Bill Text: FL S1784 | 2012 | Regular Session | Introduced
Bill Title: Citizens Property Insurance Corporation
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2012-03-09 - Died in Banking and Insurance [S1784 Detail]
Download: Florida-2012-S1784-Introduced.html
Florida Senate - 2012 SB 1784 By Senator Hays 20-00104-12 20121784__ 1 A bill to be entitled 2 An act relating to the Citizens Property Insurance 3 Corporation; amending s. 627.0655, F.S.; discontinuing 4 policy discounts relating to the Citizens Property 5 Insurance Corporation after a certain date; amending 6 s. 627.351, F.S.; revising legislative intent; 7 providing that certain residential structures are not 8 eligible for coverage by the corporation after a 9 certain date; directing the corporation to provide 10 coverage to certain excluded residential structures 11 but at rates deemed appropriate by the corporation; 12 requiring policies issued by the corporation to 13 include a provision that prohibits policyholders from 14 engaging the services of a public adjuster until after 15 the corporation has tendered an offer; revising the 16 amount of an adjuster’s fee for a claim against the 17 corporation; specifying the percentage amount of 18 emergency assessments; providing legislative intent 19 with respect to policyholder surcharges; deleting a 20 requirement that the corporation adopt a program 21 relating to quota share primary insurance agreements 22 for eligible risks; revising provisions relating to 23 wind coverage; prohibiting the corporation from 24 accepting applications for commercial nonresidential 25 risks; providing that policies do not include coverage 26 for screen enclosures or any structure detached from 27 the house; providing that the corporation does not 28 cover specified personal property; limiting coverage 29 for damage from sinkholes and providing that the 30 corporation must require repair of the property as a 31 condition of any payment; providing that the 32 corporation operates as a residual market mechanism; 33 revising provisions relating to corporation rates; 34 providing that eligible surplus lines insurers may 35 participate in take-out programs under certain 36 conditions; clarifying that the corporation is immune 37 from certain liabilities; revising requirements 38 relating to confidential records released by an 39 insurer; requiring owners of properties in special 40 flood hazard areas to maintain a separate flood 41 insurance policy after a certain date; providing 42 exceptions; amending s. 627.3511, F.S.; conforming 43 cross-references; providing an effective date. 44 45 Be It Enacted by the Legislature of the State of Florida: 46 47 Section 1. Section 627.0655, Florida Statutes, is amended 48 to read: 49 627.0655 Policyholderloss or expense-relatedpremium 50 discounts.—An insurer or person authorized to engage in the 51 business of insurance in this state may include a discount,in 52 the premium charged an insured for any policy, contract, or 53 certificate of insurance if, a discount based on the fact that54 another policy, contract, or certificate of any type has been 55 purchased by the insured: 56 (1) From the same insurer or insurer group;,57 (2) For policies issued or renewed before January 1, 2014, 58 from the Citizens Property Insurance Corporation created under 59 s. 627.351(6) if the same insurance agent is servicing both 60 policies;,or 61 (3) For policies issued or renewed before January 1, 2014, 62 from an insurer that has removed the policy from the Citizens 63 Property Insurance Corporation if the same insurance agent is 64 servicing both policies. 65 Section 2. Paragraphs (a), (b), (c), (d), (n), (o), (q), 66 (s), (w), (x), (aa), and (ee) of subsection (6) of section 67 627.351, Florida Statutes, are amended to read: 68 627.351 Insurance risk apportionment plans.— 69 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 70 (a) The public purpose of this subsection is to ensure that 71 there is an orderly market for property insurance for residents 72 and businesses of this state. 73 1. The Legislature finds that actual and threatened 74 catastrophic losses to property from hurricanes in this state 75 have caused insurers to be unwilling or unable to provide 76 property insurance coverage to the extent sought and needed. The 77 Legislature declares that it is in the public interest and 78 serves a public purpose that property in this state be 79 adequately insured in order to facilitate the remediation, 80 reconstruction, and replacement of damaged or destroyed 81 property. Such efforts are necessary in order to avoid or reduce 82 negative effects to the public health, safety, and welfare; the 83 economy of the state; and the revenues of state and local 84 governments. It is necessary, therefore, to provide property 85 insurance to applicants who are entitled to procure insurance 86 through the voluntary market but who, in good faith, are unable 87 to do so.The Legislature finds that private insurers are88unwilling or unable to provide affordable property insurance89coverage in this state to the extent sought and needed. The90absence of affordable property insurance threatens the public91health, safety, and welfare and likewise threatens the economic92health of the state. The state therefore has a compelling public93interest and a public purpose to assist in assuring that94property in the state is insured and that it is insured at95affordable rates so as to facilitate the remediation,96reconstruction, and replacement of damaged or destroyed property97in order to reduce or avoid the negative effects otherwise98resulting to the public health, safety, and welfare, to the99economy of the state, and to the revenues of the state and local100governments which are needed to provide for the public welfare.101It is necessary, therefore, to provide affordable property102insurance to applicants who are in good faith entitled to103procure insurance through the voluntary market but are unable to104do so.The Legislature intends, therefore, thataffordable105 property insurance be provided and that it continue to be 106 provided, as long as necessary, through Citizens Property 107 Insurance Corporation, a government entity that is an integral 108 part of the state, and that is not a private insurance company. 109To that end,thecorporation shall strive to increase the110availability of affordable property insurance in this state,111while achieving efficiencies and economies, and while providing112service to policyholders, applicants, and agents which is no113less than the quality generally provided in the voluntary114market, for the achievement of the foregoing public purposes.115Because it is essential for this government entity to have the116maximum financial resources to pay claims following a117catastrophic hurricane, it is the intent of the Legislature that118thecorporation continue to be an integral part of the state and119that the income of the corporation be exempt from federal income120taxation and that interest on the debt obligations issued by the121corporation be exempt from federal income taxation.122 a. It is also the intent of the Legislature that 123 policyholders, applicants, and agents of the corporation receive 124 service and treatment of the highest possible level and never 125 less than that generally provided in the voluntary market. The 126 corporation must be held to service standards no less than those 127 applied to insurers in the voluntary market by the office with 128 respect to responsiveness, timeliness, customer courtesy, and 129 overall dealings with policyholders, applicants, or agents of 130 the corporation. It is also the intent of the Legislature that 131 the corporation operate efficiently and economically. 132 b. Because it is essential that the corporation have the 133 maximum financial resources necessary to pay claims following a 134 catastrophic hurricane, the Legislature also intends that the 135 income of the corporation and interest on the debt obligations 136 issued by the corporation be exempt from federal income 137 taxation. 138 2. The Residential Property and Casualty Joint Underwriting 139 Association originally created by this statute shall be known as 140 the Citizens Property Insurance Corporation. The corporation 141 shall provide insurance for residential and commercial property, 142 for applicants who are entitled, but, in good faith, are unable 143 to procure insurance through the voluntary market. The 144 corporation shall operate pursuant to a plan of operation 145 approved by order of the Financial Services Commission. The plan 146 is subject to continuous review by the commission. The 147 commission may, by order, withdraw approval of all or part of a 148 plan if the commission determines that conditions have changed 149 since approval was granted and that the purposes of the plan 150 require changes in the plan. For the purposes of this 151 subsection, residential coverage includes both personal lines 152 residential coverage, which consists of the type of coverage 153 provided by homeowner’s, mobile home owner’s, dwelling, 154 tenant’s, condominium unit owner’s, and similar policies; and 155 commercial lines residential coverage, which consists of the 156 type of coverage provided by condominium association, apartment 157 building, and similar policies. 158 3. With respect to coverage for personal lines residential 159 structures: 160 a. Effective January 1, 2009, apersonal lines residential161 structure that has a dwelling replacement cost of $2 million or 162 more, or a single condominium unit that has a combined dwelling 163 and contents replacement cost of $2 million or more is not 164 eligible for coverage by the corporation. Such dwellings insured 165 by the corporation on December 31, 2008, may continue to be 166 covered by the corporation until the end of the policy term. 167 However, such dwellings may reapply and obtain coverage if the 168 property owner provides the corporation with a sworn affidavit 169 from one or more insurance agents, on a form provided by the 170 corporation, stating that the agents have made their best 171 efforts to obtain coverage and that the property has been 172 rejected for coverage by at least one authorized insurer and at 173 least three surplus lines insurers. If such conditions are met, 174 the dwelling may be insured by the corporation for up to 3 175 years, after which time the dwelling is ineligible for coverage. 176The office shall approve the method used by the corporation for177valuing the dwelling replacement cost for the purposes of this178subparagraph. If a policyholder is insured by the corporation179prior to being determined to be ineligible pursuant to this180subparagraph and such policyholder files a lawsuit challenging181the determination, the policyholder may remain insured by the182corporation until the conclusion of the litigation.183 b. Effective January 1, 2013, a structure that has a 184 dwelling replacement cost of $1 million or more, or a single 185 condominium unit that has a combined dwelling and contents 186 replacement cost of $1 million or more is not eligible for 187 coverage by the corporation. Such dwellings insured by the 188 corporation on December 31, 2012, may continue to be covered by 189 the corporation only until the end of the policy term. 190 c. Effective January 1, 2015, a structure insured in the 191 personal lines account of the corporation that has a dwelling 192 replacement cost of $750,000 or more, or a single condominium 193 unit that has a combined dwelling and contents replacement cost 194 of $750,000 or more is not eligible for coverage by the 195 corporation. Such dwellings insured by the corporation on 196 December 31, 2014, may continue to be covered by the corporation 197 until the end of the policy term. 198 d. Effective January 1, 2017, a structure insured in the 199 personal lines account of the corporation that has a dwelling 200 replacement cost of $500,000 or more, or a single condominium 201 unit that has a combined dwelling and contents replacement cost 202 of $500,000 or more is not eligible for coverage by the 203 corporation. Such dwellings insured by the corporation on 204 December 31, 2016, may continue to be covered by the corporation 205 until the end of the policy term. 206 4. Any structure for which a permit for construction is 207 obtained on or after June 1, 2012, seaward of the coastal 208 construction control line established pursuant to s. 161.053, is 209 not eligible for coverage by the corporation. 2104. It is the intent of the Legislature that policyholders,211applicants, and agents of the corporation receive service and212treatment of the highest possible level but never less than that213generally provided in the voluntary market. Itisalso intended214that the corporation be held to service standards no less than215those applied to insurers in the voluntary market by the office216with respect to responsiveness, timeliness, customer courtesy,217and overall dealings with policyholders, applicants, or agents218of the corporation.219 5. Effective October 1, 2012January 1, 2009, a personal 220 lines residential structure that is located in the “wind-borne 221 debris region,” as defined in s. 1609.2, International Building 222 Code (2006), and that has an insured value on the structure of 223 $750,000 or more isnoteligible for coverage by the 224 corporation. However, unless the structure has opening 225 protections as required under the Florida Building Code for a 226 newly constructed residential structure in that area, the 227 corporation may charge a surcharge that it deems appropriate for 228 such structures, notwithstanding any restrictions on rates 229 provided in this subsection or in s. 627.062. A residential 230 structure shall be deemed to comply with this subparagraph if it 231 has shutters or opening protections on all openings and if such 232 opening protections complied with the Florida Building Code at 233 the time they were installed. 234 6. In recognition of the corporation’s status as a 235 government entity, policies issued by the corporation must 236 include a provision stating that as a condition of coverage with 237 the corporation, policyholders may not engage the services of a 238 public adjuster to represent the policyholder with respect to 239 any claim filed under a policy issued by the corporation until 240 after the corporation has tendered an offer with respect to such 241 claim. For any claim filed under any policy of the corporation, 242 a public adjuster may not request payment or be paid, on a 243 contingency basis or based in any way, directly or indirectly, 244 on a percentage of the claim amount, and may be paid only a 245 reasonable hourly fee based on the actual hours of work 246 performed, subject to a maximum of 5charge, agree to, or accept247any compensation, payment, commission, fee, or other thing of248value greater than 10percent of the additional amount actually 249 paid over the amount that was originally offered by the 250 corporation for any one claim. 251 (b)1. All insurers authorized to write one or more subject 252 lines of business in this state are subject to assessment by the 253 corporation and, for the purposes of this subsection, are 254 referred to collectively as “assessable insurers.” Insurers 255 writing one or more subject lines of business in this state 256 pursuant to part VIII of chapter 626 are not assessable 257 insurers, but insureds who procure one or more subject lines of 258 business in this state pursuant to part VIII of chapter 626 are 259 subject to assessment by the corporation and are referred to 260 collectively as “assessable insureds.” An insurer’s assessment 261 liability begins on the first day of the calendar year following 262 the year in which the insurer was issued a certificate of 263 authority to transact insurance for subject lines of business in 264 this state and terminates 1 year after the end of the first 265 calendar year during which the insurer no longer holds sucha266 certificate of authorityto transact insurance for subject lines267of business in this state. 268 2.a. All revenues, assets, liabilities, losses, and 269 expenses of the corporation shall be divided into three separate 270 accounts as follows: 271 (I) A personal lines account for personal residential 272 policies issued by the corporation, or issued by the Residential 273 Property and Casualty Joint Underwriting Association and renewed 274 by the corporation, which provides comprehensive, multiperil 275 coverage on risks that are not located in areas eligible for 276 coverage by the Florida Windstorm Underwriting Association as 277 those areas were defined on January 1, 2002, and for policies 278 that do not provide coverage for the peril of wind on risks that 279 are located in such areas; 280 (II) A commercial lines account for commercial residential 281 and commercial nonresidential policies issued by the 282 corporation, or issued by the Residential Property and Casualty 283 Joint Underwriting Association and renewed by the corporation, 284 which provides coverage for basic property perils on risks that 285 are not located in areas eligible for coverage by the Florida 286 Windstorm Underwriting Association as those areas were defined 287 on January 1, 2002, and for policies that do not provide 288 coverage for the peril of wind on risks that are located in such 289 areas; and 290 (III) A coastal account for personal residential policies 291 and commercial residential and commercial nonresidential 292 property policies issued by the corporation, or transferred to 293 the corporation, which provides coverage for the peril of wind 294 on risks that are located in areas eligible for coverage by the 295 Florida Windstorm Underwriting Association as those areas were 296 defined on January 1, 2002. The corporation may offer policies 297 that provide multiperil coverage and the corporation shall 298 continue to offer policies that provide coverage only for the 299 peril of wind for risks located in areas eligible for coverage 300 in the coastal account. In issuing multiperil coverage, the 301 corporation may use its approved policy forms and rates for the 302 personal lines account. An applicant or insured who is eligible 303 to purchase a multiperil policy from the corporation may 304 purchase a multiperil policy from an authorized insurer without 305 prejudice to the applicant’s or insured’s eligibility to 306 prospectively purchase a policy that provides coverage only for 307 the peril of wind from the corporation. An applicant or insured 308 who is eligible for a corporation policy that provides coverage 309 only for the peril of wind may elect to purchase or retain such 310 policy and also purchase or retain coverage excluding wind from 311 an authorized insurer without prejudice to the applicant’s or 312 insured’s eligibility to prospectively purchase a policy that 313 provides multiperil coverage from the corporation.It is the314goal of the Legislature that there be an overall average savings315of 10 percent or more for a policyholder who currently has a316wind-only policy with the corporation, and an ex-wind policy317with a voluntary insurer or the corporation, and who obtains a318multiperil policy from the corporation.It is the intent of the 319 Legislature that the offer of multiperil coverage in the coastal 320 account be made and implemented in a manner that does not 321 adversely affect the tax-exempt status of the corporation or 322 creditworthiness of or security for currently outstanding 323 financing obligations or credit facilities of the coastal 324 account, the personal lines account, or the commercial lines 325 account.Thecoastalaccount must also include quota share326primary insurance under subparagraph (c)2.The area eligible for 327 coverage under the coastal account also includes the area within 328 Port Canaveral, which is bordered on the south by the City of 329 Cape Canaveral, bordered on the west by the Banana River, and 330 bordered on the north by Federal Government property. 331 b. The three separate accounts must be maintained as long 332 as financing obligations entered into by the Florida Windstorm 333 Underwriting Association or Residential Property and Casualty 334 Joint Underwriting Association are outstanding, in accordance 335 with the terms of the corresponding financing documents. If the 336 financing obligations are no longer outstanding, the corporation 337 may use a single account for all revenues, assets, liabilities, 338 losses, and expenses of the corporation. Consistent with this 339 subparagraph and prudent investment policies that minimize the 340 cost of carrying debt, the board shall exercise its best efforts 341 to retire existing debt or obtain the approval of necessary 342 parties to amend the terms of existing debt, so as to structure 343 the most efficient plan to consolidate the three separate 344 accounts into a single account. 345 c. Creditors of the Residential Property and Casualty Joint 346 Underwriting Association and the accounts specified in sub-sub 347 subparagraphs a.(I) and (II) may have a claim against, and 348 recourse to, those accounts and no claim against, or recourse 349 to, the account referred to in sub-sub-subparagraph a.(III). 350 Creditors of the Florida Windstorm Underwriting Association have 351 a claim against, and recourse to, the account referred to in 352 sub-sub-subparagraph a.(III) and no claim against, or recourse 353 to, the accounts referred to in sub-sub-subparagraphs a.(I) and 354 (II). 355 d. Revenues, assets, liabilities, losses, and expenses not 356 attributable to particular accounts shall be prorated among the 357 accounts. 358 e. The Legislature finds that the revenues of the 359 corporationarerevenues thatare necessary to meet the 360 requirements set forth in documents authorizing the issuance of 361 bonds under this subsection. 362 f. No part of the income of the corporation may inure to 363 the benefit of any private person. 364 3. With respect to a deficit in an account: 365 a. After accounting for theCitizenspolicyholder surcharge 366 imposed under sub-subparagraph h., if the remaining projected 367 deficit incurred in a particular calendar year: 368 (I) Is not greater than 6 percent of the aggregate 369 statewide direct written premium for the subject lines of 370 business for the prior calendar year, the entire deficit shall 371 be recovered through regular assessments of assessable insurers 372 under paragraph (q) and assessable insureds. 373 (II) Exceeds 6 percent of the aggregate statewide direct 374 written premium for the subject lines of business for the prior 375 calendar year, the corporation shall levy regular assessments on 376 assessable insurers under paragraph (q) and on assessable 377 insureds in an amount equal to the greater of 6 percent of the 378 deficit or 6 percent of the aggregate statewide direct written 379 premium for the subject lines of business for the prior calendar 380 year. Any remaining deficit shall be recovered through emergency 381 assessments under sub-subparagraph c. 382 b. Each assessable insurer’s share of the amount being 383 assessed under sub-subparagraph a. must be in the proportion 384 that the assessable insurer’s direct written premium for the 385 subject lines of business for the year preceding the assessment 386 bears to the aggregate statewide direct written premium for the 387 subject lines of business for that year. The applicable 388 assessment percentageapplicable to each assessable insuredis 389 the ratio of the amount being assessed under sub-subparagraph a. 390 to the aggregate statewide direct written premium for the 391 subject lines of business for the prior year. Assessments levied 392 by the corporation on assessable insurers under sub-subparagraph 393 a. must be paid as required by the corporation’s plan of 394 operation and paragraph (q). Assessments levied by the 395 corporation on assessable insureds under sub-subparagraph a. 396 shall be collected by the surplus lines agent at the time the 397 surplus lines agent collects the surplus lines tax required by 398 s. 626.932, and paid to the Florida Surplus Lines Service Office 399 at the time the surplus lines agent pays the surplus lines tax 400 to that office. Upon receiptof regular assessments from surplus401lines agents, the Florida Surplus Lines Service Office shall 402 transfer the assessments directly to the corporation as 403 determined by the corporation. 404 c. Upon a determination by the board of governors that a 405 deficit in an account exceeds the amount that will be recovered 406 through regular assessments under sub-subparagraph a., plus the 407 amount that is expected to be recovered through surcharges under 408 sub-subparagraph h., the board, after verification by the 409 office, shall levy emergency assessments for as many years as 410 necessary to cover the deficits, to be collected by assessable 411 insurers and the corporation and collected from assessable 412 insureds upon issuance or renewal of policies for subject lines 413 of business, excluding National Flood Insurance policies. The 414 amount collected in a particular year must be a uniform 415 percentage of that year’s direct written premium for subject 416 lines of businessand all accounts of the corporation, excluding 417 National Flood Insurance Program policy premiums, as annually 418 determined by the board and verified by the office. For all 419 accounts of the corporation, the amount of the emergency 420 assessment levied in a particular year must be a uniform 421 percentage equal to 1 and 1/2 times the uniform percentage 422 emergency assessment levied on subject lines of business. The 423 office shall verify the arithmetic calculations involved in the 424 board’s determination within 30 days after receipt of the 425 information on which the determination was based. 426 Notwithstanding any other provision of law, the corporation and 427 each assessable insurer that writes subject lines of business 428 shall collect emergency assessments from its policyholders 429 without such obligation being affected by any credit, 430 limitation, exemption, or deferment. Emergency assessments 431 levied by the corporation on assessable insureds shall be 432 collected by the surplus lines agent at the time the surplus 433 lines agent collects the surplus lines tax required by s. 434 626.932 and paid to the Florida Surplus Lines Service Office at 435 the time the surplus lines agent pays the surplus lines tax to 436 that office. The emergency assessments collected shall be 437 transferred directly to the corporation on a periodic basis as 438 determined by the corporation and held by the corporation solely 439 in the applicable account. The aggregate amount of emergency 440 assessments levied for an account under this sub-subparagraph in 441 any calendar year may be less than but not exceed the greater of 442 10 percent of the amount needed to cover the deficit, plus 443 interest, fees, commissions, required reserves, and other costs 444 associated with financing the original deficit, or 10 percent of 445 the aggregate statewide direct written premium for subject lines 446 of business and 15 percent for all accounts of the corporation 447 for the prior year, plus interest, fees, commissions, required 448 reserves, and other costs associated with financing the deficit. 449 d. The corporation may pledge the proceeds of assessments, 450 projected recoveries from the Florida Hurricane Catastrophe 451 Fund, other insurance and reinsurance recoverables, policyholder 452 surcharges and other surcharges, and other funds available to 453 the corporation as the source of revenue for and to secure bonds 454 issued under paragraph (q), bonds or other indebtedness issued 455 under subparagraph (c)2.(c)3., or lines of credit or other 456 financing mechanisms issued or created under this subsection, or 457 to retire any other debt incurred as a result of deficits or 458 events giving rise to deficits, or in any other way that the 459 board determines will efficiently recover such deficits. The 460 purpose of the lines of credit or other financing mechanisms is 461 to provide additional resources to assist the corporation in 462 covering claims and expenses attributable to a catastrophe. As 463 used in this subsection, the term “assessments” includes regular 464 assessments under sub-subparagraph a. or subparagraph (q)1. and 465 emergency assessments under sub-subparagraph d. Emergency 466 assessments collected under sub-subparagraph d. are not part of 467 an insurer’s rates, are not premium, and are not subject to 468 premium tax, fees, or commissions; however, failure to pay the 469 emergency assessment shall be treated as failure to pay premium. 470 The emergency assessments under sub-subparagraph c. shall 471 continue as long as any bonds issued or other indebtedness 472 incurred with respect to a deficit for which the assessment was 473 imposed remain outstanding, unless adequate provision has been 474 made for the payment of such bonds or other indebtedness 475 pursuant to the documents governing such bonds or indebtedness. 476 e. As used in this subsection for purposes of any deficit 477 incurred on or after January 25, 2007, the term “subject lines 478 of business” means insurance written by assessable insurers or 479 procured by assessable insureds for all property and casualty 480 lines of business in this state, but not including workers’ 481 compensation or medical malpractice. As used in this sub 482 subparagraph, the term “property and casualty lines of business” 483 includes all lines of business identified on Form 2, Exhibit of 484 Premiums and Losses, in the annual statement required of 485 authorized insurers under s. 624.424 and any rule adopted under 486 this section, except for those lines identified as accident and 487 health insurance and except for policies written under the 488 National Flood Insurance Program or the Federal Crop Insurance 489 Program. For purposes of this sub-subparagraph, the term 490 “workers’ compensation” includes both workers’ compensation 491 insurance and excess workers’ compensation insurance. 492 f. The Florida Surplus Lines Service Office shall determine 493 annually the aggregate statewide written premium in subject 494 lines of business procured by assessable insureds and report 495 that information to the corporation in a form and at a time the 496 corporation specifies to ensure that the corporation can meet 497 the requirements of this subsection and the corporation’s 498 financing obligations. 499 g. The Florida Surplus Lines Service Office shall verify 500 the proper application by surplus lines agents of assessment 501 percentages for regular assessments and emergency assessments 502 levied under this subparagraph on assessable insureds and assist 503 the corporation in ensuring the accurate, timely collection and 504 payment of assessments by surplus lines agents as required by 505 the corporation. 506 h. If a deficit is incurred in any account in 20122008or 507 thereafter, the board of governors shall levy aCitizens508 policyholder surcharge against all policyholders of the 509 corporation. 510 (I) The surcharge shall be levied as a uniform percentage 511 of the premium for the policy of up to 15 percent of such 512 premium, which funds shall be used to offset the deficit. 513 (II) It is the intent of the Legislature that the 514 policyholder’s liability for the surcharge attach on the date of 515 the order levying the surcharge. The surcharge is payable upon 516 cancellation or termination of the policy, upon renewal of the 517 policy, or upon issuance of a new policy by the corporation 518 within the first 12 months after the date of the levy or the 519 period of time necessary to fully collect the surcharge amount. 520 (III) The corporation may not levy any regular assessments 521 under paragraph (q) pursuant to sub-subparagraph a. or sub 522 subparagraph b. with respect to a particular year’s deficit 523 until the corporation has first levied the full amount of the 524 surcharge authorized by this sub-subparagraph. 525 (IV) The surcharge is not considered premium and is not 526 subject to commissions, fees, or premium taxes. However, failure 527 to pay the surcharge shall be treated as failure to pay premium. 528 i. If the amount of any assessments or surcharges collected 529 from corporation policyholders, assessable insurers or their 530 policyholders, or assessable insureds exceeds the amount of the 531 deficits, such excess amounts shall be remitted to and retained 532 by the corporation in a reserve to be used by the corporation, 533 as determined by the board of governors and approved by the 534 office, to pay claims or reduce any past, present, or future 535 plan-year deficits or to reduce outstanding debt. 536 (c) The corporation’s plan of operation: 537 1. Must provide for the adoption of residential property 538 and casualty insurance policy forms and commercial residential 539 and nonresidential property insurance forms, which must be 540 approved by the office before use. The corporation shall adopt 541 and offer only the following policy forms: 542 a. Standard personal lines policy forms that are similar 543comprehensive multiperil policies providing full coverage of a544residential property equivalentto the coverage provided in the 545 private insurance market under an HO-3, HO-4, or HO-6 policy. 546 The corporation shall cease to offer or renew HO-3 policy forms 547 on December 31, 2013. 548 b. Basic personal lines policy forms that are policies 549 similar to an HO-8 policy or a dwelling fire policy that provide 550 coverage meeting the requirements of the secondary mortgage 551 market, but which is more limited than the coverage under a 552 standard policy. 553 c. Commercial lines residential and nonresidential policy 554 forms that are generally similar to the basic perils of full 555 coverage obtainable for commercial residential structures and 556 commercial nonresidential structures in the admitted voluntary 557 market. 558 d. Personal lines and commercial lines residential property 559 insurance forms that cover the peril of wind only. The forms 560 applyare applicableonly to residential properties located in 561 areas eligible for coverage under the coastal account referred 562 to in sub-subparagraph (b)2.a. 563 e. Commercial lines nonresidential property insurance forms 564 that cover the peril of wind only. The forms are applicable only 565 to nonresidential properties located in areas eligible for 566 coverage under the coastal account referred to in sub 567 subparagraph (b)2.a. 568 f. The corporation may adopt variations of the policy forms 569 listed in sub-subparagraphs a.-e. which contain more restrictive 570 coverage. 5712. Must provide that the corporation adopt a program in572which the corporation and authorized insurers enter into quota573share primary insurance agreements for hurricane coverage, as574defined in s.627.4025(2)(a), for eligible risks, and adopt575property insurance forms for eligible risks which cover the576peril of wind only.577a.As used in this subsection, the term:578(I) “Quota share primary insurance” means an arrangement in579which the primary hurricane coverage of an eligible risk is580provided in specified percentages by the corporation and an581authorized insurer. The corporation and authorized insurer are582each solely responsible for a specified percentage of hurricane583coverage of an eligible risk as set forth in a quota share584primary insurance agreement between the corporation and an585authorized insurer and the insurance contract. The586responsibility of the corporation or authorized insurer to pay587its specified percentage of hurricane losses of an eligible588risk, as set forth in theagreement, may not be altered by the589inability of the other party to pay its specified percentage of590losses. Eligible risks that are provided hurricane coverage591through a quota share primary insurance arrangement must be592provided policy forms that set forth the obligations of the593corporation and authorized insurer under the arrangement,594clearly specify the percentages of quota share primary insurance595provided by the corporation and authorized insurer, and596conspicuously and clearly state that the authorized insurerand597the corporation maynotbe held responsible beyondtheir598specified percentage of coverage of hurricane losses.599(II) “Eligible risks” means personal lines residential and600commercial lines residential risks that meet the underwriting601criteria of the corporation and are located in areas that were602eligible for coverage by the Florida Windstorm Underwriting603Association on January 1, 2002.604b. The corporation may enter into quota share primary605insurance agreements with authorized insurers at corporation606coverage levels of 90 percent and 50 percent.607c. If the corporation determines that additional coverage608levels are necessary to maximize participation in quota share609primary insurance agreements by authorized insurers, the610corporation may establish additional coverage levels. However,611the corporation’s quota share primary insurance coverage level612may not exceed 90 percent.613d. Any quota share primary insurance agreement entered into614between an authorized insurer and the corporation must provide615for a uniform specified percentage of coverage of hurricane616losses, by county or territory as set forth by the corporation617board, for all eligible risks of the authorized insurer covered618under the agreement.619e. Any quota share primary insurance agreement entered into620between an authorized insurer and the corporation is subject to621review and approval by the office. However, such agreement shall622be authorized only as to insurance contracts entered into623between an authorized insurer and an insured who is already624insured by the corporation for wind coverage.625f. For all eligible risks covered under quota share primary626insurance agreements, the exposure and coverage levels for both627the corporation and authorized insurers shall be reported by the628corporation to the Florida Hurricane Catastrophe Fund. For all629policies of eligible risks covered undersuchagreements, the630corporation and the authorized insurermustmaintain complete631and accurate records for the purpose of exposure and loss632reimbursement audits as required byfund rules. The corporation633and the authorized insurer shall each maintain duplicate copies634of policy declaration pages and supporting claims documents.635g. The corporation board shall establish in its plan of636operation standards for quota share agreements which ensure that637there is no discriminatory application among insurers as to the638terms oftheagreements, pricing oftheagreements, incentive639provisions if any, and consideration paid for servicing policies640or adjusting claims.641h. The quota share primary insurance agreement between the642corporation and an authorized insurer must set forth the643specific terms under which coverage is provided, including, but644not limited to, the sale and servicing of policies issued under645the agreement by the insurance agent of the authorized insurer646producing the business, the reporting of information concerning647eligible risks, the payment of premium to the corporation, and648arrangements for the adjustment and payment of hurricane claims649incurred on eligible risks by the claims adjuster and personnel650of the authorized insurer. Entering into a quota sharing651insurance agreement between the corporation and an authorized652insurerisvoluntary and at the discretion of the authorized653insurer.654 2.3.a.May provide that the corporationmayemploy or 655 otherwise contract with individuals or other entities to provide 656 administrative or professional servicesthat may be appropriate657to effectuate the plan. 658 a. The corporation may borrow funds by issuing bonds or by 659 incurring other indebtedness, and shall have other powers 660 reasonably necessary to effectuate the requirements of this 661 subsection, including, without limitation,the power to issue 662 bonds and incur other indebtedness in order to refinance 663 outstanding bonds or other indebtedness. The corporation may 664 seek judicial validation of its bonds or other indebtedness 665 under chapter 75. The corporation may issue bonds or incur other 666 indebtedness, or have bonds issued on its behalf by a unit of 667 local government pursuant to subparagraph (q)2. in the absence 668 of a hurricane or other weather-related event, upon a 669 determination by the corporation, subject to approval by the 670 office, that such action would enable it to efficiently meet the 671 financial obligations of the corporation and that such 672 financings are reasonably necessary to effectuate the 673 requirements of this subsection. The corporation may take all 674 actions needed to facilitate tax-free status for such bonds or 675 indebtedness, including formation of trusts or other affiliated 676 entities. The corporation may pledge assessments, projected 677 recoveries from the Florida Hurricane Catastrophe Fund, other 678 reinsurance recoverables, market equalization and other 679 surcharges, and other funds available to the corporation as 680 security for bonds or other indebtedness. In recognition of s. 681 10, Art. I of the State Constitution, prohibiting the impairment 682 of obligations of contracts, it is the intent of the Legislature 683 that no action be taken whose purpose is to impair any bond 684 indenture or financing agreement or any revenue source committed 685 by contract to such bond or other indebtedness. 686 b. To ensure that the corporation is operating in an 687 efficient and economic manner while providing quality service to 688 policyholders, applicants, and agents, the board shall 689 commission an independent third-party consultant having 690 expertise in insurance company management or insurance company 691 management consulting to prepare a report and make 692 recommendations on the relative costs and benefits of 693 outsourcing various policy issuance and service functions to 694 private servicing carriers or entities performing similar 695 functions in the private market for a fee, rather than 696 performing such functions in-house. In making such 697 recommendations, the consultant shall consider how other 698 residual markets, both in this state and around the country, 699 outsource appropriate functions or use servicing carriers to 700 better match expenses with revenues that fluctuate based on a 701 widely varying policy count. The report must be completed by 702 July 1, 2012. Upon receiving the report, the board shall develop 703 a plan to implement the report and submit the plan for review, 704 modification, and approval to the Financial Services Commission. 705 The commission has 30 days after receiving the plan to review 706 and make additions or corrections, if any. Upon the commission’s 707 approval of the plan, the board shall begin implementing the 708 plan by January 1, 2013. 709 3.4.Must require that the corporation operate subject to 710 the supervision and approval of a board of governors consisting 711 of eight individuals who are residents of this state, from 712 different geographical areas of this state. 713 a. The Governor, the Chief Financial Officer, the President 714 of the Senate, and the Speaker of the House of Representatives 715 shall each appoint two members of the board. At least one of the 716 two members appointed by each appointing officer must have 717 demonstrated expertise in insurance and is deemed to be within 718 the scope of the exemption provided in s. 112.313(7)(b). The 719 Chief Financial Officer shall designate one of the appointees as 720 chair. All board members serve at the pleasure of the appointing 721 officer. All members of the board are subject to removal at will 722 by the officers who appointed them. All board members, including 723 the chair, must be appointed to serve for 3-year terms beginning 724 annually on a date designated by the plan. However, for the 725 first term beginning on or after July 1, 2009, each appointing 726 officer shall appoint one member of the board for a 2-year term 727 and one member for a 3-year term. A board vacancy shall be 728 filled for the unexpired term by the appointing officer. The 729 Chief Financial Officer shall appoint a technical advisory group 730 to provide information and advice to the board in connection 731 with the board’s duties under this subsection. The executive 732 director and senior managers of the corporation shall be engaged 733 by the board and serve at the pleasure of the board. Any 734 executive director appointed on or after July 1, 2006, is 735 subject to confirmation by the Senate. The executive director is 736 responsible for employing other staff as the corporation may 737 require, subject to review and concurrence by the board. 738 b. The board shall create a Market Accountability Advisory 739 Committee to assist the corporation in developing awareness of 740 its rates and its customer and agent service levels in 741 relationship to the voluntary market insurers writing similar 742 coverage, and to provide advice on issues regarding agent 743 appointments and compensation. 744 (I) The members of the advisory committee consist of the 745 following 11 persons, one of whom must be elected chair by the 746 members of the committee: four representatives, one appointed by 747 the Florida Association of Insurance Agents, one by the Florida 748 Association of Insurance and Financial Advisors, one by the 749 Professional Insurance Agents of Florida, and one by the Latin 750 American Association of Insurance Agencies; three 751 representatives appointed by the insurers with the three highest 752 voluntary market share of residential property insurance 753 business in the state; one representative from the Office of 754 Insurance Regulation; one consumer appointed by the board who is 755 insured by the corporation at the time of appointment to the 756 committee; one representative appointed by the Florida 757 Association of Realtors; and one representative appointed by the 758 Florida Bankers Association. All members shall be appointed to 759 3-year terms and may serve for consecutive terms. 760 (II) The committee shall report to the corporation at each 761 board meeting on insurance market issues which may include rates 762 and rate competition with the voluntary market; service, 763 including policy issuance, claims processing, and general 764 responsiveness to policyholders, applicants, and agents; and 765 matters relating to depopulation, producer compensation, or 766 agency agreements. 767 4.5.Must provide a procedure for determining the 768 eligibility of a risk for coverage, as follows: 769 a. Subject to s. 627.3517, with respect to personal lines 770 residential risks, if the risk is offered coverage from an 771 authorized insurer at the insurer’s approved rate under a 772 standard policy including wind coverage or, if consistent with 773 the insurer’s underwriting rules as filed with the office, a 774 basic policy including wind coverage, for a new application to 775 the corporation for coverage, the risk is not eligible for any 776 policy issued by the corporationunless the premium for coverage777from the authorized insurer is more than 15 percent greater than778the premium for comparable coverage from the corporation. If the 779 risk is not able to obtain such offer, the risk is eligible for 780 a standard policy including wind coverage or a basic policy 781 including wind coverage issued by the corporation; however, if 782 the risk could not be insured under a standard policy including 783 wind coverage regardless of market conditions, the risk is 784 eligible for a basic policy including wind coverage unless 785 rejected under subparagraph 9.8.Notwithstanding these 786 limitations, an application for coverage having an effective 787 date before January 1, 2016, is eligible for coverage by the 788 corporation if the premium for coverage from an authorized 789 insurer exceeds the premium from the corporation by more than 25 790 percent.However, a policyholder of the corporation or a791policyholder removed from the corporation through an assumption792agreement until the end of the assumption periodremains793eligible for coverage from the corporation regardless of any794offer of coverage from an authorized insurer or surplus lines795insurer.The corporation shall determine the type of policy to 796 be provided on the basis of objective standards specified in the 797 underwriting manual and based on generally accepted underwriting 798 practices. 799 (I) If the risk accepts an offer of coverage through the 800 market assistance plan or through a mechanism established by the 801 corporation before a policy is issued to the risk by the 802 corporation or during the first 30 days of coverage by the 803 corporation, and the producing agent who submitted the 804 application to the plan or to the corporation is not currently 805 appointed by the insurer, the insurer shall: 806 (A) Pay to the producing agentof record of the policyfor 807 the first year, an amount that is the greater of the insurer’s 808 usual and customary commission for the type of policy written or 809 a fee equal to the usual and customary commission of the 810 corporation; or 811 (B) Offer to allow the producing agentof record of the812policyto continue servicing the policy for at least 1 year and 813 offer to pay the agent the greater of the insurer’s or the 814 corporation’s usual and customary commission for the type of 815 policy written. 816 817 If the producing agent is unwilling or unable to accept 818 appointment, the new insurer shall pay the agent in accordance 819 with sub-sub-sub-subparagraph (A). 820 (II) If the corporation enters into a contractual agreement 821 for a take-out plan, the producing agent of record of the 822 corporation policy is entitled to retain any unearned commission 823 on the policy, and the insurer shall: 824 (A) Pay to the producing agentof record, for the first 825 year, an amount that is the greater of the insurer’s usual and 826 customary commission for the type of policy written or a fee 827 equal to the usual and customary commission of the corporation; 828 or 829 (B) Offer to allow the producing agentof recordto 830 continue servicing the policy for at least 1 year and offer to 831 pay the agent the greater of the insurer’s or the corporation’s 832 usual and customary commission for the type of policy written. 833 834 If the producing agent is unwilling or unable to accept 835 appointment, the new insurer shall pay the agent in accordance 836 with sub-sub-sub-subparagraph (A). 837 b. Subject to s. 627.3517, with respect to commercial lines 838 residential risks,for a new application to the corporation for839coverage,if the risk is offered coverage under a policy 840 including wind coverage from an authorized insurer at its 841 approved rate, the risk is not eligible for a policy issued by 842 the corporationunless the premium for coverage from the843authorized insurer is more than 15 percent greater than the844premium for comparable coverage from the corporation. If the 845 risk is not able to obtain any such offer, the risk is eligible 846 for a policy including wind coverage issued by the corporation. 847 Notwithstanding these limitations, an application for coverage 848 having an effective date before January 1, 2016, is eligible for 849 coverage by the corporation if the premium for coverage from an 850 authorized insurer exceeds the premium from the corporation by 851 more than 25 percent.However, a policyholder of the corporation852or a policyholder removed from the corporation through an853assumption agreement until the end of the assumption period854remains eligible for coverage from the corporation regardless of855anoffer of coverage from an authorized insurer or surplus lines856insurer.857 (I) If the risk accepts an offer of coverage through the 858 market assistance plan or through a mechanism established by the 859 corporation before a policy is issued to the risk by the 860 corporation or during the first 30 days of coverage by the 861 corporation, and the producing agent who submitted the 862 application to the plan or the corporation is not currently 863 appointed by the insurer, the insurer shall: 864 (A) Pay to the producing agentof record of the policy, for 865 the first year, an amount that is the greater of the insurer’s 866 usual and customary commission for the type of policy written or 867 a fee equal to the usual and customary commission of the 868 corporation; or 869 (B) Offer to allow the producing agentof record of the870policyto continue servicing the policy for at least 1 year and 871 offer to pay the agent the greater of the insurer’s or the 872 corporation’s usual and customary commission for the type of 873 policy written. 874 875 If the producing agent is unwilling or unable to accept 876 appointment, the new insurer shall pay the agent in accordance 877 with sub-sub-sub-subparagraph (A). 878 (II) If the corporation enters into a contractual agreement 879 for a take-out plan, the producing agent of record of the 880 corporation policy is entitled to retain any unearned commission 881 on the policy, and the insurer shall: 882 (A) Pay to the producing agentof record, for the first 883 year, an amount that is the greater of the insurer’s usual and 884 customary commission for the type of policy written or a fee 885 equal to the usual and customary commission of the corporation; 886 or 887 (B) Offer to allow the producing agentof recordto 888 continue servicing the policy for at least 1 year and offer to 889 pay the agent the greater of the insurer’s or the corporation’s 890 usual and customary commission for the type of policy written. 891 892 If the producing agent is unwilling or unable to accept 893 appointment, the new insurer shall pay the agent in accordance 894 with sub-sub-sub-subparagraph (A). 895 c. Effective upon this act becoming a law, the corporation 896 shall cease to accept applications for or issue new policies 897 covering commercial nonresidential risks.For purposes of898determining comparable coverage under sub-subparagraphs a. and899b., the comparisonmustbe based on those forms and coverages900that are reasonably comparable. The corporation may rely on a901determination of comparable coverage and premium made by the902producing agent who submits the application to the corporation,903made in the agent’s capacity as the corporation’s agent. A904comparison may be made solely of the premium with respect to the905main building or structure only on the following basis: the same906coverage A or other building limits; the same percentage907hurricane deductible that applies on an annual basis or that908applies to each hurricane for commercial residential property;909the same percentage of ordinance and law coverage, if the same910limit is offered by both the corporation and the authorized911insurer; the same mitigation credits, to the extent the same912types of credits are offered both by the corporation and the913authorized insurer; the same method for loss payment, such as914replacement cost or actual cash value, if the same method is915offered both by the corporation and the authorized insurer in916accordance with underwriting rules; and any other form or917coverage that is reasonably comparable as determined by the918board. If an application is submitted to the corporation for919wind-only coverage in thecoastalaccount, the premium for the920corporation’s wind-only policy plus the premium for the ex-wind921policy that is offered by an authorized insurer to the applicant922mustbe compared to the premium for multiperil coverage offered923by an authorized insurer, subject to the standards for924comparison specified in this subparagraph. If the corporation or925the applicant requests from the authorized insurer a breakdown926of the premium of the offer by types of coverage so that a927comparison may be made by the corporation or its agent and the928authorized insurer refuses or is unable to provide such929information, the corporation may treat the offer as not being an930offer of coverage from an authorized insurer at the insurer’s931approved rate.932 5.6.Must include rules for classifications of risks and 933 rates. 934 6.7.Must provide that if premium and investment income for 935 an account attributable to a particular calendar year are in 936 excess of projected losses and expenses for the account 937 attributable to that year, such excess shall be held in surplus 938 in the account. Such surplus must be available to defray 939 deficits in that account as to future years and used for that 940 purpose before assessing assessable insurers and assessable 941 insureds as to any calendar year. 942 7.8.Must provide objective criteria and procedures to be 943 uniformly applied to all applicants in determining whether an 944 individual risk is so hazardous as to be uninsurable. In making 945 this determination and in establishing the criteria and 946 procedures, the following must be considered: 947 a. Whether the likelihood of a loss for the individual risk 948 is substantially higher than for other risks of the same class; 949 and 950 b. Whether the uncertainty associated with the individual 951 risk is such that an appropriate premium cannot be determined. 952 953 The acceptance or rejection of a risk by the corporation shall 954 be construed as the private placement of insurance, and the 955 provisions of chapter 120 do not apply. 956 8.9.Must provide that the corporation make its best 957 efforts to procure catastrophe reinsurance at reasonable rates, 958 to cover its projected 100-year probable maximum loss as 959 determined by the board of governors. 960 9.10.Must issueThepolicies thatissued by the961corporation mustprovide that if the corporation or the market 962 assistance plan obtains an offer from an authorized insurer to 963 cover the risk at its approved rates or from a surplus lines 964 insurer, the risk is no longer eligible for renewal through the 965 corporation, except as otherwise provided in this subsection. 966 10.11.Corporation policies and applicationsMust include a 967 notice in the corporation policies and applications that the 968 corporation policy could, under this section, be replaced with a 969 policy issued by anauthorizedinsurer which does not provide 970 coverage identical to the coverage provided by the corporation. 971 The notice must also specify that acceptance of corporation 972 coverage creates a conclusive presumption that the applicant or 973 policyholder is aware of this potential. 974 11.12.May establish, subject to approval by the office, 975 different eligibility requirements and operational procedures 976 for any line or type of coverage for any specified county or 977 area if the board determines that such changes are justified due 978 to the voluntary market being sufficiently stable and 979 competitive in such area or for such line or type of coverage 980 and that consumers who, in good faith, are unable to obtain 981 insurance through the voluntary market through ordinary methods 982 continue to have access to coverage from the corporation. If 983 coverage is sought in connection with a real property transfer, 984 the requirements and procedures may not provide an effective 985 date of coverage later than the date of the closing of the 986 transfer as established by the transferor, the transferee, and, 987 if applicable, the lender. 988 12.13.Must provide that, with respect to the coastal 989 account, any assessable insurer with a surplus as to 990 policyholders of $25 million or less writing 25 percent or more 991 of its total countrywide property insurance premiums in this 992 state may petition the office, within the first 90 days of each 993 calendar year, to qualify as a limited apportionment company. A 994 regular assessment levied by the corporation on a limited 995 apportionment company for a deficit incurred by the corporation 996 for the coastal account may be paid to the corporation on a 997 monthly basis as the assessments are collected by the limited 998 apportionment company from its insureds pursuant to s. 627.3512, 999 but the regular assessment must be paid in full within 12 months 1000 after being levied by the corporation. A limited apportionment 1001 company shall collect from its policyholders any emergency 1002 assessment imposed under sub-subparagraph (b)3.d.The planmust1003provide that,If the office determines that any regular 1004 assessment will result in an impairment of the surplus of a 1005 limited apportionment company, the office may direct that all or 1006 part of such assessment be deferred as provided in subparagraph 1007 (q)4. However, an emergency assessment to be collected from 1008 policyholders under sub-subparagraph (b)3.d. may not be limited 1009 or deferred. 1010 13.14.Must provide that the corporation appoint as its 1011 licensed agents only those agents who also hold an appointment 1012 as defined in s. 626.015(3) with an insurer whoat the time of1013the agent’s initial appointment by the corporationis authorized 1014 to write and is actually writing personal lines residential 1015 property coverage, commercial residential property coverage, or 1016 commercial nonresidential property coverage within the state. 1017 14.15.Must provide a premium payment plan option to its 1018 policyholders which, at a minimum, allows for quarterly and 1019 semiannual payment of premiums. A monthly payment plan may, but1020is not required to,be offered. 1021 15.16.Must limit coverage on mobile homes or manufactured 1022 homes built before 1994 to actual cash value of the dwelling 1023 rather than replacement costs of the dwelling. 1024 16.17.May provide such limits of coverage as the board 1025 determines, consistent with the requirements of this subsection. 1026 17.18.May require commercial property to meet specified 1027 hurricane mitigation construction features as a condition of 1028 eligibility for coverage. 1029 18.19.Must provide that new or renewal policies issued by 1030 the corporation on or after January 1, 2012, which cover 1031 sinkhole loss do not include coverage for any loss to 1032 appurtenant structures, driveways, sidewalks, decks, or patios 1033 that are directly or indirectly caused by sinkhole activity. The 1034 corporation shall exclude such coverage using a notice of 1035 coverage change, which may be included with the policy renewal, 1036 and not by issuance of a notice of nonrenewal of the excluded 1037 coverage upon renewal of the current policy. 1038 19.20.As of January 1, 2012, must require that the agent 1039 obtain from an applicant for coverage from the corporation an 1040 acknowledgement signed by the applicant, which includes, at a 1041 minimum, the following statement: 1042 1043 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE 1044 AND ASSESSMENT LIABILITY: 1045 1046 1. AS A POLICYHOLDER OF CITIZENS PROPERTY 1047 INSURANCE CORPORATION, I UNDERSTAND THAT IF THE 1048 CORPORATION SUSTAINS A DEFICIT AS A RESULT OF 1049 HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY 1050 COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 1051 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF 1052 THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH 1053 AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS 1054 IMPOSED BY THE FLORIDA LEGISLATURE. 1055 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO 1056 EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS 1057 POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A 1058 DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 1059 LEGISLATURE. 1060 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY 1061 INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL 1062 FAITH AND CREDIT OF THE STATE OF FLORIDA. 1063 1064 a. The corporation shall maintain, in electronic format or 1065 otherwise, a copy of the applicant’s signed acknowledgement and 1066 provide a copy of the statement to the policyholder as part of 1067 the first renewal after the effective date of this subparagraph. 1068 b. The signed acknowledgement form creates a conclusive 1069 presumption that the policyholder understood and accepted his or 1070 her potential surcharge and assessment liability as a 1071 policyholder of the corporation. 1072 20. Upon notice and determination by the Department of 1073 Financial Services that an agent appointed by the corporation 1074 has violated s. 626.9541(1)(h), must provide for the immediate 1075 termination of the agent’s appointment to represent the 1076 corporation. 1077 21. Must provide that new or renewal policies issued by the 1078 corporation on or after February 1, 2013, do not include 1079 coverage for attached or detached screen enclosures. The 1080 corporation shall exclude such coverage using a notice of 1081 coverage change, which may be included with the policy renewal, 1082 and not by issuance of a notice of nonrenewal of the excluded 1083 coverage upon renewal of the current policy. 1084 22. Must provide that new or renewal personal residential 1085 policies issued by the corporation on or after February 1, 2013, 1086 do not provide coverage for detached structures on the residence 1087 premises which are separated from the dwelling by clear space. 1088 Structures connected to the dwelling by only a fence, utility 1089 line, or similar connection are considered to be detached 1090 structures. 1091 23. Must provide that new or renewal personal residential 1092 policies issued by the corporation on or after February 1, 2014, 1093 do not provide coverage for watercraft, trailers, jewelry, furs, 1094 firearms, silverware, business property on premises, business 1095 property away from premises, or grave markers. 1096 24. Must provide, as a condition for making payment for 1097 damage caused by the peril of sinkhole, regardless of whether 1098 such payment is made pursuant to the contract, mediation, 1099 neutral evaluation, appraisal, arbitration, settlement, or 1100 litigation, that the payment be dedicated entirely to the costs 1101 of repairing the structure or remediation of the land. Unless 1102 this condition is met, the corporation is prohibited from making 1103 payment. 1104 (d)1. All prospective employees for senior management 1105 positions, as defined by the plan of operation, are subject to 1106 background checks as a prerequisite for employment. The office 1107 shall conduct the background checks pursuant to ss. 624.34, 1108 624.404(3), and 628.261. 1109 2. On or before July 1 of each year, employees of the 1110 corporation must sign and submit a statement attesting that they 1111 do not have a conflict of interest, as defined in part III of 1112 chapter 112. As a condition of employment, all prospective 1113 employees must sign and submit to the corporation a conflict-of 1114 interest statement. 1115 3. Senior managers and members of the board of governors 1116 are subject to part III of chapter 112, including, but not 1117 limited to, the code of ethics and public disclosure and 1118 reporting of financial interests, pursuant to s. 112.3145. 1119 Notwithstanding s. 112.3143(2), a board member may not vote on 1120 any measure that would inure to his or her special private gain 1121 or loss; that he or she knows would inure to the special private 1122 gain or loss of any principal by whom he or she is retained or 1123 to the parent organization or subsidiary of a corporate 1124 principal by which he or she is retained, other than an agency 1125 as defined in s. 112.312; or that he or she knows would inure to 1126 the special private gain or loss of a relative or business 1127 associate of the public officer. Before the vote is taken, such 1128 member mustshallpublicly state to the assembly the nature of 1129 his or her interest in the matter from which he or she is 1130 abstaining from voting and, within 15 days after the vote 1131 occurs, disclose the nature of his or her interest as a public 1132 record in a memorandum filed with the person responsible for 1133 recording the minutes of the meeting, who shall incorporate the 1134 memorandum in the minutes. Senior managers and board members are 1135 also required to file such disclosures with the Commission on 1136 Ethics and the Office of Insurance Regulation. The executive 1137 director of the corporation or his or her designee shall notify 1138 each existing and newly appointed member of the board of 1139 governors and senior managers of their duty to comply with the 1140 reporting requirements of part III of chapter 112. At least 1141 quarterly, the executive director or his or her designee shall 1142 submit to the Commission on Ethics a list of names of the senior 1143 managers and members of the board of governors who are subject 1144 to the public disclosure requirements under s. 112.3145. 1145 4. Notwithstanding s. 112.3148 or s. 112.3149, or any other 1146 provision of law, an employee or board member may not knowingly 1147 accept, directly or indirectly, any gift or expenditure from a 1148 person or entity, or an employee or representative of such 1149 person or entity, which has a contractual relationship with the 1150 corporation or who is under consideration for a contract. An 1151 employee or board member who fails to comply with subparagraph 1152 3. or this subparagraph is subject to penalties provided under 1153 ss. 112.317 and 112.3173. 1154 5. Any senior manager of the corporation who is employed on 1155 or after January 1, 2007, regardless of the date of hire, who 1156 subsequently retires or terminates employment is prohibited from 1157 representing another person or entity before the corporation for 1158 2 years after retirement or termination of employment from the 1159 corporation. 1160 6. Any senior manager of the corporation who is employed on 1161 or after January 1, 2007, regardless of the date of hire, who 1162 subsequently retires or terminates employment is prohibited from 1163 having any employment or contractual relationship for 2 years 1164 with an insurer that has entered into a take-out bonus agreement 1165 with the corporation. 1166 (n)1.It is the intent of the Legislature that the rates 1167 for coverage provided by the corporation be actuarially 1168 determined and not be competitive with rates charged in the 1169 admitted voluntary market such that the corporation functions as 1170 a residual market mechanism that provides insurance only if such 1171 insurance cannot be procured in the voluntary market. To achieve 1172 this goal, for any rate filing made by the corporation on or 1173 after July 1, 2012:Rates for coverage provided by the1174corporationmustbe actuarially sound and subject to s.627.062,1175except as otherwise provided in this paragraph. The corporation1176shall file its recommended rates with the office at least1177annually. The corporation shall provide any additional1178information regarding the rates which the office requires. The1179office shall consider the recommendations of the board and issue1180a final order establishing the rates for the corporation within118145 days after the recommended rates are filed. The corporation1182may not pursue an administrative challenge or judicial review of1183the final order of the office.1184 1. The corporation shall file its recommended rates with 1185 the office at least annually. The office shall consider the 1186 recommended rates and issue a final order establishing the rates 1187 within 45 days after the recommended rates are filed. The 1188 corporation may not pursue an administrative challenge or 1189 judicial review of the office’s final order. 1190 2. In developing its rates, the corporation shall use an 1191 appropriate industry expense equalization factor to ensure that 1192 its rates include standard industry ratemaking expense 1193 provisions. The industry expense equalization factor must 1194 include a catastrophe risk load, a provision for taxes, a market 1195 provision for reinsurance costs, and an industry expense 1196 provision for general expenses, acquisition expenses, and 1197 commissions. 1198 3. The corporation shall implement a rate increase each 1199 year for each residential line of business it writes, which may 1200 not exceed 20 percent by territory and 25 percent for any single 1201 policy, excluding coverage changes and surcharges. This 1202 subparagraph expires January 1, 2016, and does not apply to 1203 rates for sinkhole coverage or costs for the purchase of private 1204 reinsurance, if any. 1205 4.2.In addition to the rates otherwise determined pursuant 1206 to this paragraph, the corporation shall impose and collect an 1207 amount equal to the premium tax provided in s. 624.509 to 1208 augment the financial resources of the corporation. 12093. After the public hurricane loss-projection model under1210s.627.06281has been found to be accurate and reliable by the1211Florida Commission on Hurricane Loss Projection Methodology,the1212model shall serve as the minimum benchmark for determining the1213windstorm portion of the corporation’s rates. This subparagraph1214does not require or allow the corporation to adopt rates lower1215than the rates otherwise required or allowed by this paragraph.12164. The rate filings for the corporation which were approved1217by the office and took effect January 1, 2007, are rescinded,1218except for those rates that were lowered. As soon as possible,1219the corporation shall begin using the lower rates that were in1220effect on December 31, 2006, and provide refunds to1221policyholders who paid higher rates as a result of that rate1222filing. The rates in effect on December 31, 2006, remain in1223effect for the 2007 and 2008 calendar years except for any rate1224change that results in a lower rate. The next rate change that1225may increase rates shall take effect pursuant to a new rate1226filing recommended by the corporation and established by the1227office, subject to this paragraph.12285. Beginning on July 15, 2009, andannuallythereafter, the1229corporation must make a recommended actuarially sound rate1230filing for each personal and commercial line of business it1231writes, to be effective no earlier than January 1, 2010.12326. Beginning on or after January 1, 2010, and1233notwithstanding the board’s recommended rates and the office’s1234final order regarding the corporation’s filed rates under1235subparagraph 1., the corporation shallannuallyimplement a rate1236increase which, except for sinkhole coverage,does not exceed 101237percent for any single policy issued by the corporation,1238excluding coverage changes and surcharges.1239 5.7.The corporation may also implement an increase to 1240 reflect the effect on the corporation of the cash buildup factor 1241 pursuant to s. 215.555(5)(b). 1242 1243 This paragraph does not require or allow the corporation to 1244 reduce rates. 12458. The corporation’s implementation of rates as prescribed1246in subparagraph 6. shall cease for any line of business written1247by the corporation upon the corporation’s implementation of1248actuarially sound rates. Thereafter, the corporation shall1249annually make a recommended actuarially sound rate filing for1250each commercial and personal line of business the corporation1251writes.1252 (o) If coverage in an account is deactivated pursuant to 1253 paragraph (p), coverage through the corporation shall be 1254 reactivated by order of the office only under one of the 1255 following circumstances: 1256 1. If the market assistance plan receives a minimum of 100 1257 applications for coverage within a 3-month period, or 200 1258 applications for coverage within a 1-year period or less for 1259 residential coverage, unless the market assistance plan provides 1260 a quotation from admitted carriers at their filed rates for at 1261 least 90 percent of such applicants. AAnymarket assistance 1262 plan application that is rejected because an individual risk is 1263 so hazardous as to be uninsurable using the criteria specified 1264 in subparagraph (c)7. may(c)8. shallnot be included in the 1265 minimum percentage calculationprovided herein. IfIn the event1266thatthere is a legal or administrative challenge to a 1267 determination by the office that the conditions of this 1268 subparagraph have been met for eligibility for coverage byin1269 the corporation, ananyeligible risk may obtain coverage during 1270 the pendency of such challenge. 1271 2. In response to a state of emergency declared by the 1272 Governor under s. 252.36, the office may activate coverage by 1273 order duringfor the period ofthe emergency upon a finding by 1274 the office that the emergency significantly affects the 1275 availability of residential property insurance. 1276 (q)1. The corporation shall certify to the office its needs 1277 for annual assessments as to a particular calendar year, and for 1278 any interim assessments that it deems to be necessary to sustain 1279 operations as to a particular year pending the receipt of annual 1280 assessments. Upon verification, the office shall approve such 1281 certification, and the corporation shall levy such annual or 1282 interim assessments. Such assessments mustshallbe prorated as 1283 provided in paragraph (b). The corporation shall take all 1284 reasonable and prudent steps necessary to collect the amount of 1285 assessment due from each assessable insurer, including, if 1286 prudent, filing suit to collect such assessment. If the 1287 corporation is unable to collect an assessment from any 1288 assessable insurer, the uncollected assessments shall be levied 1289 as an additional assessment against the assessable insurers and 1290 any assessable insurer required to pay an additional assessment 1291as a result of such failure to payshall have a cause of action 1292 against such nonpaying assessable insurer. Assessments shall be 1293 included as an appropriate factor in the making of rates. The 1294 failure of a surplus lines agent to collect and remit any 1295 regular or emergency assessment levied by the corporation is 1296considered to bea violation of s. 626.936 and subjects the 1297 surplus lines agent to the penalties provided in that section. 1298 2. The governing body of any unit of local government,any1299 residents of which are insured by the corporation, may issue 1300 bonds as defined in s. 125.013 or s. 166.101from time to time1301 to fund an assistance program, in conjunction with the 1302 corporation, for the purpose of defraying deficits of the 1303 corporation. In order to avoid needless and indiscriminate 1304 proliferation, duplication, and fragmentation of such assistance 1305 programs, any unit of local government,anyresidents of which 1306 are insured by the corporation, may provide for the payment of 1307 losses, regardless of whether or not the losses occurred within 1308 or outside of the territorial jurisdiction of the local 1309 government. Revenue bonds under this subparagraph may not be 1310 issued until validated pursuant to chapter 75, unless a state of 1311 emergency is declared by executive order or proclamation of the 1312 Governor pursuant to s. 252.36 making such findings as are 1313 necessary to determine that it is in the best interests of, and 1314 necessary for, the protection of the public health, safety, and 1315 general welfare of residents of this state and declaring it an 1316 essential public purpose to permit certain municipalities or 1317 counties to issue such bonds toas willpermit relief to 1318 claimants and policyholders of the corporation. Any such unit of 1319 local government may enter into such contracts with the 1320 corporation and with any other entity created pursuant to this 1321 subsection as are necessary to carry out this paragraph. Any 1322 bonds issued under this subparagraph areshall bepayable from 1323 and secured by moneys received by the corporation from emergency 1324 assessments under sub-subparagraph (b)3.c.(b)3.d., and assigned 1325 and pledged to or on behalf of the unit of local government for 1326 the benefit of the holders of such bonds. The funds, credit, 1327 property, and taxing power of the state or of the unit of local 1328 government mayshallnot be pledged for the payment of such 1329 bonds. 1330 3.a.The corporation shall adopt one or more programs 1331 subject to approval by the office for the reduction of both new 1332 and renewal writings in the corporation.Beginning January 1,13332008,1334 a. Any program the corporation adopts for the payment of 1335 bonuses to an insurer for each risk the insurer removes from the 1336 corporation mustshallcomply with s. 627.3511(2) and may not 1337 exceed the amount referenced in s. 627.3511(2) for each risk 1338 removed. The corporation may consider any prudent and not 1339 unfairly discriminatory approach to reducing corporation 1340 writings, and may adopt a credit against assessment liability or 1341 other liability that provides an incentive for insurers to take 1342 risks out of the corporation and to keep risks out of the 1343 corporation by maintaining or increasing voluntary writings in 1344 counties or areas in which corporation risks are highly 1345 concentrated and a program to provide a formula under which an 1346 insurer voluntarily taking risks out of the corporation by 1347 maintaining or increasing voluntary writings will be relieved 1348 wholly or partially from assessments under sub-subparagraphsub1349subparagraphs(b)3.a.and b.However, any “take-out bonus” or 1350 payment to an insurer must be conditioned on the property being 1351 insured for at least 5 years by the insurer, unless canceled or 1352 nonrenewed by the policyholder. If the policy is canceled or 1353 nonrenewed by the policyholder before the end of the 5-year 1354 period, the amount of the take-out bonus must be prorated for 1355 the time period the policy was insured. IfWhenthe corporation 1356 enters into a contractual agreement for a take-out plan, the 1357 producing agent of record of the corporation policy is entitled 1358 to retain any unearned commission on such policy, and the 1359 insurer shall either: 1360 (I) Pay to the producing agent of record of the policy, for 1361 the first year, an amount thatwhichis the greater of the 1362 insurer’s usual and customary commission for the type of policy 1363 written or a policy fee equal to the usual and customary 1364 commission of the corporation; or 1365 (II) Offer to allow the producing agent of record of the 1366 policy to continue servicing the policy for at leasta period of1367not less than1 year and offer to pay the agent the insurer’s 1368 usual and customary commission for the type of policy written. 1369 If the producing agent is unwilling or unable to accept 1370 appointment by the new insurer, the new insurer shall pay the 1371 agent in accordance with sub-sub-subparagraph (I). 1372 b. Any credit or exemption from regular assessments adopted 1373 under this subparagraph shall last no longer than the 3 years 1374 following the cancellation or expiration of the policy by the 1375 corporation. With the approval of the office, the board may 1376 extend such credits for an additional year if the insurer 1377 guarantees an additional year of renewability for all policies 1378 removed from the corporation, or for 2 additional years if the 1379 insurer guarantees 2 additional years of renewability for all 1380 policies so removed. 1381 c.There shall beNo credit, limitation, exemption, or 1382 deferment from emergency assessments maytobe collected from 1383 policyholders pursuant to sub-subparagraph (b)3.c.(b)3.d.1384 4. The plan mustshallprovide for the deferment, in whole 1385 or in part, of the assessment of an assessable insurer, other 1386 than an emergency assessment collected from policyholders 1387 pursuant to sub-subparagraph (b)3.c.(b)3.d., if the office 1388 finds that payment of the assessment would endanger or impair 1389 the solvency of the insurer. IfIn the eventan assessment 1390 against an assessable insurer is deferred in whole or in part, 1391 the amountby which such assessment isdeferred may be assessed 1392 against the other assessable insurers in a manner consistent 1393 with the basis for assessments set forth in paragraph (b). 1394 5.Effective July 1, 2007,In order to evaluate the costs 1395 and benefits of approved take-out plans, if the corporation pays 1396 a bonus or other payment to an insurer for an approved take-out 1397 plan, it shall maintain a record of the address or such other 1398 identifying information on the property or risk removed in order 1399 to track if and when the property or risk is later insured by 1400 the corporation. 1401 6. Any policy taken out, assumed, or removed from the 1402 corporation is, as of the effective date of the take-out, 1403 assumption, or removal, direct insurance issued by the insurer 1404 and not by the corporation, even if the corporation continues to 1405 service the policies. This subparagraph applies to policies of 1406 the corporation and not policies taken out, assumed, or removed 1407 from any other entity. 1408 7. Notwithstanding any other provision of law, for purposes 1409 of a depopulation, take-out, or keep-out program adopted by the 1410 corporation, including an initial or renewal offer of coverage 1411 made to a policyholder removed from the corporation pursuant to 1412 such program, an eligible surplus lines insurer may participate 1413 in the program in the same manner and on the same terms as an 1414 authorized insurer, except as provided under this subparagraph. 1415 To qualify for participation, the surplus lines insurer must 1416 first obtain approval from the office for its depopulation, 1417 take-out, or keep-out plan and comply with all of the 1418 corporation’s requirements for such plan applicable to admitted 1419 insurers and with all statutory provisions applicable to the 1420 removal of policies from the corporation. In considering a 1421 surplus lines insurer’s request for approval for its plan, the 1422 office must determine that the surplus lines insurer meets the 1423 following requirements: 1424 a. Maintains surplus of $50 million on a company or pooled 1425 basis; 1426 b. Maintains an A.M. Best Financial Strength Rating of “A-” 1427 or better; 1428 c. Maintains reserves, surplus, reinsurance, and 1429 reinsurance equivalents sufficient to cover the insurer’s 100 1430 year probable maximum hurricane loss at least twice in a single 1431 hurricane season, and submits such reinsurance to the office to 1432 review for purposes of the take-out; 1433 d. Provides prominent notice to the policyholder before the 1434 assumption of the policy that surplus lines policies are not 1435 provided coverage by the Florida Insurance Guaranty Association, 1436 and an outline of any substantial differences in coverage 1437 between the existing policy and the policy being offered to the 1438 insured; and 1439 e. Provides similar policy coverage. 1440 1441 This subparagraph does not subject any surplus lines insurer to 1442 requirements in addition to part VIII of chapter 626. Surplus 1443 lines brokers making an offer of coverage under this 1444 subparagraph are not required to comply with s. 626.916(1)(a), 1445 (b), (c), and (e). 1446 (s)1. There isshall beno liability on the part of, and no 1447 cause of actionof any natureshall arise against, any 1448 assessable insurer or its agents or employees, the corporation 1449 or its agents or employees, members of the board of governors or 1450 their respective designees at a board meeting, corporation 1451 committee members, or the office or its representatives, for any 1452 action taken by them in the performance of their duties or 1453 responsibilities under this subsection. 1454 a. As part of the immunity, the corporation, as a 1455 governmental entity serving a public purpose, is not liable for 1456 any claim for bad faith whether or not brought pursuant to s. 1457 624.155, and this subsection or any other provision of law does 1458 not create liability or a cause of action for bad faith or a 1459 claim for extracontractual damages. 1460 b. Such immunity does not apply to: 1461 (I)a.Any of the foregoing persons or entities for any 1462 willful tort; 1463 (II)b.The corporation or its producing agents for breach 1464 of any contract or agreement pertaining to insurance coverage; 1465 (III)c.The corporation with respect to issuance or payment 1466 of debt; 1467 (IV)d.AnAnyassessable insurer with respect to any action 1468 to enforce an assessable insurer’s obligations to the 1469 corporation under this subsection; or 1470 (V)e.The corporation in any pending or future action for 1471 breach of contract or for benefits under a policy issued by the 1472 corporation.;In any such action, the corporation is notshall1473beliable to the policyholders and beneficiaries for attorney’s 1474 fees under s. 627.428. 1475 2. The corporation shall manage its claim employees, 1476 independent adjusters, and others who handle claims to ensure 1477 they carry out the corporation’s duty to its policyholders to 1478 handle claims carefully, timely, diligently, and in good faith, 1479 balanced against the corporation’s duty to the state to manage 1480 its assets responsibly in order to minimize its assessment 1481 potential. 1482 (w) Notwithstanding any other provision of law: 1483 1. The pledge or sale of, the lien upon, and the security 1484 interest in any rights, revenues, or other assets of the 1485 corporation created or purported to be created pursuant to any 1486 financing documents to secure any bonds or other indebtedness of 1487 the corporation shall be and remain valid and enforceable, 1488 notwithstanding the commencement of and during the continuation 1489 of, and after, any rehabilitation, insolvency, liquidation, 1490 bankruptcy, receivership, conservatorship, reorganization, or 1491 similar proceeding against the corporation under the laws of 1492 this state. 1493 2.NoSuch proceeding does notshallrelieve the 1494 corporation of its obligation, or otherwise affect its ability 1495 to perform its obligation, to continue to collect, or levy and 1496 collect, assessments, market equalization or other surcharges 1497under subparagraph (c)10., or any other rights, revenues, or 1498 other assets of the corporation pledged pursuant to any 1499 financing documents. 1500 3. Each such pledge or sale of, lien upon, and security 1501 interest in, including the priority of such pledge, lien, or 1502 security interest, any such assessments, market equalization or 1503 other surcharges, or other rights, revenues, or other assets 1504 which are collected, or levied and collected, after the 1505 commencement of and during the pendency of, or after, any such 1506 proceeding continuesshall continueunaffected by such 1507 proceeding. As used in this subsection, the term “financing 1508 documents” means any agreement or agreements, instrument or 1509 instruments, or other document or documents now existing or 1510 hereafter created evidencing any bonds or other indebtedness of 1511 the corporation or pursuant to which any such bonds or other 1512 indebtedness has been or may be issued and pursuant to which any 1513 rights, revenues, or other assets of the corporation are pledged 1514 or sold to secure the repayment of such bonds or indebtedness, 1515 together with the payment of interest on such bonds or such 1516 indebtedness, or the payment of any other obligation or 1517 financial product, as defined in the plan of operation of the 1518 corporation related to such bonds or indebtedness. 1519 4. Any such pledge or sale of assessments, revenues, 1520 contract rights, or other rights or assets of the corporation 1521 constitutesshall constitutea lien and security interest, or 1522 sale, as the case may be, that is immediately effective and 1523 attaches to such assessments, revenues, or contract rights or 1524 other rights or assets, whether or not imposed or collected at 1525 the time the pledge or sale is made.AnySuch pledge or sale is 1526 effective, valid, binding, and enforceable against the 1527 corporation or other entity making such pledge or sale, and 1528 valid and binding against and superior to any competing claims 1529 or obligations owed to any other person or entity, including 1530 policyholders in this state, asserting rights in any such 1531 assessments, revenues, or contract rights or other rights or 1532 assets to the extent set forth in and in accordance with the 1533 terms of the pledge or sale contained in the applicable 1534 financing documents, whether or not any such person or entity 1535 has notice of such pledge or sale and without the need for any 1536 physical delivery, recordation, filing, or other action. 1537 5. IfAs long asthe corporation has any bonds outstanding, 1538 the corporation may not file a voluntary petition under chapter 1539 9 of the federal Bankruptcy Code or such corresponding chapter 1540 or sections as may be in effect,from time to time,and a public 1541 officer or any organization, entity, or other person may not 1542 authorize the corporation to be or become a debtor under chapter 1543 9 of the federal Bankruptcy Code or such corresponding chapter 1544 or sections as may be in effect, from time to time,during any 1545 such period. 1546 6. If ordered by a courtof competent jurisdiction, the 1547 corporation may assume policies or otherwise provide coverage 1548 for policyholders of an insurer placed in liquidation under 1549 chapter 631, under such forms, rates, terms, and conditions as 1550 the corporation deems appropriate, subject to approval by the 1551 office. 1552 (x)1. The following records of the corporation are 1553 confidential and exempt fromthe provisions ofs. 119.07(1) and 1554 s. 24(a), Art. I of the State Constitution: 1555 a. Underwriting files, except that a policyholder or an 1556 applicant shall have access to his or her own underwriting 1557 files. Confidential and exempt underwriting file records may 1558 also be released to other governmental agencies upon written 1559 request and demonstration of need; such records held by the 1560 receiving agency remain confidential and exempt as provided 1561 herein. 1562 b. Claims files, until termination of all litigation and 1563 settlement of all claims arising out of the same incident, 1564 although portions of the claims files may remain exempt, as 1565 otherwise provided by law. Confidential and exempt claims file 1566 records may be released to other governmental agencies upon 1567 written request and demonstration of need; such records held by 1568 the receiving agency remain confidential and exempt as provided 1569 herein. 1570 c. Records obtained or generated by an internal auditor 1571 pursuant to a routine audit, until the audit is completed, or if 1572 the audit is conducted as part of an investigation, until the 1573 investigation is closed or ceases to be active. An investigation 1574 is considered “active” while the investigation is being 1575 conducted with a reasonable, good faith belief that it could 1576 lead to the filing of administrative, civil, or criminal 1577 proceedings. 1578 d. Matters reasonably encompassed in privileged attorney 1579 client communications. 1580 e. Proprietary information licensed to the corporation 1581 under contract and the contract provides for the confidentiality 1582 of such proprietary information. 1583 f. All information relating to the medical condition or 1584 medical status of a corporation employee which is not relevant 1585 to the employee’s capacity to perform his or her duties, except 1586 as otherwise provided in this paragraph. Information that is 1587 exempt shall include, but is not limited to, information 1588 relating to workers’ compensation, insurance benefits, and 1589 retirement or disability benefits. 1590 g. Upon an employee’s entrance into the employee assistance 1591 program, a program to assist any employee who has a behavioral 1592 or medical disorder, substance abuse problem, or emotional 1593 difficulty which affects the employee’s job performance, all 1594 records relative to that participation shall be confidential and 1595 exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I 1596 of the State Constitution, except as otherwise provided in s. 1597 112.0455(11). 1598 h. Information relating to negotiations for financing, 1599 reinsurance, depopulation, or contractual services, until the 1600 conclusion of the negotiations. 1601 i. Minutes of closed meetings regarding underwriting files, 1602 and minutes of closed meetings regarding an open claims file 1603 until termination of all litigation and settlement of all claims 1604 with regard to that claim, except that information otherwise 1605 confidential or exempt by law shall be redacted. 1606 2. If anauthorizedinsurer is considering underwriting a 1607 risk insured by the corporation or has removed a risk from the 1608 corporation, relevant underwriting files and confidential claims 1609 files may be released to the insurer ifprovidedthe insurer 1610 agrees in writing, notarized and under oath, to maintain the 1611 confidentiality of such files. If a file is transferred to an 1612 insurer, that file is no longer a public record because it is 1613 not held by an agency subject to the provisions of the public 1614 records law. Underwriting files and confidential claims files 1615 may also be released to staff and the board of governors of the 1616 market assistance plan established pursuant to s. 627.3515, who 1617 must retain the confidentiality of such files, except such files 1618 may be released to authorized insurers that are considering 1619 assuming the risks to which the files apply if, providedthe 1620 insurer agrees in writing, notarized and under oath, to maintain 1621 the confidentiality of such files. Finally, the corporation or 1622 the board or staff of the market assistance plan may make the 1623 following information obtained from underwriting files and 1624 confidential claims files available to licensed general lines 1625 insurance agents: name, address, and telephone number of the 1626 residential property owner or insured; location of the risk; 1627 rating information; loss history; and policy type. The receiving 1628 licensed general lines insurance agent must retain the 1629 confidentiality of the information received. 1630 3. A policyholder who has filed suit against the 1631 corporation has the right to discover the contents of his or her 1632 own claims file to the same extent that discovery of such 1633 contents would be available from a private insurer in litigation 1634 as provided by the Florida Rules of Civil Procedure, the Florida 1635 Evidence Code, and other applicable law. Pursuant to subpoena, a 1636 third party has the right to discover the contents of an 1637 insured’s or applicant’s underwriting or claims file to the same 1638 extent that discovery of such contents would be available from a 1639 private insurer by subpoena as provided by the Florida Rules of 1640 Civil Procedure, the Florida Evidence Code, and other applicable 1641 law, and subject to any confidentiality protections requested by 1642 the corporation and agreed to by the seeking party or ordered by 1643 the court. The corporation may release confidential underwriting 1644 and claims file contents and information as it deems necessary 1645 and appropriate to underwrite or service insurance policies and 1646 claims, subject to any confidentiality protections deemed 1647 necessary and appropriate by the corporation. 1648 4. Portions of meetings of the corporation are exempt from 1649 the provisions of s. 286.011 and s. 24(b), Art. I of the State 1650 Constitution wherein confidential underwriting files or 1651 confidential open claims files are discussed. All portions of 1652 corporation meetings which are closed to the public shall be 1653 recorded by a court reporter. The court reporter shall record 1654 the times of commencement and termination of the meeting, all 1655 discussion and proceedings, the names of all persons present at 1656 any time, and the names of all persons speaking. No portion of 1657 any closed meeting shall be off the record. Subject to the 1658 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s 1659 notes of any closed meeting shall be retained by the corporation 1660 for a minimum of 5 years. A copy of the transcript, less any 1661 exempt matters, of any closed meeting wherein claims are 1662 discussed shall become public as to individual claims after 1663 settlement of the claim. 1664 (aa) As a condition of eligibility for coverage by the 1665 corporation, an applicant or insured of a property located in a 1666 special flood hazard area, as defined by the National Flood 1667 Insurance Program, must maintain in effect a separate flood 1668 insurance policy having coverage limits for building and 1669 contents at least equal to those provided under the 1670 corporation’s policy, subject to the maximum limits available 1671 under the National Flood Insurance Program policy. This 1672 requirement does not apply to an insured who is a tenant or a 1673 condominium unit owner above the ground floor; a policy issued 1674 by the corporation which excludes wind and hail coverage; a risk 1675 that is not eligible for flood coverage under the National Flood 1676 Insurance Program; or a mobile home that is located more than 2 1677 miles from open water, including the ocean, the gulf, a bay, a 1678 river, or the intracoastal waterway. This paragraph applies to 1679 new policies issued by the corporation on or after January 1, 1680 2013, and to policies renewed by the corporation on or after 1681 January 1, 2014.The corporation shall not require the securing1682of flood insurance as a condition of coverage if the insured or1683applicant executes a form approved by the office affirming that1684flood insurance is not provided by the corporation and that if1685flood insurance is not secured by the applicant or insured in1686addition to coverage by the corporation, the risk will not be1687covered for flood damage. A corporation policyholder electing1688not to secure flood insurance and executing a form as provided1689herein making a claim for water damage against the corporation1690shall have the burden of proving the damage was not caused by1691flooding. Notwithstanding other provisions of this subsection,1692the corporation may deny coverage to an applicant or insured who1693refuses to execute the form described herein.1694(ee) The office may establish a pilot program to offer1695optional sinkhole coverage in one or more counties or other1696territories of the corporation for the purpose of implementing1697s.627.706, as amended by s. 30, chapter 2007-1, Laws of1698Florida. Under the pilot program, the corporation is not1699required to issue a notice of nonrenewal to exclude sinkhole1700coverage upon the renewal of existing policies, but may exclude1701such coverage using a notice of coverage change.1702 Section 3. Paragraphs (a), (b), and (c) of subsection (3), 1703 subsection (4), and paragraphs (d), (e), and (f) of subsection 1704 (6) of section 627.3511, Florida Statutes, are amended to read: 1705 627.3511 Depopulation of Citizens Property Insurance 1706 Corporation.— 1707 (3) EXEMPTION FROM DEFICIT ASSESSMENTS.— 1708 (a) The calculation of an insurer’s assessment liability 1709 under s. 627.351(6)(b)3.a.or b.shall, for an insurer that in 1710 any calendar year removes 50,000 or more risks from the Citizens 1711 Property Insurance Corporation, eitherby issuance of a policy 1712 upon expiration or cancellation of the corporation policy or by 1713 assumption of the corporation’s obligations with respect to in 1714 force policies, exclude such removed policies for the succeeding 1715 3 years, as follows: 1716 1. In the first year following removal of the risks, 100 1717 percent of the risks are excluded from the calculationto the1718extent of 100 percent. 1719 2. In the second year following removal of the risks, 75 1720 percent of the risks are excluded from the calculationto the1721extent of 75 percent. 1722 3. In the third year following removal of the risks, 50 1723 percent of the risks are excluded from the calculationto the1724extent of 50 percent. 1725 1726 If the removal of risks is accomplished through assumption of 1727 obligations with respect to in-force policies, the corporation 1728 shall pay to the assuming insurer all unearned premium forwith1729respect tosuch policies less any policy acquisition costs 1730 agreed to by the corporation and assuming insurer. The term 1731 “policy acquisition costs” means the corporation’sis defined as1732 costs of issuingissuance ofthe policy andby the corporation1733whichincludes agent commissions, servicing company fees, and 1734 premium tax. This paragraph does not apply to an insurer that, 1735 at any time within 5 years before removing the risks, had a 1736 market share in excess of 0.1 percent of the statewide aggregate 1737 gross direct written premium for any line of property insurance, 1738 or to an affiliate of such an insurer. This paragraph does not 1739 apply unlesseitherat least 40 percent of the risks removed 1740 from the corporation are located in Miami-Dade, Broward, and 1741 Palm Beach Counties, or at least 30 percent of the risks removed 1742 from the corporation are located in such counties and an 1743 additional 50 percent of the risks removed from the corporation 1744 are located in other coastal counties. 1745 (b) An insurer that first wrote personal lines residential 1746 property coverage in this state on or after July 1, 1994, is 1747 exempt from regular deficit assessments imposed pursuant to s. 1748 627.351(6)(b)3.a.and b., but not emergency assessments 1749 collected from policyholders pursuant to s. 627.351(6)(b)3.c. 1750627.351(6)(b)3.d., of the Citizens Property Insurance 1751 Corporation until the earlier of the following: 1752 1. The end of the calendar year in which it first wrote 0.5 1753 percent or more of the statewide aggregate direct written 1754 premium for any line of residential property coverage; or 1755 2. December 31, 1997, or December 31 of the third year in 1756 which it wrote such coverage in this state, whichever is later. 1757 (c) Other than an insurer that is exempt under paragraph 1758 (b), an insurer that in any calendar year increases its total 1759 structure exposure subject to wind coverage by 25 percent or 1760 more over its exposure for the preceding calendar year is, with 1761 respect to that year, exempt from deficit assessments imposed 1762 pursuant to s. 627.351(6)(b)3.a.and b., but not emergency 1763 assessments collected from policyholders pursuant to s. 1764 627.351(6)(b)3.c.627.351(6)(b)3.d., of the Citizens Property 1765 Insurance Corporation attributable to such increase in exposure. 1766 (4) AGENT BONUS.—IfWhenthe corporation enters into a 1767 contractual agreement for a take-out plan that provides a bonus 1768 to the insurer, the producing agent of record of the corporation 1769 policy is entitled to retain any unearned commission on such 1770 policy, and the insurer shalleither: 1771 (a) Pay to the producing agentof record of the association1772policy, for the first year, an amount that is the greater of the 1773 insurer’s usual and customary commission for the type of policy 1774 written or a fee equal to the usual and customary commission of 1775 the corporation; or 1776 (b) Offer to allow the producing agentof record of the1777corporation policyto continue servicing the policy for at least 1778a period of not less than1 year and offer to pay the agent the 1779 greater of the insurer’s or the corporation’s usual and 1780 customary commission for the type of policy written. 1781 1782 If the producing agent is unwilling or unable to accept 1783 appointment, the new insurer shall pay the agent in accordance 1784 with paragraph (a). The requirementof this subsectionthat the 1785 producing agent of record is entitled to retain the unearned 1786 commission on an association policy does not apply to a policy 1787 for which coverage has been provided in the association for 30 1788 days or lessor for which a cancellation notice has been issued1789pursuant to s.627.351(6)(c)10. during the first 30 days of1790coverage. 1791 (6) COMMERCIAL RESIDENTIAL TAKE-OUT PLANS.— 1792 (d) The calculation of an insurer’s regular assessment 1793 liability under s. 627.351(6)(b)3.a.and b., but not emergency 1794 assessments collected from policyholders pursuant to s. 1795 627.351(6)(b)3.c.627.351(6)(b)3.d., shall, with respect to 1796 commercial residential policies removed from the corporation 1797 under an approved take-out plan, exclude such removed policies 1798 for the succeeding 3 years, as follows: 1799 1. In the first year following removal of the policies, 100 1800 percent of the policies are excluded from the calculationto the1801extent of 100 percent. 1802 2. In the second year following removal of the policies, 75 1803 percent of the policies are excluded from the calculationto the1804extent of 75 percent. 1805 3. In the third year following removal of the policies, 50 1806 percent of the policies are excluded from the calculationto the1807extent of 50 percent. 1808 (e) An insurer that first wrote commercial residential 1809 property coverage in this state on or after June 1, 1996, is 1810 exempt from regular assessments under s. 627.351(6)(b)3.a.and1811b., but not emergency assessments collected from policyholders 1812 pursuant to s. 627.351(6)(b)3.c.627.351(6)(b)3.d., with respect 1813 to commercial residential policies until the earlier of: 1814 1. The end of the calendar year in which such insurer first 1815 wrote 0.5 percent or more of the statewide aggregate direct 1816 written premium for commercial residential property coverage; or 1817 2. December 31 of the third year in which such insurer 1818 wrote commercial residential property coverage in this state. 1819 (f) An insurer that is not otherwise exempt from regular 1820 assessments under s. 627.351(6)(b)3.a.and b.with respect to 1821 commercial residential policies is, for any calendar year in 1822 which such insurer increased its total commercial residential 1823 hurricane exposure by 25 percent or more over its exposure for 1824 the preceding calendar year, exempt from regular assessments 1825 under s. 627.351(6)(b)3.a.and b., but not emergency assessments 1826 collected from policyholders pursuant to s. 627.351(6)(b)3.c. 1827627.351(6)(b)3.d., attributable to such increased exposure. 1828 Section 4. This act shall take effect upon becoming a law.