 183 not eligible for coverage by the corporation. Such dwellings 184 insured by the corporation on December 31, 2008, may continue to 185 be covered by the corporation until the end of the policy term. 186 However, such dwellingsthat are insured by the corporation and187become ineligible for coverage due to the provisions of this188subparagraphmay reapply and obtain coverage if the property 189 owner provides the corporation with a sworn affidavit from one 190 or more insurance agents, on a form provided by the corporation, 191 stating that the agents have made their best efforts to obtain 192 coverage and that the property has been rejected for coverage by 193 at least one authorized insurer and at least three surplus lines 194 insurers. If such conditions are met, the dwelling may be 195 insured by the corporation for up to 3 years, after which time 196 the dwelling is ineligible for coverage.The office shall197approve the method used by the corporation for valuing the198dwelling replacement cost for the purposes of this subparagraph.199If a policyholder is insured by the corporation prior to being200determined to be ineligible pursuant to this subparagraph and201such policyholder files a lawsuit challenging the determination,202the policyholder may remain insured by the corporation until the203conclusion of the litigation.204 b. Effective January 1, 2012, a structure that has a 205 dwelling replacement cost of $1 million or more, or a single 206 condominium unit that has a combined dwelling and contents 207 replacement cost of $1 million or more is not eligible for 208 coverage by the corporation. Such dwellings insured by the 209 corporation on December 31, 2011, may continue to be covered by 210 the corporation only until the end of the policy term. 211 c. Effective January 1, 2014, a structure insured in the 212 personal lines account of the corporation that has a dwelling 213 replacement cost of $750,000 or more, or a single condominium 214 unit that has a combined dwelling and contents replacement cost 215 of $750,000 or more is not eligible for coverage by the 216 corporation. Such dwellings insured by the corporation on 217 December 31, 2013, may continue to be covered by the corporation 218 until the end of the policy term. 219 d. Effective January 1, 2016, a structure insured in the 220 personal lines account of the corporation that has a dwelling 221 replacement cost of $500,000 or more, or a single condominium 222 unit that has a combined dwelling and contents replacement cost 223 of $500,000 or more is not eligible for coverage by the 224 corporation. Such dwellings insured by the corporation on 225 December 31, 2015, may continue to be covered by the corporation 226 until the end of the policy term. 227 4. Any structure for which a permit for construction is 228 obtained on or after June 1, 2011, seaward of the coastal 229 construction control line established pursuant to s. 161.053, is 230 not eligible for coverage by the corporation. 2314. It is the intent of the Legislature that policyholders,232applicants, and agents of the corporation receive service and233treatment of the highest possible level but never less than that234generally provided in the voluntary market. It also is intended235that the corporation be held to service standards no less than236those applied to insurers in the voluntary market by the office237with respect to responsiveness, timeliness, customer courtesy,238and overall dealings with policyholders, applicants, or agents239of the corporation.240 5. Effective October 1, 2011January 1, 2009, a personal 241 lines residential structure that is located in the “wind-borne 242 debris region,” as defined in s. 1609.2, International Building 243 Code (2006), and that has an insured value on the structure of 244 $750,000 or more isnoteligible for coverage by the 245 corporation. However, unless the structure has opening 246 protections as required under the Florida Building Code for a 247 newly constructed residential structure in that area, the 248 corporation may charge a surcharge that it deems appropriate for 249 such structures, notwithstanding any restrictions on rates 250 provided in this subsection or in s. 627.062. A residential 251 structure shall be deemed to comply withthe requirements of252 this subparagraph if it has shutters or opening protections on 253 all openings and if such opening protections complied with the 254 Florida Building Code at the time they were installed. 255 6. In recognition of the corporation’s status as a 256 government entity, policies issued by the corporation must 257 include a provision stating that as a condition of coverage with 258 the corporation, policyholders may not engage the services of a 259 public adjuster to represent the policyholder with respect to 260 any claim filed under a policy issued by the corporation until 261 after the corporation has tendered an offer with respect to such 262 claim. For any claim filed under any policy of the corporation, 263 a public adjuster may not request payment or be paid, on a 264 contingency basis or based in any way, directly or indirectly, 265 on a percentage of the claim amount, and may be paid only a 266 reasonable hourly fee based on the actual hours of work 267 performed, subject to a maximum of 5 percent of the additional 268 amount actually paid over the amount which was originally 269 offered by the corporation for any one claim. 270 (b)1. All insurers authorized to write one or more subject 271 lines of business in this state are subject to assessment by the 272 corporation and, for the purposes of this subsection, are 273 referred to collectively as “assessable insurers.” Insurers 274 writing one or more subject lines of business in this state 275 pursuant to part VIII of chapter 626 are not assessable 276 insurers, but insureds who procure one or more subject lines of 277 business in this state pursuant to part VIII of chapter 626 are 278 subject to assessment by the corporation and are referred to 279 collectively as “assessable insureds.” Anauthorizedinsurer’s 280 assessment liability beginsshall beginon the first day of the 281 calendar year following the year in which the insurer was issued 282 a certificate of authority to transact insurance for subject 283 lines of business in this state and terminatesshall terminate1 284 year after the end of the first calendar year during which the 285 insurer no longer holds a certificate of authority to transact 286 insurance for subject lines of business in this state. 287 2.a. All revenues, assets, liabilities, losses, and 288 expenses of the corporation shall be divided into three separate 289 accounts as follows: 290 (I) A personal lines account for personal residential 291 policies issued by the corporation, or issued by the Residential 292 Property and Casualty Joint Underwriting Association and renewed 293 by the corporation, which provides basicthat provide294comprehensive,multiperil coverage on risks that are not located 295 in areas eligible for coverage byinthe Florida Windstorm 296 Underwriting Association as those areas were defined on January 297 1, 2002, and forsuchpolicies that do not provide coverage for 298 the peril of wind on risks that are located in such areas; 299 (II) A commercial lines account for commercial residential 300 and commercial nonresidential policies issued by the 301 corporation, or issued by the Residential Property and Casualty 302 Joint Underwriting Association and renewed by the corporation, 303 which providesthat providecoverage for basic property perils 304 on risks that are not located in areas eligible for coverage by 305inthe Florida Windstorm Underwriting Association as those areas 306 were defined on January 1, 2002, and forsuchpolicies that do 307 not provide coverage for the peril of wind on risks that are 308 located in such areas; and 309 (III) A high-risk account for personal residential policies 310 and commercial residential and commercial nonresidential 311 property policies issued by the corporation or transferred to 312 the corporation, which providesthat providecoverage for the 313 peril of wind on risks that are located in areas eligible for 314 coverage byinthe Florida Windstorm Underwriting Association as 315 those areas were defined on January 1, 2002. The corporation may 316 offer policies that provide multiperil coverage and the 317 corporation shall continue to offer policies that provide 318 coverage only for the peril of wind for risks located in areas 319 eligible for coverage in the high-risk account. In issuing 320 multiperil coverage, the corporation may use its approved policy 321 forms and rates for the personal lines account. An applicant or 322 insured who is eligible to purchase a multiperil policy from the 323 corporation may purchase a multiperil policy from an authorized 324 insurer without prejudice to the applicant’s or insured’s 325 eligibility to prospectively purchase a policy that provides 326 coverage only for the peril of wind from the corporation. An 327 applicant or insured who is eligible for a corporation policy 328 that provides coverage only for the peril of wind may elect to 329 purchase or retain such policy and also purchase or retain 330 coverage excluding wind from an authorized insurer without 331 prejudice to the applicant’s or insured’s eligibility to 332 prospectively purchase a policy that provides multiperil 333 coverage from the corporation.It is the goal of the Legislature334that there would be an overall average savings of 10 percent or335more for a policyholder who currently has a wind-only policy336with the corporation, and an ex-wind policy with a voluntary337insurer or the corporation, and who then obtains a multiperil338policy from the corporation.It is the intent of the Legislature 339 that the offer of multiperil coverage in the high-risk account 340 be made and implemented in a manner that does not adversely 341 affect the tax-exempt status of the corporation or 342 creditworthiness of or security for currently outstanding 343 financing obligations or credit facilities of the high-risk 344 account, the personal lines account, or the commercial lines 345 account.The high-risk account must also include quota share346primary insurance under subparagraph (c)2.The area eligible for 347 coverage under the high-risk account also includes the area 348 within Port Canaveral, which is bordered on the south by the 349 City of Cape Canaveral, bordered on the west by the Banana 350 River, and bordered on the north by Federal Government property. 351 b. The three separate accounts must be maintained as long 352 as financing obligations entered into by the Florida Windstorm 353 Underwriting Association or Residential Property and Casualty 354 Joint Underwriting Association are outstanding, in accordance 355 with the terms of the corresponding financing documents. IfWhen356 the financing obligations are no longer outstanding,in357accordance with the terms of the corresponding financing358documents,the corporation may use a single account for all 359 revenues, assets, liabilities, losses, and expenses of the 360 corporation. Consistent withthe requirement ofthis 361 subparagraph and prudent investment policies that minimize the 362 cost of carrying debt, the board shall exercise its best efforts 363 to retire existing debt ortoobtain the approval of necessary 364 parties to amend the terms of existing debt, so as to structure 365 the most efficient plan to consolidate the three separate 366 accounts into a single account. 367 c. Creditors of the Residential Property and Casualty Joint 368 Underwriting Association and of the accounts specified in sub 369 sub-subparagraphs a.(I) and (II) may have a claim against, and 370 recourse to, thosetheaccountsreferred to in sub-sub371subparagraphs a.(I) and (II)andshall haveno claim against, or 372 recourse to, the account referred to in sub-sub-subparagraph 373 a.(III). Creditors of the Florida Windstorm Underwriting 374 Associationshallhave a claim against, and recourse to, the 375 account referred to in sub-sub-subparagraph a.(III) andshall376haveno claim against, or recourse to, the accounts referred to 377 in sub-sub-subparagraphs a.(I) and (II). 378 d. Revenues, assets, liabilities, losses, and expenses not 379 attributable to particular accounts shall be prorated among the 380 accounts. 381 e. The Legislature finds that the revenues of the 382 corporation are revenues that are necessary to meet the 383 requirements set forth in documents authorizing the issuance of 384 bonds under this subsection. 385 f. No part of the income of the corporation may inure to 386 the benefit of any private person. 387 3. With respect to a deficit in an account: 388 a. After accounting for theCitizenspolicyholder surcharge 389 imposed under sub-subparagraph i., ifwhenthe remaining 390 projected deficit incurred in a particular calendar year is not 391 greater than 6 percent of the aggregate statewide direct written 392 premium for the subject lines of business for the prior calendar 393 year, the entire deficit shall be recovered through regular 394 assessments of assessable insurers under paragraph (q) and 395 assessable insureds. 396 b. After accounting for the Citizens policyholder surcharge 397 imposed under sub-subparagraph i., when the remaining projected 398 deficit incurred in a particular calendar year exceeds 6 percent 399 of the aggregate statewide direct written premium for the 400 subject lines of business for the prior calendar year, the 401 corporation shall levy regular assessments on assessable 402 insurers under paragraph (q) and on assessable insureds in an 403 amount equal to the greater of 6 percent of the deficit or 6 404 percent of the aggregate statewide direct written premium for 405 the subject lines of business for the prior calendar year. Any 406 remaining deficit shall be recovered through emergency 407 assessments under sub-subparagraph d. 408 c. Each assessable insurer’s share of the amount being 409 assessed under sub-subparagraph a. or sub-subparagraph b. must 410shallbe in the proportion that the assessable insurer’s direct 411 written premium for the subject lines of business for the year 412 preceding the assessment bears to the aggregate statewide direct 413 written premium for the subject lines of business for that year. 414 The applicable assessment percentageapplicable to each415assessable insuredis the ratio of the amount being assessed 416 under sub-subparagraph a. or sub-subparagraph b. to the 417 aggregate statewide direct written premium for the subject lines 418 of business for the prior year. Assessments levied by the 419 corporation on assessable insurers under sub-subparagraphs a. 420 and b. mustshallbe paid as required by the corporation’s plan 421 of operation and paragraph (q). Assessments levied by the 422 corporation on assessable insureds under sub-subparagraphs a. 423 and b. shall be collected by the surplus lines agent at the time 424 the surplus lines agent collects the surplus lines tax required 425 by s. 626.932, andshall bepaid to the Florida Surplus Lines 426 Service Office at the time the surplus lines agent pays the 427 surplus lines tax to thatthe Florida Surplus Lines Service428 office. Upon receipt of regular assessments from surplus lines 429 agents, the Florida Surplus Lines Service Office shall transfer 430 the assessments directly to the corporation as determined by the 431 corporation. 432 d. Upon a determination by the board of governors that a 433 deficit in an account exceeds the amount that will be recovered 434 through regular assessments under sub-subparagraph a. or sub 435 subparagraph b., plus the amount that is expected to be 436 recovered through surcharges under sub-subparagraph i.,as to437the remaining projected deficitthe boardshall levy, after 438 verification by the office, shall levy emergency assessments,439 for as many years as necessary to cover the deficits, to be 440 collected by assessable insurers and the corporation and 441 collected from assessable insureds upon issuance or renewal of 442 policies for subject lines of business, excluding National Flood 443 Insurance policies. The amount of the emergency assessment 444 collected in a particular year mustshallbe a uniform 445 percentage of that year’s direct written premium for subject 446 lines of businessand all accounts of the corporation, excluding 447 National Flood Insurance Program policy premiums, as annually 448 determined by the board and verified by the office. For all 449 accounts of the corporation, the amount of the emergency 450 assessment levied in a particular year must be a uniform 451 percentage equal to 1 1/2 times the uniform percentage emergency 452 assessment levied on subject lines of business. The office shall 453 verify the arithmetic calculations involved in the board’s 454 determination within 30 days after receipt of the information on 455 which the determination was based. Notwithstanding any other 456 provision of law, the corporation and each assessable insurer 457 that writes subject lines of business shall collect emergency 458 assessments from its policyholders without such obligation being 459 affected by any credit, limitation, exemption, or deferment. 460 Emergency assessments levied by the corporation on assessable 461 insureds shall be collected by the surplus lines agent at the 462 time the surplus lines agent collects the surplus lines tax 463 required by s. 626.932 andshall bepaid to the Florida Surplus 464 Lines Service Office at the time the surplus lines agent pays 465 the surplus lines tax to thatthe Florida Surplus Lines Service466 office. The emergency assessmentssocollected shall be 467 transferred directly to the corporation on a periodic basis as 468 determined by the corporation andshall beheld by the 469 corporation solely in the applicable account. The aggregate 470 amount of emergency assessments levied for an account under this 471 sub-subparagraph in any calendar year may, at the discretion of472the board of governors,be less than butmaynot exceed the 473 greater of 10 percent of the amount needed to cover the deficit, 474 plus interest, fees, commissions, required reserves, and other 475 costs associated with financingofthe original deficit, or 10 476 percent of the aggregate statewide direct written premium for 477 subject lines of business and 15 percent for all accounts of the 478 corporation for the prior year, plus interest, fees, 479 commissions, required reserves, and other costs associated with 480 financing the deficit. 481 e. The corporation may pledge the proceeds of assessments, 482 projected recoveries from the Florida Hurricane Catastrophe 483 Fund, other insurance and reinsurance recoverables, policyholder 484 surcharges and other surcharges, and other funds available to 485 the corporation as the source of revenue for and to secure bonds 486 issued under paragraph (q), bonds or other indebtedness issued 487 under subparagraph (c)2.3., or lines of credit or other 488 financing mechanisms issued or created under this subsection, or 489 to retire any other debt incurred as a result of deficits or 490 events giving rise to deficits, or in any other way that the 491 board determines will efficiently recover such deficits. The 492 purpose of the lines of credit or other financing mechanisms is 493 to provide additional resources to assist the corporation in 494 covering claims and expenses attributable to a catastrophe. As 495 used in this subsection, the term “assessments” includes regular 496 assessments under sub-subparagraph a., sub-subparagraph b., or 497 subparagraph (q)1. and emergency assessments under sub 498 subparagraph d. Emergency assessments collected under sub 499 subparagraph d. are not part of an insurer’s rates, are not 500 premium, and are not subject to premium tax, fees, or 501 commissions; however, failure to pay the emergency assessment 502 shall be treated as failure to pay premium. The emergency 503 assessments under sub-subparagraph d. shall continue as long as 504 any bonds issued or other indebtedness incurred with respect to 505 a deficit for which the assessment was imposed remain 506 outstanding, unless adequate provision has been made for the 507 payment of such bonds or other indebtedness pursuant to the 508 documents governing such bonds orotherindebtedness. 509 f. As used in this subsection for purposes of any deficit 510 incurred on or after January 25, 2007, the term “subject lines 511 of business” means insurance written by assessable insurers or 512 procured by assessable insureds for all property and casualty 513 lines of business in this state, but not including workers’ 514 compensation or medical malpractice. As used in thisthesub 515 subparagraph, the term “property and casualty lines of business” 516 includes all lines of business identified on Form 2, Exhibit of 517 Premiums and Losses, in the annual statement required of 518 authorized insurers underbys. 624.424 and any rule adopted 519 under this section, except for those lines identified as 520 accident and health insurance and except for policies written 521 under the National Flood Insurance Program or the Federal Crop 522 Insurance Program. For purposes of this sub-subparagraph, the 523 term “workers’ compensation” includes both workers’ compensation 524 insurance and excess workers’ compensation insurance. 525 g. The Florida Surplus Lines Service Office shall determine 526 annually the aggregate statewide written premium in subject 527 lines of business procured by assessable insureds andshall528 report that information to the corporation in a form and at a 529 time the corporation specifies to ensure that the corporation 530 can meet the requirements of this subsection and the 531 corporation’s financing obligations. 532 h. The Florida Surplus Lines Service Office shall verify 533 the proper application by surplus lines agents of assessment 534 percentages for regular assessments and emergency assessments 535 levied under this subparagraph on assessable insureds andshall536 assist the corporation in ensuring the accurate, timely 537 collection and payment of assessments by surplus lines agents as 538 required by the corporation. 539 i. If a deficit is incurred in any account in 20112008or 540 thereafter, the board of governors shall levy aCitizens541 policyholder surcharge against all policyholders of the 542 corporation.for a 12-month period, which543 (I) The surcharge shall be leviedcollected at the time of544issuance or renewal of a policy,as a uniform percentage of the 545 premium for the policy of up to 15 percent of such premium, 546 which funds shall be used to offset the deficit. 547 (II) It is the intent of the Legislature that the 548 policyholder’s liability for the surcharge attach on the date of 549 the order levying the surcharge. The surcharge is payable upon 550 cancellation or termination of the policy, upon renewal of the 551 policy, or upon issuance of a new policy by the corporation 552 within the first 12 months after the date of the levy or the 553 period of time necessary to fully collect the surcharge amount. 554 (III) The corporation may not levy any regular assessments 555 under paragraph (q) pursuant to sub-subparagraph a. or sub 556 subparagraph b. with respect to a particular year’s deficit 557 until the corporation has first levied a surcharge under this 558 sub-subparagraph in the full amount authorized by this sub 559 subparagraph. 560 (IV) The surcharge isCitizens policyholder surcharges561under this sub-subparagraph arenot considered premium and is 562arenot subject to commissions, fees, or premium taxes. However, 563 failure to pay the surchargesuch surchargesshall be treated as 564 failure to pay premium. 565 j. If the amount of any assessments or surcharges collected 566 from corporation policyholders, assessable insurers or their 567 policyholders, or assessable insureds exceeds the amount of the 568 deficits, such excess amounts shall be remitted to and retained 569 by the corporation in a reserve to be used by the corporation, 570 as determined by the board of governors and approved by the 571 office, to pay claims or reduce any past, present, or future 572 plan-year deficits or to reduce outstanding debt. 573 (c) Theplan of operation of thecorporation: 574 1. Must providefor adoption ofresidential property and 575 casualty insurance policy forms and commercial residential and 576 nonresidential property insurance forms, whichformsmust be 577 approved by the office beforeprior touse. The corporation 578 shall adopt and offer only the following policy forms: 579 a. Standard personal lines policy forms that are similar 580comprehensive multiperil policies providing full coverage of a581residential property equivalentto the coverage provided in the 582 private insurance market under an HO-3, HO-4, or HO-6 policy. 583 The corporation shall cease to offer or renew HO-3 policy forms 584 on December 31, 2012. 585 b. Basic personal lines policy forms that are policies 586 similar to an HO-8 policy or a dwelling fire policy that provide 587 coverage meeting the requirements of the secondary mortgage 588 market, but whichcoverageis more limited than the coverage 589 under a standard policy. 590 c. Commercial lines residential and nonresidential policy 591 forms that are generally similar to the basic perils of full 592 coverage obtainable for commercial residential structures and 593 commercial nonresidential structures in the admitted voluntary 594 market. 595 d. Personal lines and commercial lines residential property 596 insurance forms that cover the peril of wind only. The forms are 597 applicable only to residential properties located in areas 598 eligible for coverage under the high-risk account referred to in 599 sub-subparagraph (b)2.a. 600 e. Commercial lines nonresidential property insurance forms 601 that cover the peril of wind only. The forms are applicable only 602 to nonresidential properties located in areas eligible for 603 coverage under the high-risk account referred to in sub 604 subparagraph (b)2.a. 605 f. The corporation may adopt variations of the policy forms 606 listed in sub-subparagraphs a.-e. whichthatcontain more 607 restrictive coverage. 6082.a. Must provide that the corporation adopt a program in609which the corporation and authorized insurers enter into quota610share primary insurance agreements for hurricane coverage, as611defined in s.627.4025(2)(a), for eligible risks, and adopt612property insurance forms for eligible risks which cover the613peril of wind only. As used in this subsection, the term:614(I) “Quota share primary insurance” means an arrangement in615which the primary hurricane coverage of an eligible risk is616provided in specified percentages by the corporation and an617authorized insurer. The corporation and authorized insurer are618each solely responsible for a specified percentage of hurricane619coverage of an eligible risk as set forth in a quota share620primary insurance agreement between the corporation and an621authorized insurer and the insurance contract. The622responsibility of the corporation or authorized insurer to pay623its specified percentage of hurricane losses of an eligible624risk, as set forth in the quota share primary insurance625agreement, may not be altered by the inability of the other626party to the agreement to pay its specified percentage of627hurricane losses. Eligible risks that are provided hurricane628coverage through a quota share primary insurance arrangement629must be provided policy forms that set forth the obligations of630the corporation and authorized insurer under the arrangement,631clearly specify the percentages of quota share primary insurance632provided by the corporation and authorized insurer, and633conspicuously and clearly state that neither the authorized634insurer nor the corporation may be held responsible beyond its635specified percentage of coverage of hurricane losses.636(II) “Eligible risks” means personal lines residential and637commercial lines residential risks that meet the underwriting638criteria of the corporation and are located in areas that were639eligible for coverage by the Florida Windstorm Underwriting640Association on January 1, 2002.641b. The corporation may enter into quota share primary642insurance agreements with authorized insurers at corporation643coverage levels of 90 percent and 50 percent.644c. If the corporation determines that additional coverage645levels are necessary to maximize participation in quota share646primary insurance agreements by authorized insurers, the647corporation may establish additional coverage levels. However,648the corporation’s quota share primary insurance coverage level649may not exceed 90 percent.650d. Any quota share primary insurance agreement entered into651between an authorized insurer and the corporation must provide652for a uniform specified percentage of coverage of hurricane653losses, by county or territory as set forth by the corporation654board, for all eligible risks of the authorized insurer covered655under the quota share primary insurance agreement.656e. Any quota share primary insurance agreement entered into657between an authorized insurer and the corporation is subject to658review and approval by the office. However, such agreement shall659be authorized only as to insurance contracts entered into660between an authorized insurer and an insured who is already661insured by the corporation for wind coverage.662f. For all eligible risks covered under quota share primary663insurance agreements, the exposure and coverage levels for both664the corporation and authorized insurers shall be reported by the665corporation to the Florida Hurricane Catastrophe Fund. For all666policies of eligible risks covered under quota share primary667insurance agreements, the corporation and the authorized insurer668shall maintain complete and accurate records for the purpose of669exposure and loss reimbursement audits as required by Florida670Hurricane Catastrophe Fund rules. The corporation and the671authorized insurer shall each maintain duplicate copies of672policy declaration pages and supporting claims documents.673g. The corporation board shall establish in its plan of674operation standards for quota share agreements which ensure that675there is no discriminatory application among insurers as to the676terms of quota share agreements, pricing of quota share677agreements, incentive provisions if any, and consideration paid678for servicing policies or adjusting claims.679h. The quota share primary insurance agreement between the680corporation and an authorized insurer must set forth the681specific terms under which coverage is provided, including, but682not limited to, the sale and servicing of policies issued under683the agreement by the insurance agent of the authorized insurer684producing the business, the reporting of information concerning685eligible risks, the payment of premium to the corporation, and686arrangements for the adjustment and payment of hurricane claims687incurred on eligible risks by the claims adjuster and personnel688of the authorized insurer. Entering into a quota sharing689insurance agreement between the corporation and an authorized690insurer shall be voluntary and at the discretion of the691authorized insurer.692 2.3.Mayprovide that the corporation mayemploy or 693 otherwise contract with individuals or other entities to provide 694 administrative or professional servicesthat may be appropriate695to effectuate the plan. 696 a. The corporation mayshall have the power toborrow 697 funds,by issuing bonds or by incurring other indebtedness, and 698 shall have other powers reasonably necessary to effectuate the 699 requirements of this subsection, including, without limitation, 700 the power to issue bonds and incur other indebtedness in order 701 to refinance outstanding bonds or other indebtedness. The 702 corporation may, but is not required to,seek judicial 703 validation of its bonds or other indebtedness under chapter 75. 704 The corporation may issue bonds or incur other indebtedness, or 705 have bonds issued on its behalf by a unit of local government 706 pursuant to subparagraph (q)2., in the absence of a hurricane or 707 other weather-related event, upon a determination by the 708 corporation, subject to approval by the office, that such action 709 would enable it to efficiently meet the financial obligations of 710 the corporation and that such financings are reasonably 711 necessary to effectuate the requirements of this subsection. The 712 corporation mayis authorized totake all actions needed to 713 facilitate tax-free status foranysuch bonds or indebtedness, 714 including formation of trusts or other affiliated entities. The 715 corporation mayshall have the authority topledge assessments, 716 projected recoveries from the Florida Hurricane Catastrophe 717 Fund, other reinsurance recoverables, market equalization and 718 other surcharges, and other funds available to the corporation 719 as security for bonds or other indebtedness. In recognition of 720 s. 10, Art. I of the State Constitution, prohibiting the 721 impairment of obligations of contracts, it is the intent of the 722 Legislature that no action be taken whose purpose is to impair 723 any bond indenture or financing agreement or any revenue source 724 committed by contract to such bond or other indebtedness. 725 b. To ensure that the corporation is operating in an 726 efficient and economic manner while providing quality service to 727 policyholders, applicants, and agents, the board shall 728 commission an independent third-party consultant having 729 expertise in insurance company management or insurance company 730 management consulting to prepare a report and make 731 recommendations on the relative costs and benefits of 732 outsourcing various policy issuance and service functions to 733 private servicing carriers or entities performing similar 734 functions in the private market for a fee, rather than 735 performing such functions in-house. In making such 736 recommendations, the consultant shall consider how other 737 residual markets, both in this state and around the country, 738 outsource appropriate functions or use servicing carriers to 739 better match expenses with revenues that fluctuate based on a 740 widely varying policy count. The report must be completed by 741 February 1, 2012. Upon receiving the report, the board shall 742 develop a plan to implement the report and submit the plan to 743 the Financial Services Commission. The commission has 30 days 744 after receiving the plan to review and make additions or 745 corrections, if any. Upon the commission’s approval of the plan, 746 the board shall begin implementing the plan by January 1, 2013. 747 3.4.a.Mustrequire that the corporationoperate subject to 748 the supervision and approval of a board of governors consisting 749 of eight individuals who are residents of this state, from 750 different geographical areas of this state. 751 a. The Governor, the Chief Financial Officer, the President 752 of the Senate, and the Speaker of the House of Representatives 753 shall each appoint two members of the board. At least one of the 754 two members appointed by each appointing officer must have 755 demonstrated expertise in insurance, and be within the scope of 756 the exemption provided in s. 112.313(7)(b). The Chief Financial 757 Officer shall designate one of the appointees as chair. All 758 board members serve at the pleasure of the appointing officer. 759 All members of the boardof governorsare subject to removal at 760 will by the officers who appointed them. All board members, 761 including the chair, must be appointed to serve for 3-year terms 762 beginning annually on a date designated by the plan. However, 763 for the first term beginning on or after July 1, 2009, each 764 appointing officer shall appoint one member of the board for a 765 2-year term and one member for a 3-year term. AAnyboard 766 vacancy shall be filled for the unexpired term by the appointing 767 officer. The Chief Financial Officer shall appoint a technical 768 advisory group to provide information and advice to the boardof769governorsin connection with the board’s duties under this 770 subsection. The executive director and senior managers of the 771 corporation shall be engaged by the board and serve at the 772 pleasure of the board. Any executive director appointed on or 773 after July 1, 2006, is subject to confirmation by the Senate. 774 The executive director is responsible for employing other staff 775 as the corporation may require, subject to review and 776 concurrence by the board. 777 b. The board shall create a Market Accountability Advisory 778 Committee to assist the corporation in developing awareness of 779 its rates and its customer and agent service levels in 780 relationship to the voluntary market insurers writing similar 781 coverage, and to provide advice on issues regarding agent 782 appointments and compensation. 783 (I) The members of the advisory committee shall consist of 784 the following 11 persons, one of whom must be elected chair by 785 the members of the committee: four representatives, one 786 appointed by the Florida Association of Insurance Agents, one by 787 the NationalFloridaAssociation of Insurance and Financial 788 Advisors-FloridaAdvisors, one by the Professional Insurance 789 Agents of Florida, and one by the Latin American Association of 790 Insurance Agencies; three representatives appointed by the 791 insurers with the three highest voluntary market share of 792 residential property insurance business in the state; one 793 representative from the Office of Insurance Regulation; one 794 consumer appointed by the board who is insured by the 795 corporation at the time of appointment to the committee; one 796 representative appointed by the Florida Association of Realtors; 797 and one representative appointed by the Florida Bankers 798 Association. All members shall be appointed tomust serve for3 799 year terms and may serve for consecutive terms. 800 (II) The committee shall report to the corporation at each 801 board meeting on insurance market issues which may include rates 802 and rate competition with the voluntary market; service, 803 including policy issuance, claims processing, and general 804 responsiveness to policyholders, applicants, and agents; and 805 matters relating to depopulation, producer compensation, or 806 agency agreements. 807 4.5.Must provide a procedure for determining the 808 eligibility of a risk for coverage, as follows: 809 a. Subject tothe provisions ofs. 627.3517, with respect 810 to personal lines residential risks, if the risk is offered 811 coverage from an authorized insurer at the insurer’s approved 812 rate undereithera standard policy including wind coverage or, 813 if consistent with the insurer’s underwriting rules as filed 814 with the office, a basic policy including wind coverage, for a 815 new application to the corporation for coverage, the risk is not 816 eligible for any policy issued by the corporationunless the817premium for coverage from the authorized insurer is more than 15818percent greater than the premium for comparable coverage from819the corporation. If the risk is not able to obtainanysuch 820 offer, the risk is eligible foreithera standard policy 821 including wind coverage or a basic policy including wind 822 coverage issued by the corporation; however, if the risk could 823 not be insured under a standard policy including wind coverage 824 regardless of market conditions, the risk isshall beeligible 825 for a basic policy including wind coverage unless rejected under 826 subparagraph 9.8.Notwithstanding these limitations, an 827 application for coverage having an effective date before January 828 1, 2015, is eligible for coverage by the corporation if the 829 premium for coverage from an authorized insurer exceeds the 830 premium from the corporation by more than 25 percent.However,831with regard to a policyholder of the corporation or a832policyholder removed from the corporation through an assumption833agreement until the end of the assumption period, the834policyholder remains eligible for coverage from the corporation835regardless of any offer of coverage from an authorized insurer836or surplus lines insurer.The corporation shall determine the 837 type of policy to be provided on the basis of objective 838 standards specified in the underwriting manual and based on 839 generally accepted underwriting practices. 840 (I) If the risk accepts an offer of coverage through the 841 market assistance plan oran offer of coveragethrough a 842 mechanism established by the corporation before a policy is 843 issued to the risk by the corporation or during the first 30 844 days of coverage by the corporation, and the producing agent who 845 submitted the application to the plan or to the corporation is 846 not currently 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 leasta period of854not less than1 year and offer to pay the agent the greater of 855 the insurer’s or the corporation’s usual and customary 856 commission for the type of 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) IfWhenthe corporation enters into a contractual 862 agreement for a take-out plan, the producing agent of record of 863 the corporation policy is entitled to retain any unearned 864 commission on the policy, and the insurer shall: 865 (A) Pay to the producing agentof record of the corporation866policy, for the first year, an amount that is the greater of the 867 insurer’s usual and customary commission for the type of policy 868 written or a fee equal to the usual and customary commission of 869 the corporation; or 870 (B) Offer to allow the producing agentof record of the871corporation policyto continue servicing the policy for at least 872a period of not less than1 year and offer to pay the agent the 873 greater of the insurer’s or the corporation’s usual and 874 customary commission for the type of policy written. 875 876 If the producing agent is unwilling or unable to accept 877 appointment, the new insurer shall pay the agent in accordance 878 with sub-sub-sub-subparagraph (A). 879 b. Subject to s. 627.3517, with respect to commercial lines 880 residential risks,for a new application to the corporation for881coverage,if the risk is offered coverage under a policy 882 including wind coverage from an authorized insurer at its 883 approved rate, the risk is not eligible for aanypolicy issued 884 by the corporationunless the premium for coverage from the885authorized insurer is more than 15 percent greater than the886premium for comparable coverage from the corporation. If the 887 risk is not able to obtain any such offer, the risk is eligible 888 for a policy including wind coverage issued by the corporation. 889 Notwithstanding these limitations, an application for coverage 890 having an effective date before January 1, 2015, is eligible for 891 coverage by the corporation if the premium for coverage from an 892 authorized insurer exceeds the premium from the corporation by 893 more than 25 percent.However, with regard to a policyholder of894the corporation or a policyholder removed from the corporation895through an assumption agreement until the end of the assumption896period, the policyholder remains eligible for coverage from the897corporation regardless of any offer of coverage from an898authorized insurer or surplus lines insurer.899 (I) If the risk accepts an offer of coverage through the 900 market assistance plan oran offer of coveragethrough a 901 mechanism established by the corporation before a policy is 902 issued to the risk by the corporation or during the first 30 903 days of coverage by the corporation, and the producing agent who 904 submitted the application to the plan or the corporation is not 905 currently appointed by the insurer, the insurer shall: 906 (A) Pay to the producing agentof record of the policy, for 907 the first year, an amount that is the greater of the insurer’s 908 usual and customary commission for the type of policy written or 909 a fee equal to the usual and customary commission of the 910 corporation; or 911 (B) Offer to allow the producing agentof record of the912policyto continue servicing the policy for at leasta period of913not less than1 year and offer to pay the agent the greater of 914 the insurer’s or the corporation’s usual and customary 915 commission for the type of policy written. 916 917 If the producing agent is unwilling or unable to accept 918 appointment, the new insurer shall pay the agent in accordance 919 with sub-sub-sub-subparagraph (A). 920 (II) IfWhenthe corporation enters into a contractual 921 agreement for a take-out plan, the producing agent of record of 922 the corporation policy is entitled to retain any unearned 923 commission on the policy, and the insurer shall: 924 (A) Pay to the producing agentof record of the corporation925policy, for the first year, an amount that is the greater of the 926 insurer’s usual and customary commission for the type of policy 927 written or a fee equal to the usual and customary commission of 928 the corporation; or 929 (B) Offer to allow the producing agentof record of the930corporation policyto continue servicing the policy for at least 931a period of not less than1 year and offer to pay the agent the 932 greater of the insurer’s or the corporation’s usual and 933 customary commission for the type of policy written. 934 935 If the producing agent is unwilling or unable to accept 936 appointment, the new insurer shall pay the agent in accordance 937 with sub-sub-sub-subparagraph (A). 938 c. Effective upon this act becoming a law, the corporation 939 shall cease to accept applications for or issue new policies 940 covering commercial nonresidential risks.For purposes of941determining comparable coverage under sub-subparagraphs a. and942b., the comparison shall be based on those forms and coverages943that are reasonably comparable. The corporation may rely on a944determination of comparable coverage and premium made by the945producing agent who submits the application to the corporation,946made in the agent’s capacity as the corporation’s agent. A947comparison may be made solely of the premium with respect to the948main building or structure only on the following basis: the same949coverage A or other building limits; the same percentage950hurricane deductible that applies on an annual basis or that951applies to each hurricane for commercial residential property;952the same percentage of ordinance and law coverage, if the same953limit is offered by both the corporation and the authorized954insurer; the same mitigation credits, to the extent the same955types of credits are offered both by the corporation and the956authorized insurer; the same method for loss payment, such as957replacement cost or actual cash value, if the same method is958offered both by the corporation and the authorized insurer in959accordance with underwriting rules; and any other form or960coverage that is reasonably comparable as determined by the961board. If an application is submitted to the corporation for962wind-only coverage in the high-risk account, the premium for the963corporation’s wind-only policy plus the premium for the ex-wind964policy that is offered by an authorized insurer to the applicant965shall be compared to the premium for multiperil coverage offered966by an authorized insurer, subject to the standards for967comparison specified in this subparagraph. If the corporation or968the applicant requests from the authorized insurer a breakdown969of the premium of the offer by types of coverage so that a970comparison may be made by the corporation or its agent and the971authorized insurer refuses or is unable to provide such972information, the corporation may treat the offer as not being an973offer of coverage from an authorized insurer at the insurer’s974approved rate.975 5.6.Must include rules for classifications of risks and 976 ratestherefor. 977 6.7.Must provide that if premium and investment income for 978 an account attributable to a particular calendar year are in 979 excess of projected losses and expenses for the account 980 attributable to that year, such excess shall be held in surplus 981 in the account. Such surplus mustshallbe available to defray 982 deficits in that account as to future years andshall beused 983 for that purpose beforeprior toassessing assessable insurers 984 and assessable insureds as to any calendar year. 985 7.8.Must provide objective criteria and procedures to be 986 uniformly applied toforall applicants in determining whether 987 an individual risk is so hazardous as to be uninsurable. In 988 making this determination and in establishing the criteria and 989 procedures, the following mustshallbe considered: 990 a. Whether the likelihood of a loss for the individual risk 991 is substantially higher than for other risks of the same class; 992 and 993 b. Whether the uncertainty associated with the individual 994 risk is such that an appropriate premium cannot be determined. 995 996 The acceptance or rejection of a risk by the corporation shall 997 be construed as the private placement of insurance, and the 998 provisions of chapter 120 doshallnot apply. 999 8.9.Must provide that the corporationShall make its best 1000 efforts to procure catastrophe reinsurance at reasonable rates, 1001 to cover its projected 100-year probable maximum loss as 1002 determined by the board of governors. 1003 9.10.Must issueThepolicies thatissued by the1004corporation mustprovide that, if the corporation or the market 1005 assistance plan obtains an offer from an authorized insurer to 1006 cover the risk at its approved rates or from a surplus lines 1007 insurer, the risk is no longer eligible for renewal through the 1008 corporation, except as otherwise provided in this subsection. 1009 10.11.MustCorporation Policies and applications must1010 include a notice in the corporation policies and applications 1011 that the corporation policy could, under this section, be 1012 replaced with a policy issued by anauthorizedinsurer which 1013thatdoes not provide coverage identical to the coverage 1014 provided by the corporation. The notice mustshallalso specify 1015 that acceptance of corporation coverage creates a conclusive 1016 presumption that the applicant or policyholder is aware of this 1017 potential. 1018 11.12.May establish, subject to approval by the office, 1019 different eligibility requirements and operational procedures 1020 for any line or type of coverage for any specified county or 1021 area if the board determines that such changesto the1022eligibility requirements and operational proceduresare 1023 justified due to the voluntary market being sufficiently stable 1024 and competitive in such area or for such line or type of 1025 coverage and that consumers who, in good faith, are unable to 1026 obtain insurance through the voluntary market through ordinary 1027 methodswouldcontinue to have access to coverage from the 1028 corporation. IfWhencoverage is sought in connection with a 1029 real property transfer, thesuchrequirements and procedures may 1030shallnot provideforan effective date of coverage later than 1031 the date of the closing of the transfer as established by the 1032 transferor, the transferee, and, if applicable, the lender. 1033 12.13.Must provide that, with respect to the high-risk 1034 account, any assessable insurer with a surplus as to 1035 policyholders of $25 million or less writing 25 percent or more 1036 of its total countrywide property insurance premiums in this 1037 state may petition the office, within the first 90 days of each 1038 calendar year, to qualify as a limited apportionment company. A 1039 regular assessment levied by the corporation on a limited 1040 apportionment company for a deficit incurred by the corporation 1041 for the high-risk accountin 2006 or thereaftermay be paid to 1042 the corporation on a monthly basis as the assessments are 1043 collected by the limited apportionment company from its insureds 1044 pursuant to s. 627.3512, but the regular assessment must be paid 1045 in full within 12 months after being levied by the corporation. 1046 A limited apportionment company shall collect from its 1047 policyholders any emergency assessment imposed under sub 1048 subparagraph (b)3.d.The plan shall provide that,If the office 1049 determines that any regular assessment will result in an 1050 impairment of the surplus of a limited apportionment company, 1051 the office may direct that all or part of such assessment be 1052 deferred as provided in subparagraph (q)4. However,there shall1053be no limitation or deferment ofan emergency assessment to be 1054 collected from policyholders under sub-subparagraph (b)3.d. may 1055 not be limited or deferred. 1056 13.14.Effective January 1, 2012, mustprovide that the1057corporationappoint as its licensed agents only those agents who 1058 also hold an appointment as defined in s. 626.015(3) with an 1059 insurer whoat the time of the agent’s initial appointment by1060the corporationis authorized to write and is actually writing 1061 personal lines residential property coverage, commercial 1062 residential property coverage, or commercial nonresidential 1063 property coverage within the state. 1064 14.15.Must provide, by July 1, 2007,a premium payment 1065 plan option to its policyholders which,allowsat a minimum, 1066 allows for quarterly and semiannual payment of premiums. A 1067 monthly payment plan may, but is not required to,be offered. 1068 15.16.Must limit coverage on mobile homes or manufactured 1069 homes built beforeprior to1994 to actual cash value of the 1070 dwelling rather than replacement costs of the dwelling. 1071 16.17.May provide such limits of coverage as the board 1072 determines, consistent with the requirements of this subsection. 1073 17.18.May require commercial property to meet specified 1074 hurricane mitigation construction features as a condition of 1075 eligibility for coverage. 1076 18. As of January 1, 2012, must require that the agent 1077 obtain from an applicant for coverage from the corporation an 1078 acknowledgement signed by the applicant, which includes, at a 1079 minimum, the following statement: 1080 1081 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT 1082 LIABILITY: 1083 1084 1. AS A POLICYHOLDER OF CITIZENS PROPERTY 1085 INSURANCE CORPORATION, I UNDERSTAND THAT IF THE 1086 CORPORATION SUSTAINS A DEFICIT AS A RESULT OF 1087 HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY 1088 COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 1089 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF 1090 THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH 1091 AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS 1092 IMPOSED BY THE FLORIDA LEGISLATURE. 1093 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO 1094 EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS 1095 POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A 1096 DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 1097 LEGISLATURE. 1098 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY 1099 INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL 1100 FAITH AND CREDIT OF THE STATE OF FLORIDA. 1101 1102 a. The corporation shall maintain, in electronic format or 1103 otherwise, a copy of the applicant’s signed acknowledgement and 1104 provide a copy of the statement to the policyholder as part of 1105 the first renewal after the effective date of this sub 1106 subparagraph. 1107 b. The signed acknowledgement form creates a conclusive 1108 presumption that the policyholder understood and accepted his or 1109 her potential surcharge and assessment liability as a 1110 policyholder of the corporation. 1111 19. Upon notice and determination by the Department of 1112 Financial Services that an agent appointed by the corporation 1113 has violated s. 626.9541(1)(h), immediately terminate the 1114 agent’s appointment to represent the corporation. 1115 20. Must provide that new or renewal policies issued by the 1116 corporation on or after February 1, 2012, do not include 1117 coverage for attached or detached screen enclosures. The 1118 corporation shall exclude such coverage using a notice of 1119 coverage change, which may be included with the policy renewal, 1120 and not by issuance of a notice of nonrenewal of the excluded 1121 coverage upon renewal of the current policy. 1122 21. Must provide that new or renewal personal residential 1123 policies issued by the corporation on or after February 1, 2013, 1124 do not provide coverage for detached structures on the residence 1125 premises which are separated from the dwelling by clear space. 1126 Structures connected to the dwelling by only a fence, utility 1127 line, or similar connection are considered to be detached 1128 structures. 1129 22. Must provide that new or renewal personal residential 1130 policies issued by the corporation on or after February 1, 2013, 1131 do not provide coverage for watercraft, trailers, jewelry, furs, 1132 firearms, silverware, business property on premises, business 1133 property away from premises, or grave markers. 1134 23. Must offer sinkhole coverage. However, effective 1135 February 1, 2012, coverage is not included for losses to 1136 appurtenant structures, driveways, sidewalks, decks, or patios 1137 which are directly or indirectly caused by sinkhole activity. 1138 The corporation shall exclude such coverage using a notice of 1139 coverage change, which may be included with the policy renewal, 1140 and not by issuance of a notice of nonrenewal of the excluded 1141 coverage upon renewal of the current policy. 1142 24. As a condition for making payment for damage caused by 1143 the peril of sinkhole, regardless of whether such payment is 1144 made pursuant to the contract, mediation, neutral evaluation, 1145 appraisal, arbitration, settlement, or litigation, the payment 1146 must be dedicated entirely to the costs of repairing the 1147 structure or remediation of the land. Unless this condition is 1148 met, the corporation is prohibited from making payment. 1149 (d)1. All prospective employees for senior management 1150 positions, as defined by the plan of operation, are subject to 1151 background checks as a prerequisite for employment. The office 1152 shall conduct the background checkson such prospective1153employeespursuant to ss. 624.34, 624.404(3), and 628.261. 1154 2. On or before July 1 of each year, employees of the 1155 corporation mustare required tosign and submit a statement 1156 attesting that they do not have a conflict of interest, as 1157 defined in part III of chapter 112. As a condition of 1158 employment, all prospective employees mustare required tosign 1159 and submit to the corporation a conflict-of-interest statement. 1160 3. Senior managers and members of the board of governors 1161 are subject tothe provisions ofpart III of chapter 112, 1162 including, but not limited to, the code of ethics and public 1163 disclosure and reporting of financial interests, pursuant to s. 1164 112.3145. 1165 a. Senior managers and board members are also required to 1166 file such disclosures with the Commission on Ethics and the 1167 Office of Insurance Regulation. The executive director of the 1168 corporation or his or her designee shall notify each existing 1169 and newly appointedand existing appointedmember of the board 1170 of governors and senior managers of their duty to comply with 1171 the reporting requirements of part III of chapter 112. At least 1172 quarterly, the executive director or his or her designee shall 1173 submit to the Commission on Ethics a list of names of the senior 1174 managers and members of the board of governors who are subject 1175 to the public disclosure requirements under s. 112.3145. 1176 b. Notwithstanding s. 112.3143(2), a board member may not 1177 vote on any measure that would inure to his or her special 1178 private gain or loss; that he or she knows would inure to the 1179 special private gain or loss of any principal by whom he or she 1180 is retained or to the parent organization or subsidiary of a 1181 corporate principal by which he or she is retained, other than 1182 an agency as defined in s. 112.312; or that he or she knows 1183 would inure to the special private gain or loss of a relative or 1184 business associate of the public officer. Before the vote is 1185 taken, such member must publicly state to the assembly the 1186 nature of his or her interest in the matter from which he or she 1187 is abstaining and, within 15 days after the vote occurs, 1188 disclose the nature of his or her interest as a public record in 1189 a memorandum filed with the person responsible for recording the 1190 minutes of the meeting, who shall incorporate the memorandum in 1191 the minutes. 1192 4. Notwithstanding s. 112.3148 or s. 112.3149, or any other 1193 provision of law, an employee or board member may not knowingly 1194 accept, directly or indirectly, any gift or expenditure from a 1195 person or entity, or an employee or representative of such 1196 person or entity, whichthathas a contractual relationship with 1197 the corporation or who is under consideration for a contract. An 1198 employee or board member who fails to comply with subparagraph 1199 3. or this subparagraph is subject to penalties provided under 1200 ss. 112.317 and 112.3173. 1201 5. Any senior manager of the corporation who is employed on 1202 or after January 1, 2007, regardless of the date of hire, who 1203 subsequently retires or terminates employment is prohibited from 1204 representing another person or entity before the corporation for 1205 2 years after retirement or termination of employment from the 1206 corporation. 1207 6. Any senior manager of the corporation who is employed on 1208 or after January 1, 2007, regardless of the date of hire, who 1209 subsequently retires or terminates employment is prohibited from 1210 having any employment or contractual relationship for 2 years 1211 with an insurer that has entered into a take-out bonus agreement 1212 with the corporation. 1213 (n)1.It is the intent of the Legislature that the rates 1214 for coverage provided by the corporation be actuarially 1215 determined and not be competitive with rates charged in the 1216 admitted voluntary market such that the corporation functions as 1217 a residual market mechanism that provides insurance only if such 1218 insurance cannot be procured in the voluntary market. To achieve 1219 this goal, for any rate filing made by the corporation on or 1220 after July 1, 2011:Rates for coverage provided by the1221corporation shall be actuarially sound and subject to the1222requirements of s.627.062, except as otherwise provided in this1223paragraph. The corporation shall file its recommended rates with1224the office at least annually. The corporation shall provide any1225additional information regarding the rates which the office1226requires. The office shall consider the recommendations of the1227board and issue a final order establishing the rates for the1228corporation within 45 days after the recommended rates are1229filed. The corporation may not pursue an administrative1230challenge or judicial review of the final order of the office.1231 1. The corporation shall file its recommended rates with 1232 the office at least annually. The office shall consider the 1233 recommended rates and issue a final order establishing the rates 1234 within 45 days after the recommended rates are filed. The 1235 corporation may not pursue an administrative challenge or 1236 judicial review of the office’s final order. 1237 2. In developing its rates, the corporation shall use an 1238 appropriate industry expense equalization factor to ensure that 1239 its rates include standard industry ratemaking expense 1240 provisions. The industry expense equalization factor must 1241 include a catastrophe risk load, a provision for taxes, a market 1242 provision for reinsurance costs, and an industry expense 1243 provision for general expenses, acquisition expenses, and 1244 commissions. 1245 3. The corporation shall implement a rate increase each 1246 year for each residential line of business it writes, which may 1247 not exceed 20 percent by territory and 25 percent for any single 1248 policy, excluding coverage changes and surcharges. This 1249 subparagraph expires January 1, 2015, and does not apply to 1250 rates for sinkhole coverage or costs for the purchase of private 1251 reinsurance, if any. 1252 4.2.In addition to the rates otherwise determined pursuant 1253 to this paragraph, the corporation shall impose and collect an 1254 amount equal to the premium tax provided for in s. 624.509 to 1255 augment the financial resources of the corporation. 12563. After the public hurricane loss-projection model under1257s.627.06281has been found to be accurate and reliable by the1258Florida Commission on Hurricane Loss Projection Methodology,1259that model shall serve as the minimum benchmark for determining1260the windstorm portion of the corporation’s rates. This1261subparagraph does not require or allow the corporation to adopt1262rates lower than the rates otherwise required or allowed by this1263paragraph.12644. The rate filings for the corporation which were approved1265by the office and which took effect January 1, 2007, are1266rescinded, except for those rates that were lowered. As soon as1267possible, the corporation shall begin using the lower rates that1268were in effect on December 31, 2006, and shall provide refunds1269to policyholders who have paid higher rates as a result of that1270rate filing. The rates in effect on December 31, 2006, shall1271remain in effect for the 2007 and 2008 calendar years except for1272any rate change that results in a lower rate. The next rate1273change that may increase rates shall take effect pursuant to a1274new rate filing recommended by the corporation and established1275by the office, subject to the requirements of this paragraph.12765. Beginning on July 15, 2009, and each year thereafter,1277the corporation must make a recommended actuarially sound rate1278filing for each personal and commercial line of business it1279writes, to be effective no earlier than January 1, 2010.12806. Beginning on or after January 1, 2010, and1281notwithstanding the board’s recommended rates and the office’s1282final order regarding the corporation’s filed rates under1283subparagraph 1., the corporation shall implement a rate increase1284each year which does not exceed 10 percent for any single policy1285issued by the corporation, excluding coverage changes and1286surcharges.1287 5.7.The corporation may also implement an increase to 1288 reflect the effect on the corporation of the cash buildup factor 1289 pursuant to s. 215.555(5)(b). 1290 6. This paragraph does not require or allow the corporation 1291 to reduce rates. 12928. The corporation’s implementation of rates as prescribed1293in subparagraph 6. shall cease for any line of business written1294by the corporation upon the corporation’s implementation of1295actuarially sound rates. Thereafter, the corporation shall1296annually make a recommended actuarially sound rate filing for1297each commercial and personal line of business the corporation1298writes.1299 (o) If coverage in an account is deactivated pursuant to 1300 paragraph (p), coverage through the corporation shall be 1301 reactivated by order of the office only under one of the 1302 following circumstances: 1303 1. If the market assistance plan receives a minimum of 100 1304 applications for coverage within a 3-month period, or 200 1305 applications for coverage within a 1-year period or less for 1306 residential coverage, unless the market assistance plan provides 1307 a quotation from admitted carriers at their filed rates for at 1308 least 90 percent of such applicants. AAnymarket assistance 1309 plan application that is rejected because an individual risk is 1310 so hazardous as to be uninsurable using the criteria specified 1311 in subparagraph (c)7. may(c)8. shallnot be included in the 1312 minimum percentage calculationprovided herein. IfIn the event1313thatthere is a legal or administrative challenge to a 1314 determination by the office that the conditions of this 1315 subparagraph have been met for eligibility for coverage byin1316 the corporation, ananyeligible risk may obtain coverage during 1317 the pendency of such challenge. 1318 2. In response to a state of emergency declared by the 1319 Governor under s. 252.36, the office may activate coverage by 1320 order duringfor the period ofthe emergency upon a finding by 1321 the office that the emergency significantly affects the 1322 availability of residential property insurance. 1323 (q)1. The corporation shall certify to the office its needs 1324 for annual assessments as to a particular calendar year, and for 1325 any interim assessments that it deems to be necessary to sustain 1326 operations as to a particular year pending the receipt of annual 1327 assessments. Upon verification, the office shall approve such 1328 certification, and the corporation shall levy such annual or 1329 interim assessments. Such assessments mustshallbe prorated as 1330 provided in paragraph (b). The corporation shall take all 1331 reasonable and prudent steps necessary to collect the amount of 1332 assessment due from each assessable insurer, including, if 1333 prudent, filing suit to collect such assessment. If the 1334 corporation is unable to collect an assessment from any 1335 assessable insurer, the uncollected assessments shall be levied 1336 as an additional assessment against the assessable insurers and 1337 any assessable insurer required to pay an additional assessment 1338as a result of such failure to payshall have a cause of action 1339 against such nonpaying assessable insurer. Assessments shall be 1340 included as an appropriate factor in the making of rates. The 1341 failure of a surplus lines agent to collect and remit any 1342 regular or emergency assessment levied by the corporation is 1343considered to bea violation of s. 626.936 and subjects the 1344 surplus lines agent to the penalties provided in that section. 1345 2. The governing body of any unit of local government,any1346 residents of which are insured by the corporation, may issue 1347 bonds as defined in s. 125.013 or s. 166.101from time to time1348 to fund an assistance program, in conjunction with the 1349 corporation, for the purpose of defraying deficits of the 1350 corporation. In order to avoid needless and indiscriminate 1351 proliferation, duplication, and fragmentation of such assistance 1352 programs, any unit of local government,anyresidents of which 1353 are insured by the corporation, may provide for the payment of 1354 losses, regardless of whether or not the losses occurred within 1355 or outside of the territorial jurisdiction of the local 1356 government. Revenue bonds under this subparagraph may not be 1357 issued until validated pursuant to chapter 75, unless a state of 1358 emergency is declared by executive order or proclamation of the 1359 Governor pursuant to s. 252.36 making such findings as are 1360 necessary to determine that it is in the best interests of, and 1361 necessary for, the protection of the public health, safety, and 1362 general welfare of residents of this state and declaring it an 1363 essential public purpose to permit certain municipalities or 1364 counties to issue such bonds toas willpermit relief to 1365 claimants and policyholders of the corporation. Any such unit of 1366 local government may enter into such contracts with the 1367 corporation and with any other entity created pursuant to this 1368 subsection as are necessary to carry out this paragraph. Any 1369 bonds issued under this subparagraph areshall bepayable from 1370 and secured by moneys received by the corporation from emergency 1371 assessments under sub-subparagraph (b)3.d., and assigned and 1372 pledged to or on behalf of the unit of local government for the 1373 benefit of the holders of such bonds. The funds, credit, 1374 property, and taxing power of the state or of the unit of local 1375 government mayshallnot be pledged for the payment of such 1376 bonds. 1377 3.a.The corporation shall adopt one or more programs 1378 subject to approval by the office for the reduction of both new 1379 and renewal writings in the corporation.Beginning January 1,13802008,1381 a. Any program the corporation adopts for the payment of 1382 bonuses to an insurer for each risk the insurer removes from the 1383 corporation mustshallcomply with s. 627.3511(2) and may not 1384 exceed the amount referenced in s. 627.3511(2) for each risk 1385 removed. The corporation may consider any prudent and not 1386 unfairly discriminatory approach to reducing corporation 1387 writings, and may adopt a credit against assessment liability or 1388 other liability that provides an incentive for insurers to take 1389 risks out of the corporation and to keep risks out of the 1390 corporation by maintaining or increasing voluntary writings in 1391 counties or areas in which corporation risks are highly 1392 concentrated and a program to provide a formula under which an 1393 insurer voluntarily taking risks out of the corporation by 1394 maintaining or increasing voluntary writings will be relieved 1395 wholly or partially from assessments under sub-subparagraphs 1396 (b)3.a. and b. However, any “take-out bonus” or payment to an 1397 insurer must be conditioned on the property being insured for at 1398 least 5 years by the insurer, unless canceled or nonrenewed by 1399 the policyholder. If the policy is canceled or nonrenewed by the 1400 policyholder before the end of the 5-year period, the amount of 1401 the take-out bonus must be prorated for the time period the 1402 policy was insured. IfWhenthe corporation enters into a 1403 contractual agreement for a take-out plan, the producing agent 1404 of record of the corporation policy is entitled to retain any 1405 unearned commission on such policy, and the insurer shall 1406 either: 1407 (I) Pay to the producing agent of record of the policy, for 1408 the first year, an amount thatwhichis the greater of the 1409 insurer’s usual and customary commission for the type of policy 1410 written or a policy fee equal to the usual and customary 1411 commission of the corporation; or 1412 (II) Offer to allow the producing agent of record of the 1413 policy to continue servicing the policy for at leasta period of1414not less than1 year and offer to pay the agent the insurer’s 1415 usual and customary commission for the type of policy written. 1416 If the producing agent is unwilling or unable to accept 1417 appointment by the new insurer, the new insurer shall pay the 1418 agent in accordance with sub-sub-subparagraph (I). 1419 b. Any credit or exemption from regular assessments adopted 1420 under this subparagraph shall last no longer than the 3 years 1421 following the cancellation or expiration of the policy by the 1422 corporation. With the approval of the office, the board may 1423 extend such credits for an additional year if the insurer 1424 guarantees an additional year of renewability for all policies 1425 removed from the corporation, or for 2 additional years if the 1426 insurer guarantees 2 additional years of renewability for all 1427 policies so removed. 1428 c.There shall beNo credit, limitation, exemption, or 1429 deferment from emergency assessments maytobe collected from 1430 policyholders pursuant to sub-subparagraph (b)3.d. 1431 4. The plan mustshallprovide for the deferment, in whole 1432 or in part, of the assessment of an assessable insurer, other 1433 than an emergency assessment collected from policyholders 1434 pursuant to sub-subparagraph (b)3.d., if the office finds that 1435 payment of the assessment would endanger or impair the solvency 1436 of the insurer. IfIn the eventan assessment against an 1437 assessable insurer is deferred in whole or in part, the amount 1438by which such assessment isdeferred may be assessed against the 1439 other assessable insurers in a manner consistent with the basis 1440 for assessments set forth in paragraph (b). 1441 5.Effective July 1, 2007,In order to evaluate the costs 1442 and benefits of approved take-out plans, if the corporation pays 1443 a bonus or other payment to an insurer for an approved take-out 1444 plan, it shall maintain a record of the address or such other 1445 identifying information on the property or risk removed in order 1446 to track if and when the property or risk is later insured by 1447 the corporation. 1448 6. Any policy taken out, assumed, or removed from the 1449 corporation is, as of the effective date of the take-out, 1450 assumption, or removal, direct insurance issued by the insurer 1451 and not by the corporation, even if the corporation continues to 1452 service the policies. This subparagraph applies to policies of 1453 the corporation and not policies taken out, assumed, or removed 1454 from any other entity. 1455 d. Notwithstanding any other provision of law, for purposes 1456 of a depopulation, take-out, or keep-out program adopted by the 1457 corporation, including an initial or renewal offer of coverage 1458 made to a policyholder removed from the corporation pursuant to 1459 such program, an eligible surplus lines insurer may participate 1460 in the program in the same manner and on the same terms as an 1461 authorized insurer, except as provided under this subparagraph. 1462 To qualify for participation, the surplus lines insurer must 1463 first obtain approval from the office for its depopulation, 1464 take-out, or keep-out plan and then comply with all of the 1465 corporation’s requirements for such plan applicable to admitted 1466 insurers and with all statutory provisions applicable to the 1467 removal of policies from the corporation. In considering a 1468 surplus lines insurer’s request for approval for its plan, the 1469 office must determine that the surplus lines insurer meets the 1470 following requirements: 1471 (I) Maintains surplus of $50 million on a company or pooled 1472 basis; 1473 (II) Maintains an A.M. Best Financial Strength Rating of 1474 “A-” or better; 1475 (III) Maintains reserves, surplus, reinsurance, and 1476 reinsurance equivalents sufficient to cover the insurer’s 100 1477 year probable maximum hurricane loss at least twice in a single 1478 hurricane season, and submits such reinsurance to the office to 1479 review for purposes of the take-out; 1480 (IV) Provides prominent notice to the policyholder before 1481 the assumption of the policy that surplus lines policies are not 1482 provided coverage by the Florida Insurance Guaranty Association, 1483 and an outline of any substantial differences in coverage 1484 between the existing policy and the policy being offered to the 1485 insured; and 1486 (V) Provides similar policy coverage. 1487 1488 This sub-subparagraph does not subject any surplus lines insurer 1489 to requirements in addition to part VIII of chapter 626. Surplus 1490 lines brokers making an offer of coverage under this sub 1491 subparagraph are not required to comply with s. 626.916(1)(a), 1492 (b), (c), and (e). 1493 (s)1. There isshall beno liability on the part of, and no 1494 cause of actionof any natureshall arise against, any 1495 assessable insurer or its agents or employees, the corporation 1496 or its agents or employees, members of the board of governors or 1497 their respective designees at a board meeting, corporation 1498 committee members, or the office or its representatives, for any 1499 action taken by them in the performance of their duties or 1500 responsibilities under this subsection. 1501 a. As part of the immunity, the corporation, as a 1502 governmental entity serving a public purpose, is not liable for 1503 any claim for bad faith whether or not brought pursuant to s. 1504 624.155, and this subsection or any other provision of law does 1505 not create liability or a cause of action for bad faith or a 1506 claim for extracontractual damages. 1507 b. Such immunity does not apply to: 1508 (I)a.Any of the foregoing persons or entities for any 1509 willful tort; 1510 (II)b.The corporation or its producing agents for breach 1511 of any contract or agreement pertaining to insurance coverage; 1512 (III)c.The corporation with respect to issuance or payment 1513 of debt; 1514 (IV)d.AnAnyassessable insurer with respect to any action 1515 to enforce an assessable insurer’s obligations to the 1516 corporation under this subsection; or 1517 (V)e.The corporation in any pending or future action for 1518 breach of contract or for benefits under a policy issued by the 1519 corporation.;In any such action, the corporation is notshall1520beliable to the policyholders and beneficiaries for attorney’s 1521 fees under s. 627.428. 1522 2. The corporation shall manage its claim employees, 1523 independent adjusters, and others who handle claims to ensure 1524 they carry out the corporation’s duty to its policyholders to 1525 handle claims carefully, timely, diligently, and in good faith, 1526 balanced against the corporation’s duty to the state to manage 1527 its assets responsibly in order to minimize its assessment 1528 potential. 1529 (w) Notwithstanding any other provision of law: 1530 1. The pledge or sale of, the lien upon, and the security 1531 interest in any rights, revenues, or other assets of the 1532 corporation created or purported to be created pursuant to any 1533 financing documents to secure any bonds or other indebtedness of 1534 the corporation shall be and remain valid and enforceable, 1535 notwithstanding the commencement of and during the continuation 1536 of, and after, any rehabilitation, insolvency, liquidation, 1537 bankruptcy, receivership, conservatorship, reorganization, or 1538 similar proceeding against the corporation under the laws of 1539 this state. 1540 2.NoSuch proceeding does notshallrelieve the 1541 corporation of its obligation, or otherwise affect its ability 1542 to perform its obligation, to continue to collect, or levy and 1543 collect, assessments, market equalization or other surcharges 1544under subparagraph (c)10., or any other rights, revenues, or 1545 other assets of the corporation pledged pursuant to any 1546 financing documents. 1547 3. Each such pledge or sale of, lien upon, and security 1548 interest in, including the priority of such pledge, lien, or 1549 security interest, any such assessments, market equalization or 1550 other surcharges, or other rights, revenues, or other assets 1551 which are collected, or levied and collected, after the 1552 commencement of and during the pendency of, or after, any such 1553 proceeding continuesshall continueunaffected by such 1554 proceeding. As used in this subsection, the term “financing 1555 documents” means any agreement or agreements, instrument or 1556 instruments, or other document or documents now existing or 1557 hereafter created evidencing any bonds or other indebtedness of 1558 the corporation or pursuant to which any such bonds or other 1559 indebtedness has been or may be issued and pursuant to which any 1560 rights, revenues, or other assets of the corporation are pledged 1561 or sold to secure the repayment of such bonds or indebtedness, 1562 together with the payment of interest on such bonds or such 1563 indebtedness, or the payment of any other obligation or 1564 financial product, as defined in the plan of operation of the 1565 corporation related to such bonds or indebtedness. 1566 4. Any such pledge or sale of assessments, revenues, 1567 contract rights, or other rights or assets of the corporation 1568 constitutesshall constitutea lien and security interest, or 1569 sale, as the case may be, that is immediately effective and 1570 attaches to such assessments, revenues, or contract rights or 1571 other rights or assets, whether or not imposed or collected at 1572 the time the pledge or sale is made.AnySuch pledge or sale is 1573 effective, valid, binding, and enforceable against the 1574 corporation or other entity making such pledge or sale, and 1575 valid and binding against and superior to any competing claims 1576 or obligations owed to any other person or entity, including 1577 policyholders in this state, asserting rights in any such 1578 assessments, revenues, or contract rights or other rights or 1579 assets to the extent set forth in and in accordance with the 1580 terms of the pledge or sale contained in the applicable 1581 financing documents, whether or not any such person or entity 1582 has notice of such pledge or sale and without the need for any 1583 physical delivery, recordation, filing, or other action. 1584 5. IfAs long asthe corporation has any bonds outstanding, 1585 the corporation may not file a voluntary petition under chapter 1586 9 of the federal Bankruptcy Code or such corresponding chapter 1587 or sections as may be in effect,from time to time,and a public 1588 officer or any organization, entity, or other person may not 1589 authorize the corporation to be or become a debtor under chapter 1590 9 of the federal Bankruptcy Code or such corresponding chapter 1591 or sections as may be in effect, from time to time,during any 1592 such period. 1593 6. If ordered by a courtof competent jurisdiction, the 1594 corporation may assume policies or otherwise provide coverage 1595 for policyholders of an insurer placed in liquidation under 1596 chapter 631, under such forms, rates, terms, and conditions as 1597 the corporation deems appropriate, subject to approval by the 1598 office. 1599 (x)1. The following records of the corporation are 1600 confidential and exempt fromthe provisions ofs. 119.07(1) and 1601 s. 24(a), Art. I of the State Constitution: 1602 a. Underwriting files, except that a policyholder or an 1603 applicant shall have access to his or her own underwriting 1604 files. Confidential and exempt underwriting file records may 1605 also be released to other governmental agencies upon written 1606 request and demonstration of need; such records held by the 1607 receiving agency remain confidential and exempt as provided 1608 herein. 1609 b. Claims files, until termination of all litigation and 1610 settlement of all claims arising out of the same incident, 1611 although portions of the claims files may remain exempt, as 1612 otherwise provided by law. Confidential and exempt claims file 1613 records may be released to other governmental agencies upon 1614 written request and demonstration of need; such records held by 1615 the receiving agency remain confidential and exempt as provided 1616 herein. 1617 c. Records obtained or generated by an internal auditor 1618 pursuant to a routine audit, until the audit is completed, or if 1619 the audit is conducted as part of an investigation, until the 1620 investigation is closed or ceases to be active. An investigation 1621 is considered “active” while the investigation is being 1622 conducted with a reasonable, good faith belief that it could 1623 lead to the filing of administrative, civil, or criminal 1624 proceedings. 1625 d. Matters reasonably encompassed in privileged attorney 1626 client communications. 1627 e. Proprietary information licensed to the corporation 1628 under contract and the contract provides for the confidentiality 1629 of such proprietary information. 1630 f. All information relating to the medical condition or 1631 medical status of a corporation employee which is not relevant 1632 to the employee’s capacity to perform his or her duties, except 1633 as otherwise provided in this paragraph. Information that is 1634 exempt shall include, but is not limited to, information 1635 relating to workers’ compensation, insurance benefits, and 1636 retirement or disability benefits. 1637 g. Upon an employee’s entrance into the employee assistance 1638 program, a program to assist any employee who has a behavioral 1639 or medical disorder, substance abuse problem, or emotional 1640 difficulty which affects the employee’s job performance, all 1641 records relative to that participation shall be confidential and 1642 exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I 1643 of the State Constitution, except as otherwise provided in s. 1644 112.0455(11). 1645 h. Information relating to negotiations for financing, 1646 reinsurance, depopulation, or contractual services, until the 1647 conclusion of the negotiations. 1648 i. Minutes of closed meetings regarding underwriting files, 1649 and minutes of closed meetings regarding an open claims file 1650 until termination of all litigation and settlement of all claims 1651 with regard to that claim, except that information otherwise 1652 confidential or exempt by law shall be redacted. 1653 2. If anauthorizedinsurer is considering underwriting a 1654 risk insured by the corporation or has removed a risk from the 1655 corporation, relevant underwriting files and confidential claims 1656 files may be released to the insurer ifprovidedthe insurer 1657 agrees in writing, notarized and under oath, to maintain the 1658 confidentiality of such files. If a file is transferred to an 1659 insurer, that file is no longer a public record because it is 1660 not held by an agency subject to the provisions of the public 1661 records law. Underwriting files and confidential claims files 1662 may also be released to staff and the board of governors of the 1663 market assistance plan established pursuant to s. 627.3515, who 1664 must retain the confidentiality of such files, except such files 1665 may be released to authorized insurers that are considering 1666 assuming the risks to which the files apply if, providedthe 1667 insurer agrees in writing, notarized and under oath, to maintain 1668 the confidentiality of such files. Finally, the corporation or 1669 the board or staff of the market assistance plan may make the 1670 following information obtained from underwriting files and 1671 confidential claims files available to licensed general lines 1672 insurance agents: name, address, and telephone number of the 1673 residential property owner or insured; location of the risk; 1674 rating information; loss history; and policy type. The receiving 1675 licensed general lines insurance agent must retain the 1676 confidentiality of the information received. 1677 3. A policyholder who has filed suit against the 1678 corporation has the right to discover the contents of his or her 1679 own claims file to the same extent that discovery of such 1680 contents would be available from a private insurer in litigation 1681 as provided by the Florida Rules of Civil Procedure, the Florida 1682 Evidence Code, and other applicable law. Pursuant to subpoena, a 1683 third party has the right to discover the contents of an 1684 insured’s or applicant’s underwriting or claims file to the same 1685 extent that discovery of such contents would be available from a 1686 private insurer by subpoena as provided by the Florida Rules of 1687 Civil Procedure, the Florida Evidence Code, and other applicable 1688 law, and subject to any confidentiality protections requested by 1689 the corporation and agreed to by the seeking party or ordered by 1690 the court. The corporation may release confidential underwriting 1691 and claims file contents and information as it deems necessary 1692 and appropriate to underwrite or service insurance policies and 1693 claims, subject to any confidentiality protections deemed 1694 necessary and appropriate by the corporation. 1695 4. Portions of meetings of the corporation are exempt from 1696 the provisions of s. 286.011 and s. 24(b), Art. I of the State 1697 Constitution wherein confidential underwriting files or 1698 confidential open claims files are discussed. All portions of 1699 corporation meetings which are closed to the public shall be 1700 recorded by a court reporter. The court reporter shall record 1701 the times of commencement and termination of the meeting, all 1702 discussion and proceedings, the names of all persons present at 1703 any time, and the names of all persons speaking. No portion of 1704 any closed meeting shall be off the record. Subject to the 1705 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s 1706 notes of any closed meeting shall be retained by the corporation 1707 for a minimum of 5 years. A copy of the transcript, less any 1708 exempt matters, of any closed meeting wherein claims are 1709 discussed shall become public as to individual claims after 1710 settlement of the claim. 1711 (y) It is the intent of the Legislature that the amendments 1712 to this subsection enacted in 2002 should, over time, reduce the 1713 probable maximum windstorm losses in the residual markets and 1714shouldreduce the potential assessments to be levied on property 1715 insurers and policyholders statewide.In furtherance of this1716intent:17171. The board shall, on or before February 1 of each year,1718provide a report to the President of the Senate and the Speaker1719of the House of Representatives showing the reduction or1720increase in the 100-year probable maximum loss attributable to1721wind-only coverages and the quota share program under this1722subsection combined, as compared to the benchmark 100-year1723probable maximum loss of the Florida Windstorm Underwriting1724Association. For purposes of this paragraph, the benchmark 1001725year probable maximum loss of the Florida Windstorm Underwriting1726Association shall be the calculation dated February 2001 and1727based on November 30, 2000, exposures. In order to ensure1728comparability of data, the board shall use the same methods for1729calculating its probable maximum loss as were used to calculate1730the benchmark probable maximum loss.17312. Beginning December 1, 2010, if the report under1732subparagraph 1. for any year indicates that the 100-year1733probable maximum loss attributable to wind-only coverages and1734the quota share program combined does not reflect a reduction of1735at least 25 percent from the benchmark, the board shall reduce1736the boundaries of the high-risk area eligible for wind-only1737coverages under this subsection in a manner calculated to reduce1738such probable maximum loss to an amount at least 25 percent1739below the benchmark.17403. Beginning February 1, 2015, if the report under1741subparagraph 1. for any year indicates that the 100-year1742probable maximum loss attributable to wind-only coverages and1743the quota share program combined does not reflect a reduction of1744at least 50 percent from the benchmark, the boundaries of the1745high-risk area eligible for wind-only coverages under this1746subsection shall be reduced by the elimination of any area that1747is not seaward of a line 1,000 feet inland from the Intracoastal1748Waterway.1749 (aa) As a condition of eligibility for coverage by the 1750 corporation, an applicant or insured of a property located in 1751 Special Flood Hazard Area, as defined by the National Flood 1752 Insurance Program, must maintain in effect a separate flood 1753 insurance policy having coverage limits for building and 1754 contents at least equal to those provided under the 1755 corporation’s policy, subject to the maximum limits available 1756 under the National Flood Insurance Program policy. This 1757 requirement does not apply to an insured who is a tenant or a 1758 condominium unit owner above the ground floor; a policy issued 1759 by the corporation which excludes wind and hail coverage; a risk 1760 that is not eligible for flood coverage under the National Flood 1761 Insurance Program; or a mobile home that is located more than 2 1762 miles from open water, including the ocean, the gulf, a bay, a 1763 river, or the intracoastal waterway. This paragraph applies to 1764 new policies issued by the corporation on or after January 1, 1765 2012, and to policies renewed by the corporation on or after 1766 January 1, 2013.The corporation shall not require the securing1767of flood insurance as a condition of coverage if the insured or1768applicant executes a form approved by the office affirming that1769flood insurance is not provided by the corporation and that if1770flood insurance is not secured by the applicant or insured in1771addition to coverage by the corporation, the risk will not be1772covered for flood damage. A corporation policyholder electing1773not to secure flood insurance and executing a form as provided1774herein making a claim for water damage against the corporation1775shall have the burden of proving the damage was not caused by1776flooding. Notwithstanding other provisions of this subsection,1777the corporation may deny coverage to an applicant or insured who1778refuses to execute the form described herein.1779(ee) The office may establish a pilot program to offer1780optional sinkhole coverage in one or more counties or other1781territories of the corporation for the purpose of implementing1782s.627.706, as amended by s. 30, chapter 2007-1, Laws of1783Florida. Under the pilot program, the corporation is not1784required to issue a notice of nonrenewal to exclude sinkhole1785coverage upon the renewal of existing policies, but may exclude1786such coverage using a notice of coverage change.1787 Section 3. Subsection (4) of section 627.3511, Florida 1788 Statutes, is amended to read: 1789 627.3511 Depopulation of Citizens Property Insurance 1790 Corporation.— 1791 (4) AGENT BONUS.—IfWhenthe corporation enters into a 1792 contractual agreement for a take-out plan that provides a bonus 1793 to the insurer, the producing agent of record of the corporation 1794 policy is entitled to retain any unearned commission on such 1795 policy, and the insurer shalleither: 1796 (a) Pay to the producing agentof record of the association1797policy, for the first year, an amount that is the greater of the 1798 insurer’s usual and customary commission for the type of policy 1799 written or a fee equal to the usual and customary commission of 1800 the corporation; or 1801 (b) Offer to allow the producing agentof record of the1802corporation policyto continue servicing the policy for at least 1803a period of not less than1 year and offer to pay the agent the 1804 greater of the insurer’s or the corporation’s usual and 1805 customary commission for the type of policy written. 1806 1807 If the producing agent is unwilling or unable to accept 1808 appointment, the new insurer shall pay the agent in accordance 1809 with paragraph (a). The requirementof this subsectionthat the 1810 producing agent of record is entitled to retain the unearned 1811 commission on an association policy does not apply to a policy 1812 for which coverage has been provided in the association for 30 1813 days or lessor for which a cancellation notice has been issued1814pursuant to s.627.351(6)(c)10. during the first 30 days of1815coverage. 1816 Section 4. This act shall take effect upon becoming a law.