Bill Text: FL S1770 | 2013 | Regular Session | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Property Insurance
Spectrum: Committee Bill
Status: (Passed) 2013-05-29 - Chapter No. 2013-60, companion bill(s) passed, see SB 1850 (Ch. 2013-61) [S1770 Detail]
Download: Florida-2013-S1770-Comm_Sub.html
Bill Title: Property Insurance
Spectrum: Committee Bill
Status: (Passed) 2013-05-29 - Chapter No. 2013-60, companion bill(s) passed, see SB 1850 (Ch. 2013-61) [S1770 Detail]
Download: Florida-2013-S1770-Comm_Sub.html
Florida Senate - 2013 CS for SB 1770
By the Committees on Appropriations; and Banking and Insurance
576-03539-13 20131770c1
1 A bill to be entitled
2 An act relating to property insurance; amending s.
3 215.555, F.S.; changing the name of the Florida
4 Hurricane Catastrophe Fund Finance Corporation to the
5 State Board of Administration Finance Corporation;
6 creating s. 215.5551, F.S.; creating the Florida
7 Catastrophe Risk Capital Access Facility to increase
8 the access of small domestic insurers to risk-capital
9 markets; providing intent; establishing the facility
10 in the State Board of Administration; providing the
11 purposes of the facility; requiring the facility to be
12 funded entirely by participating insurers after
13 initial apportionment; providing limitations;
14 providing for a board of directors; providing immunity
15 from liability; providing for an annual report;
16 amending s. 624.155, F.S.; providing that Citizens
17 Property Insurance Corporation is an insurer subject
18 to civil actions as an agent of the state covered by
19 sovereign immunity; amending s. 626.752, F.S.,
20 relating to the exchange of business between an agent
21 and insurer; providing an exemption from the
22 requirements of that section to the corporation or
23 certain private entities under certain circumstances;
24 amending s. 627.062, F.S.; requiring the Office of
25 Insurance Regulation to calculate and publish
26 insurance inflation factors for use in residential
27 property insurance filings; prohibiting the office
28 from disapproving a rate as excessive due to the
29 insurer’s purchase of reinsurance for certain
30 purposes; deleting obsolete provisions; conforming
31 cross-references; amending s. 627.0628, F.S.;
32 requiring the Florida Commission on Hurricane Loss
33 Projection Methodology to consider methods for
34 improving the accuracy of wind mitigation discounts;
35 amending s. 627.0629, F.S.; requiring insurers to
36 provide notice of mitigation discounts in a
37 residential property insurance rate filing; revising
38 the criteria for when the office may hold a public
39 hearing regarding a rate filing; amending s. 627.171,
40 F.S.; allowing a consent to an excess rate to apply to
41 subsequent policy renewals; limiting the allowable
42 amount of excess rates to counties where there is no
43 competition; amending s. 627.351, F.S.; revising
44 legislative intent with respect to the corporation;
45 reducing the value of residential structures that can
46 be covered by the corporation; revising the
47 corporation’s eligibility criteria for structures
48 located seaward of the coastal construction control
49 line; requiring the corporation’s board of governors
50 to concur with certain decisions by the executive
51 director; providing for risk-sharing agreements
52 between the corporation and other insurers and
53 specifying the requirements and limitations of such
54 agreements; revising provisions relating to the
55 appointment of the board of governors and the
56 executive director; deleting provisions allowing a
57 policyholder removed from the corporation to remain
58 eligible for coverage regardless of an offer of
59 coverage from an authorized insurer; revising
60 corporation criteria for appointing agents; requiring
61 disclosure of potential corporation surcharges and
62 policyholder obligations to try and obtain private
63 market coverage; revising provisions relating to the
64 Auditor General’s review of the corporation; requiring
65 the board to contract with an independent auditing
66 firm to conduct performance audits; authorizing the
67 corporation to adopt programs that encourage insurers
68 to remove policies from the corporation through a loan
69 secured by a surplus note; requiring the corporation
70 to have an inspector general; providing for
71 appointment; providing duties; requiring an annual
72 report to the Legislature; revising provisions
73 relating to purchases by the corporation; providing
74 that the corporation is subject to state agency
75 purchasing requirements; requiring the corporation to
76 provide notice of purchasing decisions; providing
77 procedures for protesting such decisions; providing
78 applicability; revising the corporation’s rate
79 standards; requiring that corporation rates be
80 competitive with approved rates charged in the
81 admitted market, actuarially sound, and include a
82 catastrophe risk load factor; providing exceptions;
83 limiting rate increases for specified personal and
84 commercial lines residential policies and allowing an
85 additional rate increase; requiring the corporation to
86 annually certify its rates; requiring the board of
87 directors to provide recommendations to the
88 Legislature on ways of providing rate relief to those
89 who demonstrate a financial need; deleting obsolete
90 provisions; creating s. 627.3518, F.S.; establishing a
91 clearinghouse within the corporation for identifying
92 and diverting insurance coverage to private insurers;
93 providing definitions; providing requirements and
94 duties of the corporation, insurers, and agents;
95 providing for an alternative to submitting risks to
96 the corporation; establishing a temporary keepout
97 program that allows authorized insurers to provide
98 coverage to applicants for coverage through the
99 corporation through the market assistance program
100 until the clearinghouse is operational; providing
101 program components; providing for expiration; amending
102 s. 627.405, F.S.; authorizing policyholders to assign
103 benefits subject to conditions in the policy; amending
104 s. 627.410, F.S.; conforming provisions to changes
105 made by the act; providing effective dates.
106
107 Be It Enacted by the Legislature of the State of Florida:
108
109 Section 1. Paragraph (n) of subsection (2) and paragraph
110 (d) of subsection (6) of section 215.555, Florida Statutes, are
111 amended to read:
112 215.555 Florida Hurricane Catastrophe Fund.—
113 (2) DEFINITIONS.—As used in this section:
114 (n) “Corporation” means the State Board of Administration
115 Florida Hurricane Catastrophe Fund Finance Corporation created
116 in paragraph (6)(d).
117 (6) REVENUE BONDS.—
118 (d) State Board of Administration Florida Hurricane
119 Catastrophe Fund Finance Corporation.—
120 1. In addition to the findings and declarations in
121 subsection (1), the Legislature also finds and declares that:
122 a. The public benefits corporation created under this
123 paragraph will provide a mechanism necessary for the cost
124 effective and efficient issuance of bonds. This mechanism will
125 eliminate unnecessary costs in the bond issuance process,
126 thereby increasing the amounts available for to pay
127 reimbursement for losses to property sustained as a result of
128 hurricane damage.
129 b. The purpose of such bonds is to fund reimbursements
130 through the Florida Hurricane Catastrophe Fund to pay for the
131 costs of construction, reconstruction, repair, restoration, and
132 other costs associated with damage to properties of
133 policyholders of covered policies due to the occurrence of a
134 hurricane.
135 c. The efficacy of the financing mechanism will be enhanced
136 by the corporation’s ownership of the assessments, by the
137 insulation of the assessments from possible bankruptcy
138 proceedings, and by covenants of the state with the
139 corporation’s bondholders.
140 2.a. The State Board of Administration Finance Corporation
141 There is created, which is a public benefits corporation and,
142 which is an instrumentality of the state, to be known as the
143 Florida Hurricane Catastrophe Fund Finance Corporation. The
144 State Board of Administration Finance Corporation is for all
145 purposes the successor to the Florida Hurricane Catastrophe Fund
146 Finance Corporation.
147 a.b. The corporation shall operate under a five-member
148 board of directors consisting of the Governor or a designee, the
149 Chief Financial Officer or a designee, the Attorney General or a
150 designee, the director of the Division of Bond Finance of the
151 State Board of Administration, and the Chief Operating Officer
152 senior employee of the State Board of Administration responsible
153 for operations of the Florida Hurricane Catastrophe Fund.
154 b.c. The corporation has all of the powers of corporations
155 under chapter 607 and under chapter 617, subject only to the
156 provisions of this subsection.
157 c.d. The corporation may issue bonds and engage in such
158 other financial transactions as are necessary to provide
159 sufficient funds to achieve the purposes of this section.
160 d.e. The corporation may invest in any of the investments
161 authorized under s. 215.47.
162 e.f. There is shall be no liability on the part of, and no
163 cause of action shall arise against, any board members or
164 employees of the corporation for any actions taken by them in
165 the performance of their duties under this paragraph.
166 3.a. In actions under chapter 75 to validate any bonds
167 issued by the corporation, the notice required by s. 75.06 must
168 shall be published in two newspapers of general circulation in
169 the state, and the complaint and order of the court shall be
170 served only on the State Attorney of the Second Judicial
171 Circuit.
172 b. The state hereby covenants with holders of bonds of the
173 corporation that the state will not repeal or abrogate the power
174 of the board to direct the Office of Insurance Regulation to
175 levy the assessments and to collect the proceeds of the revenues
176 pledged to the payment of such bonds as long as any such bonds
177 remain outstanding unless adequate provision has been made for
178 the payment of such bonds pursuant to the documents authorizing
179 the issuance of the such bonds.
180 c.4. The bonds of the corporation are not a debt of the
181 state or of any political subdivision, and neither the state nor
182 any political subdivision is liable on such bonds. The
183 corporation may not does not have the power to pledge the
184 credit, the revenues, or the taxing power of the state or of any
185 political subdivision. The credit, revenues, or taxing power of
186 the state or of any political subdivision may shall not be
187 deemed to be pledged to the payment of any bonds of the
188 corporation.
189 d.5.a. The property, revenues, and other assets of the
190 corporation; the transactions and operations of the corporation
191 and the income from such transactions and operations; and all
192 bonds issued under this paragraph and interest on such bonds are
193 exempt from taxation by the state and any political subdivision,
194 including the intangibles tax under chapter 199 and the income
195 tax under chapter 220. This exemption does not apply to any tax
196 imposed by chapter 220 on interest, income, or profits on debt
197 obligations owned by corporations other than the State Board of
198 Administration Florida Hurricane Catastrophe Fund Finance
199 Corporation.
200 e.b. All bonds of the corporation are shall be and
201 constitute legal investments without limitation for all public
202 bodies of this state; for all banks, trust companies, savings
203 banks, savings associations, savings and loan associations, and
204 investment companies; for all administrators, executors,
205 trustees, and other fiduciaries; for all insurance companies and
206 associations and other persons carrying on an insurance
207 business; and for all other persons who are now or may hereafter
208 be authorized to invest in bonds or other obligations of the
209 state and are shall be and constitute eligible securities to be
210 deposited as collateral for the security of any state, county,
211 municipal, or other public funds. This sub-subparagraph shall be
212 considered as additional and supplemental authority and may
213 shall not be limited without specific reference to this sub
214 subparagraph.
215 4.6. The corporation and its corporate existence shall
216 continue until terminated by law; however, no such law shall
217 take effect as long as the corporation has bonds outstanding
218 unless adequate provision has been made for the payment of such
219 bonds pursuant to the documents authorizing the issuance of such
220 bonds. Upon termination of the existence of the corporation, all
221 of its rights and properties in excess of its obligations shall
222 pass to and be vested in the state.
223 Section 2. Section 215.5551, Florida Statutes, is created
224 to read:
225 215.5551 Florida Catastrophe Risk Capital Access Facility.
226 (1) The Legislature finds that the global market for
227 catastrophe risk has expanded dramatically, resulting in the
228 availability of billions of dollars in additional risk capital
229 for insurers and new and innovative alternative risk-transfer
230 mechanisms. The Legislature also finds that having access to
231 additional risk capital and risk-transfer mechanisms provides
232 insurers providing coverage in this state with an opportunity to
233 expand their capacity to write additional business and diversify
234 their catastrophe risk. The Legislature further finds that
235 despite an expansion in the amount of available global risk
236 capital, small insurers, particularly smaller domestic insurers,
237 writing property insurance in this state face substantial
238 challenges accessing these global markets when the relatively
239 small amount of risk finance required by any one company is not
240 economically viable. Therefore, it is the intent of the
241 Legislature to create a mechanism to facilitate the access of
242 small domestic insurers to global risk capital markets and risk
243 transfer mechanisms.
244 (2) Effective July 1, 2013, the Florida Catastrophe Risk
245 Capital Access Facility is created within the State Board of
246 Administration. The facility is not defined nor may it function
247 as an insurer, reinsurer, or other risk-bearing entity under
248 state law.
249 (3) The facility shall:
250 (a) Aggregate the demand for risk finance from global
251 capital markets among smaller volume domestic property insurance
252 companies writing business in this state.
253 (b) Design and execute risk-transfer tools such as
254 insurance-linked securities and other securitization models for
255 participating insurers, and use special purpose vehicles or
256 protected cells, onshore or offshore, as appropriate, to
257 increase access to risk capital.
258 (c) Identify and coordinate appropriate risk-transfer
259 products and opportunities, initially targeting layers of
260 coverage below, alongside, and above the portion of the
261 reinsurance market covered by the Florida Hurricane Catastrophe
262 Fund.
263 (d) Establish and maintain regular and ongoing contact with
264 global risk capital market participants, institutions, and
265 investors, in order to identify opportunities that satisfy and
266 coordinate insurer demand for additional risk capital.
267 (4) After an initial apportionment for startup purposes,
268 the facility shall be funded entirely by participating insurers
269 on a pro rata basis.
270 (5) In conducting its affairs, the facility may not:
271 (a) Take a position in, or provide financial support for,
272 risk-transfer transactions;
273 (b) Be a guarantor of premium or make any other financial
274 guarantees to participating insurers;
275 (c) Create contractual obligations on the part of the
276 state; or
277 (d) Levy taxes or assessments.
278 (6) The facility shall be governed by a board of directors
279 composed of seven members, one from the Department of Financial
280 Services; one from the State Board of Administration; one from
281 the Office of Insurance Regulation; three industry members
282 representing Florida property insurance writers, the reinsurance
283 community, and the financial securities industry; and one member
284 appointed by a majority of the board. The board may employ or
285 contract with such staff and professionals as the board deems
286 necessary to accomplish its purpose.
287 (7) There shall be no liability on the part of, and no
288 cause of action of any nature may arise against, the facility or
289 its agents or employees, the board of directors, or the
290 department or office or their representatives for any action
291 taken by them in the performance of their powers and duties
292 under this section.
293 (8) The facility shall submit a report to the Financial
294 Services Commission by January 1 of each year describing
295 facility activities and transactions undertaken by participating
296 insurers.
297 Section 3. Subsection (1) of section 624.155, Florida
298 Statutes, is amended and subsection (10) is added to that
299 section, to read:
300 624.155 Civil remedy.—
301 (1) Any person may bring a civil action against an insurer,
302 including Citizens Property Insurance Corporation, if when such
303 person is damaged:
304 (a) By a violation of any of the following provisions by
305 the insurer:
306 1. Section 626.9541(1)(i), (o), or (x);
307 2. Section 626.9551;
308 3. Section 626.9705;
309 4. Section 626.9706;
310 5. Section 626.9707; or
311 6. Section 627.7283.
312 (b) By the commission of any of the following acts by the
313 insurer:
314 1. Not attempting in good faith to settle claims if when,
315 under all the circumstances, it could and should have done so,
316 had it acted fairly and honestly toward its insured and with due
317 regard for her or his interests;
318 2. Making claims payments to insureds or beneficiaries not
319 accompanied by a statement setting forth the coverage under
320 which payments are being made; or
321 3. Except as to liability coverages, failing to promptly
322 settle claims, when the obligation to settle a claim has become
323 reasonably clear, under one portion of the insurance policy
324 coverage in order to influence settlements under other portions
325 of the insurance policy coverage.
326
327 Notwithstanding the provisions of this subsection the above to
328 the contrary, a person pursuing a remedy under this section need
329 not prove that such act was committed or performed with such
330 frequency as to indicate a general business practice.
331 (10) For the purposes of this section, Citizens Property
332 Insurance Corporation is an agent of the state covered under s.
333 768.28.
334 Section 4. Subsection (4) of section 626.752, Florida
335 Statutes, is amended to read:
336 626.752 Exchange of business.—
337 (4) The foregoing limitations and restrictions do shall not
338 be construed and shall not apply to the placing of surplus lines
339 business under the provisions of part VIII, or to the activities
340 of Citizens Property Insurance Corporation or private entities
341 referenced under 627.3518(7) when placing new and renewal
342 business with authorized insurers in accordance with s.627.3518.
343 Section 5. Subsection (2) and paragraph (d) of subsection
344 (3) of section 627.062, Florida Statutes, are amended to read:
345 627.062 Rate standards.—
346 (2) As to all such classes of insurance:
347 (a) Insurers or rating organizations shall establish and
348 use rates, rating schedules, or rating manuals that allow the
349 insurer a reasonable rate of return on the classes of insurance
350 written in this state. A copy of rates, rating schedules, rating
351 manuals, premium credits or discount schedules, and surcharge
352 schedules, and changes thereto, must be filed with the office in
353 accordance with under one of the following procedures:
354 1. If the filing is made at least 90 days before the
355 proposed effective date and is not implemented during the
356 office’s review of the filing and any proceeding and judicial
357 review, such filing is considered a “file and use” filing. In
358 such case, the office shall finalize its review by issuance of a
359 notice of intent to approve or a notice of intent to disapprove
360 within 90 days after receipt of the filing. The notice of intent
361 to approve and the notice of intent to disapprove constitute
362 agency action for purposes of the Administrative Procedure Act.
363 Requests for supporting information, requests for mathematical
364 or mechanical corrections, or notification to the insurer by the
365 office of its preliminary findings does not toll the 90-day
366 period during any such proceedings and subsequent judicial
367 review. The rate shall be deemed approved if the office does not
368 issue a notice of intent to approve or a notice of intent to
369 disapprove within 90 days after receipt of the filing.
370 2. If the filing is not made in accordance with
371 subparagraph 1., such filing must be made as soon as
372 practicable, but within 30 days after the effective date, and is
373 considered a “use and file” filing. An insurer making a “use and
374 file” filing is potentially subject to an order by the office to
375 return to policyholders those portions of rates found to be
376 excessive to policyholders, as provided in paragraph (i) (h).
377 3. For all property insurance filings made or submitted
378 after January 25, 2007, but before May 1, 2012, an insurer
379 seeking a rate that is greater than the rate most recently
380 approved by the office shall make a “file and use” filing. For
381 purposes of this subparagraph, motor vehicle collision and
382 comprehensive coverages are not considered property coverages.
383 (b) Upon receiving a rate filing, the office shall review
384 the filing to determine if a rate is excessive, inadequate, or
385 unfairly discriminatory. In making that determination, the
386 office shall, in accordance with generally accepted and
387 reasonable actuarial techniques, consider the following factors:
388 1. Past and prospective loss experience within and without
389 this state.
390 2. Past and prospective expenses.
391 3. The degree of competition among insurers for the risk
392 insured.
393 4. Investment income reasonably expected by the insurer,
394 consistent with the insurer’s investment practices, from
395 investable premiums anticipated from in the filing, plus any
396 other expected income from currently invested assets
397 representing the amount expected on unearned premium reserves
398 and loss reserves. The commission may adopt rules that use using
399 reasonable techniques of actuarial science and economics to
400 specify the manner in which insurers calculate investment income
401 attributable to classes of insurance written in this state and
402 the manner in which investment income is used to calculate
403 insurance rates. Such rules manner must allow contemplate
404 allowances for an underwriting profit factor and full
405 consideration of investment income which produce a reasonable
406 rate of return; however, investment income from invested surplus
407 may not be considered.
408 5. The reasonableness of the judgment reflected in the
409 filing.
410 6. Dividends, savings, or unabsorbed premium deposits
411 allowed or returned to state Florida policyholders, members, or
412 subscribers.
413 7. The adequacy of loss reserves.
414 8. The cost of reinsurance. The office may not disapprove a
415 rate as excessive solely due solely to the insurer having
416 obtained catastrophic reinsurance to cover the insurer’s
417 estimated 250-year probable maximum loss or any lower level of
418 loss, or due solely to an admitted carrier purchasing private
419 reinsurance that would insure against potential deficits within
420 the Florida Hurricane Catastrophe Fund which the most recent
421 estimate made pursuant to s. 215.555(4)(c)2. predicts would be
422 funded through revenue bonds issued under s. 215.555(6).
423 9. Trend factors, including trends in actual losses per
424 insured unit for the insurer making the filing.
425 10. Conflagration and catastrophe hazards, if applicable.
426 11. Projected hurricane losses, if applicable, which must
427 be estimated using a model or method found to be acceptable or
428 reliable by the Florida Commission on Hurricane Loss Projection
429 Methodology, and as further provided in s. 627.0628.
430 12. A reasonable margin for underwriting profit and
431 contingencies.
432 13. The cost of medical services, if applicable.
433 14. Other relevant factors that affect the frequency or
434 severity of claims or expenses.
435 (c) The office shall calculate and publish insurance
436 inflation factors based on noncatastrophe direct loss costs for
437 use in residential property insurance filings. The office shall
438 update the published factors at least annually and make them
439 available on its website. The calculation of insurance inflation
440 factors are not subject to rulemaking under chapter 120.
441 1. An insurer making a residential property insurance rate
442 filing that proposes a change in noncatastrophe base rates by a
443 uniform factor equal to or less than the applicable published
444 insurance inflation factor, may make a rate filing under s.
445 627.0645 which consists of a rate certification in lieu of a
446 full rate filing under paragraph (a). The office shall verify
447 insurer use of the appropriate published inflation factor and,
448 if the inflation factor is used appropriately, the filed rates
449 shall be deemed not excessive.
450 2. An insurer filing under this paragraph may make a
451 separate filing pursuant to paragraph (l) to adjust its rates
452 for reinsurance rates, reinsurance financing costs and products,
453 and cash buildup factor costs. The insurance inflation factors
454 do not apply to these filings.
455 3. This paragraph does not apply to filings made by
456 Citizens Property Insurance Corporation.
457 (d)(c) In the case of fire insurance rates, consideration
458 must be given to the availability of water supplies and the
459 experience of the fire insurance business during a period of not
460 less than the most recent 5-year or longer period for which such
461 experience is available.
462 (e)(d) If conflagration or catastrophe hazards are
463 considered by an insurer in its rates or rating plan, including
464 surcharges and discounts, the insurer must shall establish a
465 reserve for that portion of the premium allocated to such hazard
466 and maintain the premium in a catastrophe reserve. Removal of
467 such premiums from the reserve for purposes other than paying
468 claims associated with a catastrophe or purchasing reinsurance
469 for catastrophes must be approved by the office. Any ceding
470 commission received by an insurer purchasing reinsurance for
471 catastrophes must be placed in the catastrophe reserve.
472 (f)(e) After consideration of the rate factors provided in
473 paragraphs (b), (c), and (d), and (e) the office may find a rate
474 to be excessive, inadequate, or unfairly discriminatory based
475 upon the following standards:
476 1. Rates shall be deemed excessive if they are likely to
477 produce a profit from Florida business which is unreasonably
478 high in relation to the risk involved in the class of business
479 or if expenses are unreasonably high in relation to services
480 rendered.
481 2. Rates shall be deemed excessive if, among other things,
482 the rate structure established by a stock insurance company
483 provides for replenishment of surpluses from premiums, if the
484 such replenishment is attributable to investment losses.
485 3. Rates shall be deemed inadequate if they are clearly
486 insufficient, together with the investment income attributable
487 to them, they are clearly insufficient to sustain projected
488 losses and expenses in the class of business to which they
489 apply.
490 4. A rating plan, including discounts, credits, or
491 surcharges, shall be deemed unfairly discriminatory if it fails
492 to clearly and equitably reflect consideration of the
493 policyholder’s participation in a risk management program
494 adopted pursuant to s. 627.0625.
495 5. A rate shall be deemed inadequate as to the premium
496 charged to a risk or group of risks if discounts or credits are
497 allowed which exceed a reasonable reflection of expense savings
498 and reasonably expected loss experience from the risk or group
499 of risks.
500 6. A rate shall be deemed unfairly discriminatory as to a
501 risk or group of risks if the application of premium discounts,
502 credits, or surcharges among such risks does not bear a
503 reasonable relationship to the expected loss and expense
504 experience among the various risks.
505 (g)(f) In reviewing a rate filing, the office may require
506 the insurer to provide, at the insurer’s expense, all
507 information necessary to evaluate the condition of the company
508 and the reasonableness of the filing according to the criteria
509 enumerated in this section.
510 (h)(g) The office may at any time review a rate, rating
511 schedule, rating manual, or rate change; the pertinent records
512 of the insurer; and market conditions. If the office finds on a
513 preliminary basis that a rate may be excessive, inadequate, or
514 unfairly discriminatory, the office shall initiate proceedings
515 to disapprove the rate and shall so notify the insurer. However,
516 the office may not disapprove as excessive any rate for which it
517 has given final approval or which has been deemed approved for 1
518 year after the effective date of the filing unless the office
519 finds that a material misrepresentation or material error was
520 made by the insurer or was contained in the filing. Upon
521 notification being notified, the insurer or rating organization
522 shall, within 60 days, file with the office all information
523 that, in the belief of the insurer or organization, proves the
524 reasonableness, adequacy, and fairness of the rate or rate
525 change. The office shall issue a notice of intent to approve or
526 a notice of intent to disapprove pursuant to paragraph (a)
527 within 90 days after receipt of the insurer’s initial response.
528 In such instances and in any administrative proceeding relating
529 to the legality of the rate, the insurer or rating organization
530 shall carry the burden of proof of showing, by a preponderance
531 of the evidence, to show that the rate is not excessive,
532 inadequate, or unfairly discriminatory. After the office
533 notifies an insurer that a rate may be excessive, inadequate, or
534 unfairly discriminatory, unless the office withdraws the
535 notification, the insurer may not alter the rate except to
536 conform to the office’s notice until the earlier of 120 days
537 after the date the notification was provided or 180 days after
538 the date of implementing the rate. The office, Subject to
539 chapter 120, the office may disapprove without the 60-day
540 notification any rate increase filed by an insurer within the
541 prohibited time period or during the time that the legality of
542 the increased rate is being contested.
543 (i)(h) If the office finds that a rate or rate change is
544 excessive, inadequate, or unfairly discriminatory, the office
545 shall issue an order of disapproval requiring specifying that a
546 new rate or rate schedule, which responds to the findings of the
547 office, be filed by the insurer. The office shall further order,
548 for any “use and file” filing made in accordance with
549 subparagraph (a)2., that the portion of premiums charged which
550 constitute each policyholder constituting the portion of the
551 rate above that which was actuarially justified be returned to
552 the policyholder in the form of a credit or refund. If the
553 office finds that an insurer’s rate or rate change is
554 inadequate, the new rate or rate schedule filed with the office
555 in response to such a finding applies is applicable only to new
556 or renewal business of the insurer written by the insurer on or
557 after the effective date of the responsive filing.
558 (j)(i) Except as otherwise specifically provided in this
559 chapter, for property and casualty insurance the office may not
560 directly or indirectly:
561 1. Prohibit an any insurer, including any residual market
562 plan or joint underwriting association, from paying acquisition
563 costs based on the full amount of premium, as defined in s.
564 627.403, applicable to any policy, or prohibit any such insurer
565 from including the full amount of acquisition costs in a rate
566 filing; or
567 2. Impede, abridge, or otherwise compromise an insurer’s
568 right to acquire policyholders, advertise, or appoint agents,
569 including the calculation, manner, or amount of such agent
570 commissions, if any.
571 (k)(j) With respect to residential property insurance rate
572 filings, the rate filing must account for mitigation measures
573 undertaken by policyholders to reduce hurricane losses.
574 (l)(k)1. A residential property insurer may make a separate
575 filing limited solely to an adjustment of its rates for
576 reinsurance, the cost of financing products used as a
577 replacement for reinsurance, financing costs incurred in the
578 purchase of reinsurance, and the actual cost paid due to the
579 application of the cash build-up factor pursuant to s.
580 215.555(5)(b) if the insurer:
581 a. Elects to purchase financing products, such as a
582 liquidity instrument or line of credit, in which case the cost
583 included in filing for the liquidity instrument or line of
584 credit may not result in a premium increase exceeding 3 percent
585 for any individual policyholder. All costs contained in the
586 filing may not result in an overall premium increase of more
587 than 15 percent for any individual policyholder.
588 b. Includes in the filing a copy of all of its reinsurance,
589 liquidity instrument, or line of credit contracts; proof of the
590 billing or payment for the contracts; and the calculation upon
591 which the proposed rate change is based demonstrating that the
592 costs meet the criteria of this section.
593 2. An insurer that purchases reinsurance or financing
594 products from an affiliated company may make a separate filing
595 only if the costs for such reinsurance or financing products are
596 charged at or below charges made for comparable coverage by
597 nonaffiliated reinsurers or financial entities making such
598 coverage or financing products available in this state.
599 3. An insurer may make only one filing per 12-month period
600 under this paragraph.
601 4. An insurer that elects to implement a rate change under
602 this paragraph must file its rate filing with the office at
603 least 45 days before the effective date of the rate change.
604 After an insurer submits a complete filing that meets all of the
605 requirements of this paragraph, the office has 45 days after the
606 date of the filing to review the rate filing and determine if
607 the rate is excessive, inadequate, or unfairly discriminatory.
608
609 The provisions of this subsection do not apply to workers’
610 compensation, employer’s liability insurance, and motor vehicle
611 insurance.
612 (3)
613 (d)1. The following categories or kinds of insurance and
614 types of commercial lines risks are not subject to paragraph
615 (2)(a) or paragraph (2)(g) (2)(f):
616 a. Excess or umbrella.
617 b. Surety and fidelity.
618 c. Boiler and machinery and leakage and fire extinguishing
619 equipment.
620 d. Errors and omissions.
621 e. Directors and officers, employment practices, fiduciary
622 liability, and management liability.
623 f. Intellectual property and patent infringement liability.
624 g. Advertising injury and Internet liability insurance.
625 h. Property risks rated under a highly protected risks
626 rating plan.
627 i. General liability.
628 j. Nonresidential property, except for collateral
629 protection insurance as defined in s. 624.6085.
630 k. Nonresidential multiperil.
631 l. Excess property.
632 m. Burglary and theft.
633 n. Any other commercial lines categories or kinds of
634 insurance or types of commercial lines risks that the office
635 determines should not be subject to paragraph (2)(a) or
636 paragraph (2)(g) (2)(f) because of the existence of a
637 competitive market for such insurance, similarity of such
638 insurance to other categories or kinds of insurance not subject
639 to paragraph (2)(a) or paragraph (2)(g) (2)(f), or to improve
640 the general operational efficiency of the office.
641 2. Insurers or rating organizations shall establish and use
642 rates, rating schedules, or rating manuals that to allow the
643 insurer a reasonable rate of return on insurance and risks
644 described in subparagraph 1. which are written in this state.
645 3. An insurer must notify the office of any changes to
646 rates for insurance and risks described in subparagraph 1.
647 within 30 days after the effective date of the change. The
648 notice must include the name of the insurer, the type or kind of
649 insurance subject to rate change, total premium written during
650 the immediately preceding year by the insurer for the type or
651 kind of insurance subject to the rate change, and the average
652 statewide percentage change in rates. Underwriting files,
653 premiums, losses, and expense statistics relating with regard to
654 such insurance and risks written by an insurer must be
655 maintained by the insurer and subject to examination by the
656 office. Upon examination, the office, in accordance with
657 generally accepted and reasonable actuarial techniques, shall
658 consider the rate factors in paragraphs (2)(b), (d) (c), and (e)
659 (d) and the standards in paragraph (2)(f) (2)(e) to determine if
660 the rate is excessive, inadequate, or unfairly discriminatory.
661 4. A rating organization must notify the office of any
662 changes to loss cost for insurance and risks described in
663 subparagraph 1. within 30 days after the effective date of the
664 change. The notice must include the name of the rating
665 organization, the type or kind of insurance subject to a loss
666 cost change, loss costs during the immediately preceding year
667 for the type or kind of insurance subject to the loss cost
668 change, and the average statewide percentage change in loss
669 cost. Actuarial data relating with regard to changes to loss
670 cost for risks not subject to paragraph (2)(a) or paragraph
671 (2)(g) (2)(f) must be maintained by the rating organization for
672 2 years after the effective date of the change and are subject
673 to examination by the office. The office may require the rating
674 organization to incur the costs associated with an examination.
675 Upon examination, the office, in accordance with generally
676 accepted and reasonable actuarial techniques, shall consider the
677 rate factors in paragraphs (2)(b), (d), and (e) (2)(b)-(d) and
678 the standards in paragraph (2)(f) (2)(e) to determine if the
679 rate is excessive, inadequate, or unfairly discriminatory.
680 Section 6. Paragraphs (a) and (b) of subsection (3) of
681 section 627.0628, Florida Statutes, are amended to read:
682 627.0628 Florida Commission on Hurricane Loss Projection
683 Methodology; public records exemption; public meetings
684 exemption.—
685 (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
686 (a) The commission shall consider any actuarial methods,
687 principles, standards, models, or output ranges that have the
688 potential for improving the accuracy of or reliability of the
689 hurricane loss projections and wind mitigation discounts used in
690 residential property insurance rate filings. The commission
691 shall, from time to time, adopt findings as to the accuracy or
692 reliability of particular methods, principles, standards,
693 models, or output ranges.
694 (b) The commission shall consider any actuarial methods,
695 principles, standards, or models that have the potential for
696 improving the accuracy of or reliability of projecting probable
697 maximum loss levels. The commission shall adopt findings as to
698 the accuracy or reliability of particular methods, principles,
699 standards, or models related to probable maximum loss
700 calculations. The commission shall review models for accuracy of
701 use when establishing wind mitigation discounts.
702 Section 7. Subsections (1) and (6) of section 627.0629,
703 Florida Statutes, are amended to read:
704 627.0629 Residential property insurance; rate filings.—
705 (1) It is the intent of the Legislature that insurers
706 provide savings to consumers who install or implement windstorm
707 damage mitigation techniques, alterations, or solutions to their
708 properties to prevent windstorm losses. A rate filing for
709 residential property insurance must include notice of the
710 mitigation discounts offered by the insurer, which must be
711 actuarially reasonable discounts, credits, or other rate
712 differentials, or appropriate reductions in deductibles, for
713 properties on which fixtures or construction techniques
714 demonstrated to reduce the amount of loss in a windstorm have
715 been installed or implemented. The fixtures or construction
716 techniques must include, but are not limited to, fixtures or
717 construction techniques that enhance roof strength, roof
718 covering performance, roof-to-wall strength, wall-to-floor-to
719 foundation strength, opening protection, and the impact
720 resistance of window, door, and skylight openings strength.
721 Credits, discounts, or other rate differentials, or appropriate
722 reductions in deductibles, for fixtures and construction
723 techniques that meet the minimum requirements of the Florida
724 Building Code must be included in the rate filing. The office
725 shall determine the discounts, credits, other rate
726 differentials, and appropriate reductions in deductibles that
727 reflect the full actuarial value of such revaluation, which may
728 be used by insurers in rate filings.
729 (6) The office may hold a public hearing for a any rate
730 filing that is based in whole or in part on data from a computer
731 model which exceeds may not exceed 15 percent in counties the
732 office determines do not have a reasonable degree of competition
733 unless there is a public hearing.
734 Section 8. Section 627.171, Florida Statutes, is amended to
735 read:
736 627.171 Excess rates.—
737 (1) With the written consent of the insured signed before
738 prior to the policy inception date and filed with the insurer,
739 the insurer may use a rate in excess of the otherwise applicable
740 filed rate on any specific risk. The signed consent form is
741 valid for subsequent renewals and must include the filed rate as
742 well as the excess rate for the risk insured., and A copy of the
743 form must be maintained by the insurer for 3 years and be
744 available for review by the office.
745 (2) In those counties in which the office has determined
746 there is not a reasonable degree of competition, an insurer may
747 not use excess rates authorized under pursuant to this section
748 for more than 10 percent of its commercial insurance policies
749 written or renewed in each calendar year for any line of
750 commercial insurance or for more than 5 percent of its personal
751 lines insurance policies written or renewed in each calendar
752 year for any line of personal insurance. In determining the 10
753 percent limitation for commercial insurance policies, the
754 insurer shall exclude a any workers’ compensation policy that
755 was written for an employer who had coverage in the joint
756 underwriting plan created by s. 627.311(5) immediately before
757 prior to the writing of the policy by the insurer and a any
758 workers’ compensation policy that was written for an employer
759 who had been offered coverage in the joint underwriting plan but
760 who was written a policy by the insurer in lieu of accepting the
761 joint underwriting plan policy. Such These workers’ compensation
762 policies shall be excluded from the 10-percent limitation for
763 the first 3 years of coverage.
764 Section 9. Paragraphs (a), (b), (c), (g), (i), (m), (q),
765 and (z) of subsection (6) of section 627.351, Florida Statutes,
766 are amended, and paragraph (gg) is added to that subsection, to
767 read:
768 627.351 Insurance risk apportionment plans.—
769 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
770 (a) The public purpose of this subsection is to ensure that
771 there is an orderly market for property insurance for residents
772 and businesses of this state.
773 1. The Legislature finds that private insurers are entering
774 the Florida property insurance market unwilling or unable to
775 provide affordable property insurance coverage in many regions
776 of the state. The Legislature further finds that when Citizens
777 Property Insurance Corporation offers rates that are not
778 adequate to cover the average costs that are generated from the
779 claims filed by its policyholders, the deficiency may create a
780 financial burden on all other state policyholders who must
781 purchase their own insurance from private insurers at full
782 actuarial cost and pay an added fee to cover a portion of the
783 cost for claims filed by policyholders of the corporation. The
784 Legislature intends that the corporation not act as a barrier or
785 competitor to the private insurance market but be available to
786 residents of in this state only if there is no private market
787 coverage available at rates determined reasonable by the Office
788 of Insurance Regulation to the extent sought and needed. The
789 absence of affordable property insurance threatens the public
790 health, safety, and welfare and likewise threatens the economic
791 health of the state. As the corporation has continued its rapid
792 growth and exposure, it increasingly threatens state residents
793 with having to absorb an even greater financial burden than they
794 are currently bearing. The state, therefore, has a compelling
795 public interest and a public purpose to assist in assuring that
796 property in the state is insured and that it is insured at
797 affordable, actuarially sound, noncompetitive rates so as to
798 facilitate the remediation, reconstruction, and replacement of
799 damaged or destroyed property without overburdening the
800 policyholders of this state in order to reduce or avoid the
801 negative effects on otherwise resulting to the public health,
802 safety, and welfare; on, to the economy of the state; and on,
803 and to the revenues of the state and local governments which are
804 needed to provide for the public welfare. It is necessary,
805 therefore, to make provide affordable, actuarially sound,
806 noncompetitive property insurance available to applicants who
807 are, in good faith, entitled to procure insurance through the
808 voluntary market but are unable to do so. The Legislature
809 intends, therefore, that affordable, actuarially sound,
810 noncompetitive property insurance be provided and that it
811 continue to be provided, as long as necessary, through Citizens
812 Property Insurance Corporation, a government entity that is an
813 integral part of the state, and that is not a private insurance
814 company, or through referrals to private insurers participating
815 in a clearinghouse established by the corporation. To that end,
816 the corporation shall strive to promote increase the
817 availability of affordable and actuarially sound private
818 property insurance in this state, supplemented by coverage
819 provided by the corporation if appropriate, while achieving
820 efficiencies and economies, and while providing service to
821 policyholders, applicants, and agents which is no less than the
822 quality generally provided in the voluntary market, for the
823 achievement of the foregoing public purposes. Because it is
824 essential for this government entity to have the maximum
825 financial resources to pay claims following a catastrophic
826 hurricane, it is further the intent of the Legislature that the
827 corporation continue to be an integral part of the state and not
828 a private insurance company, and that the income of the
829 corporation be exempt from federal income taxation, and that
830 interest on the debt obligations issued by the corporation be
831 exempt from federal income taxation.
832 2. The Residential Property and Casualty Joint Underwriting
833 Association originally created by this statute shall be known as
834 the Citizens Property Insurance Corporation. The corporation
835 shall provide insurance for residential and commercial property
836 insurance, for applicants who are eligible entitled, but, in
837 good faith, are unable to procure insurance through the
838 voluntary market. The corporation shall operate pursuant to a
839 plan of operation approved by order of the Financial Services
840 Commission. The plan is subject to continuous review by the
841 commission, and. the commission may, by order, withdraw approval
842 of all or part of a plan if the commission determines that
843 conditions have changed since approval was granted and that the
844 purposes of the plan require changes in the plan. For the
845 purposes of this subsection, residential coverage includes both
846 personal lines residential coverage, which consists of the type
847 of coverage provided by homeowner’s, mobile home owner’s,
848 dwelling, tenant’s, condominium unit owner’s, and similar
849 policies; and commercial lines residential coverage, which
850 consists of the type of coverage provided by condominium
851 association, apartment building, and similar policies.
852 3. With respect to coverage for personal lines residential
853 structures:
854 a. Effective January 1, 2014 2009, a personal lines
855 residential structure that has a dwelling replacement cost of $1
856 $2 million or more, or a single condominium unit that has a
857 combined dwelling and contents replacement cost of $1 $2 million
858 or more is not eligible for coverage by the corporation. Such
859 dwellings insured by the corporation on December 31, 2013 2008,
860 may continue to be covered by the corporation until the end of
861 the policy term. However, such dwellings may reapply and obtain
862 coverage if the property owner provides the corporation with a
863 sworn affidavit from one or more insurance agents, on a form
864 provided by the corporation, stating that the agents have made
865 their best efforts to obtain coverage and that the property has
866 been rejected for coverage by at least one authorized insurer
867 and at least three surplus lines insurers. If such conditions
868 are met, the dwelling may be insured by the corporation for up
869 to 3 years, after which time the dwelling is ineligible for
870 coverage. The office shall approve the method used by the
871 corporation for valuing the dwelling replacement costs under
872 cost for the purposes of this subparagraph. If a policyholder is
873 insured by the corporation before prior to being determined to
874 be ineligible pursuant to this subparagraph and such
875 policyholder files a lawsuit challenging the determination, the
876 policyholder may remain insured by the corporation until the
877 conclusion of the litigation.
878 b. Effective January 1, 2015, a structure that has a
879 dwelling replacement cost of $900,000 or more, or a single
880 condominium unit that has a combined dwelling and contents
881 replacement cost of $900,000 or more, is not eligible for
882 coverage by the corporation. Such dwellings insured by the
883 corporation on December 31, 2014, may continue to be covered by
884 the corporation until the end of the policy term.
885 c. Effective January 1, 2016, a structure that has a
886 dwelling replacement cost of $800,000 or more, or a single
887 condominium unit that has a combined dwelling and contents
888 replacement cost of $800,000 or more, is not eligible for
889 coverage by the corporation. Such dwellings insured by the
890 corporation on December 31, 2015, may continue to be covered by
891 the corporation until the end of the policy term.
892 d. Effective January 1, 2017, a structure that has a
893 dwelling replacement cost of $700,000 or more, or a single
894 condominium unit that has a combined dwelling and contents
895 replacement cost of $700,000 or more, is not eligible for
896 coverage by the corporation. Such dwellings insured by the
897 corporation on December 31, 2016, may continue to be covered by
898 the corporation until the end of the policy term.
899 e. Effective January 1, 2018, a structure that has a
900 dwelling replacement cost of $600,000 or more, or a single
901 condominium unit that has a combined dwelling and contents
902 replacement cost of $600,000 or more, is not eligible for
903 coverage by the corporation. Such dwellings insured by the
904 corporation on December 31, 2017, may continue to be covered by
905 the corporation until the end of the policy term.
906 f. Effective January 1, 2019, a structure that has a
907 dwelling replacement cost of $500,000 or more, or a single
908 condominium unit that has a combined dwelling and contents
909 replacement cost of $500,000 or more, is not eligible for
910 coverage by the corporation. Such dwellings insured by the
911 corporation on December 31, 2018, may continue to be covered by
912 the corporation until the end of the policy term.
913
914 The requirements of sub-subparagraphs b.-f. do not apply in
915 counties where the office determines there is not a reasonable
916 degree of competition. In such counties the eligibility
917 requirements of sub-subparagraph a. apply.
918 4. It is the intent of the Legislature that policyholders,
919 applicants, and agents of the corporation receive service and
920 treatment of the highest possible level but never less than that
921 generally provided in the voluntary market. It is also intended
922 that the corporation be held to service standards no less than
923 those applied to insurers in the voluntary market by the office
924 with respect to responsiveness, timeliness, customer courtesy,
925 and overall dealings with policyholders, applicants, or agents
926 of the corporation.
927 5. A new structure for which a notice of commencement has
928 been issued on or after July 1, 2013, pursuant to s. 713.135,
929 which is located seaward of the coastal construction control
930 line created pursuant to s. 161.053, is ineligible for coverage
931 through the corporation unless the structure meets the coastal
932 code-plus building code criteria developed and recommended by
933 the Florida Building Commission. Filing a notice of commencement
934 for an addition to an existing structure that was built before
935 July 1, 2013, requires that the addition be built according to
936 the code-plus building criteria but does not require that the
937 existing structure meet the code-plus criteria in order to be
938 eligible for coverage through the corporation. Effective January
939 1, 2009, a personal lines residential structure that is located
940 in the “wind-borne debris region,” as defined in s. 1609.2,
941 International Building Code (2006), and that has an insured
942 value on the structure of $750,000 or more is not eligible for
943 coverage by the corporation unless the structure has opening
944 protections as required under the Florida Building Code for a
945 newly constructed residential structure in that area. A
946 residential structure shall be deemed to comply with this
947 subparagraph if it has shutters or opening protections on all
948 openings and if such opening protections complied with the
949 Florida Building Code at the time they were installed.
950 6. For any claim filed under any policy of the corporation,
951 a public adjuster may not charge, agree to, or accept any
952 compensation, payment, commission, fee, or other thing of value
953 greater than 10 percent of the additional amount actually paid
954 over the amount that was originally offered by the corporation
955 for any one claim.
956 (b)1. All insurers authorized to write one or more subject
957 lines of business in this state are subject to assessment by the
958 corporation and, for the purposes of this subsection, are
959 referred to collectively as “assessable insurers.” Insurers
960 writing one or more subject lines of business in this state
961 pursuant to part VIII of chapter 626 are not assessable
962 insurers; however, but insureds who procure one or more subject
963 lines of business in this state pursuant to part VIII of chapter
964 626 are subject to assessment by the corporation and are
965 referred to collectively as “assessable insureds.” An insurer’s
966 assessment liability begins on the first day of the calendar
967 year following the year in which the insurer was issued a
968 certificate of authority to transact insurance for subject lines
969 of business in this state and terminates 1 year after the end of
970 the first calendar year during which the insurer no longer holds
971 a certificate of authority to transact insurance for subject
972 lines of business in this state.
973 2.a. All revenues, assets, liabilities, losses, and
974 expenses of the corporation shall be divided into three separate
975 accounts as follows:
976 (I) A personal lines account for personal residential
977 policies issued by the corporation, or issued by the Residential
978 Property and Casualty Joint Underwriting Association and renewed
979 by the corporation, which provides comprehensive, multiperil
980 coverage on risks that are not located in areas eligible for
981 coverage by the Florida Windstorm Underwriting Association as
982 those areas were defined on January 1, 2002, and for policies
983 that do not provide coverage for the peril of wind on risks that
984 are located in such areas;
985 (II) A commercial lines account for commercial residential
986 and commercial nonresidential policies issued by the
987 corporation, or issued by the Residential Property and Casualty
988 Joint Underwriting Association and renewed by the corporation,
989 which provides coverage for basic property perils on risks that
990 are not located in areas eligible for coverage by the Florida
991 Windstorm Underwriting Association as those areas were defined
992 on January 1, 2002, and for policies that do not provide
993 coverage for the peril of wind on risks that are located in such
994 areas; and
995 (III) A coastal account for personal residential policies
996 and commercial residential and commercial nonresidential
997 property policies issued by the corporation, or transferred to
998 the corporation, which provides coverage for the peril of wind
999 on risks that are located in areas eligible for coverage by the
1000 Florida Windstorm Underwriting Association as those areas were
1001 defined on January 1, 2002. The corporation may offer policies
1002 that provide multiperil coverage and the corporation shall
1003 continue to offer policies that provide coverage only for the
1004 peril of wind for risks located in areas eligible for coverage
1005 in the coastal account. In issuing multiperil coverage, the
1006 corporation may use its approved policy forms and rates for the
1007 personal lines account. An applicant or insured who is eligible
1008 to purchase a multiperil policy from the corporation may
1009 purchase a multiperil policy from an authorized insurer without
1010 prejudice to the applicant’s or insured’s eligibility to
1011 prospectively purchase a policy that provides coverage only for
1012 the peril of wind from the corporation. An applicant or insured
1013 who is eligible for a corporation policy that provides coverage
1014 only for the peril of wind may elect to purchase or retain such
1015 policy and also purchase or retain coverage excluding wind from
1016 an authorized insurer without prejudice to the applicant’s or
1017 insured’s eligibility to prospectively purchase a policy that
1018 provides multiperil coverage from the corporation. It is the
1019 goal of the Legislature that there be an overall average savings
1020 of 10 percent or more for a policyholder who currently has a
1021 wind-only policy with the corporation, and an ex-wind policy
1022 with a voluntary insurer or the corporation, and who obtains a
1023 multiperil policy from the corporation. It is the intent of the
1024 Legislature that the offer of multiperil coverage in the coastal
1025 account be made and implemented in a manner that does not
1026 adversely affect the tax-exempt status of the corporation or
1027 creditworthiness of or security for currently outstanding
1028 financing obligations or credit facilities of the coastal
1029 account, the personal lines account, or the commercial lines
1030 account. The coastal account must also include quota share
1031 primary insurance under subparagraph (c)2. The area eligible for
1032 coverage under the coastal account also includes the area within
1033 Port Canaveral, which is bordered on the south by the City of
1034 Cape Canaveral, bordered on the west by the Banana River, and
1035 bordered on the north by Federal Government property.
1036 b. The three separate accounts must be maintained as long
1037 as financing obligations entered into by the Florida Windstorm
1038 Underwriting Association or Residential Property and Casualty
1039 Joint Underwriting Association are outstanding, in accordance
1040 with the terms of the corresponding financing documents. If the
1041 financing obligations are no longer outstanding, the corporation
1042 may use a single account for all revenues, assets, liabilities,
1043 losses, and expenses of the corporation. Consistent with this
1044 subparagraph and prudent investment policies that minimize the
1045 cost of carrying debt, the board shall exercise its best efforts
1046 to retire existing debt or obtain the approval of necessary
1047 parties to amend the terms of existing debt, in order so as to
1048 structure the most efficient plan for consolidating to
1049 consolidate the three separate accounts into a single account.
1050 c. Creditors of the Residential Property and Casualty Joint
1051 Underwriting Association and the accounts specified in sub-sub
1052 subparagraphs a.(I) and (II) may have a claim against, and
1053 recourse to, those accounts and no claim against, or recourse
1054 to, the account referred to in sub-sub-subparagraph a.(III).
1055 Creditors of the Florida Windstorm Underwriting Association have
1056 a claim against, and recourse to, the account referred to in
1057 sub-sub-subparagraph a.(III) and no claim against, or recourse
1058 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
1059 (II).
1060 d. Revenues, assets, liabilities, losses, and expenses not
1061 attributable to particular accounts shall be prorated among the
1062 accounts.
1063 e. The Legislature finds that the revenues of the
1064 corporation are revenues that are necessary to meet the
1065 requirements set forth in documents authorizing the issuance of
1066 bonds under this subsection.
1067 f. The income of the corporation may not inure to the
1068 benefit of any private person.
1069 3. With respect to a deficit in an account:
1070 a. After accounting for the Citizens policyholder surcharge
1071 imposed under sub-subparagraph i., if the remaining projected
1072 deficit incurred in the coastal account in a particular calendar
1073 year:
1074 (I) Is not greater than 2 percent of the aggregate
1075 statewide direct written premium for the subject lines of
1076 business for the prior calendar year, the entire deficit shall
1077 be recovered through regular assessments of assessable insurers
1078 under paragraph (q) and assessable insureds.
1079 (II) Exceeds 2 percent of the aggregate statewide direct
1080 written premium for the subject lines of business for the prior
1081 calendar year, the corporation shall levy regular assessments on
1082 assessable insurers under paragraph (q) and on assessable
1083 insureds in an amount equal to the greater of 2 percent of the
1084 projected deficit or 2 percent of the aggregate statewide direct
1085 written premium for the subject lines of business for the prior
1086 calendar year. Any remaining projected deficit shall be
1087 recovered through emergency assessments under sub-subparagraph
1088 d.
1089 b. Each assessable insurer’s share of the amount being
1090 assessed under sub-subparagraph a. must be in the proportion
1091 that the assessable insurer’s direct written premium for the
1092 subject lines of business for the year preceding the assessment
1093 bears to the aggregate statewide direct written premium for the
1094 subject lines of business for that year. The assessment
1095 percentage applicable to each assessable insured is the ratio of
1096 the amount being assessed under sub-subparagraph a. to the
1097 aggregate statewide direct written premium for the subject lines
1098 of business for the prior year. Assessments levied by the
1099 corporation on assessable insurers under sub-subparagraph a.
1100 must be paid as required by the corporation’s plan of operation
1101 and paragraph (q). Assessments levied by the corporation on
1102 assessable insureds under sub-subparagraph a. shall be collected
1103 by the surplus lines agent at the time the surplus lines agent
1104 collects the surplus lines tax required by s. 626.932, and paid
1105 to the Florida Surplus Lines Service Office at the time the
1106 surplus lines agent pays the surplus lines tax to that office.
1107 Upon receipt of regular assessments from surplus lines agents,
1108 the Florida Surplus Lines Service Office shall transfer the
1109 assessments directly to the corporation as determined by the
1110 corporation.
1111 c. After accounting for the Citizens policyholder surcharge
1112 imposed under sub-subparagraph i., the remaining projected
1113 deficits in the personal lines account and in the commercial
1114 lines account in a particular calendar year shall be recovered
1115 through emergency assessments under sub-subparagraph d.
1116 d. Upon a determination by the executive director, with the
1117 concurrence of the board of governors, that a projected deficit
1118 in an account exceeds the amount that is expected to be
1119 recovered through regular assessments under sub-subparagraph a.,
1120 plus the amount that is expected to be recovered through
1121 policyholder surcharges under sub-subparagraph i., the executive
1122 director, with concurrence by the board, after verification by
1123 the office, shall levy emergency assessments for as many years
1124 as necessary to cover the deficits, to be collected by
1125 assessable insurers and the corporation and collected from
1126 assessable insureds upon issuance or renewal of policies for
1127 subject lines of business, excluding National Flood Insurance
1128 policies. The executive director shall notify the Financial
1129 Services Commission of the emergency assessments within 5 days
1130 after the board’s concurrence with the executive director’s
1131 determination that such assessments are necessary. The amount
1132 collected in a particular year must be a uniform percentage of
1133 that year’s direct written premium for subject lines of business
1134 and all accounts of the corporation, excluding National Flood
1135 Insurance Program policy premiums, as annually determined by the
1136 executive director, with concurrence by the board, and verified
1137 by the office. The office shall verify the arithmetic
1138 calculations involved in the board’s determination within 30
1139 days after receipt of the information on which the determination
1140 was based. The office shall notify assessable insurers and the
1141 Florida Surplus Lines Service Office of the date on which
1142 assessable insurers shall begin to collect and assessable
1143 insureds shall begin to pay such assessment. The date must be at
1144 least may be not less than 90 days after the date the
1145 corporation levies emergency assessments pursuant to this sub
1146 subparagraph. Notwithstanding any other provision of law, the
1147 corporation and each assessable insurer that writes subject
1148 lines of business shall collect emergency assessments from its
1149 policyholders without such obligation being affected by any
1150 credit, limitation, exemption, or deferment. Emergency
1151 assessments levied by the corporation on assessable insureds
1152 shall be collected by the surplus lines agent at the time the
1153 surplus lines agent collects the surplus lines tax required by
1154 s. 626.932 and paid to the Florida Surplus Lines Service Office
1155 at the time the surplus lines agent pays the surplus lines tax
1156 to that office. The emergency assessments collected shall be
1157 transferred directly to the corporation on a periodic basis as
1158 determined by the corporation and held by the corporation solely
1159 in the applicable account. The aggregate amount of emergency
1160 assessments levied for an account under this sub-subparagraph in
1161 any calendar year may be less than but not exceed the greater of
1162 10 percent of the amount needed to cover the deficit, plus
1163 interest, fees, commissions, required reserves, and other costs
1164 associated with financing the original deficit, or 10 percent of
1165 the aggregate statewide direct written premium for subject lines
1166 of business and all accounts of the corporation for the prior
1167 year, plus interest, fees, commissions, required reserves, and
1168 other costs associated with financing the deficit.
1169 e. The corporation may pledge the proceeds of assessments,
1170 projected recoveries from the Florida Hurricane Catastrophe
1171 Fund, other insurance and reinsurance recoverables, policyholder
1172 surcharges and other surcharges, and other funds available to
1173 the corporation as the source of revenue for and to secure bonds
1174 issued under paragraph (q), bonds or other indebtedness issued
1175 under subparagraph (c)3., or lines of credit or other financing
1176 mechanisms issued or created under this subsection, or to retire
1177 any other debt incurred as a result of deficits or events giving
1178 rise to deficits, or in any other way that the executive
1179 director, with the concurrence of the board, determines will
1180 efficiently recover such deficits. The purpose of the lines of
1181 credit or other financing mechanisms is to provide additional
1182 resources to assist the corporation in covering claims and
1183 expenses attributable to a catastrophe. As used in this
1184 subsection, the term “assessments” includes regular assessments
1185 under sub-subparagraph a. or subparagraph (q)1. and emergency
1186 assessments under sub-subparagraph d. Emergency assessments
1187 collected under sub-subparagraph d. are not part of an insurer’s
1188 rates, are not premium, and are not subject to premium tax,
1189 fees, or commissions; however, failure to pay the emergency
1190 assessment shall be treated as failure to pay premium. The
1191 emergency assessments under sub-subparagraph d. shall continue
1192 as long as any bonds issued or other indebtedness incurred with
1193 respect to a deficit for which the assessment was imposed remain
1194 outstanding, unless adequate provision has been made for the
1195 payment of such bonds or other indebtedness pursuant to the
1196 documents governing such bonds or indebtedness.
1197 f. As used in this subsection for purposes of any deficit
1198 incurred on or after January 25, 2007, the term “subject lines
1199 of business” means insurance written by assessable insurers or
1200 procured by assessable insureds for all property and casualty
1201 lines of business in this state, but not including workers’
1202 compensation or medical malpractice. As used in this sub
1203 subparagraph, the term “property and casualty lines of business”
1204 includes all lines of business identified on Form 2, Exhibit of
1205 Premiums and Losses, in the annual statement required of
1206 authorized insurers under s. 624.424 and any rule adopted under
1207 this section, except for those lines identified as accident and
1208 health insurance and except for policies written under the
1209 National Flood Insurance Program or the Federal Crop Insurance
1210 Program. For purposes of this sub-subparagraph, the term
1211 “workers’ compensation” includes both workers’ compensation
1212 insurance and excess workers’ compensation insurance.
1213 g. The Florida Surplus Lines Service Office shall annually
1214 determine annually the aggregate statewide written premium in
1215 subject lines of business procured by assessable insureds and
1216 report that information to the corporation in a form and at a
1217 time the corporation specifies to ensure that the corporation
1218 can meet the requirements of this subsection and the
1219 corporation’s financing obligations.
1220 h. The Florida Surplus Lines Service Office shall verify
1221 the proper application by surplus lines agents of assessment
1222 percentages for regular assessments and emergency assessments
1223 levied under this subparagraph on assessable insureds and assist
1224 the corporation in ensuring the accurate, timely collection and
1225 payment of assessments by surplus lines agents as required by
1226 the corporation.
1227 i. In 2008 or thereafter, Upon a determination by the board
1228 of governors that an account has a projected deficit, the board
1229 shall levy a Citizens policyholder surcharge against all
1230 policyholders of the corporation.
1231 (I) The surcharge shall be levied as a uniform percentage
1232 of the premium for the policy of up to 15 percent of the policy
1233 such premium, which funds shall be used to offset the deficit.
1234 (II) The surcharge is payable upon cancellation or
1235 termination of the policy, upon renewal of the policy, or upon
1236 issuance of a new policy by the corporation within the first 12
1237 months after the date of the levy or the period of time
1238 necessary to fully collect the surcharge amount.
1239 (III) The corporation may not levy any regular assessments
1240 under paragraph (q) pursuant to sub-subparagraph a. or sub
1241 subparagraph b. with respect to a particular year’s deficit
1242 until the corporation has first levied the full amount of the
1243 surcharge authorized by this sub-subparagraph.
1244 (IV) The surcharge is not considered premium and is not
1245 subject to commissions, fees, or premium taxes. However, failure
1246 to pay the surcharge shall be treated as failure to pay premium.
1247 j. If the amount of any assessments or surcharges collected
1248 from corporation policyholders, assessable insurers or their
1249 policyholders, or assessable insureds exceeds the amount of the
1250 deficits, such excess amounts shall be remitted to and retained
1251 by the corporation in a reserve to be used by the corporation,
1252 as determined by the executive director, with the concurrence of
1253 the board of governors, and approved by the office, to pay
1254 claims or reduce any past, present, or future plan-year deficits
1255 or to reduce outstanding debt.
1256 (c) The corporation’s plan of operation:
1257 1. Must provide for adoption of residential property and
1258 casualty insurance policy forms and commercial residential and
1259 nonresidential property insurance forms, which must be approved
1260 by the office before use. The corporation shall adopt the
1261 following policy forms:
1262 a. Standard personal lines policy forms that are
1263 comprehensive multiperil policies providing full coverage of a
1264 residential property equivalent to the coverage provided in the
1265 private insurance market under an HO-3, HO-4, or HO-6 policy.
1266 b. Basic personal lines policy forms that are policies
1267 similar to an HO-8 policy or a dwelling fire policy that provide
1268 coverage meeting the requirements of the secondary mortgage
1269 market, but which is more limited than the coverage under a
1270 standard policy.
1271 c. Commercial lines residential and nonresidential policy
1272 forms that are generally similar to the basic perils of full
1273 coverage obtainable for commercial residential structures and
1274 commercial nonresidential structures in the admitted voluntary
1275 market.
1276 d. Personal lines and commercial lines residential property
1277 insurance forms that cover the peril of wind only. Such The
1278 forms are applicable only to residential properties located in
1279 areas eligible for coverage under the coastal account referred
1280 to in sub-subparagraph (b)2.a.
1281 e. Commercial lines nonresidential property insurance forms
1282 that cover the peril of wind only. Such The forms are applicable
1283 only to nonresidential properties located in areas eligible for
1284 coverage under the coastal account referred to in sub
1285 subparagraph (b)2.a.
1286 f. The corporation may adopt variations of the policy forms
1287 listed in sub-subparagraphs a.-e. which contain more restrictive
1288 coverage.
1289 g. Effective January 1, 2013, the corporation shall offer a
1290 basic personal lines policy similar to an HO-8 policy with
1291 dwelling repair based on common construction materials and
1292 methods.
1293 2. Must provide that the corporation and an authorized
1294 insurer may enter into a risk-sharing agreement for the purpose
1295 of reducing the corporation’s exposure. As used in this
1296 subparagraph, the term “risk-sharing agreement” means an
1297 agreement between the corporation and an authorized insurer for
1298 the corporation to retain part, but not all, of the risk for a
1299 specified group of policies or specified perils within a group
1300 of policies, as part of the terms for removal of policies from
1301 the corporation.
1302 a. Entering into a risk-sharing agreement is voluntary and
1303 at the discretion of the corporation and the authorized insurer.
1304 To avoid unnecessary expense, the executive director, with
1305 concurrence of the board of governors, may limit the
1306 corporation’s participation in risk-sharing agreements to those
1307 participants capable and willing to assume a minimum of 25
1308 percent of the exposure on at least 100,000 policies and may
1309 specify other limitations. A risk-sharing agreement in which the
1310 corporation retains part of the risk may not exceed 5 years.
1311 b. The risk-sharing agreement may cover policies in any
1312 account and may cover any perils. The corporation may act as a
1313 reinsurer or a cedent under a risk sharing agreement or an
1314 excess of loss agreement. If the corporation is the reinsurer,
1315 the insurance policy forms and endorsements must be approved by
1316 the office, cover all perils that are the subject of the risk
1317 sharing agreement, and cover at least the same limits as the
1318 corporation policies being replaced.
1319 c. The terms of each risk-sharing agreement must ensure
1320 that the consideration received by the corporation is
1321 commensurate with the risk retained by the corporation and the
1322 risk assumed by the authorized insurer. The corporation may not
1323 share risk for bad faith.
1324 d. The risk-sharing agreement must specify the proportion
1325 of exposure that the authorized insurer reports to the Florida
1326 Hurricane Catastrophe Fund and the exposure retained by the
1327 corporation. Each shall pay premium and receive reimbursements
1328 from the fund for the exposure that they retain or assume as
1329 provided in the risk-sharing agreement. The risk retained or
1330 assumed is eligible for coverage by the fund and is not
1331 considered reinsurance for purposes of coverage by the fund.
1332 However, the authorized insurer and the corporation may report
1333 participation in the risk sharing agreement on their financial
1334 statements as reinsurance if appropriate according to the
1335 characteristics of the agreement based on statutory accounting
1336 rules and instructions.
1337 e. Notwithstanding any other provision of law:
1338 (I) Policies offered coverage by the corporation or an
1339 authorized insurer through a risk-sharing agreement are not
1340 eligible for coverage by the corporation outside of the
1341 agreement; and
1342 (II) A risk-sharing agreement between the corporation and
1343 an authorized insurer is not subject to the requirements of a
1344 take-out or keep-out program under ss. 627.3517 and this
1345 subsection, except that the agreement must be filed by the
1346 authorized insurer with the office for review and approval
1347 before the execution of the agreement by the insurer.
1348 f. To ensure that exposures are accurately reported to the
1349 Florida Hurricane Catastrophe Fund, the corporation and each
1350 insurer participating in a risk-sharing agreement under this
1351 subparagraph must report its exposure under covered policies to
1352 the fund as required under s. 215.555(5)(c), including the
1353 requirement that, by September 1 of each year, each insurer
1354 notify the board of its insured values under covered policies as
1355 of June 30 of that year. Each report must also specify the
1356 percentage of liability applicable to the corporation and the
1357 percentage applicable to the insurer. Pursuant to its authority
1358 under s. 215.555, the State Board of Administration shall adopt
1359 rules to administer this sub-subparagraph.
1360 2. Must provide that the corporation adopt a program in
1361 which the corporation and authorized insurers enter into quota
1362 share primary insurance agreements for hurricane coverage, as
1363 defined in s. 627.4025(2)(a), for eligible risks, and adopt
1364 property insurance forms for eligible risks which cover the
1365 peril of wind only.
1366 a. As used in this subsection, the term:
1367 (I) “Quota share primary insurance” means an arrangement in
1368 which the primary hurricane coverage of an eligible risk is
1369 provided in specified percentages by the corporation and an
1370 authorized insurer. The corporation and authorized insurer are
1371 each solely responsible for a specified percentage of hurricane
1372 coverage of an eligible risk as set forth in a quota share
1373 primary insurance agreement between the corporation and an
1374 authorized insurer and the insurance contract. The
1375 responsibility of the corporation or authorized insurer to pay
1376 its specified percentage of hurricane losses of an eligible
1377 risk, as set forth in the agreement, may not be altered by the
1378 inability of the other party to pay its specified percentage of
1379 losses. Eligible risks that are provided hurricane coverage
1380 through a quota share primary insurance arrangement must be
1381 provided policy forms that set forth the obligations of the
1382 corporation and authorized insurer under the arrangement,
1383 clearly specify the percentages of quota share primary insurance
1384 provided by the corporation and authorized insurer, and
1385 conspicuously and clearly state that the authorized insurer and
1386 the corporation may not be held responsible beyond their
1387 specified percentage of coverage of hurricane losses.
1388 (II) “Eligible risks” means personal lines residential and
1389 commercial lines residential risks that meet the underwriting
1390 criteria of the corporation and are located in areas that were
1391 eligible for coverage by the Florida Windstorm Underwriting
1392 Association on January 1, 2002.
1393 b. The corporation may enter into quota share primary
1394 insurance agreements with authorized insurers at corporation
1395 coverage levels of 90 percent and 50 percent.
1396 c. If the corporation determines that additional coverage
1397 levels are necessary to maximize participation in quota share
1398 primary insurance agreements by authorized insurers, the
1399 corporation may establish additional coverage levels. However,
1400 the corporation’s quota share primary insurance coverage level
1401 may not exceed 90 percent.
1402 d. Any quota share primary insurance agreement entered into
1403 between an authorized insurer and the corporation must provide
1404 for a uniform specified percentage of coverage of hurricane
1405 losses, by county or territory as set forth by the corporation
1406 board, for all eligible risks of the authorized insurer covered
1407 under the agreement.
1408 e. Any quota share primary insurance agreement entered into
1409 between an authorized insurer and the corporation is subject to
1410 review and approval by the office. However, such agreement shall
1411 be authorized only as to insurance contracts entered into
1412 between an authorized insurer and an insured who is already
1413 insured by the corporation for wind coverage.
1414 f. For all eligible risks covered under quota share primary
1415 insurance agreements, the exposure and coverage levels for both
1416 the corporation and authorized insurers shall be reported by the
1417 corporation to the Florida Hurricane Catastrophe Fund. For all
1418 policies of eligible risks covered under such agreements, the
1419 corporation and the authorized insurer must maintain complete
1420 and accurate records for the purpose of exposure and loss
1421 reimbursement audits as required by fund rules. The corporation
1422 and the authorized insurer shall each maintain duplicate copies
1423 of policy declaration pages and supporting claims documents.
1424 g. The corporation board shall establish in its plan of
1425 operation standards for quota share agreements which ensure that
1426 there is no discriminatory application among insurers as to the
1427 terms of the agreements, pricing of the agreements, incentive
1428 provisions if any, and consideration paid for servicing policies
1429 or adjusting claims.
1430 h. The quota share primary insurance agreement between the
1431 corporation and an authorized insurer must set forth the
1432 specific terms under which coverage is provided, including, but
1433 not limited to, the sale and servicing of policies issued under
1434 the agreement by the insurance agent of the authorized insurer
1435 producing the business, the reporting of information concerning
1436 eligible risks, the payment of premium to the corporation, and
1437 arrangements for the adjustment and payment of hurricane claims
1438 incurred on eligible risks by the claims adjuster and personnel
1439 of the authorized insurer. Entering into a quota sharing
1440 insurance agreement between the corporation and an authorized
1441 insurer is voluntary and at the discretion of the authorized
1442 insurer.
1443 3.a. May provide that the corporation may employ or
1444 otherwise contract with individuals or other entities to provide
1445 administrative or professional services that may be appropriate
1446 to effectuate the plan. The corporation may borrow funds by
1447 issuing bonds or by incurring other indebtedness, and shall have
1448 other powers reasonably necessary to effectuate the requirements
1449 of this subsection, including, without limitation, the power to
1450 issue bonds and incur other indebtedness in order to refinance
1451 outstanding bonds or other indebtedness. The corporation may
1452 seek judicial validation of its bonds or other indebtedness
1453 under chapter 75. The corporation may issue bonds or incur other
1454 indebtedness, or have bonds issued on its behalf by a unit of
1455 local government pursuant to subparagraph (q)2. in the absence
1456 of a hurricane or other weather-related event, upon a
1457 determination by the corporation, subject to approval by the
1458 office, that such action would enable it to efficiently meet the
1459 financial obligations of the corporation and that such
1460 financings are reasonably necessary to effectuate the
1461 requirements of this subsection. The corporation may take all
1462 actions needed to facilitate tax-free status for such bonds or
1463 indebtedness, including formation of trusts or other affiliated
1464 entities. The corporation may pledge assessments, projected
1465 recoveries from the Florida Hurricane Catastrophe Fund, other
1466 reinsurance recoverables, Citizens policyholder surcharges and
1467 other surcharges, and other funds available to the corporation
1468 as security for bonds or other indebtedness. In recognition of
1469 s. 10, Art. I of the State Constitution, prohibiting the
1470 impairment of obligations of contracts, it is the intent of the
1471 Legislature that no action not be taken whose purpose is to
1472 impair any bond indenture or financing agreement or any revenue
1473 source committed by contract to such bond or other indebtedness.
1474 b. May provide that the corporation employ or otherwise
1475 contract with individuals or other entities to provide
1476 administrative or professional services that may be appropriate
1477 to effectuate the plan. To ensure that the corporation is
1478 operating in an efficient and economic manner while providing
1479 quality service to policyholders, applicants, and agents, the
1480 board shall commission an independent third-party consultant
1481 having expertise in insurance company management or insurance
1482 company management consulting to prepare a report and make
1483 recommendations on the relative costs and benefits of
1484 outsourcing various policy issuance and service functions to
1485 private servicing carriers or entities performing similar
1486 functions in the private market for a fee, rather than
1487 performing such functions in-house. In making such
1488 recommendations, the consultant shall consider how other
1489 residual markets, both in this state and around the country,
1490 outsource appropriate functions or use servicing carriers to
1491 better match expenses with revenues that fluctuate based on a
1492 widely varying policy count. The report must be completed by
1493 July 1, 2012. Upon receiving the report, the executive director,
1494 with the concurrence of the board, shall develop a plan to
1495 implement the report and submit the plan for review,
1496 modification, and approval to the Financial Services Commission.
1497 Upon the commission’s approval of the plan, the board shall
1498 begin implementing the plan by January 1, 2013.
1499 4. Must require that the corporation operate subject to the
1500 supervision and approval of a board of governors consisting of
1501 eight individuals who are residents of this state and who are,
1502 from different geographical areas of the this state.
1503 a. The Governor, the Chief Financial Officer, the President
1504 of the Senate, and the Speaker of the House of Representatives
1505 shall each appoint two members of the board. All board members,
1506 except those appointed by the speaker, must be confirmed by the
1507 Senate during the legislative session following their
1508 appointment. At least one of the two members appointed by each
1509 appointing officer must have demonstrated expertise in insurance
1510 and must be is deemed to be within the scope of the exemption
1511 provided under in s. 112.313(7)(b). The Chief Financial Officer
1512 shall designate one of the appointees as chair for the purpose
1513 of presiding over the orderly conduct of meetings. An appointee
1514 serves as chair for no more than one term. All board members
1515 serve at the pleasure of the appointing officer. All members of
1516 the board are subject to removal at will by the officers who
1517 appointed them. All board members, including the chair, shall
1518 must be appointed to serve for 3-year terms beginning annually
1519 on a date designated by the plan. However, for the first term
1520 beginning on or after July 1, 2009, each appointing officer
1521 shall appoint one member of the board for a 2-year term and one
1522 member for a 3-year term. A board vacancy shall be filled for
1523 the unexpired term by the appointing officer. A board member may
1524 not serve for more than two terms, except that a board member
1525 appointed to fill an unexpired term created by a vacancy may be
1526 appointed for two subsequent terms. The Chief Financial Officer
1527 shall appoint a technical advisory group to provide information
1528 and advice to the executive director and the board in connection
1529 with the corporation’s board’s duties under this subsection. The
1530 executive director shall be appointed by and serve at the
1531 pleasure of the Governor and the Chief Financial Officer. and
1532 Senior managers of the corporation shall be appointed by the
1533 executive director, with the concurrence of engaged by the
1534 board, and serve at the pleasure of the executive director
1535 board. Appointment of the Any executive director appointed on or
1536 after July 1, 2006, is subject to confirmation by the Senate
1537 upon original appointment and upon the election or reelection of
1538 the Governor and Chief Financial Officer if retained. The
1539 executive director is responsible for employing other staff as
1540 the corporation may require, subject to review and concurrence
1541 by the board.
1542 b. The board shall create a Market Accountability Advisory
1543 Committee to assist the corporation in developing awareness of
1544 its rates and its customer and agent service levels in
1545 relationship to the voluntary market insurers writing similar
1546 coverage.
1547 (I) The members of the advisory committee consist of the
1548 following 11 persons, one of whom must be elected chair by the
1549 members of the committee: four representatives, one appointed by
1550 the Florida Association of Insurance Agents, one by the Florida
1551 Association of Insurance and Financial Advisors, one by the
1552 Professional Insurance Agents of Florida, and one by the Latin
1553 American Association of Insurance Agencies; three
1554 representatives appointed by the insurers with the three highest
1555 voluntary market share of residential property insurance
1556 business in the state; one representative from the Office of
1557 Insurance Regulation; one consumer appointed by the board who is
1558 insured by the corporation at the time of appointment to the
1559 committee; one representative appointed by the Florida
1560 Association of Realtors; and one representative appointed by the
1561 Florida Bankers Association. All members shall be appointed to
1562 3-year terms, serve at the pleasure of the board of governors,
1563 and may serve for consecutive terms.
1564 (II) The committee shall report to the corporation at each
1565 board meeting on insurance market issues that which may include
1566 rates and rate competition within with the voluntary market;
1567 service, including policy issuance, claims processing, and
1568 general responsiveness to policyholders, applicants, and agents;
1569 and matters relating to depopulation.
1570 5. Must provide a procedure for determining the eligibility
1571 of a risk for coverage by the corporation which applies to both
1572 new and renewal policies, as follows:
1573 a. Subject to s. 627.3517, with respect to personal lines
1574 residential risks, if the risk is offered coverage from an
1575 authorized insurer at the insurer’s approved rate under a
1576 standard policy including wind coverage or, if consistent with
1577 the insurer’s underwriting rules as filed with the office, a
1578 basic policy including wind coverage, for a new application to
1579 the corporation for coverage, the risk is not eligible for any
1580 policy issued by the corporation unless the premium for coverage
1581 from the authorized insurer is more than 15 percent greater than
1582 the premium for comparable coverage from the corporation. If the
1583 risk is not able to obtain such offer, the risk is eligible for
1584 a standard policy including wind coverage or a basic policy
1585 including wind coverage issued by the corporation; however, if
1586 the risk could not be insured under a standard policy including
1587 wind coverage regardless of market conditions, the risk is
1588 eligible for a basic policy including wind coverage unless
1589 rejected under subparagraph 8. However, a policyholder of the
1590 corporation or a policyholder removed from the corporation
1591 through an assumption agreement until the end of the assumption
1592 period remains eligible for coverage from the corporation
1593 regardless of any offer of coverage from an authorized insurer
1594 or surplus lines insurer. The corporation shall determine the
1595 type of policy to be provided on the basis of objective
1596 standards specified in the underwriting manual and based on
1597 generally accepted underwriting practices.
1598 (I) If the risk accepts an offer of coverage through the
1599 market assistance plan or through a mechanism established by the
1600 corporation before a policy is issued to the risk by the
1601 corporation or during the first 30 days of coverage by the
1602 corporation, and the producing agent who submitted the
1603 application to the plan or to the corporation is not currently
1604 appointed by the insurer, the insurer shall:
1605 (A) Pay to the producing agent of record of the policy for
1606 the first year, an amount that is the greater of the insurer’s
1607 usual and customary commission for the type of policy written or
1608 a fee equal to the usual and customary commission of the
1609 corporation; or
1610 (B) Offer to allow the producing agent of record of the
1611 policy to continue servicing the policy for at least 1 year and
1612 offer to pay the agent the greater of the insurer’s or the
1613 corporation’s usual and customary commission for the type of
1614 policy written.
1615
1616 If the producing agent is unwilling or unable to accept
1617 appointment, the new insurer shall pay the agent in accordance
1618 with sub-sub-sub-subparagraph (A).
1619 (II) If the corporation enters into a contractual agreement
1620 for a take-out plan, the producing agent of record of the
1621 corporation policy is entitled to retain any unearned commission
1622 on the policy, and the insurer shall:
1623 (A) Pay to the producing agent of record, for the first
1624 year, an amount that is the greater of the insurer’s usual and
1625 customary commission for the type of policy written or a fee
1626 equal to the usual and customary commission of the corporation;
1627 or
1628 (B) Offer to allow the producing agent of record to
1629 continue servicing the policy for at least 1 year and offer to
1630 pay the agent the greater of the insurer’s or the corporation’s
1631 usual and customary commission for the type of policy written.
1632
1633 If the producing agent is unwilling or unable to accept
1634 appointment, the new insurer shall pay the agent in accordance
1635 with sub-sub-sub-subparagraph (A).
1636 b. With respect to commercial lines residential risks, for
1637 a new application to the corporation for coverage, if the risk
1638 is offered coverage under a policy including wind coverage from
1639 an authorized insurer at its approved rate, the risk is not
1640 eligible for a policy issued by the corporation unless the
1641 premium for coverage from the authorized insurer is more than 15
1642 percent greater than the premium for comparable coverage from
1643 the corporation. If the risk is not able to obtain any such
1644 offer, the risk is eligible for a policy including wind coverage
1645 issued by the corporation. However, a policyholder of the
1646 corporation or a policyholder removed from the corporation
1647 through an assumption agreement until the end of the assumption
1648 period remains eligible for coverage from the corporation
1649 regardless of an offer of coverage from an authorized insurer or
1650 surplus lines insurer.
1651 (I) If the risk accepts an offer of coverage through the
1652 market assistance plan or through a mechanism established by the
1653 corporation before a policy is issued to the risk by the
1654 corporation or during the first 30 days of coverage by the
1655 corporation, and the producing agent who submitted the
1656 application to the plan or the corporation is not currently
1657 appointed by the insurer, the insurer shall:
1658 (A) Pay to the producing agent of record of the policy, for
1659 the first year, an amount that is the greater of the insurer’s
1660 usual and customary commission for the type of policy written or
1661 a fee equal to the usual and customary commission of the
1662 corporation; or
1663 (B) Offer to allow the producing agent of record of the
1664 policy to continue servicing the policy for at least 1 year and
1665 offer to pay the agent the greater of the insurer’s or the
1666 corporation’s usual and customary commission for the type of
1667 policy written.
1668
1669 If the producing agent is unwilling or unable to accept
1670 appointment, the new insurer shall pay the agent in accordance
1671 with sub-sub-sub-subparagraph (A).
1672 (II) If the corporation enters into a contractual agreement
1673 for a take-out plan, the producing agent of record of the
1674 corporation policy is entitled to retain any unearned commission
1675 on the policy, and the insurer shall:
1676 (A) Pay to the producing agent of record, for the first
1677 year, an amount that is the greater of the insurer’s usual and
1678 customary commission for the type of policy written or a fee
1679 equal to the usual and customary commission of the corporation;
1680 or
1681 (B) Offer to allow the producing agent of record to
1682 continue servicing the policy for at least 1 year and offer to
1683 pay the agent the greater of the insurer’s or the corporation’s
1684 usual and customary commission for the type of policy written.
1685
1686 If the producing agent is unwilling or unable to accept
1687 appointment, the new insurer shall pay the agent in accordance
1688 with sub-sub-sub-subparagraph (A).
1689 c. For purposes of determining comparable coverage under
1690 sub-subparagraphs a. and b., the comparison must be based on
1691 those forms and coverages that are reasonably comparable. The
1692 corporation may rely on a determination of comparable coverage
1693 and premium made by the producing agent who submits the
1694 application to the corporation, made in the agent’s capacity as
1695 the corporation’s agent. A comparison may be made solely of the
1696 premium with respect to the main building or structure only on
1697 the following basis: the same coverage A or other building
1698 limits; the same percentage hurricane deductible that applies on
1699 an annual basis or that applies to each hurricane for commercial
1700 residential property; the same percentage of ordinance and law
1701 coverage, if the same limit is offered by both the corporation
1702 and the authorized insurer; the same mitigation credits, to the
1703 extent the same types of credits are offered both by the
1704 corporation and the authorized insurer; the same method for loss
1705 payment, such as replacement cost or actual cash value, if the
1706 same method is offered both by the corporation and the
1707 authorized insurer in accordance with underwriting rules; and
1708 any other form or coverage that is reasonably comparable as
1709 determined by the board. If an application is submitted to the
1710 corporation for wind-only coverage in the coastal account, the
1711 premium for the corporation’s wind-only policy plus the premium
1712 for the ex-wind policy that is offered by an authorized insurer
1713 to the applicant must be compared to the premium for multiperil
1714 coverage offered by an authorized insurer, subject to the
1715 standards for comparison specified in this subparagraph. If the
1716 corporation or the applicant requests from the authorized
1717 insurer a breakdown of the premium of the offer by types of
1718 coverage so that a comparison may be made by the corporation or
1719 its agent and the authorized insurer refuses or is unable to
1720 provide such information, the corporation may treat the offer as
1721 not being an offer of coverage from an authorized insurer at the
1722 insurer’s approved rate.
1723 6. Must include rules for classifications of risks and
1724 rates.
1725 7. Must provide that if premium and investment income for
1726 an account attributable to a particular calendar year are in
1727 excess of projected losses and expenses for the account
1728 attributable to that year, such excess must shall be held in
1729 surplus in the account. Such surplus must be available to defray
1730 deficits in that account as to future years and used for that
1731 purpose before assessing assessable insurers and assessable
1732 insureds as to any calendar year.
1733 8. Must provide objective criteria and procedures that are
1734 to be uniformly applied to all applicants in determining whether
1735 an individual risk is so hazardous as to be uninsurable. In
1736 making this determination and in establishing the criteria and
1737 procedures, the following must be considered:
1738 a. Whether the likelihood of a loss for the individual risk
1739 is substantially higher than for other risks of the same class;
1740 and
1741 b. Whether the uncertainty associated with the individual
1742 risk is such that an appropriate premium cannot be determined.
1743
1744 The acceptance or rejection of a risk by the corporation shall
1745 be construed as the private placement of insurance, and the
1746 provisions of chapter 120 do not apply.
1747 9. Must provide that the corporation make its best efforts
1748 to procure catastrophe reinsurance at reasonable rates, to cover
1749 its projected 100-year probable maximum loss as determined by
1750 the board of governors.
1751 10. Must provide that the policies issued by the
1752 corporation must provide that if the corporation or the market
1753 assistance plan obtains an offer from an authorized insurer to
1754 cover the risk at its approved rates, the risk is no longer
1755 eligible for renewal through the corporation, except as
1756 otherwise provided in this subsection.
1757 11. Must provide that corporation policies and applications
1758 must include a notice that the corporation policy could, under
1759 this section, be replaced with a policy issued by an authorized
1760 insurer which does not provide coverage identical to the
1761 coverage provided by the corporation. The notice must also
1762 specify that acceptance of corporation coverage creates a
1763 conclusive presumption that the applicant or policyholder is
1764 aware of this potential.
1765 12. May establish, subject to approval by the office,
1766 different eligibility requirements and operational procedures
1767 for any line or type of coverage for any specified county or
1768 area if the board determines that such changes are justified due
1769 to the voluntary market being sufficiently stable and
1770 competitive in such area or for such line or type of coverage
1771 and that consumers who, in good faith, are unable to obtain
1772 insurance through the voluntary market through ordinary methods
1773 continue to have access to coverage from the corporation. If
1774 coverage is sought in connection with a real property transfer,
1775 the requirements and procedures may not provide an effective
1776 date of coverage later than the date of the closing of the
1777 transfer as established by the transferor, the transferee, and,
1778 if applicable, the lender.
1779 13. Must provide that, with respect to the coastal account,
1780 any assessable insurer that has with a surplus as to
1781 policyholders of $25 million or less writing 25 percent or more
1782 of its total countrywide property insurance premiums in this
1783 state may petition the office, within the first 90 days of each
1784 calendar year, petition the office to qualify as a limited
1785 apportionment company. A regular assessment levied by the
1786 corporation on a limited apportionment company for a deficit
1787 incurred by the corporation for the coastal account may be paid
1788 to the corporation on a monthly basis as the assessments are
1789 collected by the limited apportionment company from its
1790 insureds. The, but a limited apportionment company must begin
1791 collecting the regular assessments within not later than 90 days
1792 after the regular assessments are levied by the corporation, and
1793 the regular assessments must be paid in full within 15 months
1794 after being levied by the corporation. A limited apportionment
1795 company shall collect from its policyholders any emergency
1796 assessment imposed under sub-subparagraph (b)3.d. The plan must
1797 provide that, if the office determines that any regular
1798 assessment will result in an impairment of the surplus of a
1799 limited apportionment company, the office may direct that all or
1800 part of such assessment be deferred as provided in subparagraph
1801 (q)4. However, an emergency assessment to be collected from
1802 policyholders under sub-subparagraph (b)3.d. may not be limited
1803 or deferred.
1804 14. Must provide that the corporation appoint as its
1805 licensed agents only those agents who at the time of initial
1806 appointment also hold an appointment as defined in s. 626.015(3)
1807 with an insurer who at the time of the agent’s initial
1808 appointment by the corporation is authorized to write and is
1809 actually writing personal lines residential property coverage,
1810 commercial residential property coverage, or commercial
1811 nonresidential property coverage within the state. As a
1812 condition of continued appointment, agents of the corporation
1813 must maintain appropriate documentation specified by the
1814 corporation which warrants and certifies that alternative
1815 coverage was annually sought for each risk placed by that agent
1816 with the corporation in accordance with s. 627.3518. After
1817 January 1, 2014, if an agent places a policy with the
1818 corporation which was ineligible for coverage based on
1819 eligibility standards at the time of placement, agent
1820 commissions may not be paid on that policy.
1821 15. Must provide a premium payment plan option to its
1822 policyholders which, at a minimum, allows for quarterly and
1823 semiannual payment of premiums. A monthly payment plan may, but
1824 is not required to, be offered.
1825 16. Must limit coverage on mobile homes or manufactured
1826 homes built before 1994 to actual cash value of the dwelling
1827 rather than replacement costs of the dwelling.
1828 17. May provide such limits of coverage as the board
1829 determines, consistent with the requirements of this subsection.
1830 18. May require commercial property to meet specified
1831 hurricane mitigation construction features as a condition of
1832 eligibility for coverage.
1833 19. Must provide that new or renewal policies issued by the
1834 corporation on or after January 1, 2012, which cover sinkhole
1835 loss do not include coverage for any loss to appurtenant
1836 structures, driveways, sidewalks, decks, or patios that are
1837 directly or indirectly caused by sinkhole activity. The
1838 corporation shall exclude such coverage using a notice of
1839 coverage change, which may be included with the policy renewal,
1840 and not by issuance of a notice of nonrenewal of the excluded
1841 coverage upon renewal of the current policy.
1842 20. Must, as of July January 1, 2014 2012, must require
1843 that the agent obtain from an applicant for coverage from the
1844 corporation an acknowledgment signed by the applicant, which
1845 includes, at a minimum, the following statement:
1846
1847 ACKNOWLEDGMENT OF POTENTIAL SURCHARGEAND ASSESSMENT LIABILITY:
1848
1849 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
1850 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
1851 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
1852 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
1853 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
1854 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
1855 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
1856 LEGISLATURE.
1857 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
1858 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
1859 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
1860 BE ELIGIBLE FOR COVERAGE BY CITIZENS I MUST FIRST TRY TO OBTAIN
1861 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
1862 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
1863 ARE REGULATED AND APPROVED BY THE STATE.
1864 3.2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
1865 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
1866 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
1867 FLORIDA LEGISLATURE.
1868 4.3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
1869 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
1870 STATE OF FLORIDA.
1871 a. The corporation shall maintain, in electronic format or
1872 otherwise, a copy of the applicant’s signed acknowledgment and
1873 provide a copy of the statement to the policyholder as part of
1874 his or her the first renewal after the effective date of this
1875 subparagraph.
1876 b. The signed acknowledgment form creates a conclusive
1877 presumption that the policyholder understood and accepted his or
1878 her potential surcharge and assessment liability as a
1879 policyholder of the corporation.
1880 (g) The executive director, with the concurrence of the
1881 board, shall determine whether it is more cost-effective and in
1882 the best interests of the corporation to use legal services
1883 provided by in-house attorneys employed by the corporation
1884 rather than contracting with outside counsel. In making such
1885 determination, the board shall document its findings and shall
1886 consider: the expertise needed; whether time commitments exceed
1887 in-house staff resources; whether local representation is
1888 needed; the travel, lodging and other costs associated with in
1889 house representation; and such other factors that the board
1890 determines are relevant.
1891 (i)1. The Office of the Internal Auditor is established
1892 within the corporation to provide a central point for
1893 coordination of and responsibility for activities that promote
1894 accountability, integrity, and efficiency to the policyholders
1895 and to the taxpayers of this state. The internal auditor shall
1896 be appointed by the board of governors, shall report to and be
1897 under the general supervision of the board of governors, and is
1898 not subject to supervision by an any employee of the
1899 corporation. Administrative staff and support shall be provided
1900 by the corporation. The internal auditor shall be appointed
1901 without regard to political affiliation. It is the duty and
1902 responsibility of the internal auditor to:
1903 a. Provide direction for, supervise, conduct, and
1904 coordinate audits, investigations, and management reviews
1905 relating to the programs and operations of the corporation.
1906 b. Conduct, supervise, or coordinate other activities
1907 carried out or financed by the corporation for the purpose of
1908 promoting efficiency in the administration of, or preventing and
1909 detecting fraud, abuse, and mismanagement in, its programs and
1910 operations.
1911 c. Submit final audit reports, reviews, or investigative
1912 reports to the board of governors, the executive director, the
1913 members of the Financial Services Commission, and the President
1914 of the Senate and the Speaker of the House of Representatives.
1915 d. Keep the executive director and the board of governors
1916 informed concerning fraud, abuses, and internal control
1917 deficiencies relating to programs and operations administered or
1918 financed by the corporation, recommend corrective action, and
1919 report on the progress made in implementing corrective action.
1920 e. Report expeditiously to the Department of Law
1921 Enforcement or other law enforcement agencies, as appropriate,
1922 whenever the internal auditor has reasonable grounds to believe
1923 there has been a violation of criminal law.
1924 f. Cooperate and coordinate activities with the
1925 corporation’s inspector general.
1926 2. On or before February 15, the internal auditor shall
1927 prepare an annual report evaluating the effectiveness of the
1928 internal controls of the corporation and providing
1929 recommendations for corrective action, if necessary, and
1930 summarizing the audits, reviews, and investigations conducted by
1931 the office during the preceding fiscal year. The final report
1932 shall be furnished to the board of governors and the executive
1933 director, the President of the Senate, the Speaker of the House
1934 of Representatives, and the Financial Services Commission.
1935 (m)1. The Auditor General shall conduct an operational
1936 audit of the corporation annually every 3 years to evaluate
1937 management’s performance in administering laws, policies, and
1938 procedures governing the operations of the corporation in an
1939 efficient and effective manner. The scope of the review must
1940 shall include, but is not limited to, evaluating claims
1941 handling, customer service, take-out programs and bonuses;,
1942 financing arrangements made to address a 100-year probable
1943 maximum loss; personnel costs and administration; underwriting,
1944 including processes designed to ensure compliance with policy
1945 eligibility requirements of law;, procurement of goods and
1946 services;, internal controls;, and the internal audit function;
1947 and related internal controls. A copy of the report shall be
1948 provided to the corporation’s board, the President of the
1949 Senate, the Speaker of the House of Representatives, each member
1950 of the Financial Services Commission, and the Office of
1951 Insurance Regulation. The initial audit must be completed by
1952 February 1, 2009.
1953 2. The executive director, with the concurrence of the
1954 board, shall contract with an independent auditing firm to
1955 conduct a performance audit of the corporation every 2 years.
1956 The objectives of the audit include, but are not limited to, an
1957 evaluation, within the context of insurance industry best
1958 practices, of the corporation’s strategic planning processes,
1959 the functionality of the corporation’s organizational structure,
1960 the compensation levels of senior management, and the overall
1961 management and operations of the corporation. A copy of the
1962 audit report shall be provided to the corporation’s board, the
1963 President of the Senate, the Speaker of the House of
1964 Representatives, each member of the Financial Services
1965 Commission, the Office of Insurance Regulation, and the Auditor
1966 General. The initial audit must be completed by June 1, 2014.
1967 (q)1. The corporation shall certify to the office its needs
1968 for annual assessments as to a particular calendar year, and for
1969 any interim assessments that it deems to be necessary to sustain
1970 operations as to a particular year pending the receipt of annual
1971 assessments. Upon verification, the office shall approve such
1972 certification, and the corporation shall levy such annual or
1973 interim assessments. Such assessments shall be prorated as
1974 provided in paragraph (b). The corporation shall take all
1975 reasonable and prudent steps necessary to collect the amount of
1976 assessments due from each assessable insurer, including, if
1977 prudent, filing suit to collect the assessments, and the office
1978 may provide such assistance to the corporation it deems
1979 appropriate. If the corporation is unable to collect an
1980 assessment from any assessable insurer, the uncollected
1981 assessments shall be levied as an additional assessment against
1982 the assessable insurers and any assessable insurer required to
1983 pay an additional assessment as a result of such failure to pay
1984 shall have a cause of action against the such nonpaying
1985 assessable insurer. Assessments must shall be included as an
1986 appropriate factor in the making of rates. The failure of a
1987 surplus lines agent to collect and remit any regular or
1988 emergency assessment levied by the corporation is considered to
1989 be a violation of s. 626.936 and subjects the surplus lines
1990 agent to the penalties provided in that section.
1991 2. The governing body of any unit of local government, any
1992 residents of which are insured by the corporation, may issue
1993 bonds as defined in s. 125.013 or s. 166.101 from time to time
1994 to fund an assistance program, in conjunction with the
1995 corporation, for the purpose of defraying deficits of the
1996 corporation. In order to avoid needless and indiscriminate
1997 proliferation, duplication, and fragmentation of such assistance
1998 programs, the any unit of local government, any residents of
1999 which are insured by the corporation, may provide for the
2000 payment of losses, regardless of whether or not the losses
2001 occurred within or outside of the territorial jurisdiction of
2002 the local government. Revenue bonds under this subparagraph may
2003 not be issued until validated pursuant to chapter 75, unless a
2004 state of emergency is declared by executive order or
2005 proclamation of the Governor pursuant to s. 252.36 which makes
2006 making such findings as are necessary to determine that it is in
2007 the best interests of, and necessary for, the protection of the
2008 public health, safety, and general welfare of residents of this
2009 state and declaring it an essential public purpose to permit
2010 certain municipalities or counties to issue such bonds as will
2011 permit relief to claimants and policyholders of the corporation.
2012 Any such unit of local government may enter into such contracts
2013 with the corporation and with any other entity created pursuant
2014 to this subsection as are necessary to carry out this paragraph.
2015 Any bonds issued are under this subparagraph shall be payable
2016 from and secured by moneys received by the corporation from
2017 emergency assessments under sub-subparagraph (b)3.d., and
2018 assigned and pledged to or on behalf of the unit of local
2019 government for the benefit of the holders of such bonds. The
2020 funds, credit, property, and taxing power of the state or of the
2021 unit of local government may shall not be pledged for the
2022 payment of such bonds.
2023 3.a. The corporation shall adopt one or more programs
2024 subject to approval by the office for the reduction of both new
2025 and renewal writings by in the corporation. The corporation may
2026 consider any prudent and not unfairly discriminatory approach to
2027 reducing corporation writings.
2028 a. The corporation may adopt a credit against assessment
2029 liability or other liability which provides an incentive for
2030 insurers to take and keep risks out of the corporation by
2031 maintaining or increasing voluntary writings in counties or
2032 areas in which corporation risks are highly concentrated, and a
2033 program to provide a formula under which an insurer voluntarily
2034 taking risks out of the corporation by maintaining or increasing
2035 voluntary writings is relieved, wholly or partially, from
2036 assessments under sub-subparagraph (b)3.a.
2037 b. Beginning January 1, 2008, Any program the corporation
2038 adopts for the payment of bonuses to an insurer for each risk
2039 the insurer removes from the corporation must shall comply with
2040 s. 627.3511(2) and may not exceed the amount referenced in s.
2041 627.3511(2) for each risk removed. The corporation may consider
2042 any prudent and not unfairly discriminatory approach to reducing
2043 corporation writings, and may adopt a credit against assessment
2044 liability or other liability that provides an incentive for
2045 insurers to take risks out of the corporation and to keep risks
2046 out of the corporation by maintaining or increasing voluntary
2047 writings in counties or areas in which corporation risks are
2048 highly concentrated and a program to provide a formula under
2049 which an insurer voluntarily taking risks out of the corporation
2050 by maintaining or increasing voluntary writings will be relieved
2051 wholly or partially from assessments under sub-subparagraph
2052 (b)3.a. However, Any “take-out bonus” or payment to an insurer
2053 must be conditioned on the property being insured for at least 5
2054 years by the insurer, unless canceled or nonrenewed by the
2055 policyholder. If the policy is canceled or nonrenewed by the
2056 policyholder before the end of the 5-year period, the amount of
2057 the take-out bonus must be prorated for the time period the
2058 policy was insured. If When the corporation enters into a
2059 contractual agreement for a take-out plan, the producing agent
2060 of record of the corporation policy is entitled to retain any
2061 unearned commission on such policy, and the insurer shall
2062 either:
2063 (I) Pay to the producing agent of record of the policy, for
2064 the first year, an amount which is the greater of the insurer’s
2065 usual and customary commission for the type of policy written or
2066 a policy fee equal to the usual and customary commission of the
2067 corporation; or
2068 (II) Offer to allow the producing agent of record of the
2069 policy to continue servicing the policy for at least a period of
2070 not less than 1 year and offer to pay the agent the insurer’s
2071 usual and customary commission for the type of policy written.
2072 If the producing agent is unwilling or unable to accept
2073 appointment by the new insurer, the new insurer shall pay the
2074 agent in accordance with sub-sub-subparagraph (I).
2075 c.b. Any credit or exemption from regular assessments
2076 adopted under this subparagraph shall last up to no longer than
2077 the 3 years after following the cancellation or expiration of
2078 the policy by the corporation. With the approval of the office,
2079 the board may extend such credits for an additional year if the
2080 insurer guarantees an additional year of renewability for all
2081 policies removed from the corporation, or for 2 additional years
2082 if the insurer guarantees 2 additional years of renewability for
2083 all policies so removed.
2084 d.c. A There shall be no credit, limitation, exemption, or
2085 deferment from emergency assessments to be collected from
2086 policyholders pursuant to sub-subparagraph (b)3.d. is
2087 prohibited.
2088 4. The corporation plan shall provide for the deferment, in
2089 whole or in part, of the assessment of an assessable insurer,
2090 other than an emergency assessment collected from policyholders
2091 pursuant to sub-subparagraph (b)3.d., if the office finds that
2092 payment of the assessment would endanger or impair the solvency
2093 of the insurer. If In the event an assessment against an
2094 assessable insurer is deferred in whole or in part, the amount
2095 by which such assessment is deferred may be assessed against the
2096 other assessable insurers in a manner consistent with the basis
2097 for assessments set forth in paragraph (b).
2098 5. Effective July 1, 2007, In order to evaluate the costs
2099 and benefits of approved take-out plans, if the corporation pays
2100 a bonus or other payment to an insurer for an approved take-out
2101 plan, it shall maintain a record of the address or such other
2102 identifying information on the property or risk removed in order
2103 to track if and when the property or risk is later insured by
2104 the corporation.
2105 6. Any policy taken out, assumed, or removed from the
2106 corporation is, as of the effective date of the take-out,
2107 assumption, or removal, direct insurance issued by the insurer
2108 and not by the corporation, even if the corporation continues to
2109 service the policies. This subparagraph applies to policies of
2110 the corporation and not policies taken out, assumed, or removed
2111 from any other entity.
2112 6. The corporation may adopt one or more programs to
2113 encourage authorized insurers to remove policies from the
2114 corporation through a loan from the corporation to an insurer
2115 secured by a surplus note that contains such necessary and
2116 reasonable provisions as the corporation requires. Such surplus
2117 note is subject to the review and approval of the office
2118 pursuant to s. 628.401. The corporation may include, but is not
2119 limited to, provisions regarding the maximum size of a loan to
2120 an insurer, capital matching requirements, the relationship
2121 between the aggregate number of policies or amount of loss
2122 exposure removed from the association and the amount of a loan,
2123 retention requirements related to policies removed from the
2124 corporation, and limitations on the number of insurers receiving
2125 loans from the corporation under any one management group in
2126 whatever form or arrangement. If a loan secured by a surplus
2127 note is provided to a new mutual insurance company, the
2128 corporation may require the board of the new mutual insurer to
2129 have a majority of independent board members, may restrict the
2130 ability of the new mutual insurer to convert to a stock insurer
2131 while the mutual insurer owes any principal or interest under
2132 the surplus note to the corporation, establish a capital match
2133 requirement of up to $1 of private capital for each $4 of the
2134 corporation’s loan to a new mutual insurer, and limit the
2135 eligibility of a new mutual insurer for a waiver of the ceding
2136 commission traditionally associated with take-out programs from
2137 the corporation to those new mutual insurers that agree
2138 contractually to maintain an expense ratio below 20 per cent of
2139 written premium. For this purpose, the term “expense ratio”
2140 means the sum of agent commissions and other acquisition
2141 expenses; general and administrative expenses; and premium
2142 taxes, licenses, and fees, divided by the gross written premium.
2143 (z) In enacting the provisions of this section, the
2144 Legislature recognizes that both the Florida Windstorm
2145 Underwriting Association and the Residential Property and
2146 Casualty Joint Underwriting Association have entered into
2147 financing arrangements that obligate each entity to service its
2148 debts and maintain the capacity to repay funds secured under
2149 these financing arrangements. It is the intent of the
2150 Legislature that nothing in this section not be construed to
2151 compromise, diminish, or interfere with the rights of creditors
2152 under such financing arrangements. It is further the intent of
2153 the Legislature to preserve the obligations of the Florida
2154 Windstorm Underwriting Association and Residential Property and
2155 Casualty Joint Underwriting Association with regard to
2156 outstanding financing arrangements, with such obligations
2157 passing entirely and unchanged to the corporation and,
2158 specifically, to the applicable account of the corporation. So
2159 long as any bonds, notes, indebtedness, or other financing
2160 obligations of the Florida Windstorm Underwriting Association or
2161 the Residential Property and Casualty Joint Underwriting
2162 Association are outstanding, under the terms of the financing
2163 documents pertaining to them, the executive director of the
2164 corporation, with the concurrence of the governing board, of the
2165 corporation shall have and shall exercise the authority to levy,
2166 charge, collect, and receive all premiums, assessments,
2167 surcharges, charges, revenues, and receipts that the
2168 associations had authority to levy, charge, collect, or receive
2169 under the provisions of subsection (2) and this subsection,
2170 respectively, as they existed on January 1, 2002, to provide
2171 moneys, without exercise of the authority provided by this
2172 subsection, in at least the amounts, and by the times, as would
2173 be provided under those former provisions of subsection (2) or
2174 this subsection, respectively, so that the value, amount, and
2175 collectability of any assets, revenues, or revenue source
2176 pledged or committed to, or any lien thereon securing such
2177 outstanding bonds, notes, indebtedness, or other financing
2178 obligations is will not be diminished, impaired, or adversely
2179 affected by the amendments made by this section act and to
2180 permit compliance with all provisions of financing documents
2181 pertaining to such bonds, notes, indebtedness, or other
2182 financing obligations, or the security or credit enhancement for
2183 them, and any reference in this subsection to bonds, notes,
2184 indebtedness, financing obligations, or similar obligations, of
2185 the corporation must shall include like instruments or contracts
2186 of the Florida Windstorm Underwriting Association and the
2187 Residential Property and Casualty Joint Underwriting Association
2188 to the extent not inconsistent with the provisions of the
2189 financing documents pertaining to them.
2190 (gg) The Office of Inspector General is established within
2191 the corporation to provide a central point for coordination of
2192 and responsibility for activities that promote accountability,
2193 integrity, and efficiency. The office shall be headed by an
2194 inspector general, which is a senior management position that
2195 involves planning, coordinating, and performing activities
2196 assigned to and assumed by the inspector general for the
2197 corporation.
2198 1. The inspector general shall be appointed by the
2199 Financial Services Commission and may be removed from office
2200 only by the commission. The inspector general shall be appointed
2201 without regard to political affiliation.
2202 a. At a minimum, the inspector general must possess a
2203 bachelor’s degree from an accredited college or university and 8
2204 years of professional experience related to the duties of an
2205 inspector general as described in this paragraph, of which 5
2206 years must have been at a supervisory level.
2207 b. Until June 30, 2014, the inspector general shall be
2208 under the general supervision of the Financial Services
2209 Commission and not subject to the supervision of any employee of
2210 the corporation. Beginning July 1, 2014, the inspector general
2211 shall report to, and be under the supervision of, the chair of
2212 the board of governors. The executive director or corporation
2213 staff may not prevent or prohibit the inspector general from
2214 initiating, carrying out, or completing any review, evaluation,
2215 or investigation.
2216 2. The inspector general shall initiate, direct,
2217 coordinate, participate in, and perform studies, reviews,
2218 evaluations, and investigations designed to assess management
2219 practices; compliance with laws, rules, and policies; and
2220 program effectiveness and efficiency. This includes:
2221 a. Conducting internal examinations; investigating
2222 allegations of fraud, waste, abuse, malfeasance, mismanagement,
2223 employee misconduct, or violations of corporation policies; and
2224 conducting any other investigations as directed by the Financial
2225 Services Commission or as independently determined.
2226 b. Evaluating and recommending actions regarding security,
2227 the ethical behavior of personnel and vendors, and compliance
2228 with rules, laws, policies, and personnel matters; and rendering
2229 ethics opinions.
2230 c. Overseeing or participating in personnel and
2231 administrative policy compliance and management, operational
2232 reviews, and conducting and selecting human resources-related
2233 advice and consultation.
2234 d. In conjunction with the ethics and compliance officer,
2235 evaluating the application of a corporation code of ethics,
2236 providing input on the design and content of ethics-related
2237 policy training courses, educating employees on the code and on
2238 appropriate conduct, and checking for compliance.
2239 e. Participating in policy development and review. This
2240 includes working collaboratively with the ethics and compliance
2241 officer in the creation, modification, and maintenance of
2242 personnel and administrative services policies and in the
2243 identification of policy enhancements; and researching policy
2244 related issues.
2245 f. Participating in the activities of the senior management
2246 team and evaluating the management’s compliance with recommended
2247 solutions.
2248 g. Cooperating and coordinating activities with the chief
2249 of internal audit, but not conducting internal audits.
2250 h. Maintaining records of investigations and discipline in
2251 accordance with established policies.
2252 i. Supervising and directing the tasks and assignments of
2253 the staff assigned to assist with the inspector general’s
2254 projects. This includes regular review and feedback regarding
2255 work in progress and upon completion and providing input
2256 regarding relevant training and staff development activities as
2257 warranted.
2258 j. Directing, planning, preparing, and presenting interim
2259 and final reports and oral briefings to the Financial Services
2260 Commission and the executive director which communicate the
2261 results of studies, reviews, and investigations.
2262 k. Providing the executive director with independent and
2263 objective assessments of programs and activities.
2264 l. Completing special projects and assignments as directed
2265 by the Financial Services Commission and performing other duties
2266 as requested by the commission.
2267 3. At least annually, the inspector general shall provide a
2268 report to the President of the Senate and the Speaker of the
2269 House of Representatives regarding the corporation’s
2270 clearinghouse and the extent to which policies are being
2271 returned to the voluntary market. This report must include an
2272 analysis regarding the effectiveness of the clearinghouse in
2273 encouraging voluntary market participation in depopulation.
2274 Section 10. Effective October 1, 2013, paragraph (e) of
2275 subsection (6) of section 627.351, Florida Statutes, is amended
2276 to read
2277 627.351 Insurance risk apportionment plans.—
2278 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
2279 (e) The corporation is subject to s. 287.057 for the
2280 purchase of commodities and contractual services except as
2281 otherwise provided in this paragraph. Services provided by
2282 tradepersons or technical experts to assist a licensed adjuster
2283 in the evaluation of individual claims are not subject to the
2284 procurement requirements of this section. Additionally, the
2285 procurement of financial services providers and underwriters
2286 must be made pursuant to s. 627.3513 Purchases that equal or
2287 exceed $2,500, but are less than $25,000, shall be made by
2288 receipt of written quotes, written record of telephone quotes,
2289 or informal bids, whenever practical. The procurement of goods
2290 or services valued at or over $25,000 shall be subject to
2291 competitive solicitation, except in situations where the goods
2292 or services are provided by a sole source or are deemed an
2293 emergency purchase; the services are exempted from competitive
2294 solicitation requirements under s. 287.057(3)(f); or the
2295 procurement of services is subject to s. 627.3513. Justification
2296 for the sole-sourcing or emergency procurement must be
2297 documented. Contracts for goods or services valued at or more
2298 than over $100,000 are subject to approval by the board.
2299 1. The corporation is an agency for the purposes of s.
2300 287.057, except for subsection (22) of that section for which
2301 the corporation is an eligible user.
2302 a. The authority of the Department of Management Services
2303 and the Chief Financial Officer under s. 287.057 extends to the
2304 corporation as if the corporation were an agency.
2305 b. The executive director of the corporation is the agency
2306 head under s. 287.057, except for resolution of bid protests for
2307 which the board would serve as the agency head.
2308 2. The corporation must provide notice of a decision or
2309 intended decision concerning a solicitation, contract award, or
2310 exceptional purchase by electronic posting. Such notice must
2311 contain the following statement: “Failure to file a protest
2312 within the time prescribed in this section constitutes a waiver
2313 of proceedings.”
2314 a. A person adversely affected by the corporation’s
2315 decision or intended decision to award a contract pursuant to s.
2316 287.057(1) or s. 287.057(3)(c) who elects to challenge the
2317 decision must file a written notice of protest with the
2318 executive director of the corporation within 72 hours after the
2319 corporation posts a notice of its decision or intended decision.
2320 For a protest of the terms, conditions, and specifications
2321 contained in a solicitation, including any provisions governing
2322 the methods for ranking bids, proposals, replies, awarding
2323 contracts, reserving rights of further negotiation, or modifying
2324 or amending any contract, the notice of protest must be filed in
2325 writing within 72 hours after the posting of the solicitation.
2326 Saturdays, Sundays, and state holidays are excluded in the
2327 computation of the 72-hour time period.
2328 b. A formal written protest must be filed within 10 days
2329 after the date the notice of protest is filed. The formal
2330 written protest must state with particularity the facts and law
2331 upon which the protest is based. Upon receipt of a formal
2332 written protest that has been timely filed, the corporation must
2333 stop the solicitation or contract award process until the
2334 subject of the protest is resolved by final board action unless
2335 the executive director sets forth in writing particular facts
2336 and circumstances that require the continuance of the
2337 solicitation or contract award process without delay in order to
2338 avoid an immediate and serious danger to the public health,
2339 safety, or welfare. The corporation must provide an opportunity
2340 to resolve the protest by mutual agreement between the parties
2341 within 7 business days after receipt of the formal written
2342 protest. If the subject of a protest is not resolved by mutual
2343 agreement within 7 business days, the corporation’s board must
2344 place the protest on the agenda and resolve it at its next
2345 regularly scheduled meeting. The protest must be heard by the
2346 board at a publicly noticed meeting in accordance with
2347 procedures established by the board.
2348 c. In a protest of an invitation-to-bid or request-for
2349 proposals procurement, submissions made after the bid or
2350 proposal opening which amend or supplement the bid or proposal
2351 may not be considered. In protesting an invitation-to-negotiate
2352 procurement, submissions made after the corporation announces
2353 its intent to award a contract, reject all replies, or withdraw
2354 the solicitation that amends or supplements the reply may not be
2355 considered. Unless otherwise provided by law, the burden of
2356 proof rests with the party protesting the corporation’s action.
2357 In a competitive-procurement protest, other than a rejection of
2358 all bids, proposals, or replies, the corporation’s board must
2359 conduct a de novo proceeding to determine whether the
2360 corporation’s proposed action is contrary to the corporation’s
2361 governing statutes, the corporation’s rules or policies, or the
2362 solicitation specifications. The standard of proof for the
2363 proceeding is whether the corporation’s action was clearly
2364 erroneous, contrary to competition, arbitrary, or capricious. In
2365 any bid-protest proceeding contesting an intended corporation
2366 action to reject all bids, proposals, or replies, the standard
2367 of review by the board is whether the corporation’s intended
2368 action is illegal, arbitrary, dishonest, or fraudulent.
2369 d. Failure to file a notice of protest or failure to file a
2370 formal written protest constitutes a waiver of proceedings.
2371 3. Contract actions and decisions by the board under this
2372 paragraph are final. Any further legal remedy must be made in
2373 the Circuit Court of Leon County.
2374 Section 11. The purchase of commodities and contractual
2375 services by Citizens Property Insurance Corporation commenced
2376 before October 1, 2013, is governed by the law in effect on
2377 September 30, 2013.
2378 Section 12. Effective January 1, 2014, paragraph (n) of
2379 subsection (6) of section 627.351, Florida Statutes, is amended
2380 to read:
2381 627.351 Insurance risk apportionment plans.—
2382 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
2383 (n)1. Rates for coverage provided by the corporation must
2384 be actuarially sound and subject to s. 627.062, Except as
2385 otherwise provided in this paragraph, rates for coverage
2386 provided by the corporation must be actuarially sound and not
2387 competitive with approved rates charged in the admitted
2388 voluntary market in order for the corporation to function as a
2389 residual market mechanism that provides insurance only if
2390 insurance cannot be procured in the voluntary market.
2391 a. In establishing actuarially sound rates the corporation
2392 shall include an appropriate catastrophe risk load factor that
2393 reflects the actual catastrophic risk exposure retained by the
2394 corporation.
2395 b. In establishing noncompetitive rates for personal and
2396 commercial lines residential policies, the average rates of the
2397 corporation for each rating territory may not be less than the
2398 average rates charged by the insurer that had the highest
2399 average rate in that rating territory among the 20 voluntary
2400 admitted insurers with the greatest total direct written premium
2401 in the state for that line of business in the preceding year.
2402 c. In establishing noncompetitive rates for mobile home
2403 coverage, the average rates of the corporation may not be less
2404 than the average rates charged by the insurer that had the
2405 highest average rate in that rating territory among the five
2406 voluntary admitted insurers with the greatest total written
2407 premium for mobile home owner’s policies in the state in the
2408 preceding year. The corporation shall file its recommended rates
2409 with the office at least annually. The corporation shall provide
2410 any additional information regarding the rates which the office
2411 requires. The office shall consider the recommendations of the
2412 board and issue a final order establishing the rates for the
2413 corporation within 45 days after the recommended rates are
2414 filed. The corporation may not pursue an administrative
2415 challenge or judicial review of the final order of the office.
2416 d. Rates for commercial nonresidential policies must be
2417 actuarially sound in accordance with sub-subparagraph a.
2418 e. The requirements of sub-subparagraphs b. and c. do not
2419 apply to rates in territories where the office determines there
2420 is not a reasonable degree of competition. In such territories
2421 the corporation’s rates must be actuarially sound in accordance
2422 with sub-subparagraph a.
2423 2. In addition to the rates otherwise determined pursuant
2424 to this paragraph, the corporation shall impose and collect an
2425 amount equal to the premium tax provided in s. 624.509 to
2426 augment the financial resources of the corporation.
2427 3. After the public hurricane loss-projection model under
2428 s. 627.06281 has been found to be accurate and reliable by the
2429 Florida Commission on Hurricane Loss Projection Methodology, the
2430 model shall serve as the minimum benchmark for determining the
2431 windstorm portion of the corporation’s rates. This subparagraph
2432 does not require or allow the corporation to adopt rates lower
2433 than the rates otherwise required or allowed by this paragraph.
2434 4. The rate filings for the corporation which were approved
2435 by the office and took effect January 1, 2007, are rescinded,
2436 except for those rates that were lowered. As soon as possible,
2437 the corporation shall begin using the lower rates that were in
2438 effect on December 31, 2006, and provide refunds to
2439 policyholders who paid higher rates as a result of that rate
2440 filing. The rates in effect on December 31, 2006, remain in
2441 effect for the 2007 and 2008 calendar years except for any rate
2442 change that results in a lower rate. The next rate change that
2443 may increase rates shall take effect pursuant to a new rate
2444 filing recommended by the corporation and established by the
2445 office, subject to this paragraph.
2446 5. Beginning on July 15, 2009, and annually thereafter, the
2447 corporation must make a recommended actuarially sound rate
2448 filing for each personal and commercial line of business it
2449 writes, to be effective no earlier than January 1, 2010.
2450 3.6. For policies initially insured by the corporation
2451 before July 1, 2013, and which have continuously been insured by
2452 the corporation since that date, Beginning on or after January
2453 1, 2010, and notwithstanding the board’s recommended rates and
2454 the office’s final order regarding the corporation’s filed rates
2455 under subparagraph 1., the corporation shall annually implement
2456 a rate increase that which, except for sinkhole coverage, does
2457 not exceed 10 percent for any territory single policy issued by
2458 the corporation, excluding coverage changes and surcharges. This
2459 subparagraph is limited to:
2460 a. Personal lines residential policies that have a dwelling
2461 replacement cost of less than $300,000 and that cover homestead
2462 personal residential properties or occupied permanent
2463 residencies having a written rental agreement for at least 12
2464 months.
2465 b. Personal lines residential wind-only policies that cover
2466 homestead personal residential properties, or that are occupied
2467 permanent residencies that have a written rental agreement for
2468 no less than 12 months, and have a dwelling replacement cost of
2469 less than:
2470 (1) $1 million on July 1, 2013.
2471 (II) $800,000 on January 1, 2014.
2472 (III) $600,000 on January 1, 2015.
2473 c. Commercial lines residential properties.
2474 4. The corporation shall also implement the following:
2475 a.7. The corporation may also implement An increase to
2476 reflect the effect on the corporation of the cash buildup factor
2477 pursuant to s. 215.555(5)(b).
2478 b. An increase of up to 3 percent, which shall only be used
2479 to purchase catastrophe reinsurance or other risk transfer
2480 mechanisms for purposes of protecting the corporation and its
2481 policyholders from potential shortfalls and assessments. In any
2482 year for which the full 3 percent increase is imposed, there
2483 must also be a corresponding 3 percent decrease, 1 percent per
2484 account, from the Citizens policyholder surcharge in (b)3.i.,
2485 for that year.
2486 5.8. The corporation’s implementation of rates as
2487 prescribed in subparagraph 3. 6. shall cease for any line of
2488 business written by the corporation upon the corporation’s
2489 implementation of the rates described in subparagraph 1.
2490 actuarially sound rates. Thereafter, the corporation shall
2491 annually make a recommended actuarially sound rate filing
2492 implementing such rates for each commercial and personal line of
2493 business the corporation writes.
2494 6. The corporation shall annually certify to the office
2495 that its rates comply with the requirements of this paragraph.
2496 If any adjustment in the rates or rating factors of the
2497 corporation is necessary to ensure such compliance, the
2498 corporation shall make and implement such adjustments and file
2499 its revised rates and rating factors with the office. If the
2500 office thereafter determines that the revised rates and rating
2501 factors fail to comply with this paragraph, it shall notify the
2502 corporation and require the corporation to amend its rates or
2503 rating factors in conjunction with its next rate filing. The
2504 office must notify the corporation by electronic means of any
2505 rate filing it approves for any insurer among the insurers
2506 referred to in this paragraph.
2507 7. By January 1, 2014, the board shall provide
2508 recommendations to the Legislature on how to provide relief to a
2509 policyholder whose premium reflects the full rate required under
2510 subparagraph 1. and who demonstrates a financial need at the
2511 time of application or renewal.
2512 Section 13. Section 627.3518, Florida Statutes, is created
2513 to read:
2514 627.3518 Citizens Property Insurance Corporation
2515 clearinghouse.—The Legislature recognizes that Citizens Property
2516 Insurance Corporation has authority to establish a clearinghouse
2517 as a separate organizational unit within the corporation for the
2518 purpose of determining the eligibility of new and renewal risks,
2519 excluding commercial residential, seeking coverage through the
2520 corporation and facilitating the identification and diversion of
2521 ineligible applicants and current policyholders from the
2522 corporation into the voluntary insurance market. The purpose of
2523 this section is to augment that authority by providing a
2524 framework for the corporation to implement such program by July
2525 1, 2013.
2526 (1) As used in this section, the term:
2527 (a) “Clearinghouse” means the clearinghouse diversion
2528 program created under this section.
2529 (b) “Corporation” means Citizens Property Insurance
2530 Corporation.
2531 (c) “Exclusive agent” means a licensed insurance agent who
2532 has agreed, by contract, to act exclusively for one company or
2533 group of affiliated insurance companies and is disallowed by the
2534 provisions of that contract to directly write for any other
2535 unaffiliated insurer absent express consent from the company or
2536 group of affiliated insurance companies.
2537 (d) “Independent agent” means a licensed insurance agent
2538 not described in paragraph (c).
2539 (2) In order to confirm eligibility with the corporation
2540 and to enhance the access of new applicants for coverage and
2541 existing policyholders of the corporation to offers of coverage
2542 from authorized and eligible insurers, the corporation shall
2543 establish a clearinghouse to facilitate the diversion of
2544 ineligible applicants and existing policyholders from the
2545 corporation into the voluntary insurance market.
2546 (3) The clearinghouse shall have the same rights and
2547 responsibilities in carrying out its duties as a licensed
2548 general lines agent, but is not required to employ or engage a
2549 licensed general lines agent or to maintain an insurance agency
2550 license in order to solicit and place insurance coverage. In
2551 establishing the clearinghouse, the corporation may:
2552 (a) Require all new applications and all policies due for
2553 renewal to be submitted to the clearinghouse or a private
2554 alternative in order to facilitate obtaining an offer of
2555 coverage from an authorized insurer before binding or renewing
2556 coverage by the corporation.
2557 (b) Employ or otherwise contract with individuals or other
2558 entities to provide administrative or professional services in
2559 order to effectuate the plan within the corporation in
2560 accordance with the applicable purchasing requirements under s.
2561 627.351.
2562 (c) Enter into contracts with an authorized or eligible
2563 insurer participating in the clearinghouse and accept an
2564 appointment by such insurer.
2565 (d) Provide funds to operate the clearinghouse, or charge
2566 agents and insurers a reasonable fee to offset, or partially
2567 offset, the costs of the clearinghouse. Insurers participating
2568 in the clearinghouse are not required to use the clearinghouse
2569 for the renewal of policies initially written through the
2570 clearinghouse.
2571 (e) Develop an enhanced application for obtaining
2572 information that will assist private insurers in determining
2573 whether to make an offer of coverage through the clearinghouse.
2574 (f) Before approving new applications for coverage by the
2575 corporation, require every application to be subject to a 48
2576 hour period that allows an insurer participating in the
2577 clearinghouse to select the application for coverage. The
2578 insurer may issue a binder on any policy selected for coverage
2579 for a period of at least 30 days, but not more than 60 days.
2580 (4) An authorized or eligible insurer may participate in
2581 the clearinghouse; however, participation is not mandatory.
2582 Insurers making offers of coverage to new applicants or renewing
2583 policyholders through the clearinghouse:
2584 (a) Are not required to individually appoint an agent whose
2585 customer is underwritten and bound through the clearinghouse.
2586 Notwithstanding s. 626.112, insurers are not required to appoint
2587 an agent on a policy underwritten through the clearinghouse as
2588 long as that policy remains with the insurer. Insurers may
2589 appoint an agent whose customer is initially underwritten and
2590 bound through the clearinghouse. If an insurer accepts a policy
2591 from an agent who is not appointed pursuant to this paragraph
2592 and thereafter accepts a policy from such agent, the provisions
2593 of s. 626.112 requiring appointment apply to the agent.
2594 (b) Must enter into a limited agency agreement with each
2595 agent who is not appointed in accordance with paragraph (a) and
2596 whose customer is underwritten and bound through the
2597 clearinghouse.
2598 (c) Must enter into its standard agency agreement with each
2599 agent whose customer is underwritten and bound through the
2600 clearinghouse if that agent has been appointed by the insurer
2601 pursuant to s. 626.112.
2602 (d) Must comply with s. 627.4133(2).
2603 (e) Must allow authorized or eligible insurers
2604 participating in the clearinghouse to participate through their
2605 single, designated managing general agent or broker; however the
2606 provisions of paragraph (6)(a) regarding ownership, control, and
2607 use of the expirations apply.
2608 (5)(a) Notwithstanding s. 627.3517, an applicant for new
2609 coverage is not eligible for coverage from the corporation if
2610 the applicant is offered coverage from an authorized insurer
2611 through the clearinghouse at a premium that is at or below the
2612 eligibility threshold established under s. 627.351(6)(c)5.a.
2613 (b) Notwithstanding any other provisions of law, if a
2614 renewing policyholder of the corporation is offered coverage
2615 from an authorized insurer for a personal lines or commercial
2616 lines risk at a premium that is no more than 15 percent above
2617 the corporation’s renewal premium for comparable coverage, the
2618 risk is not eligible for coverage with the corporation.
2619 (c) Notwithstanding s. 626.916(1), if an applicant for new
2620 or renewal coverage from the corporation does not receive an
2621 offer of coverage from an authorized insurer, the applicant may
2622 choose to accept an offer of coverage from an eligible insurer
2623 or their broker under ss. 626.913-626.937. Such offers of
2624 coverage from an eligible insurer do not make the risk
2625 ineligible for coverage with the corporation.
2626 (d) An applicant for new or renewal coverage from the
2627 corporation may choose to accept any offers of coverage received
2628 through the clearinghouse from an authorized insurer that is
2629 greater than 15 percent of the corporation’s renewal premium.
2630 (e) Sections 627.351(6)(c)5.a.(I) and b.(I) do not apply to
2631 an offer of coverage from an authorized insurer obtained through
2632 the clearinghouse.
2633 (6) Independent agents who submit new applications for
2634 coverage or who are the agent of record on a renewal policy
2635 submitted to the clearinghouse:
2636 (a) Must maintain ownership and the exclusive use of
2637 expirations, records, or other written or electronic information
2638 directly related to such applications or renewals written
2639 through the corporation or through an insurer participating in
2640 the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
2641 and (II)(B). Contracts with the corporation or required by the
2642 corporation may not amend, modify, interfere with, or limit such
2643 rights of ownership. Such expirations, records, or other written
2644 or electronic information may be used to review an application,
2645 issue a policy, or for any other purpose necessary for placing
2646 business through the clearinghouse.
2647 (b) Are not required to be appointed by an insurer
2648 participating in the clearinghouse for policies written solely
2649 through the clearinghouse, notwithstanding s. 626.112.
2650 (c) May accept an appointment from an insurer participating
2651 in the clearinghouse.
2652 (d) Must enter into a standard or limited agency agreement
2653 with the insurer, at the insurer’s option.
2654
2655 Applicants ineligible for coverage under paragraph (5)
2656 remain ineligible if their independent agent is unwilling or
2657 unable to enter into a standard or limited agency agreement with
2658 an insurer participating in the clearinghouse.
2659 (7) Exclusive agents submitting new applications for
2660 coverage or who are the agent of record on a renewal policy
2661 submitted to the clearinghouse:
2662 (a) Must maintain ownership and the exclusive use of
2663 expirations, records, or other written or electronic information
2664 directly related to such applications or renewals written
2665 through the corporation or through an insurer participating in
2666 the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
2667 and (II)(B). Contracts with the corporation or required by the
2668 corporation may not amend, modify, interfere with, or limit such
2669 rights of ownership. Such expirations, records, or other written
2670 or electronic information may be used to review an application,
2671 issue a policy, or for any other purpose necessary for placing
2672 business through the clearinghouse.
2673 (b) Are not required to be appointed by an insurer
2674 participating in the clearinghouse for policies written solely
2675 through the clearinghouse, notwithstanding s. 626.112.
2676 (c) Must accept an offer of coverage from an insurer whose
2677 limited servicing agreement is approved by that agent’s
2678 exclusive insurer as eligible to participate in the
2679 clearinghouse with that insurer’s exclusive agents.
2680 (d) Must enter into a limited servicing agreement with the
2681 insurer making an offer of coverage, and may do so only after
2682 the exclusive agent’s insurer has approved the terms of the
2683 agreement. The exclusive agent’s insurer must approve a limited
2684 service agreement for the clearinghouse if the insurer has
2685 approved a service agreement with the agent for other purposes.
2686
2687 An applicant is ineligible for coverage under paragraph (5)
2688 if the applicant’s exclusive agent is unwilling or unable to
2689 enter into a standard or limited agency agreement with a
2690 participating insurer making an offer of coverage to that
2691 applicant.
2692 (8) To promote private market initiatives that provide
2693 offers of coverage from authorized and eligible insurers to
2694 applicants for coverage by the corporation and to the
2695 corporation’s policyholders on renewal, the corporation shall
2696 publish, by January 1, 2014, reasonable standards for private
2697 alternatives to the submission of a risk to the clearinghouse.
2698 Such private alternatives may act in a master agency arrangement
2699 that allows agents to be appointed as subagents of a master
2700 agency and to use private alternatives for the submission of
2701 risks to the clearinghouse. The alternative option allowed under
2702 this subsection is an alternative to, and not a replacement for,
2703 the clearinghouse. Neither the clearinghouse nor any private
2704 entity operating under this subsection may prohibit insurers
2705 that elect to participate from participating in more than one
2706 clearinghouse or alternative; however, an insurer participating
2707 in the private entity must also participate in the
2708 clearinghouse.
2709 (9) Submission of an application to the clearinghouse for
2710 coverage by the corporation does not constitute the binding of
2711 coverage, and the failure of the clearinghouse to obtain an
2712 offer of coverage by an insurer is not considered acceptance of
2713 coverage of the risk by the corporation.
2714 (10) The clearinghouse does not include commercial
2715 residential policies.
2716 Section 14. Temporary keepout program.—Citizens Property
2717 Corporation shall implement a temporary keepout program
2718 beginning July 1, 2013, and ending on the date the clearinghouse
2719 program established under s. 627.3518, Florida Statutes, is
2720 operational.
2721 (1) Subject to procedures adopted by the corporation, the
2722 program shall provide an opportunity for new applicants for
2723 personal residential multiperil coverage with the corporation to
2724 be offered coverage with authorized insurers through the market
2725 assistance plan established under s. 627.3515, Florida Statutes.
2726 (2) The program is subject to all of the following:
2727 (a) The corporation may not accept a new personal
2728 residential multiperil application for coverage within 72 hours
2729 after submission of the risk to the market assistance plan under
2730 subsection (1).
2731 (b) Section 627.3517, Florida Statutes, relating to
2732 consumer choice of agent does not apply to applications for
2733 coverage accepted by authorized insurers under the program.
2734 (c) Insurers issuing policies under this section are
2735 subject to s. 627.3518(3), Florida Statutes, relating to agent
2736 appointment.
2737 (d) Notwithstanding s. 626.916(1), Florida Statutes, if an
2738 applicant for new or renewal coverage from the corporation does
2739 not receive an offer of coverage from an eligible insurer, the
2740 applicant may accept an offer from a designated broker of an
2741 insurer eligible under ss. 626.913-626.937, Florida Statutes.
2742 (3) This section expires on March 1, 2014, or when the
2743 clearinghouse program established under s. 627.3518, Florida
2744 Statutes, becomes operational, whichever occurs first.
2745 Section 15. Subsection (1) of section 627.405, Florida
2746 Statutes, is amended to read:
2747 627.405 Insurable interest; property.—
2748 (1) A No contract for property of insurance of property or
2749 of any interest in property or arising from property is not
2750 shall be enforceable as to the insurance except for the benefit
2751 of persons having an insurable interest in the things insured as
2752 at the time of the loss. Policyholders under a contract of
2753 property insurance may assign benefits to be received under that
2754 contract consistent with, and subject to, the conditions in the
2755 policy.
2756 Section 16. Subsection (1) of section 627.410, Florida
2757 Statutes, is amended to read:
2758 627.410 Filing, approval of forms.—
2759 (1) A No basic insurance policy or annuity contract form,
2760 or application form where written application is required and is
2761 to be made a part of the policy or contract, or group
2762 certificates issued under a master contract delivered in this
2763 state, or printed rider or endorsement form or form of renewal
2764 certificate, may not shall be delivered or issued for delivery
2765 in this state, unless the form has been filed with the office by
2766 or on in behalf of the insurer that which proposes to use such
2767 form and has been approved by the office. This provision does
2768 not apply to surety bonds or to policies, riders, endorsements,
2769 or forms of unique character that which are designed for and
2770 used with relation to insurance on upon a particular subject,
2771 (other than as to health insurance), or that which relate to the
2772 manner of distributing distribution of benefits or to the
2773 reservation of rights and benefits under life or health
2774 insurance policies and are used at the request of the individual
2775 policyholder, contract holder, or certificateholder. For As to
2776 group insurance policies effectuated and delivered outside this
2777 state but covering persons resident in this state, the group
2778 certificates to be delivered or issued for delivery in this
2779 state shall be filed with the office for information purposes
2780 only.
2781 Section 17. Except as otherwise expressly provided in the
2782 act, this act shall take effect July 1, 2013.
