Bill Text: FL S1746 | 2017 | Regular Session | Introduced
Bill Title: Insurance
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2017-05-05 - Died in Banking and Insurance [S1746 Detail]
Download: Florida-2017-S1746-Introduced.html
Florida Senate - 2017 SB 1746 By Senator Flores 39-01597B-17 20171746__ 1 A bill to be entitled 2 An act relating to insurance; amending s. 215.555, 3 F.S.; deleting the cash build-up factor from the 4 formula used by the State Board of Administration in 5 determining reimbursement premiums to be paid into the 6 Florida Hurricane Catastrophe Fund; amending s. 7 626.7452, F.S.; requiring, rather than authorizing 8 under certain circumstances, managing general agents 9 to be examined as if they were the insurers on whose 10 behalf they act; amending s. 626.922, F.S.; specifying 11 the venue for civil actions concerning certain surplus 12 lines property insurance policies; amending s. 13 627.0613, F.S.; adding specified powers of the 14 consumer advocate appointed by the Chief Financial 15 Officer; amending s. 627.062, F.S.; providing an 16 exception from a specified rate factor that is 17 required to be considered by the Office of Insurance 18 Regulation in making a certain determination relating 19 to rate filings; conforming a provision to changes 20 made by the act; revising the limit of the overall 21 premium increase for residential property insurance 22 which results from costs in a certain filing; 23 authorizing the consumer advocate to request certain 24 administrative proceedings or expedited appellate 25 reviews; amending s. 627.351, F.S.; specifying that a 26 personal lines residential risk is not eligible for 27 coverage by the Citizens Property Insurance 28 Corporation if a certain offer of coverage is received 29 from an authorized insurer pursuant to the 30 corporation’s policyholder eligibility clearinghouse 31 program; providing that the risk remains eligible for 32 coverage with the corporation under certain 33 circumstances; requiring the corporation’s plan of 34 operation to provide eligibility for coverage to a 35 personal lines residential policyholder of the 36 corporation under certain circumstances; providing 37 construction and applicability; requiring, under 38 certain circumstances, the corporation to file and the 39 office to approve a 0 percent recommended rate change 40 for the windstorm portion of a rate in a certain 41 rating territory; conforming a provision to changes 42 made by the act; amending s. 627.409, F.S.; providing 43 an exception, under certain circumstances, from a bar 44 from recovery under a residential property insurance 45 contract or policy for misrepresentations, omissions, 46 concealments of fact, or incorrect statements; 47 amending s. 627.7011, F.S.; requiring insurers of 48 certain homeowners’ policies, under certain 49 circumstances, to pay replacement costs without 50 reservation or holdback of any depreciation in value; 51 amending s. 627.70132, F.S.; revising the timeframe 52 within which a certain notice of windstorm or 53 hurricane claim must be given to the insurer; 54 providing an effective date. 55 56 Be It Enacted by the Legislature of the State of Florida: 57 58 Section 1. Paragraph (b) of subsection (5) of section 59 215.555, Florida Statutes, is amended to read: 60 215.555 Florida Hurricane Catastrophe Fund.— 61 (5) REIMBURSEMENT PREMIUMS.— 62 (b) The State Board of Administration shall select an 63 independent consultant to develop a formula for determining the 64 actuarially indicated premium to be paid to the fund. The 65 formula shall specify, for each zip code or other limited 66 geographical area, the amount of premium to be paid by an 67 insurer for each $1,000 of insured value under covered policies 68 in that zip code or other area. In establishing premiums, the 69 board shall consider the coverage elected under paragraph (4)(b) 70 and any factors that tend to enhance the actuarial 71 sophistication of ratemaking for the fund, including 72 deductibles, type of construction, type of coverage provided, 73 relative concentration of risks, and other such factors deemed 74 by the board to be appropriate.The formula must provide for a75cash build-up factor. For the 2009-2010 contract year, the76factor is 5 percent. For the 2010-2011 contract year, the factor77is 10 percent. For the 2011-2012 contract year, the factor is 1578percent. For the 2012-2013 contract year, the factor is 2079percent. For the 2013-2014 contract year and thereafter, the80factor is 25 percent.The formula may provide for a procedure to 81 determine the premiums to be paid by new insurers that begin 82 writing covered policies after the beginning of a contract year, 83 taking into consideration when the insurer starts writing 84 covered policies, the potential exposure of the insurer, the 85 potential exposure of the fund, the administrative costs to the 86 insurer and to the fund, and any other factors deemed 87 appropriate by the board. The formula must be approved by 88 unanimous vote of the board. The board may, at any time, revise 89 the formula pursuant to the procedure provided in this 90 paragraph. 91 Section 2. Section 626.7452, Florida Statutes, is amended 92 to read: 93 626.7452 Managing general agents; examination authority. 94 The acts of the managing general agent are considered to be the 95 acts of the insurer on whose behalf it is acting. A managing 96 general agent mustmaybe examined as if it were the insurer 97except in the case where the managing general agent solely98represents a single domestic insurer. 99 Section 3. Section 626.922, Florida Statutes, is amended to 100 read: 101 626.922 Evidence of the insurance; changes; penalty; venue 102 for civil actions.— 103 (1) Upon placing a surplus lines coverage, the surplus 104 lines agent shall promptly issue and deliver to the insured 105 evidence of the insurance consisting either of the policy as 106 issued by the insurer or, if such policy is not then available, 107 a certificate, cover note, or other confirmation of insurance. 108 Such document shall be executed or countersigned by the surplus 109 lines agent and shall show the description and location of the 110 subject of the insurance; coverage, conditions, and term of the 111 insurance; the premium and rate charged and taxes collected from 112 the insured; and the name and address of the insured and 113 insurer. If the direct risk is assumed by more than one insurer, 114 the document shall state the name and address and proportion of 115 the entire direct risk assumed by each insurer. A surplus lines 116 agent may not delegate the duty to issue any such document to 117 producing general lines agents without prior written authority 118 from the surplus lines insurer. A general lines agent may issue 119 any such document only if the agent has prior written authority 120 from the surplus lines agent. The surplus lines agent must 121 maintain copies of the authorization from the surplus lines 122 insurer and the delegation to the producing general lines agent. 123 The producing agent must maintain copies of the written 124 delegation from the surplus lines agent and copies of any 125 evidence of coverage or certificate of insurance which the 126 producing agent issues or delivers. Any evidence of coverage 127 issued by a producing agent pursuant to this section must 128 include the name and address of the authorizing surplus lines 129 agent. 130 (2) No surplus lines agent shall issue any such document, 131 or purport to insure or represent that insurance will be or has 132 been granted by any unauthorized insurer, unless he or she has 133 prior written authority from the insurer for the insurance, or 134 has received information from the insurer in the regular course 135 of business that such insurance has been granted, or an 136 insurance policy providing the insurance actually has been 137 issued by the insurer and delivered to the insured. 138 (3) If after the issuance and delivery of any such document 139 there is any change as to the identity of the insurers, or the 140 proportion of the direct risk assumed by the insurer as stated 141 in the original certificate, cover note, or confirmation, or in 142 any other material respect as to the insurance coverage 143 evidenced by such a document, the surplus lines agent shall 144 promptly issue and deliver to the insured a substitute 145 certificate, cover note, or confirmation, or an endorsement for 146 the original such document, accurately showing the current 147 status of the coverage and the insurers responsible thereunder. 148 No such change shall result in a coverage or insurance contract 149 which would be in violation of this Surplus Lines Law if 150 originally issued on such basis. 151 (4) A copy of the policy or cover note or confirmation of 152 insurance shall be delivered to the insured within 60 days after 153 the effectuation of coverage. 154 (5) Any surplus lines agent who knowingly or negligently 155 issues a false certificate, cover note, or confirmation of 156 insurance, or false endorsement therefor, or who fails promptly 157 to notify the insured of any material change with respect to 158 such insurance by delivery to the insured of a substitute 159 certificate, cover note, or confirmation, or endorsement as 160 provided in subsection (3), shall, upon conviction, be subject 161 to the penalties provided by s. 624.15 or to any greater 162 applicable penalty otherwise provided by law. 163 (6) A civil action concerning a surplus lines property 164 insurance policy that covers property in this state must take 165 place in the circuit court of the county where the property is 166 located. 167 Section 4. Subsection (1) of section 627.0613, Florida 168 Statutes, is amended to read: 169 627.0613 Consumer advocate.—The Chief Financial Officer 170 must appoint a consumer advocate who must represent the general 171 public of the state before the department and the office. The 172 consumer advocate must report directly to the Chief Financial 173 Officer, but is not otherwise under the authority of the 174 department or of any employee of the department. The consumer 175 advocate has such powers as are necessary to carry out the 176 duties of the office of consumer advocate, including, but not 177 limited to, the powers to: 178 (1) Initiate or recommend to the department or office, by 179 petition, the commencement of any proceeding or action; appear 180 or intervene in any proceeding or action before the department 181 or office; or appear or intervene in any proceeding before the 182 Division of Administrative Hearings relating to subject matter 183 under the jurisdiction of the department or office. 184 Section 5. Paragraphs (b) and (k) of subsection (2) and 185 subsection (6) of section 627.062, Florida Statutes, are amended 186 to read: 187 627.062 Rate standards.— 188 (2) As to all such classes of insurance: 189 (b) Upon receiving a rate filing, the office shall review 190 the filing to determine if a rate is excessive, inadequate, or 191 unfairly discriminatory. In making that determination, the 192 office shall, in accordance with generally accepted and 193 reasonable actuarial techniques, consider the following factors: 194 1. Past and prospective loss experience within and without 195 this state. 196 2. Past and prospective expenses, except that such expenses 197 of a residential property insurer may not include attorney fees 198 or costs paid by the insurer which were awarded on a claim 199 pursuant to s. 627.428 or a claim on which a settlement 200 agreement was executed between the insurer and the insured. 201 3. The degree of competition among insurers for the risk 202 insured. 203 4. Investment income reasonably expected by the insurer, 204 consistent with the insurer’s investment practices, from 205 investable premiums anticipated in the filing, plus any other 206 expected income from currently invested assets representing the 207 amount expected on unearned premium reserves and loss reserves. 208 The commission may adopt rules using reasonable techniques of 209 actuarial science and economics to specify the manner in which 210 insurers calculate investment income attributable to classes of 211 insurance written in this state and the manner in which 212 investment income is used to calculate insurance rates. Such 213 manner must contemplate allowances for an underwriting profit 214 factor and full consideration of investment income that produces 215 a reasonable rate of return; however, investment income from 216 invested surplus may not be considered. 217 5. The reasonableness of the judgment reflected in the 218 filing. 219 6. Dividends, savings, or unabsorbed premium deposits 220 allowed or returned to policyholders, members, or subscribers in 221 this state. 222 7. The adequacy of loss reserves. 223 8. The cost of reinsurance. The office may not disapprove a 224 rate as excessive solely due to the insurer having obtained 225 catastrophic reinsurance to cover the insurer’s estimated 250 226 year probable maximum loss or any lower level of loss. 227 9. Trend factors, including trends in actual losses per 228 insured unit for the insurer making the filing. 229 10. Conflagration and catastrophe hazards, if applicable. 230 11. Projected hurricane losses, if applicable, which must 231 be estimated using a model or method found to be acceptable or 232 reliable by the Florida Commission on Hurricane Loss Projection 233 Methodology, and as further provided in s. 627.0628. 234 12. Projected flood losses for personal residential 235 property insurance, if applicable, which may be estimated using 236 a model or method, or a straight average of model results or 237 output ranges, independently found to be acceptable or reliable 238 by the Florida Commission on Hurricane Loss Projection 239 Methodology and as further provided in s. 627.0628. 240 13. A reasonable margin for underwriting profit and 241 contingencies. 242 14. The cost of medical services, if applicable. 243 15. Other relevant factors that affect the frequency or 244 severity of claims or expenses. 245 (k)1. A residential property insurer may make a separate 246 filing limited solely to an adjustment of its rates for 247 reinsurance, the cost of financing products used as a 248 replacement for reinsurance, and financing costs incurred in the 249 purchase of reinsurance, and the actual cost paid due to the250application of the cash build-up factor pursuant to s.251215.555(5)(b)if the insurer: 252 a. Elects to purchase financing products such as a 253 liquidity instrument or line of credit, in which case the cost 254 included in filing for the liquidity instrument or line of 255 credit may not result in a premium increase exceeding 3 percent 256 for any individual policyholder. All costs contained in the 257 filing may not result in an overall premium increase of more 258 than 1015percent for any individual policyholder. 259 b. Includes in the filing a copy of all of its reinsurance, 260 liquidity instrument, or line of credit contracts; proof of the 261 billing or payment for the contracts; and the calculation upon 262 which the proposed rate change is based demonstrating that the 263 costs meet the criteria of this section. 264 2. An insurer that purchases reinsurance or financing 265 products from an affiliated company may make a separate filing 266 only if the costs for such reinsurance or financing products are 267 charged at or below charges made for comparable coverage by 268 nonaffiliated reinsurers or financial entities making such 269 coverage or financing products available in this state. 270 3. An insurer may make only one filing per 12-month period 271 under this paragraph. 272 4. An insurer that elects to implement a rate change under 273 this paragraph must file its rate filing with the office at 274 least 45 days before the effective date of the rate change. 275 After an insurer submits a complete filing that meets all of the 276 requirements of this paragraph, the office has 45 days after the 277 date of the filing to review the rate filing and determine if 278 the rate is excessive, inadequate, or unfairly discriminatory. 279 280 The provisions of this subsection do not apply to workers’ 281 compensation, employer’s liability insurance, and motor vehicle 282 insurance. 283 (6)(a) If an insurer or the consumer advocate appointed 284 under s. 627.0613 requests an administrative hearing pursuant to 285 s. 120.57 related to a rate filing under this section, the 286 director of the Division of Administrative Hearings shall 287 expedite the hearing and assign an administrative law judge who 288 shall commence the hearing within 30 days after the receipt of 289 the formal request and enter a recommended order within 30 days 290 after the hearing or within 30 days after receipt of the hearing 291 transcript by the administrative law judge, whichever is later. 292 Each party shall have 10 days in which to submit written 293 exceptions to the recommended order. The office shall enter a 294 final order within 30 days after the entry of the recommended 295 order. The provisions of this paragraph may be waived upon 296 stipulation of all parties. 297 (b) Upon entry of a final order, the insurer or consumer 298 advocate may request an expedited appellate review pursuant to 299 the Florida Rules of Appellate Procedure. It is the intent of 300 the Legislature that the First District Court of Appeal grant an 301 insurer’s request for an expedited appellate review. 302 Section 6. Paragraphs (c) and (n) of subsection (6) of 303 section 627.351, Florida Statutes, are amended to read: 304 627.351 Insurance risk apportionment plans.— 305 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 306 (c) The corporation’s plan of operation: 307 1. Must provide for adoption of residential property and 308 casualty insurance policy forms and commercial residential and 309 nonresidential property insurance forms, which must be approved 310 by the office before use. The corporation shall adopt the 311 following policy forms: 312 a. Standard personal lines policy forms that are 313 comprehensive multiperil policies providing full coverage of a 314 residential property equivalent to the coverage provided in the 315 private insurance market under an HO-3, HO-4, or HO-6 policy. 316 b. Basic personal lines policy forms that are policies 317 similar to an HO-8 policy or a dwelling fire policy that provide 318 coverage meeting the requirements of the secondary mortgage 319 market, but which is more limited than the coverage under a 320 standard policy. 321 c. Commercial lines residential and nonresidential policy 322 forms that are generally similar to the basic perils of full 323 coverage obtainable for commercial residential structures and 324 commercial nonresidential structures in the admitted voluntary 325 market. 326 d. Personal lines and commercial lines residential property 327 insurance forms that cover the peril of wind only. The forms are 328 applicable only to residential properties located in areas 329 eligible for coverage under the coastal account referred to in 330 sub-subparagraph (b)2.a. 331 e. Commercial lines nonresidential property insurance forms 332 that cover the peril of wind only. The forms are applicable only 333 to nonresidential properties located in areas eligible for 334 coverage under the coastal account referred to in sub 335 subparagraph (b)2.a. 336 f. The corporation may adopt variations of the policy forms 337 listed in sub-subparagraphs a.-e. which contain more restrictive 338 coverage. 339 g. Effective January 1, 2013, the corporation shall offer a 340 basic personal lines policy similar to an HO-8 policy with 341 dwelling repair based on common construction materials and 342 methods. 343 2. Must provide that the corporation adopt a program in 344 which the corporation and authorized insurers enter into quota 345 share primary insurance agreements for hurricane coverage, as 346 defined in s. 627.4025(2)(a), for eligible risks, and adopt 347 property insurance forms for eligible risks which cover the 348 peril of wind only. 349 a. As used in this subsection, the term: 350 (I) “Quota share primary insurance” means an arrangement in 351 which the primary hurricane coverage of an eligible risk is 352 provided in specified percentages by the corporation and an 353 authorized insurer. The corporation and authorized insurer are 354 each solely responsible for a specified percentage of hurricane 355 coverage of an eligible risk as set forth in a quota share 356 primary insurance agreement between the corporation and an 357 authorized insurer and the insurance contract. The 358 responsibility of the corporation or authorized insurer to pay 359 its specified percentage of hurricane losses of an eligible 360 risk, as set forth in the agreement, may not be altered by the 361 inability of the other party to pay its specified percentage of 362 losses. Eligible risks that are provided hurricane coverage 363 through a quota share primary insurance arrangement must be 364 provided policy forms that set forth the obligations of the 365 corporation and authorized insurer under the arrangement, 366 clearly specify the percentages of quota share primary insurance 367 provided by the corporation and authorized insurer, and 368 conspicuously and clearly state that the authorized insurer and 369 the corporation may not be held responsible beyond their 370 specified percentage of coverage of hurricane losses. 371 (II) “Eligible risks” means personal lines residential and 372 commercial lines residential risks that meet the underwriting 373 criteria of the corporation and are located in areas that were 374 eligible for coverage by the Florida Windstorm Underwriting 375 Association on January 1, 2002. 376 b. The corporation may enter into quota share primary 377 insurance agreements with authorized insurers at corporation 378 coverage levels of 90 percent and 50 percent. 379 c. If the corporation determines that additional coverage 380 levels are necessary to maximize participation in quota share 381 primary insurance agreements by authorized insurers, the 382 corporation may establish additional coverage levels. However, 383 the corporation’s quota share primary insurance coverage level 384 may not exceed 90 percent. 385 d. Any quota share primary insurance agreement entered into 386 between an authorized insurer and the corporation must provide 387 for a uniform specified percentage of coverage of hurricane 388 losses, by county or territory as set forth by the corporation 389 board, for all eligible risks of the authorized insurer covered 390 under the agreement. 391 e. Any quota share primary insurance agreement entered into 392 between an authorized insurer and the corporation is subject to 393 review and approval by the office. However, such agreement shall 394 be authorized only as to insurance contracts entered into 395 between an authorized insurer and an insured who is already 396 insured by the corporation for wind coverage. 397 f. For all eligible risks covered under quota share primary 398 insurance agreements, the exposure and coverage levels for both 399 the corporation and authorized insurers shall be reported by the 400 corporation to the Florida Hurricane Catastrophe Fund. For all 401 policies of eligible risks covered under such agreements, the 402 corporation and the authorized insurer must maintain complete 403 and accurate records for the purpose of exposure and loss 404 reimbursement audits as required by fund rules. The corporation 405 and the authorized insurer shall each maintain duplicate copies 406 of policy declaration pages and supporting claims documents. 407 g. The corporation board shall establish in its plan of 408 operation standards for quota share agreements which ensure that 409 there is no discriminatory application among insurers as to the 410 terms of the agreements, pricing of the agreements, incentive 411 provisions if any, and consideration paid for servicing policies 412 or adjusting claims. 413 h. The quota share primary insurance agreement between the 414 corporation and an authorized insurer must set forth the 415 specific terms under which coverage is provided, including, but 416 not limited to, the sale and servicing of policies issued under 417 the agreement by the insurance agent of the authorized insurer 418 producing the business, the reporting of information concerning 419 eligible risks, the payment of premium to the corporation, and 420 arrangements for the adjustment and payment of hurricane claims 421 incurred on eligible risks by the claims adjuster and personnel 422 of the authorized insurer. Entering into a quota sharing 423 insurance agreement between the corporation and an authorized 424 insurer is voluntary and at the discretion of the authorized 425 insurer. 426 3. May provide that the corporation may employ or otherwise 427 contract with individuals or other entities to provide 428 administrative or professional services that may be appropriate 429 to effectuate the plan. The corporation may borrow funds by 430 issuing bonds or by incurring other indebtedness, and shall have 431 other powers reasonably necessary to effectuate the requirements 432 of this subsection, including, without limitation, the power to 433 issue bonds and incur other indebtedness in order to refinance 434 outstanding bonds or other indebtedness. The corporation may 435 seek judicial validation of its bonds or other indebtedness 436 under chapter 75. The corporation may issue bonds or incur other 437 indebtedness, or have bonds issued on its behalf by a unit of 438 local government pursuant to subparagraph (q)2. in the absence 439 of a hurricane or other weather-related event, upon a 440 determination by the corporation, subject to approval by the 441 office, that such action would enable it to efficiently meet the 442 financial obligations of the corporation and that such 443 financings are reasonably necessary to effectuate the 444 requirements of this subsection. The corporation may take all 445 actions needed to facilitate tax-free status for such bonds or 446 indebtedness, including formation of trusts or other affiliated 447 entities. The corporation may pledge assessments, projected 448 recoveries from the Florida Hurricane Catastrophe Fund, other 449 reinsurance recoverables, policyholder surcharges and other 450 surcharges, and other funds available to the corporation as 451 security for bonds or other indebtedness. In recognition of s. 452 10, Art. I of the State Constitution, prohibiting the impairment 453 of obligations of contracts, it is the intent of the Legislature 454 that no action be taken whose purpose is to impair any bond 455 indenture or financing agreement or any revenue source committed 456 by contract to such bond or other indebtedness. 457 4. Must require that the corporation operate subject to the 458 supervision and approval of a board of governors consisting of 459 nine individuals who are residents of this state and who are 460 from different geographical areas of the state, one of whom is 461 appointed by the Governor and serves solely to advocate on 462 behalf of the consumer. The appointment of a consumer 463 representative by the Governor is deemed to be within the scope 464 of the exemption provided in s. 112.313(7)(b) and is in addition 465 to the appointments authorized under sub-subparagraph a. 466 a. The Governor, the Chief Financial Officer, the President 467 of the Senate, and the Speaker of the House of Representatives 468 shall each appoint two members of the board. At least one of the 469 two members appointed by each appointing officer must have 470 demonstrated expertise in insurance and be deemed to be within 471 the scope of the exemption provided in s. 112.313(7)(b). The 472 Chief Financial Officer shall designate one of the appointees as 473 chair. All board members serve at the pleasure of the appointing 474 officer. All members of the board are subject to removal at will 475 by the officers who appointed them. All board members, including 476 the chair, must be appointed to serve for 3-year terms beginning 477 annually on a date designated by the plan. However, for the 478 first term beginning on or after July 1, 2009, each appointing 479 officer shall appoint one member of the board for a 2-year term 480 and one member for a 3-year term. A board vacancy shall be 481 filled for the unexpired term by the appointing officer. The 482 Chief Financial Officer shall appoint a technical advisory group 483 to provide information and advice to the board in connection 484 with the board’s duties under this subsection. The executive 485 director and senior managers of the corporation shall be engaged 486 by the board and serve at the pleasure of the board. Any 487 executive director appointed on or after July 1, 2006, is 488 subject to confirmation by the Senate. The executive director is 489 responsible for employing other staff as the corporation may 490 require, subject to review and concurrence by the board. 491 b. The board shall create a Market Accountability Advisory 492 Committee to assist the corporation in developing awareness of 493 its rates and its customer and agent service levels in 494 relationship to the voluntary market insurers writing similar 495 coverage. 496 (I) The members of the advisory committee consist of the 497 following 11 persons, one of whom must be elected chair by the 498 members of the committee: four representatives, one appointed by 499 the Florida Association of Insurance Agents, one by the Florida 500 Association of Insurance and Financial Advisors, one by the 501 Professional Insurance Agents of Florida, and one by the Latin 502 American Association of Insurance Agencies; three 503 representatives appointed by the insurers with the three highest 504 voluntary market share of residential property insurance 505 business in the state; one representative from the Office of 506 Insurance Regulation; one consumer appointed by the board who is 507 insured by the corporation at the time of appointment to the 508 committee; one representative appointed by the Florida 509 Association of Realtors; and one representative appointed by the 510 Florida Bankers Association. All members shall be appointed to 511 3-year terms and may serve for consecutive terms. 512 (II) The committee shall report to the corporation at each 513 board meeting on insurance market issues which may include rates 514 and rate competition with the voluntary market; service, 515 including policy issuance, claims processing, and general 516 responsiveness to policyholders, applicants, and agents; and 517 matters relating to depopulation. 518 5. Must provide a procedure for determining the eligibility 519 of a risk for coverage, as follows: 520 a. Subject to s. 627.3517, with respect to personal lines 521 residential risks, if the risk is offered coverage from an 522 authorized insurer at the insurer’s approved rate under a 523 standard policy including wind coverage or, if consistent with 524 the insurer’s underwriting rules as filed with the office, a 525 basic policy including wind coverage, for a new application to 526 the corporation for coverage, the risk is not eligible for any 527 policy issued by the corporation unless the premium for coverage 528 from the authorized insurer is more than 15 percent greater than 529 the premium for comparable coverage from the corporation. 530 Whenever an offer of coverage for a personal lines residential 531 risk is received for a policyholder of the corporation at 532 renewal from an authorized insurer pursuant to s. 627.3518, if 533 the offer is equal to or less than the corporation’s renewal 534 premium for comparable coverage, the risk is not eligible for 535 coverage with the corporation. If the risk is not able to obtain 536 such offer, the risk is eligible for a standard policy including 537 wind coverage or a basic policy including wind coverage issued 538 by the corporation; however, if the risk could not be insured 539 under a standard policy including wind coverage regardless of 540 market conditions, the risk is eligible for a basic policy 541 including wind coverage unless rejected under subparagraph 8. 542 Whenever an offer of coverage for a personal lines residential 543 risk is received from an insurer for a policyholder of the 544 corporation, the risk remains eligible for coverage with the 545 corporation.However,A policyholder removed from the 546 corporation through an assumption agreement remains eligible for 547 coverage from the corporation until the end of the assumption 548 period. The corporation shall determine the type of policy to be 549 provided on the basis of objective standards specified in the 550 underwriting manual and based on generally accepted underwriting 551 practices. 552 (I) If the risk accepts an offer of coverage through the 553 market assistance plan or through a mechanism established by the 554 corporation other than a plan established by s. 627.3518, before 555 a policy is issued to the risk by the corporation or during the 556 first 30 days of coverage by the corporation, and the producing 557 agent who submitted the application to the plan or to the 558 corporation is not currently appointed by the insurer, the 559 insurer shall: 560 (A) Pay to the producing agent of record of the policy for 561 the first year, an amount that is the greater of the insurer’s 562 usual and customary commission for the type of policy written or 563 a fee equal to the usual and customary commission of the 564 corporation; or 565 (B) Offer to allow the producing agent of record of the 566 policy to continue servicing the policy for at least 1 year and 567 offer to pay the agent the greater of the insurer’s or the 568 corporation’s usual and customary commission for the type of 569 policy written. 570 571 If the producing agent is unwilling or unable to accept 572 appointment, the new insurer shall pay the agent in accordance 573 with sub-sub-sub-subparagraph (A). 574 (II) If the corporation enters into a contractual agreement 575 for a take-out plan, the producing agent of record of the 576 corporation policy is entitled to retain any unearned commission 577 on the policy, and the insurer shall: 578 (A) Pay to the producing agent of record, for the first 579 year, an amount that is the greater of the insurer’s usual and 580 customary commission for the type of policy written or a fee 581 equal to the usual and customary commission of the corporation; 582 or 583 (B) Offer to allow the producing agent of record to 584 continue servicing the policy for at least 1 year and offer to 585 pay the agent the greater of the insurer’s or the corporation’s 586 usual and customary commission for the type of policy written. 587 588 If the producing agent is unwilling or unable to accept 589 appointment, the new insurer shall pay the agent in accordance 590 with sub-sub-sub-subparagraph (A). 591 b. With respect to commercial lines residential risks, for 592 a new application to the corporation for coverage, if the risk 593 is offered coverage under a policy including wind coverage from 594 an authorized insurer at its approved rate, the risk is not 595 eligible for a policy issued by the corporation unless the 596 premium for coverage from the authorized insurer is more than 15 597 percent greater than the premium for comparable coverage from 598 the corporation. Whenever an offer of coverage for a commercial 599 lines residential risk is received for a policyholder of the 600 corporation at renewal from an authorized insurer, if the offer 601 is equal to or less than the corporation’s renewal premium for 602 comparable coverage, the risk is not eligible for coverage with 603 the corporation. If the risk is not able to obtain any such 604 offer, the risk is eligible for a policy including wind coverage 605 issued by the corporation. However, a policyholder removed from 606 the corporation through an assumption agreement remains eligible 607 for coverage from the corporation until the end of the 608 assumption period. 609 (I) If the risk accepts an offer of coverage through the 610 market assistance plan or through a mechanism established by the 611 corporation other than a plan established by s. 627.3518, before 612 a policy is issued to the risk by the corporation or during the 613 first 30 days of coverage by the corporation, and the producing 614 agent who submitted the application to the plan or the 615 corporation is not currently appointed by the insurer, the 616 insurer shall: 617 (A) Pay to the producing agent of record of the policy, for 618 the first year, an amount that is the greater of the insurer’s 619 usual and customary commission for the type of policy written or 620 a fee equal to the usual and customary commission of the 621 corporation; or 622 (B) Offer to allow the producing agent of record of the 623 policy to continue servicing the policy for at least 1 year and 624 offer to pay the agent the greater of the insurer’s or the 625 corporation’s usual and customary commission for the type of 626 policy written. 627 628 If the producing agent is unwilling or unable to accept 629 appointment, the new insurer shall pay the agent in accordance 630 with sub-sub-sub-subparagraph (A). 631 (II) If the corporation enters into a contractual agreement 632 for a take-out plan, the producing agent of record of the 633 corporation policy is entitled to retain any unearned commission 634 on the policy, and the insurer shall: 635 (A) Pay to the producing agent of record, for the first 636 year, an amount that is the greater of the insurer’s usual and 637 customary commission for the type of policy written or a fee 638 equal to the usual and customary commission of the corporation; 639 or 640 (B) Offer to allow the producing agent of record to 641 continue servicing the policy for at least 1 year and offer to 642 pay the agent the greater of the insurer’s or the corporation’s 643 usual and customary commission for the type of policy written. 644 645 If the producing agent is unwilling or unable to accept 646 appointment, the new insurer shall pay the agent in accordance 647 with sub-sub-sub-subparagraph (A). 648 c. For purposes of determining comparable coverage under 649 sub-subparagraphs a. and b., the comparison must be based on 650 those forms and coverages that are reasonably comparable. The 651 corporation may rely on a determination of comparable coverage 652 and premium made by the producing agent who submits the 653 application to the corporation, made in the agent’s capacity as 654 the corporation’s agent. A comparison may be made solely of the 655 premium with respect to the main building or structure only on 656 the following basis: the same coverage A or other building 657 limits; the same percentage hurricane deductible that applies on 658 an annual basis or that applies to each hurricane for commercial 659 residential property; the same percentage of ordinance and law 660 coverage, if the same limit is offered by both the corporation 661 and the authorized insurer; the same mitigation credits, to the 662 extent the same types of credits are offered both by the 663 corporation and the authorized insurer; the same method for loss 664 payment, such as replacement cost or actual cash value, if the 665 same method is offered both by the corporation and the 666 authorized insurer in accordance with underwriting rules; and 667 any other form or coverage that is reasonably comparable as 668 determined by the board. If an application is submitted to the 669 corporation for wind-only coverage in the coastal account, the 670 premium for the corporation’s wind-only policy plus the premium 671 for the ex-wind policy that is offered by an authorized insurer 672 to the applicant must be compared to the premium for multiperil 673 coverage offered by an authorized insurer, subject to the 674 standards for comparison specified in this subparagraph. If the 675 corporation or the applicant requests from the authorized 676 insurer a breakdown of the premium of the offer by types of 677 coverage so that a comparison may be made by the corporation or 678 its agent and the authorized insurer refuses or is unable to 679 provide such information, the corporation may treat the offer as 680 not being an offer of coverage from an authorized insurer at the 681 insurer’s approved rate. 682 6. Must include rules for classifications of risks and 683 rates. 684 7. Must provide that if premium and investment income for 685 an account attributable to a particular calendar year are in 686 excess of projected losses and expenses for the account 687 attributable to that year, such excess shall be held in surplus 688 in the account. Such surplus must be available to defray 689 deficits in that account as to future years and used for that 690 purpose before assessing assessable insurers and assessable 691 insureds as to any calendar year. 692 8. Must provide objective criteria and procedures to be 693 uniformly applied to all applicants in determining whether an 694 individual risk is so hazardous as to be uninsurable. In making 695 this determination and in establishing the criteria and 696 procedures, the following must be considered: 697 a. Whether the likelihood of a loss for the individual risk 698 is substantially higher than for other risks of the same class; 699 and 700 b. Whether the uncertainty associated with the individual 701 risk is such that an appropriate premium cannot be determined. 702 703 The acceptance or rejection of a risk by the corporation shall 704 be construed as the private placement of insurance, and the 705 provisions of chapter 120 do not apply. 706 9. Must provide that the corporation make its best efforts 707 to procure catastrophe reinsurance at reasonable rates, to cover 708 its projected 100-year probable maximum loss as determined by 709 the board of governors. 710 10. The policies issued by the corporation must provide 711 that if the corporation or the market assistance plan obtains an 712 offer from an authorized insurer to cover the risk at its 713 approved rates, the risk is no longer eligible for renewal 714 through the corporation, except as otherwise provided in this 715 subsection. 716 11. Corporation policies and applications must include a 717 notice that the corporation policy could, under this section, be 718 replaced with a policy issued by an authorized insurer which 719 does not provide coverage identical to the coverage provided by 720 the corporation. The notice must also specify that acceptance of 721 corporation coverage creates a conclusive presumption that the 722 applicant or policyholder is aware of this potential. 723 12. May establish, subject to approval by the office, 724 different eligibility requirements and operational procedures 725 for any line or type of coverage for any specified county or 726 area if the board determines that such changes are justified due 727 to the voluntary market being sufficiently stable and 728 competitive in such area or for such line or type of coverage 729 and that consumers who, in good faith, are unable to obtain 730 insurance through the voluntary market through ordinary methods 731 continue to have access to coverage from the corporation. If 732 coverage is sought in connection with a real property transfer, 733 the requirements and procedures may not provide an effective 734 date of coverage later than the date of the closing of the 735 transfer as established by the transferor, the transferee, and, 736 if applicable, the lender. 737 13. Must provide that, with respect to the coastal account, 738 any assessable insurer with a surplus as to policyholders of $25 739 million or less writing 25 percent or more of its total 740 countrywide property insurance premiums in this state may 741 petition the office, within the first 90 days of each calendar 742 year, to qualify as a limited apportionment company. A regular 743 assessment levied by the corporation on a limited apportionment 744 company for a deficit incurred by the corporation for the 745 coastal account may be paid to the corporation on a monthly 746 basis as the assessments are collected by the limited 747 apportionment company from its insureds, but a limited 748 apportionment company must begin collecting the regular 749 assessments not later than 90 days after the regular assessments 750 are levied by the corporation, and the regular assessments must 751 be paid in full within 15 months after being levied by the 752 corporation. A limited apportionment company shall collect from 753 its policyholders any emergency assessment imposed under sub 754 subparagraph (b)3.d. The plan must provide that, if the office 755 determines that any regular assessment will result in an 756 impairment of the surplus of a limited apportionment company, 757 the office may direct that all or part of such assessment be 758 deferred as provided in subparagraph (q)4. However, an emergency 759 assessment to be collected from policyholders under sub 760 subparagraph (b)3.d. may not be limited or deferred. 761 14. Must provide that the corporation appoint as its 762 licensed agents only those agents who throughout such 763 appointments also hold an appointment as defined in s. 764 626.015(3) by an insurer who is authorized to write and is 765 actually writing or renewing personal lines residential property 766 coverage, commercial residential property coverage, or 767 commercial nonresidential property coverage within the state. 768 15. Must provide a premium payment plan option to its 769 policyholders which, at a minimum, allows for quarterly and 770 semiannual payment of premiums. A monthly payment plan may, but 771 is not required to, be offered. 772 16. Must limit coverage on mobile homes or manufactured 773 homes built before 1994 to actual cash value of the dwelling 774 rather than replacement costs of the dwelling. 775 17. Must provide coverage for manufactured or mobile home 776 dwellings. Such coverage must also include the following 777 attached structures: 778 a. Screened enclosures that are aluminum framed or screened 779 enclosures that are not covered by the same or substantially the 780 same materials as those of the primary dwelling; 781 b. Carports that are aluminum or carports that are not 782 covered by the same or substantially the same materials as those 783 of the primary dwelling; and 784 c. Patios that have a roof covering that is constructed of 785 materials that are not the same or substantially the same 786 materials as those of the primary dwelling. 787 788 The corporation shall make available a policy for mobile homes 789 or manufactured homes for a minimum insured value of at least 790 $3,000. 791 18. May provide such limits of coverage as the board 792 determines, consistent with the requirements of this subsection. 793 19. May require commercial property to meet specified 794 hurricane mitigation construction features as a condition of 795 eligibility for coverage. 796 20. Must provide that new or renewal policies issued by the 797 corporation on or after January 1, 2012, which cover sinkhole 798 loss do not include coverage for any loss to appurtenant 799 structures, driveways, sidewalks, decks, or patios that are 800 directly or indirectly caused by sinkhole activity. The 801 corporation shall exclude such coverage using a notice of 802 coverage change, which may be included with the policy renewal, 803 and not by issuance of a notice of nonrenewal of the excluded 804 coverage upon renewal of the current policy. 805 21. As of January 1, 2012, must require that the agent 806 obtain from an applicant for coverage from the corporation an 807 acknowledgment signed by the applicant, which includes, at a 808 minimum, the following statement: 809 810 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE 811 AND ASSESSMENT LIABILITY: 812 813 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE 814 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A 815 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON, 816 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 817 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE 818 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT 819 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 820 LEGISLATURE. 821 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER 822 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM, 823 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO 824 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN 825 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE 826 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES 827 ARE REGULATED AND APPROVED BY THE STATE. 828 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY 829 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER 830 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE 831 FLORIDA LEGISLATURE. 832 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE 833 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE 834 STATE OF FLORIDA. 835 836 a. The corporation shall maintain, in electronic format or 837 otherwise, a copy of the applicant’s signed acknowledgment and 838 provide a copy of the statement to the policyholder as part of 839 the first renewal after the effective date of this subparagraph. 840 b. The signed acknowledgment form creates a conclusive 841 presumption that the policyholder understood and accepted his or 842 her potential surcharge and assessment liability as a 843 policyholder of the corporation. 844 22. Must provide that a personal lines residential 845 policyholder of the corporation remains eligible for coverage 846 from the corporation by not accepting an offer of coverage from 847 an authorized insurer, including offers made pursuant to an 848 assumption agreement or takeout agreement. An offer is not 849 accepted if the corporation policyholder or agent of record 850 expressly declines or does not respond to the offer. This 851 subparagraph does not apply to an offer made pursuant to s. 852 627.3518. 853 (n)1. Rates for coverage provided by the corporation must 854 be actuarially sound and subject to s. 627.062, except as 855 otherwise provided in this paragraph. The corporation shall file 856 its recommended rates with the office at least annually. The 857 corporation shall provide any additional information regarding 858 the rates which the office requires. The office shall consider 859 the recommendations of the board and issue a final order 860 establishing the rates for the corporation within 45 days after 861 the recommended rates are filed. The corporation may not pursue 862 an administrative challenge or judicial review of the final 863 order of the office. 864 2. In addition to the rates otherwise determined pursuant 865 to this paragraph, the corporation shall impose and collect an 866 amount equal to the premium tax provided in s. 624.509 to 867 augment the financial resources of the corporation. 868 3.a. After the public hurricane loss-projection model under 869 s. 627.06281 has been found to be accurate and reliable by the 870 Florida Commission on Hurricane Loss Projection Methodology, the 871 model shall be considered when establishing the windstorm 872 portion of the corporation’s rates. The corporation may use the 873 public model results in combination with the results of private 874 models to calculate rates for the windstorm portion of the 875 corporation’s rates. This sub-subparagraphsubparagraphdoes not 876 require or allow the corporation to adopt rates lower than the 877 rates otherwise required or allowed by this paragraph. 878 b. Notwithstanding sub-subparagraph a., in a rating 879 territory located in a county that the office determines does 880 not have a reasonable degree of competition, the corporation 881 shall file and the office shall approve a recommended rate 882 change of 0 percent for the windstorm portion of a rate in that 883 territory if, within that territory: 884 (I) At least one of the windstorm models used by the 885 corporation indicates an increase in the windstorm portion of 886 the rate and a different such model indicates a decrease in the 887 windstorm portion of the rate; and 888 (II) The combination of models used by the corporation 889 under sub-subparagraph a. to calculate the rate indicates an 890 increase for the windstorm portion of the rate. 891 4. The rate filings for the corporation which were approved 892 by the office and took effect January 1, 2007, are rescinded, 893 except for those rates that were lowered. As soon as possible, 894 the corporation shall begin using the lower rates that were in 895 effect on December 31, 2006, and provide refunds to 896 policyholders who paid higher rates as a result of that rate 897 filing. The rates in effect on December 31, 2006, remain in 898 effect for the 2007 and 2008 calendar years except for any rate 899 change that results in a lower rate. The next rate change that 900 may increase rates shall take effect pursuant to a new rate 901 filing recommended by the corporation and established by the 902 office, subject to this paragraph. 903 5. Beginning on July 15, 2009, and annually thereafter, the 904 corporation must make a recommended actuarially sound rate 905 filing for each personal and commercial line of business it 906 writes, to be effective no earlier than January 1, 2010. 907 6. Beginning on or after January 1, 2010, and 908 notwithstanding the board’s recommended rates and the office’s 909 final order regarding the corporation’s filed rates under 910 subparagraph 1., the corporation shall annually implement a rate 911 increase which, except for sinkhole coverage, does not exceed 10 912 percent for any single policy issued by the corporation, 913 excluding coverage changes and surcharges. 9147. The corporation may also implement an increase to915reflect the effect on the corporation of the cash buildup factor916pursuant to s. 215.555(5)(b).917 7.8.The corporation’s implementation of rates as 918 prescribed in subparagraph 6. shall cease for any line of 919 business written by the corporation upon the corporation’s 920 implementation of actuarially sound rates. Thereafter, the 921 corporation shall annually make a recommended actuarially sound 922 rate filing for each commercial and personal line of business 923 the corporation writes. 924 Section 7. Subsection (1) of section 627.409, Florida 925 Statutes, is amended, and subsection (4) is added to that 926 section, to read: 927 627.409 Representations in applications; warranties.— 928 (1) Any statement or description made by or on behalf of an 929 insured or annuitant in an application for an insurance policy 930 or annuity contract, or in negotiations for a policy or 931 contract, is a representation and not a warranty. Except as 932 provided in subsection (3) or subsection (4), a 933 misrepresentation, omission, concealment of fact, or incorrect 934 statement may prevent recovery under the contract or policy only 935 if any of the following apply: 936 (a) The misrepresentation, omission, concealment, or 937 statement is fraudulent or is material to the acceptance of the 938 risk or to the hazard assumed by the insurer. 939 (b) If the true facts had been known to the insurer 940 pursuant to a policy requirement or other requirement, the 941 insurer in good faith would not have issued the policy or 942 contract, would not have issued it at the same premium rate, 943 would not have issued a policy or contract in as large an 944 amount, or would not have provided coverage with respect to the 945 hazard resulting in the loss. 946 (4) For residential property insurance, if a policy or 947 contract has been in effect for more than 120 days, a violation 948 of subsection (1) does not prevent recovery under the contract 949 or policy. 950 Section 8. Subsection (3) of section 627.7011, Florida 951 Statutes, is amended to read: 952 627.7011 Homeowners’ policies; offer of replacement cost 953 coverage and law and ordinance coverage.— 954 (3) In the event of a loss for which a dwelling or personal 955 property is insured on the basis of replacement costs: 956 (a) For a dwelling, the insurer must initially pay at least 957 the actual cash value of the insured loss, less any applicable 958 deductible. The insurer shall pay any remaining amounts 959 necessary to perform such repairs as work is performed and 960 expenses are incurred. For losses occurring in a county that is 961 subject to a state of emergency declared pursuant to chapter 962 252, the insurer must pay the replacement cost without 963 reservation or holdback of any depreciation in value. If a total 964 loss of a dwelling occurs, the insurer shall pay the replacement 965 cost coverage without reservation or holdback of any 966 depreciation in value, pursuant to s. 627.702. 967 (b) For personal property: 968 1. The insurer must offer coverage under which the insurer 969 is obligated to pay the replacement cost without reservation or 970 holdback for any depreciation in value, whether or not the 971 insured replaces the property. 972 2. The insurer may also offer coverage under which the 973 insurer may limit the initial payment to the actual cash value 974 of the personal property to be replaced, require the insured to 975 provide receipts for the purchase of the property financed by 976 the initial payment, use such receipts to make the next payment 977 requested by the insured for the replacement of insured 978 property, and continue this process until the insured remits all 979 receipts up to the policy limits for replacement costs. For 980 losses occurring in a county that is subject to a state of 981 emergency declared pursuant to chapter 252, the insurer must pay 982 the replacement cost without reservation or holdback of any 983 depreciation in value. The insurer must provide clear notice of 984 this process before the policy is bound. A policyholder must be 985 provided an actuarially reasonable premium credit or discount 986 for this coverage. The insurer may not require the policyholder 987 to advance payment for the replaced property. 988 Section 9. Section 627.70132, Florida Statutes, is amended 989 to read: 990 627.70132 Notice of windstorm or hurricane claim.—A claim, 991 supplemental claim, or reopened claim under an insurance policy 992 that provides property insurance, as defined in s. 624.604, for 993 loss or damage caused by the peril of windstorm or hurricane is 994 barred unless notice of the claim, supplemental claim, or 995 reopened claim was given to the insurer in accordance with the 996 terms of the policy within 53years after the hurricane first 997 made landfall or the windstorm caused the covered damage. For 998 purposes of this section, the term “supplemental claim” or 999 “reopened claim” means any additional claim for recovery from 1000 the insurer for losses from the same hurricane or windstorm 1001 which the insurer has previously adjusted pursuant to the 1002 initial claim. This section does not affect any applicable 1003 limitation on civil actions provided in s. 95.11 for claims, 1004 supplemental claims, or reopened claims timely filed under this 1005 section. 1006 Section 10. This act shall take effect July 1, 2017.