September 18, 2020
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Senate Bill 1486

Senate Bill sb1486e1

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    CS for SB 1486                                 First Engrossed



  1                      A bill to be entitled

  2         An act relating to property insurance; amending

  3         s. 215.555, F.S.; revising the retention of

  4         losses for which an insurer is not entitled to

  5         reimbursement from the Florida Hurricane

  6         Catastrophe Fund; amending s. 215.559, F.S.;

  7         revising the allocation of funds appropriated

  8         to the Department of Community Affairs from the

  9         Florida Hurricane Catastrophe Fund for the

10         Hurricane Loss Mitigation Program; requiring

11         that the department establish a low-interest

12         loan program and pilot project for hurricane

13         loss mitigation; authorizing contractual

14         agreements between the department and financial

15         institutions; authorizing the Department of

16         Community Affairs to adopt rules; amending s.

17         627.062, F.S.; requiring the Office of

18         Insurance Regulation to submit a proposed plan

19         to the Legislature establishing uniform rating

20         territories to be used by insurers for

21         residential property insurance rate filings;

22         requiring a further act of the Legislature to

23         implement the plan; limiting the recoupment by

24         an insurer in its rates of the reimbursement

25         premium it pays to the Florida Hurricane

26         Catastrophe Fund; amending s. 627.0628, F.S.;

27         restricting the admissibility and relevance in

28         rate proceedings of findings of the Florida

29         Commission on Hurricane Loss Projection

30         Methodology; amending s. 627.0629, F.S.;

31         lowering the percentage amount of a rate filing


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    CS for SB 1486                                 First Engrossed



 1         based on a computer model which requires a

 2         public hearing; creating s. 627.06281, F.S.;

 3         requiring residential property insurers and

 4         rating and advisory organizations to report

 5         hurricane loss data for development of a public

 6         hurricane model for hurricane loss projections;

 7         amending s. 627.351, F.S.; revising the

 8         appointments to the board and the approval of

 9         officers and employees of the corporation;

10         providing additional legislative intent

11         relating to the Citizens Property Insurance

12         Corporation; authorizing the corporation to

13         issue bonds and incur indebtedness for certain

14         purposes; requiring creation of a Market

15         Accountability Advisory Committee to assist the

16         corporation for certain purposes; providing for

17         appointment of committee members; providing for

18         terms; requiring reports to the corporation;

19         revising requirements for the plan of operation

20         of the corporation; deleting an obsolete

21         reporting requirement; establishing a pilot

22         program; specifying nonapplication of certain

23         policy requirements in a county lacking

24         reasonable degrees of competition for certain

25         policies under certain circumstances; requiring

26         the commission to adopt rules; deleting an

27         obsolete rate methodology panel reporting

28         requirement provision; creating s. 627.40951,

29         F.S.; providing legislative findings and

30         intent; providing for an advisory committee;

31         providing for membership; providing for


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    CS for SB 1486                                 First Engrossed



 1         recommendations to be submitted to the

 2         Legislature regarding standard residential

 3         property insurance policies; amending s.

 4         627.411, F.S.; adding grounds for which the

 5         Office of Insurance Regulation must disapprove

 6         a form filed by an insurer; amending s.

 7         627.4133, F.S.; prohibiting insurers from

 8         canceling or nonrenewing residential property

 9         insurance policies under certain emergency

10         circumstances; providing exceptions; providing

11         notice requirements; providing application to

12         personal residential and commercial residential

13         policies covering certain damaged property;

14         extending the effective date of certain

15         policies under certain hurricane circumstances;

16         authorizing the insurer to collect premiums for

17         the extended period; providing nonapplication;

18         amending s. 627.4143, F.S.; requiring insurers

19         to provide personal lines property insurance

20         policyholders with a checklist of items

21         contained in policies; authorizing the

22         Financial Services Commission to adopt rules;

23         prescribing elements to be contained in the

24         checklist; requiring the checklist and outline

25         of insurance coverage to be sent with each

26         renewal; clarifying that homeowners' insurance

27         includes mobile homeowners', dwelling, and

28         condominium unit owners' insurance for purposes

29         of the outline of coverage; amending s.

30         627.701, F.S.; increasing the maximum allowable

31         hurricane deductible for personal lines and


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    CS for SB 1486                                 First Engrossed



 1         certain commercial lines residential policies;

 2         requiring insurers to offer specified hurricane

 3         deductibles for such policies; requiring

 4         insurers to provide written notice explaining

 5         hurricane deductible options for such policies;

 6         providing for computation and display of the

 7         dollar value of hurricane deductibles;

 8         requiring insurers to compute and display

 9         actual dollar values of certain riders for

10         certain policies; amending s. 627.701, F.S.;

11         providing that the requirement for a hurricane

12         deductible to apply on an annual basis applies

13         to personal lines residential property

14         insurance policies; requiring insurers that

15         provide commercial residential property

16         insurance to offer alternative hurricane

17         deductibles that apply on an annual basis or to

18         each hurricane; amending s. 627.7011, F.S.;

19         requiring insurers to offer coverage for

20         additional costs of repair due to laws and

21         ordinances; requiring insurers to pay the

22         replacement cost for a loss insured on that

23         basis, whether or not the insured replaces or

24         repairs the dwelling or property; requiring

25         certain homeowner's insurance policies to

26         contain a specified statement; providing

27         intent; amending s. 627.7015, F.S.; revising

28         purpose and scope provisions relating to an

29         alternative procedure for resolution of

30         disputed property insurance claims; providing

31         that failure of an insurer to notify a claimant


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    CS for SB 1486                                 First Engrossed



 1         of the availability of mediation excuses an

 2         insured from being required to submit to

 3         certain loss appraisal processes; amending s.

 4         627.702, F.S.; providing legislative intent

 5         regarding the requirement that an insurer pay

 6         policy limits if there is a total loss of a

 7         building; providing nonapplication of certain

 8         insurer liability requirements under certain

 9         circumstances; limiting an insurer's liability

10         to certain loss covered by a covered peril;

11         amending s. 627.706, F.S., relating to sinkhole

12         insurance; providing definitions; creating s.

13         627.7065, F.S.; providing legislative findings;

14         requiring the Department of Financial Services

15         and the Office of the Insurance Consumer

16         Advocate to consult with the Florida Geological

17         Survey and the Department of Environmental

18         Protection to implement a statewide automated

19         database of sinkholes and related activity;

20         providing requirements for the form and content

21         of the database; authorizing the Department of

22         Financial Services to require insurers to

23         provide certain information; providing for

24         management of the database; requiring the

25         department to investigate sinkhole activity

26         reports and include findings and investigations

27         in the database; requiring the Department of

28         Environmental Protection to report on the

29         database to the Governor, Legislature, and

30         Chief Financial Officer; authorizing the

31         Department of Financial Services to adopt


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    CS for SB 1486                                 First Engrossed



 1         implementing rules; amending s. 627.707, F.S.;

 2         revising standards for investigations of

 3         sinkhole claims by insurers; requiring an

 4         insurer to engage an engineer or professional

 5         geologist for certain purposes; requiring a

 6         report under certain circumstances; requiring

 7         an insurer to provide written notice to a

 8         policyholder disclosing certain information;

 9         authorizing an insurer to deny a claim under

10         certain circumstances; authorizing a

11         policyholder to demand certain testing;

12         providing requirements; specifying required

13         activities for insurers if a sinkhole loss is

14         verified; specifying payment requirements for

15         insurers; providing limitations; requiring the

16         insurer to pay fees of the engineer and

17         geologist; authorizing an insurer to engage a

18         structural engineer for certain purposes;

19         creating s. 627.7072, F.S.; specifying

20         requirements for sinkhole testing by engineers

21         and geologists; creating s. 627.7073, F.S.;

22         providing reporting requirements for engineers

23         and geologists after testing for sinkholes;

24         specifying a presumption of correctness of

25         certain findings; requiring an insurer paying a

26         sinkhole loss claim to file a report and

27         certification with the county property

28         appraiser; requiring the property appraiser to

29         record the report and certification; requiring

30         the insurer to bear the cost of filing and

31         recording; requiring a seller of certain


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    CS for SB 1486                                 First Engrossed



 1         property to make certain disclosures to

 2         property buyers under certain circumstances;

 3         creating s. 627.711, F.S.; requiring insurers

 4         to notify applicants or policyholders of the

 5         availability and amounts of certain discounts,

 6         credits, rate differentials, or reductions in

 7         deductibles for properties on which certain

 8         fixtures have been installed or construction

 9         techniques have been implemented; requiring

10         insurers to provide qualifying information;

11         authorizing the Financial Services Commission

12         to adopt rules; creating s. 627.712, F.S.;

13         requiring property insurers to pay or deny

14         claims within certain time periods; providing

15         that overdue payments bear interest; creating

16         the Task Force on Long-Term Solutions for

17         Florida's Hurricane Insurance Market; requiring

18         the Executive Office of the Governor, the

19         Department of Financial Services, and the

20         Office of Insurance Regulation to provide

21         administrative support and staff support;

22         providing membership; providing purpose and

23         intent; providing for research and hearings on

24         specified issues; requiring the task force to

25         submit a report of findings and recommendations

26         to the Governor, the Chief Financial Officer,

27         the President of the Senate, and the Speaker of

28         the House of Representatives; providing for

29         additional activities; providing for expiration

30         of the task force; requiring the Office of

31         Insurance Regulation to submit a report to the


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    CS for SB 1486                                 First Engrossed



 1         Legislature relating to residential property

 2         insurance; providing report requirements;

 3         requiring the Office of the Auditor General to

 4         conduct an operational audit of Citizens

 5         Property Insurance Corporation; specifying

 6         audit requirements; requiring a report;

 7         requiring the board of governors of the

 8         Citizens Property Insurance Corporation to

 9         submit a report to the Legislature relating to

10         property and casualty insurance; specifying

11         report requirements; providing an appropriation

12         and authorizing positions; providing a

13         contingent effective date; providing effective

14         dates.

15  

16  Be It Enacted by the Legislature of the State of Florida:

17  

18         Section 1.  Effective June 1, 2005, paragraph (e) of

19  subsection (2) of section 215.555, Florida Statutes, is

20  amended to read:

21         215.555  Florida Hurricane Catastrophe Fund.--

22         (2)  DEFINITIONS.--As used in this section:

23         (e)  "Retention" means the amount of losses below which

24  an insurer is not entitled to reimbursement from the fund. An

25  insurer's retention shall be calculated as follows:

26         1.  The board shall calculate and report to each

27  insurer the retention multiples for that year. For the

28  contract year beginning June 1, 2005 2004, the retention

29  multiple shall be equal to $4.5 billion divided by the total

30  estimated reimbursement premium for the contract year; for

31  subsequent years, the retention multiple shall be equal to


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    CS for SB 1486                                 First Engrossed



 1  $4.5 billion, adjusted based upon the reported exposure from

 2  the prior contract year to reflect the percentage growth in

 3  exposure to the fund for covered policies since 2004 2003 ,

 4  divided by the total estimated reimbursement premium for the

 5  contract year. Total reimbursement premium for purposes of the

 6  calculation under this subparagraph shall be estimated using

 7  the assumption that all insurers have selected the 90-percent

 8  coverage level.

 9         2.  The retention multiple as determined under

10  subparagraph 1. shall be adjusted to reflect the coverage

11  level elected by the insurer. For insurers electing the

12  90-percent coverage level, the adjusted retention multiple is

13  100 percent of the amount determined under subparagraph 1. For

14  insurers electing the 75-percent coverage level, the retention

15  multiple is 120 percent of the amount determined under

16  subparagraph 1. For insurers electing the 45-percent coverage

17  level, the adjusted retention multiple is 200 percent of the

18  amount determined under subparagraph 1.

19         3.  An insurer shall determine its provisional

20  retention by multiplying its provisional reimbursement premium

21  by the applicable adjusted retention multiple and shall

22  determine its actual retention by multiplying its actual

23  reimbursement premium by the applicable adjusted retention

24  multiple.

25         4.  For insurers who experience multiple covered events

26  causing loss during the contract year, beginning June 1, 2005,

27  each insurer's full retention shall be applied to each of the

28  covered events causing the two largest losses for that

29  insurer. For each other covered event resulting in losses, the

30  insurer's retention shall be reduced to one-third of the full

31  retention. The reimbursement contract shall provide for the


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    CS for SB 1486                                 First Engrossed



 1  reimbursement of losses for each covered event based on the

 2  full retention with adjustments made to reflect the reduced

 3  retentions after January 1 of the contract year provided the

 4  insurer reports its losses as specified in the reimbursement

 5  contract.

 6         Section 2.  Effective July 1, 2005, section 215.559,

 7  Florida Statutes, is amended to read:

 8         215.559  Hurricane Loss Mitigation Program.--

 9         (1)  There is created a Hurricane Loss Mitigation

10  Program. The Legislature shall annually appropriate $10

11  million of the moneys authorized for appropriation under s.

12  215.555(7)(c) from the Florida Hurricane Catastrophe Fund to

13  the Department of Community Affairs for the purposes set forth

14  in this section.

15         (2)(a)  Seven million dollars in funds provided in

16  subsection (1) shall be used for programs to improve the wind

17  resistance of residences and mobile homes, including loans,

18  subsidies, grants, demonstration projects, and direct

19  assistance; cooperative programs with local governments and

20  the Federal Government; and other efforts to prevent or reduce

21  losses or reduce the cost of rebuilding after a disaster.

22         (b)  Three million dollars in funds provided in

23  subsection (1) shall be used to retrofit existing facilities

24  used as public hurricane shelters. The department must

25  prioritize the use of these funds for projects included in the

26  September 1, 2000, version of the Shelter Retrofit Report

27  prepared in accordance with s. 252.385(3), and each annual

28  report thereafter. The department must give funding priority

29  to projects in regional planning council regions that have

30  shelter deficits and to projects that maximize use of state

31  funds.


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    CS for SB 1486                                 First Engrossed



 1         (3)  By the 2006-2007 fiscal year, the Department of

 2  Community Affairs shall develop a low-interest loan program

 3  for homeowners and mobile home owners to retrofit their homes

 4  with fixtures or apply construction techniques that have been

 5  demonstrated to reduce the amount of damage or loss due to a

 6  hurricane. Funding for the program shall be used to subsidize

 7  or guaranty private-sector loans for this purpose to qualified

 8  homeowners by financial institutions chartered by the state or

 9  Federal Government. The department may enter into contracts

10  with financial institutions for this purpose. The department

11  shall establish criteria for determining eligibility for the

12  loans and selecting recipients, standards for retrofitting

13  homes or mobile homes, limitations on loan subsidies and loan

14  guaranties, and other terms and conditions of the program,

15  which must be specified in the department's report to the

16  Legislature on January 1, 2006, required by subsection (8).

17  For the 2005-2006 fiscal year, the Department of Community

18  Affairs may use up to $1 million of the funds appropriated

19  pursuant to paragraph (2)(a) to begin the low-interest loan

20  program as a pilot project in one or more counties. The

21  Department of Financial Services, the Office of Financial

22  Regulation, the Florida Housing Finance Corporation, and the

23  Office of Tourism, Trade, and Economic Development shall

24  assist the Department of Community Affairs in establishing the

25  program and pilot project. The department may use up to 2.5

26  percent of the funds appropriated in any given fiscal year for

27  administering the loan program. The department may adopt rules

28  to implement the program.

29         (4)(3)  Forty percent of the total appropriation in

30  paragraph (2)(a) shall be used to inspect and improve

31  tie-downs for mobile homes. Within 30 days after the effective


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    CS for SB 1486                                 First Engrossed



 1  date of that appropriation, the department shall contract with

 2  a public higher educational institution in this state which

 3  has previous experience in administering the programs set

 4  forth in this subsection to serve as the administrative entity

 5  and fiscal agent pursuant to s. 216.346 for the purpose of

 6  administering the programs set forth in this subsection in

 7  accordance with established policy and procedures. The

 8  administrative entity working with the advisory council set up

 9  under subsection (6) (5) shall develop a list of mobile home

10  parks and counties that may be eligible to participate in the

11  tie-down program.

12         (5)(4)  Of moneys provided to the Department of

13  Community Affairs in paragraph (2)(a), 10 percent shall be

14  allocated to a Type I Center within the State University

15  System dedicated to hurricane research. The Type I Center

16  shall develop a preliminary work plan approved by the advisory

17  council set forth in subsection (6) (5) to eliminate the state

18  and local barriers to upgrading existing mobile homes and

19  communities, research and develop a program for the recycling

20  of existing older mobile homes, and support programs of

21  research and development relating to hurricane loss reduction

22  devices and techniques for site-built residences. The State

23  University System also shall consult with the Department of

24  Community Affairs and assist the department with the report

25  required under subsection (8) (7).

26         (6)(5)  Except for the program set forth in subsection

27  (3), The Department of Community Affairs shall develop the

28  programs set forth in this section in consultation with an

29  advisory council consisting of a representative designated by

30  the Chief Financial Officer, a representative designated by

31  the Florida Home Builders Association, a representative


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    CS for SB 1486                                 First Engrossed



 1  designated by the Florida Insurance Council, a representative

 2  designated by the Federation of Manufactured Home Owners, a

 3  representative designated by the Florida Association of

 4  Counties, and a representative designated by the Florida

 5  Manufactured Housing Association.

 6         (7)(6)  Moneys provided to the Department of Community

 7  Affairs under this section are intended to supplement other

 8  funding sources of the Department of Community Affairs and may

 9  not supplant other funding sources of the Department of

10  Community Affairs.

11         (8)(7)  On January 1st of each year, the Department of

12  Community Affairs shall provide a full report and accounting

13  of activities under this section and an evaluation of such

14  activities to the Speaker of the House of Representatives, the

15  President of the Senate, and the Majority and Minority Leaders

16  of the House of Representatives and the Senate.

17         (9)(8)  This section is repealed June 30, 2011.

18         Section 3.  Subsections (4) and (5) of section 627.062,

19  Florida Statutes, are amended to read:

20         627.062  Rate standards.--

21         (4)  The establishment of any rate, rating

22  classification, rating plan or schedule, or variation thereof

23  in violation of part IX of chapter 626 is also in violation of

24  this section. In order to enhance the ability of consumers to

25  compare premiums and to increase the accuracy and usefulness

26  of rate-comparison information provided by the office to the

27  public, the office shall develop a proposed standard rating

28  territory plan to be used by all authorized property and

29  casualty insurers for residential property insurance. In

30  adopting the proposed plan, the office may consider

31  geographical characteristics relevant to risk, county lines,


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    CS for SB 1486                                 First Engrossed



 1  major roadways, existing rating territories used by a

 2  significant segment of the market, and other relevant factors.

 3  Such plan shall be submitted to the President of the Senate

 4  and the Speaker of the House of Representatives by January 15,

 5  2006. The plan may not be implemented unless authorized by

 6  further act of the Legislature.

 7         (5)  With respect to a rate filing involving coverage

 8  of the type for which the insurer is required to pay a

 9  reimbursement premium to the Florida Hurricane Catastrophe

10  Fund, the insurer may fully recoup in its property insurance

11  premiums any reimbursement premiums paid to the Florida

12  Hurricane Catastrophe Fund, together with reasonable costs of

13  other reinsurance, but may not recoup reinsurance costs that

14  duplicate coverage provided by the Florida Hurricane

15  Catastrophe Fund. An insurer may not recoup more than 1 year

16  of reimbursement premium at a time. Any under-recoupment from

17  the prior year may be added to the following year's

18  reimbursement premium and any over-recoupment shall be

19  subtracted from the following year's reimbursement premium.

20         Section 4.  Paragraph (c) of subsection (1) and

21  paragraph (c) of subsection (3) of section 627.0628, Florida

22  Statutes, are amended to read:

23         627.0628  Florida Commission on Hurricane Loss

24  Projection Methodology.--

25         (1)  LEGISLATIVE FINDINGS AND INTENT.--

26         (c)  It is the intent of the Legislature to create the

27  Florida Commission on Hurricane Loss Projection Methodology as

28  a panel of experts to provide the most actuarially

29  sophisticated guidelines and standards for projection of

30  hurricane losses possible, given the current state of

31  actuarial science. It is the further intent of the Legislature


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    CS for SB 1486                                 First Engrossed



 1  that such standards and guidelines must be used by the State

 2  Board of Administration in developing reimbursement premium

 3  rates for the Florida Hurricane Catastrophe Fund, and, subject

 4  to paragraph (3)(c), may be used by insurers in rate filings

 5  under s. 627.062 unless the way in which such standards and

 6  guidelines were applied by the insurer was erroneous, as shown

 7  by a preponderance of the evidence.

 8         (3)  ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--

 9         (c)  With respect to a rate filing under s. 627.062, an

10  insurer may employ actuarial methods, principles, standards,

11  models, or output ranges found by the commission to be

12  accurate or reliable to determine hurricane loss factors for

13  use in a rate filing under s. 627.062. Such, which findings

14  and factors are admissible and relevant in consideration of a

15  rate filing by the office or in any arbitration or

16  administrative or judicial review only if the office and the

17  consumer advocate appointed pursuant to s. 627.0613 have

18  access to all of the assumptions and factors that were used in

19  developing the actuarial methods, principles, standards,

20  models, or output ranges, and are not precluded from

21  disclosing such information in a rate proceeding.

22         Section 5.  Subsection (7) of section 627.0629, Florida

23  Statutes, is amended to read:

24         627.0629  Residential property insurance; rate

25  filings.--

26         (7)  Any rate filing that is based in whole or part on

27  data from a computer model may not exceed 15 25 percent unless

28  there is a public hearing.

29         Section 6.  Section 627.06281, Florida Statutes, is

30  created to read:

31  


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    CS for SB 1486                                 First Engrossed



 1         627.06281  Public hurricane loss projection model;

 2  reporting of data by insurers.--Within 30 days after a written

 3  request for loss data and associated exposure data by the

 4  office or a type I center within the State University System

 5  established to study mitigation, residential property insurers

 6  and licensed rating and advisory organizations that compile

 7  residential property insurance loss data shall provide loss

 8  data and associated exposure data for residential property

 9  insurance policies to the office or to a type I center within

10  the State University System established to study mitigation,

11  as directed by the office, for the purposes of developing,

12  maintaining, and updating a public model for hurricane loss

13  projections. The loss data and associated exposure data

14  provided shall be in writing.

15         Section 7.  Paragraphs (a), (c), and (d) of subsection

16  (6) of section 627.351, Florida Statutes, are amended to read:

17         627.351  Insurance risk apportionment plans.--

18         (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--

19         (a)1.  The Legislature finds that actual and threatened

20  catastrophic losses to property in this state from hurricanes

21  have caused insurers to be unwilling or unable to provide

22  property insurance coverage to the extent sought and needed.

23  It is in the public interest and a public purpose to assist in

24  assuring that property in the state is insured so as to

25  facilitate the remediation, reconstruction, and replacement of

26  damaged or destroyed property in order to reduce or avoid the

27  negative effects otherwise resulting to the public health,

28  safety, and welfare; to the economy of the state; and to the

29  revenues of the state and local governments needed to provide

30  for the public welfare. It is necessary, therefore, to provide

31  property insurance to applicants who are in good faith


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    CS for SB 1486                                 First Engrossed



 1  entitled to procure insurance through the voluntary market but

 2  are unable to do so. The Legislature intends by this

 3  subsection that property insurance be provided and that it

 4  continues, as long as necessary, through an entity organized

 5  to achieve efficiencies and economies, while providing service

 6  to policyholders, applicants, and agents that is no less than

 7  the quality generally provided in the voluntary market, all

 8  toward the achievement of the foregoing public purposes.

 9  Because it is essential for the corporation to have the

10  maximum financial resources to pay claims following a

11  catastrophic hurricane, it is the intent of the Legislature

12  that the income of the corporation be exempt from federal

13  income taxation and that interest on the debt obligations

14  issued by the corporation be exempt from federal income

15  taxation.

16         2.  The Residential Property and Casualty Joint

17  Underwriting Association originally created by this statute

18  shall be known, as of July 1, 2002, as the Citizens Property

19  Insurance Corporation. The corporation shall provide insurance

20  for residential and commercial property, for applicants who

21  are in good faith entitled, but are unable, to procure

22  insurance through the voluntary market. The corporation shall

23  operate pursuant to a plan of operation approved by order of

24  the office. The plan is subject to continuous review by the

25  office. The office may, by order, withdraw approval of all or

26  part of a plan if the office determines that conditions have

27  changed since approval was granted and that the purposes of

28  the plan require changes in the plan. For the purposes of this

29  subsection, residential coverage includes both personal lines

30  residential coverage, which consists of the type of coverage

31  provided by homeowner's, mobile home owner's, dwelling,


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    CS for SB 1486                                 First Engrossed



 1  tenant's, condominium unit owner's, and similar policies, and

 2  commercial lines residential coverage, which consists of the

 3  type of coverage provided by condominium association,

 4  apartment building, and similar policies.

 5         3.  It is the intent of the Legislature that

 6  policyholders, applicants, and agents of the corporation

 7  receive service and treatment of the highest possible level

 8  but never less than that generally provided in the voluntary

 9  market. It also is intended that the corporation be held to

10  service standards no less than those applied to insurers in

11  the voluntary market by the office with respect to

12  responsiveness, timeliness, customer courtesy, and overall

13  dealings with policyholders, applicants, or agents of the

14  corporation.

15         (c)  The plan of operation of the corporation:

16         1.  Must provide for adoption of residential property

17  and casualty insurance policy forms and commercial residential

18  and nonresidential property insurance forms, which forms must

19  be approved by the office prior to use. The corporation shall

20  adopt the following policy forms:

21         a.  Standard personal lines policy forms that are

22  comprehensive multiperil policies providing full coverage of a

23  residential property equivalent to the coverage provided in

24  the private insurance market under an HO-3, HO-4, or HO-6

25  policy.

26         b.  Basic personal lines policy forms that are policies

27  similar to an HO-8 policy or a dwelling fire policy that

28  provide coverage meeting the requirements of the secondary

29  mortgage market, but which coverage is more limited than the

30  coverage under a standard policy.

31  


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    CS for SB 1486                                 First Engrossed



 1         c.  Commercial lines residential policy forms that are

 2  generally similar to the basic perils of full coverage

 3  obtainable for commercial residential structures in the

 4  admitted voluntary market.

 5         d.  Personal lines and commercial lines residential

 6  property insurance forms that cover the peril of wind only.

 7  The forms are applicable only to residential properties

 8  located in areas eligible for coverage under the high-risk

 9  account referred to in sub-subparagraph (b)2.a.

10         e.  Commercial lines nonresidential property insurance

11  forms that cover the peril of wind only. The forms are

12  applicable only to nonresidential properties located in areas

13  eligible for coverage under the high-risk account referred to

14  in sub-subparagraph (b)2.a.

15         2.a.  Must provide that the corporation adopt a program

16  in which the corporation and authorized insurers enter into

17  quota share primary insurance agreements for hurricane

18  coverage, as defined in s. 627.4025(2)(a), for eligible risks,

19  and adopt property insurance forms for eligible risks which

20  cover the peril of wind only. As used in this subsection, the

21  term:

22         (I)  "Quota share primary insurance" means an

23  arrangement in which the primary hurricane coverage of an

24  eligible risk is provided in specified percentages by the

25  corporation and an authorized insurer. The corporation and

26  authorized insurer are each solely responsible for a specified

27  percentage of hurricane coverage of an eligible risk as set

28  forth in a quota share primary insurance agreement between the

29  corporation and an authorized insurer and the insurance

30  contract. The responsibility of the corporation or authorized

31  insurer to pay its specified percentage of hurricane losses of


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    CS for SB 1486                                 First Engrossed



 1  an eligible risk, as set forth in the quota share primary

 2  insurance agreement, may not be altered by the inability of

 3  the other party to the agreement to pay its specified

 4  percentage of hurricane losses. Eligible risks that are

 5  provided hurricane coverage through a quota share primary

 6  insurance arrangement must be provided policy forms that set

 7  forth the obligations of the corporation and authorized

 8  insurer under the arrangement, clearly specify the percentages

 9  of quota share primary insurance provided by the corporation

10  and authorized insurer, and conspicuously and clearly state

11  that neither the authorized insurer nor the corporation may be

12  held responsible beyond its specified percentage of coverage

13  of hurricane losses.

14         (II)  "Eligible risks" means personal lines residential

15  and commercial lines residential risks that meet the

16  underwriting criteria of the corporation and are located in

17  areas that were eligible for coverage by the Florida Windstorm

18  Underwriting Association on January 1, 2002.

19         b.  The corporation may enter into quota share primary

20  insurance agreements with authorized insurers at corporation

21  coverage levels of 90 percent and 50 percent.

22         c.  If the corporation determines that additional

23  coverage levels are necessary to maximize participation in

24  quota share primary insurance agreements by authorized

25  insurers, the corporation may establish additional coverage

26  levels. However, the corporation's quota share primary

27  insurance coverage level may not exceed 90 percent.

28         d.  Any quota share primary insurance agreement entered

29  into between an authorized insurer and the corporation must

30  provide for a uniform specified percentage of coverage of

31  hurricane losses, by county or territory as set forth by the


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    CS for SB 1486                                 First Engrossed



 1  corporation board, for all eligible risks of the authorized

 2  insurer covered under the quota share primary insurance

 3  agreement.

 4         e.  Any quota share primary insurance agreement entered

 5  into between an authorized insurer and the corporation is

 6  subject to review and approval by the office. However, such

 7  agreement shall be authorized only as to insurance contracts

 8  entered into between an authorized insurer and an insured who

 9  is already insured by the corporation for wind coverage.

10         f.  For all eligible risks covered under quota share

11  primary insurance agreements, the exposure and coverage levels

12  for both the corporation and authorized insurers shall be

13  reported by the corporation to the Florida Hurricane

14  Catastrophe Fund. For all policies of eligible risks covered

15  under quota share primary insurance agreements, the

16  corporation and the authorized insurer shall maintain complete

17  and accurate records for the purpose of exposure and loss

18  reimbursement audits as required by Florida Hurricane

19  Catastrophe Fund rules. The corporation and the authorized

20  insurer shall each maintain duplicate copies of policy

21  declaration pages and supporting claims documents.

22         g.  The corporation board shall establish in its plan

23  of operation standards for quota share agreements which ensure

24  that there is no discriminatory application among insurers as

25  to the terms of quota share agreements, pricing of quota share

26  agreements, incentive provisions if any, and consideration

27  paid for servicing policies or adjusting claims.

28         h.  The quota share primary insurance agreement between

29  the corporation and an authorized insurer must set forth the

30  specific terms under which coverage is provided, including,

31  but not limited to, the sale and servicing of policies issued


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    CS for SB 1486                                 First Engrossed



 1  under the agreement by the insurance agent of the authorized

 2  insurer producing the business, the reporting of information

 3  concerning eligible risks, the payment of premium to the

 4  corporation, and arrangements for the adjustment and payment

 5  of hurricane claims incurred on eligible risks by the claims

 6  adjuster and personnel of the authorized insurer. Entering

 7  into a quota sharing insurance agreement between the

 8  corporation and an authorized insurer shall be voluntary and

 9  at the discretion of the authorized insurer.

10         3.  May provide that the corporation may employ or

11  otherwise contract with individuals or other entities to

12  provide administrative or professional services that may be

13  appropriate to effectuate the plan. The corporation shall have

14  the power to borrow funds, by issuing bonds or by incurring

15  other indebtedness, and shall have other powers reasonably

16  necessary to effectuate the requirements of this subsection,

17  including without limitation, the power to issue bonds and

18  incur other indebtedness in order to refinance outstanding

19  bonds or other indebtedness. The corporation may, but is not

20  required to, seek judicial validation of its bonds or other

21  indebtedness under chapter 75. The corporation may issue bonds

22  or incur other indebtedness, or have bonds issued on its

23  behalf by a unit of local government pursuant to subparagraph

24  (g)2., in the absence of a hurricane or other weather-related

25  event, upon a determination by the corporation, subject to

26  approval by the office, that such action would enable it to

27  efficiently meet the financial obligations of the corporation

28  and that such financings are reasonably necessary to

29  effectuate the requirements of this subsection. The

30  corporation is authorized to take all actions needed to

31  facilitate tax-free status for any such bonds or indebtedness,


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    CS for SB 1486                                 First Engrossed



 1  including formation of trusts or other affiliated entities.

 2  The corporation shall have the authority to pledge

 3  assessments, projected recoveries from the Florida Hurricane

 4  Catastrophe Fund, other reinsurance recoverables, market

 5  equalization and other surcharges, and other funds available

 6  to the corporation as security for bonds or other

 7  indebtedness. In recognition of s. 10, Art. I of the State

 8  Constitution, prohibiting the impairment of obligations of

 9  contracts, it is the intent of the Legislature that no action

10  be taken whose purpose is to impair any bond indenture or

11  financing agreement or any revenue source committed by

12  contract to such bond or other indebtedness.

13         4.a.  Must require that the corporation operate subject

14  to the supervision and approval of a board of governors

15  consisting of 8 7 individuals who are residents of this state,

16  from different geographical areas of this state, appointed by

17  the Chief Financial Officer. The Governor, the Chief Financial

18  Officer, the President of the Senate, and the Speaker of the

19  House of Representatives shall each appoint two members of the

20  board, effective August 1, 2005. At least one of the two

21  members appointed by each appointing officer must have

22  demonstrated expertise in insurance. The Chief Financial

23  Officer shall designate one of the appointees as chair. All

24  board members serve at the pleasure of the appointing officer

25  Chief Financial Officer. All board members, including the

26  chair, must be appointed to serve for 3-year terms beginning

27  annually on a date designated by the plan. Any board vacancy

28  shall be filled for the unexpired term by the appointing

29  officer Chief Financial Officer. The Chief Financial Officer

30  shall appoint a technical advisory group to provide

31  information and advice to the board of governors in connection


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    CS for SB 1486                                 First Engrossed



 1  with the board's duties under this subsection. The executive

 2  director and senior managers of the corporation shall be

 3  engaged by the board, as recommended by the Chief Financial

 4  Officer and serve at the pleasure of the board Chief Financial

 5  Officer. The executive director is responsible for employing

 6  other staff as the corporation may require, subject to review

 7  and concurrence by the board and office of the Chief Financial

 8  Officer.

 9         b.  The board shall create a Market Accountability

10  Advisory Committee to assist the corporation in developing

11  awareness of its rates and its customer and agent service

12  levels in relationship to the voluntary market insurers

13  writing similar coverage. The members of the advisory

14  committee shall consist of the following 11 persons, one of

15  whom must be elected chair by the members of the committee:

16  four representatives, one appointed by the Florida Association

17  of Insurance Agents, one by the Florida Association of

18  Insurance and Financial Advisors, one by the Professional

19  Insurance Agents of Florida, and one by the Latin American

20  Association of Insurance Agencies; three representatives

21  appointed by the insurers with the three highest voluntary

22  market share of residential property insurance business in the

23  state; one representative from the Office of Insurance

24  Regulation; one consumer appointed by the board who is insured

25  by the corporation at the time of appointment to the

26  committee; one representative appointed by the Florida

27  Association of Realtors; and one representative appointed by

28  the Florida Bankers Association. All members must serve for

29  3-year terms and may serve for consecutive terms. The

30  committee shall report to the corporation at each board

31  meeting on insurance market issues which may include rates and


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    CS for SB 1486                                 First Engrossed



 1  rate competition with the voluntary market; service, including

 2  policy issuance, claims processing, and general responsiveness

 3  to policyholders, applicants, and agents; and matters relating

 4  to depopulation.

 5         5.  Must provide a procedure for determining the

 6  eligibility of a risk for coverage, as follows:

 7         a.  Subject to the provisions of s. 627.3517, with

 8  respect to personal lines residential risks, if the risk is

 9  offered coverage from an authorized insurer at the insurer's

10  approved rate under either a standard policy including wind

11  coverage or, if consistent with the insurer's underwriting

12  rules as filed with the office, a basic policy including wind

13  coverage, the risk is not eligible for any policy issued by

14  the corporation. If the risk is not able to obtain any such

15  offer, the risk is eligible for either a standard policy

16  including wind coverage or a basic policy including wind

17  coverage issued by the corporation; however, if the risk could

18  not be insured under a standard policy including wind coverage

19  regardless of market conditions, the risk shall be eligible

20  for a basic policy including wind coverage unless rejected

21  under subparagraph 8. The corporation shall determine the type

22  of policy to be provided on the basis of objective standards

23  specified in the underwriting manual and based on generally

24  accepted underwriting practices.

25         (I)  If the risk accepts an offer of coverage through

26  the market assistance plan or an offer of coverage through a

27  mechanism established by the corporation before a policy is

28  issued to the risk by the corporation or during the first 30

29  days of coverage by the corporation, and the producing agent

30  who submitted the application to the plan or to the

31  


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    CS for SB 1486                                 First Engrossed



 1  corporation is not currently appointed by the insurer, the

 2  insurer shall:

 3         (A)  Pay to the producing agent of record of the

 4  policy, for the first year, an amount that is the greater of

 5  the insurer's usual and customary commission for the type of

 6  policy written or a fee equal to the usual and customary

 7  commission of the corporation; or

 8         (B)  Offer to allow the producing agent of record of

 9  the policy to continue servicing the policy for a period of

10  not less than 1 year and offer to pay the agent the greater of

11  the insurer's or the corporation's usual and customary

12  commission for the type of policy written.

13  

14  If the producing agent is unwilling or unable to accept

15  appointment, the new insurer shall pay the agent in accordance

16  with sub-sub-sub-subparagraph (A).

17         (II)  When the corporation enters into a contractual

18  agreement for a take-out plan, the producing agent of record

19  of the corporation policy is entitled to retain any unearned

20  commission on the policy, and the insurer shall:

21         (A)  Pay to the producing agent of record of the

22  corporation policy, for the first year, an amount that is the

23  greater of the insurer's usual and customary commission for

24  the type of policy written or a fee equal to the usual and

25  customary commission of the corporation; or

26         (B)  Offer to allow the producing agent of record of

27  the corporation policy to continue servicing the policy for a

28  period of not less than 1 year and offer to pay the agent the

29  greater of the insurer's or the corporation's usual and

30  customary commission for the type of policy written.

31  


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    CS for SB 1486                                 First Engrossed



 1  If the producing agent is unwilling or unable to accept

 2  appointment, the new insurer shall pay the agent in accordance

 3  with sub-sub-sub-subparagraph (A).

 4         b.  With respect to commercial lines residential risks,

 5  if the risk is offered coverage under a policy including wind

 6  coverage from an authorized insurer at its approved rate, the

 7  risk is not eligible for any policy issued by the corporation.

 8  If the risk is not able to obtain any such offer, the risk is

 9  eligible for a policy including wind coverage issued by the

10  corporation.

11         (I)  If the risk accepts an offer of coverage through

12  the market assistance plan or an offer of coverage through a

13  mechanism established by the corporation before a policy is

14  issued to the risk by the corporation or during the first 30

15  days of coverage by the corporation, and the producing agent

16  who submitted the application to the plan or the corporation

17  is not currently appointed by the insurer, the insurer shall:

18         (A)  Pay to the producing agent of record of the

19  policy, for the first year, an amount that is the greater of

20  the insurer's usual and customary commission for the type of

21  policy written or a fee equal to the usual and customary

22  commission of the corporation; or

23         (B)  Offer to allow the producing agent of record of

24  the policy to continue servicing the policy for a period of

25  not less than 1 year and offer to pay the agent the greater of

26  the insurer's or the corporation's usual and customary

27  commission for the type of policy written.

28  

29  If the producing agent is unwilling or unable to accept

30  appointment, the new insurer shall pay the agent in accordance

31  with sub-sub-sub-subparagraph (A).


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    CS for SB 1486                                 First Engrossed



 1         (II)  When the corporation enters into a contractual

 2  agreement for a take-out plan, the producing agent of record

 3  of the corporation policy is entitled to retain any unearned

 4  commission on the policy, and the insurer shall:

 5         (A)  Pay to the producing agent of record of the

 6  corporation policy, for the first year, an amount that is the

 7  greater of the insurer's usual and customary commission for

 8  the type of policy written or a fee equal to the usual and

 9  customary commission of the corporation; or

10         (B)  Offer to allow the producing agent of record of

11  the corporation policy to continue servicing the policy for a

12  period of not less than 1 year and offer to pay the agent the

13  greater of the insurer's or the corporation's usual and

14  customary commission for the type of policy written.

15  

16  If the producing agent is unwilling or unable to accept

17  appointment, the new insurer shall pay the agent in accordance

18  with sub-sub-sub-subparagraph (A).

19         6.  Must include rules for classifications of risks and

20  rates therefor.

21         7.  Must provide that if premium and investment income

22  for an account attributable to a particular calendar year are

23  in excess of projected losses and expenses for the account

24  attributable to that year, such excess shall be held in

25  surplus in the account. Such surplus shall be available to

26  defray deficits in that account as to future years and shall

27  be used for that purpose prior to assessing assessable

28  insurers and assessable insureds as to any calendar year.

29         8.  Must provide objective criteria and procedures to

30  be uniformly applied for all applicants in determining whether

31  an individual risk is so hazardous as to be uninsurable. In


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    CS for SB 1486                                 First Engrossed



 1  making this determination and in establishing the criteria and

 2  procedures, the following shall be considered:

 3         a.  Whether the likelihood of a loss for the individual

 4  risk is substantially higher than for other risks of the same

 5  class; and

 6         b.  Whether the uncertainty associated with the

 7  individual risk is such that an appropriate premium cannot be

 8  determined.

 9  

10  The acceptance or rejection of a risk by the corporation shall

11  be construed as the private placement of insurance, and the

12  provisions of chapter 120 shall not apply.

13         9.  Must provide that the corporation shall make its

14  best efforts to procure catastrophe reinsurance at reasonable

15  rates, to cover its projected 100-year probable maximum loss

16  as determined by the board of governors.

17         10.  Must provide that in the event of regular deficit

18  assessments under sub-subparagraph (b)3.a. or sub-subparagraph

19  (b)3.b., in the personal lines account, the commercial lines

20  residential account, or the high-risk account, the corporation

21  shall levy upon corporation policyholders in its next rate

22  filing, or by a separate rate filing solely for this purpose,

23  a market equalization surcharge arising from a regular

24  assessment in such account in a percentage equal to the total

25  amount of such regular assessments divided by the aggregate

26  statewide direct written premium for subject lines of business

27  for the prior calendar year. Market equalization surcharges

28  under this subparagraph are not considered premium and are not

29  subject to commissions, fees, or premium taxes; however,

30  failure to pay a market equalization surcharge shall be

31  treated as failure to pay premium.


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    CS for SB 1486                                 First Engrossed



 1         11.  The policies issued by the corporation must

 2  provide that, if the corporation or the market assistance plan

 3  obtains an offer from an authorized insurer to cover the risk

 4  at its approved rates, the risk is no longer eligible for

 5  renewal through the corporation.

 6         12.  Corporation policies and applications must include

 7  a notice that the corporation policy could, under this

 8  section, be replaced with a policy issued by an authorized

 9  insurer that does not provide coverage identical to the

10  coverage provided by the corporation. The notice shall also

11  specify that acceptance of corporation coverage creates a

12  conclusive presumption that the applicant or policyholder is

13  aware of this potential.

14         13.  May establish, subject to approval by the office,

15  different eligibility requirements and operational procedures

16  for any line or type of coverage for any specified county or

17  area if the board determines that such changes to the

18  eligibility requirements and operational procedures are

19  justified due to the voluntary market being sufficiently

20  stable and competitive in such area or for such line or type

21  of coverage and that consumers who, in good faith, are unable

22  to obtain insurance through the voluntary market through

23  ordinary methods would continue to have access to coverage

24  from the corporation. When coverage is sought in connection

25  with a real property transfer, such requirements and

26  procedures shall not provide for an effective date of coverage

27  later than the date of the closing of the transfer as

28  established by the transferor, the transferee, and, if

29  applicable, the lender.

30         14.  Must provide that, with respect to the high-risk

31  account, any assessable insurer with a surplus as to


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    CS for SB 1486                                 First Engrossed



 1  policyholders of $25 million or less writing 25 percent or

 2  more of its total countrywide property insurance premiums in

 3  this state may petition the office, within the first 90 days

 4  of each calendar year, to qualify as a limited apportionment

 5  company. In no event shall a limited apportionment company be

 6  required to participate in the portion of any assessment,

 7  within the high-risk account, pursuant to sub-subparagraph

 8  (b)3.a. or sub-subparagraph (b)3.b. in the aggregate which

 9  exceeds $50 million after payment of available high-risk

10  account funds in any calendar year. However, a limited

11  apportionment company shall collect from its policyholders any

12  emergency assessment imposed under sub-subparagraph (b)3.d.

13  The plan shall provide that, if the office determines that any

14  regular assessment will result in an impairment of the surplus

15  of a limited apportionment company, the office may direct that

16  all or part of such assessment be deferred as provided in

17  subparagraph (g)4. However, there shall be no limitation or

18  deferment of an emergency assessment to be collected from

19  policyholders under sub-subparagraph (b)3.d.

20         15.  Must provide that the corporation appoint as its

21  licensed agents only those agents who also hold an appointment

22  as defined in s. 626.015(3) with an insurer who at the time of

23  the agent's initial appointment by the corporation is

24  authorized to write and is actually writing personal lines

25  residential property coverage, commercial residential property

26  coverage, or commercial nonresidential property coverage

27  within the state.

28         (d)1.  It is the intent of the Legislature that the

29  rates for coverage provided by the corporation be actuarially

30  sound and not competitive with approved rates charged in the

31  admitted voluntary market, so that the corporation functions


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    CS for SB 1486                                 First Engrossed



 1  as a residual market mechanism to provide insurance only when

 2  the insurance cannot be procured in the voluntary market.

 3  Rates shall include an appropriate catastrophe loading factor

 4  that reflects the actual catastrophic exposure of the

 5  corporation.

 6         2.  For each county, the average rates of the

 7  corporation for each line of business for personal lines

 8  residential policies excluding rates for wind-only policies

 9  shall be no lower than the average rates charged by the

10  insurer that had the highest average rate in that county among

11  the 20 insurers with the greatest total direct written premium

12  in the state for that line of business in the preceding year,

13  except that with respect to mobile home coverages, the average

14  rates of the corporation shall be no lower than the average

15  rates charged by the insurer that had the highest average rate

16  in that county among the 5 insurers with the greatest total

17  written premium for mobile home owner's policies in the state

18  in the preceding year.

19         3.  Rates for personal lines residential wind-only

20  policies must be actuarially sound and not competitive with

21  approved rates charged by authorized insurers. However, for

22  personal lines residential wind-only policies issued or

23  renewed between July 1, 2002, and June 30, 2003, the maximum

24  premium increase must be no greater than 10 percent of the

25  Florida Windstorm Underwriting Association premium for that

26  policy in effect on June 30, 2002, as adjusted for coverage

27  changes and seasonal occupancy surcharges. For personal lines

28  residential wind-only policies issued or renewed between July

29  1, 2003, and June 30, 2004, the corporation shall use its

30  existing filed and approved wind-only rating and

31  classification plans, provided, however, that the maximum


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    CS for SB 1486                                 First Engrossed



 1  premium increase must be no greater than 20 percent of the

 2  premium for that policy in effect on June 30, 2003, as

 3  adjusted for coverage changes and seasonal occupancy

 4  surcharges. Corporation rate manuals shall include a rate

 5  surcharge for seasonal occupancy. To ensure that personal

 6  lines residential wind-only rates effective on or after July

 7  1, 2004, are not competitive with approved rates charged by

 8  authorized insurers, the corporation, in conjunction with the

 9  office, shall develop a wind-only ratemaking methodology,

10  which methodology shall be contained in each a rate filing

11  made by the corporation with the office by January 1, 2004. If

12  the office thereafter determines that the wind-only rates or

13  rating factors filed by the corporation fail to comply with

14  the wind-only ratemaking methodology provided for in this

15  subsection, it shall so notify the corporation and require the

16  corporation to amend its rates or rating factors to come into

17  compliance within 90 days of notice from the office. The

18  office shall report to the Speaker of the House of

19  Representatives and the President of the Senate on the

20  provisions of the wind-only ratemaking methodology by January

21  31, 2004.

22         4.  For the purposes of establishing a pilot program to

23  evaluate issues relating to the availability and affordability

24  of insurance in an area where historically there has been

25  little market competition, the provisions of subparagraph 2.

26  do not apply to coverage provided by the corporation in Monroe

27  County if the office determines that a reasonable degree of

28  competition does not exist for personal lines residential

29  policies. The provisions of subparagraph 3. do not apply to

30  coverage provided by the corporation in Monroe County if the

31  office determines that a reasonable degree of competition does


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    CS for SB 1486                                 First Engrossed



 1  not exist for personal lines residential policies in the area

 2  of that county which is eligible for wind-only coverage. In

 3  this county, the rates for personal lines residential coverage

 4  shall be actuarially sound and not excessive, inadequate, or

 5  unfairly discriminatory and are subject to the other

 6  provisions of the paragraph and s. 627.062. The commission

 7  shall adopt rules establishing the criteria for determining

 8  whether a reasonable degree of competition exists for personal

 9  lines residential policies in Monroe County. By March 1, 2006,

10  the office shall submit a report to the Legislature providing

11  an evaluation of the implementation of the pilot program

12  affecting Monroe County.

13         5.4.  Rates for commercial lines coverage shall not be

14  subject to the requirements of subparagraph 2., but shall be

15  subject to all other requirements of this paragraph and s.

16  627.062.

17         6.5.  Nothing in this paragraph shall require or allow

18  the corporation to adopt a rate that is inadequate under s.

19  627.062.

20         7.6.  The corporation shall certify to the office at

21  least twice annually that its personal lines rates comply with

22  the requirements of subparagraphs 1. and 2. If any adjustment

23  in the rates or rating factors of the corporation is necessary

24  to ensure such compliance, the corporation shall make and

25  implement such adjustments and file its revised rates and

26  rating factors with the office. If the office thereafter

27  determines that the revised rates and rating factors fail to

28  comply with the provisions of subparagraphs 1. and 2., it

29  shall notify the corporation and require the corporation to

30  amend its rates or rating factors in conjunction with its next

31  rate filing. The office must notify the corporation by


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    CS for SB 1486                                 First Engrossed



 1  electronic means of any rate filing it approves for any

 2  insurer among the insurers referred to in subparagraph 2.

 3         8.7.  In addition to the rates otherwise determined

 4  pursuant to this paragraph, the corporation shall impose and

 5  collect an amount equal to the premium tax provided for in s.

 6  624.509 to augment the financial resources of the corporation.

 7         9.8.a.  To assist the corporation in developing

 8  additional ratemaking methods to assure compliance with

 9  subparagraphs 1. and 4., the corporation shall appoint a rate

10  methodology panel consisting of one person recommended by the

11  Florida Association of Insurance Agents, one person

12  recommended by the Professional Insurance Agents of Florida,

13  one person recommended by the Florida Association of Insurance

14  and Financial Advisors, one person recommended by the insurer

15  with the highest voluntary market share of residential

16  property insurance business in the state, one person

17  recommended by the insurer with the second-highest voluntary

18  market share of residential property insurance business in the

19  state, one person recommended by an insurer writing commercial

20  residential property insurance in this state, one person

21  recommended by the Office of Insurance Regulation, and one

22  board member designated by the board chairman, who shall serve

23  as chairman of the panel.

24         b.  By January 1, 2004, the rate methodology panel

25  shall provide a report to the corporation of its findings and

26  recommendations for the use of additional ratemaking methods

27  and procedures, including the use of a rate equalization

28  surcharge in an amount sufficient to assure that the total

29  cost of coverage for policyholders or applicants to the

30  corporation is sufficient to comply with subparagraph 1.

31  


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    CS for SB 1486                                 First Engrossed



 1         c.  Within 30 days after such report, the corporation

 2  shall present to the President of the Senate, the Speaker of

 3  the House of Representatives, the minority party leaders of

 4  each house of the Legislature, and the chairs of the standing

 5  committees of each house of the Legislature having

 6  jurisdiction of insurance issues, a plan for implementing the

 7  additional ratemaking methods and an outline of any

 8  legislation needed to facilitate use of the new methods.

 9         d.  The plan must include a provision that producer

10  commissions paid by the corporation shall not be calculated in

11  such a manner as to include any rate equalization surcharge.

12  However, without regard to the plan to be developed or its

13  implementation, producer commissions paid by the corporation

14  for each account, other than the quota share primary program,

15  shall remain fixed as to percentage, effective rate,

16  calculation, and payment method until January 1, 2004.

17         10.9.  By January 1, 2004, the corporation shall

18  develop a notice to policyholders or applicants that the rates

19  of Citizens Property Insurance Corporation are intended to be

20  higher than the rates of any admitted carrier and providing

21  other information the corporation deems necessary to assist

22  consumers in finding other voluntary admitted insurers willing

23  to insure their property.

24         Section 8.  Section 627.40951, Florida Statutes, is

25  created to read:

26         627.40951  Standard personal lines residential

27  insurance policy.--

28         (1)  The Legislature finds that many consumers who

29  filed property loss claims as a result of the hurricanes that

30  struck this state in 2004 were inadequately insured due to the

31  difficulty consumers encounter in trying to understand the


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    CS for SB 1486                                 First Engrossed



 1  complex nature of property insurance policies. The purpose and

 2  intent of this section is to have property and casualty

 3  insurers offer standard personal lines residential property

 4  insurance policies and standard checklists of policy contents,

 5  in accordance with s. 627.4143, to consumers and to ensure

 6  that these policies and checklists are written in a simple

 7  format with easily readable language that will enable most

 8  consumers to understand the principal benefits and coverage

 9  provided in the policy; the principal exclusions and

10  limitations or reductions contained in the policy, including,

11  but not limited to, deductibles, coinsurance, and any other

12  limitations or reductions; and any additional coverage

13  provided through any rider or endorsement that accompanies the

14  policy and renewal or cancellation provisions.

15         (2)  The Chief Financial Officer shall appoint an

16  advisory committee composed of two representatives of insurers

17  currently selling personal lines residential property

18  insurance coverage, two representatives of property and

19  casualty agents, two representatives of consumers, two

20  representatives of the Commissioner of Insurance Regulation,

21  and the Insurance Consumer Advocate or her or his designee.

22  The Chief Financial Officer or her or his designee shall serve

23  as chair of the committee. The committee shall develop policy

24  language for coverage that represents general industry

25  standards in the market for comprehensive coverage under

26  personal lines residential insurance policies and shall

27  develop a checklist to be used with each type of personal

28  lines residential property insurance policy. The committee

29  shall review policies and related forms written by Insurance

30  Services Office, Inc. The committee shall file a report

31  containing its recommendations to the President of the Senate


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    CS for SB 1486                                 First Engrossed



 1  and the Speaker of the House of Representatives by January 15,

 2  2006. No insurer shall be required to offer the standard

 3  policy unless required by further act of the Legislature.

 4         Section 9.  Subsection (1) of section 627.411, Florida

 5  Statutes, is amended to read:

 6         627.411  Grounds for disapproval.--

 7         (1)  The office shall disapprove any form filed under

 8  s. 627.410, or withdraw any previous approval thereof, only if

 9  the form:

10         (a)  Is in any respect in violation of, or does not

11  comply with, this code.

12         (b)  Contains or incorporates by reference, where such

13  incorporation is otherwise permissible, any inconsistent,

14  ambiguous, or misleading clauses, or exceptions and conditions

15  which deceptively affect the risk purported to be assumed in

16  the general coverage of the contract.

17         (c)  Has any title, heading, or other indication of its

18  provisions which is misleading.

19         (d)  Is printed or otherwise reproduced in such manner

20  as to render any material provision of the form substantially

21  illegible.

22         (e)  Is for residential property insurance and contains

23  provisions that are unfair or inequitable or encourage

24  misrepresentation.

25         (f)(e)  Is for health insurance, and:

26         1.  Provides benefits that are unreasonable in relation

27  to the premium charged.;

28         2.  Contains provisions that are unfair or inequitable

29  or contrary to the public policy of this state or that

30  encourage misrepresentation.;

31  


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    CS for SB 1486                                 First Engrossed



 1         3.  Contains provisions that apply rating practices

 2  that result in unfair discrimination pursuant to s.

 3  626.9541(1)(g)2.

 4         (g)(f)  Excludes coverage for human immunodeficiency

 5  virus infection or acquired immune deficiency syndrome or

 6  contains limitations in the benefits payable, or in the terms

 7  or conditions of such contract, for human immunodeficiency

 8  virus infection or acquired immune deficiency syndrome which

 9  are different than those which apply to any other sickness or

10  medical condition.

11         Section 10.  Paragraphs (d) and (e) are added to

12  subsection (2) of section 627.4133, Florida Statutes, to read:

13         627.4133  Notice of cancellation, nonrenewal, or

14  renewal premium.--

15         (2)  With respect to any personal lines or commercial

16  residential property insurance policy, including, but not

17  limited to, any homeowner's, mobile home owner's, farmowner's,

18  condominium association, condominium unit owner's, apartment

19  building, or other policy covering a residential structure or

20  its contents:

21         (d)1.  Upon a declaration of an emergency pursuant to

22  s. 252.36 and the filing of an order by the Commissioner of

23  Insurance Regulation, an insurer may not cancel or nonrenew a

24  personal residential or commercial residential property

25  insurance policy covering a dwelling or residential property

26  located in this state which has been damaged as a result of a

27  hurricane or wind loss that is the subject of the declaration

28  of emergency for a period of 90 days after the dwelling or

29  residential property has been repaired. A structure is deemed

30  to be repaired when substantially completed and restored to

31  


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    CS for SB 1486                                 First Engrossed



 1  the extent that it is insurable by another authorized insurer

 2  that is writing policies in this state.

 3         2.  However, an insurer or agent may cancel or nonrenew

 4  such a policy prior to the repair of the dwelling or

 5  residential property:

 6         a.  Upon 10 days' notice for nonpayment of premium; or

 7         b.  Upon 45 days' notice:

 8         (I)  For a material misstatement or fraud related to

 9  the claim;

10         (II)  If the insurer determines that the insured has

11  unreasonably caused a delay in the repair of the dwelling; or

12         (III)  If the insurer has paid policy limits.

13         3.  If the insurer elects to nonrenew a policy covering

14  a property that has been damaged, the insurer shall provide at

15  least 90 days' notice to the insured that the insurer intends

16  to nonrenew the policy 90 days after the dwelling or

17  residential property has been repaired. Nothing in this

18  paragraph shall prevent the insurer from canceling or

19  nonrenewing the policy 90 days after the repairs are complete

20  for the same reasons the insurer would otherwise have canceled

21  or nonrenewed the policy but for the limitations of

22  subparagraph 1. The Financial Services Commission may adopt

23  rules, and the Commissioner of Insurance Regulation may issue

24  orders, necessary to implement this paragraph.

25         4.  This paragraph shall also apply to personal

26  residential and commercial residential policies covering

27  property that was damaged as the result of Tropical Storm

28  Bonnie, Hurricane Charley, Hurricane Frances, Hurricane Ivan,

29  or Hurricane Jeanne.

30         (e)  If any cancellation or nonrenewal of a policy

31  subject to this subsection is to take effect during the


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    CS for SB 1486                                 First Engrossed



 1  duration of a hurricane as defined in s. 627.4025(2)(c), the

 2  effective date of such cancellation or nonrenewal is extended

 3  until the end of the duration of such hurricane. The insurer

 4  may collect premium at the prior rates or the rates then in

 5  effect for the period of time for which coverage is extended.

 6  This paragraph does not apply to any property with respect to

 7  which replacement coverage has been obtained and which is in

 8  effect for a claim occurring during the duration of the

 9  hurricane.

10         Section 11.  Effective January 1, 2006, section

11  627.4143, Florida Statutes, is amended to read:

12         627.4143  Outline of coverage.--

13         (1)  No private passenger automobile or basic

14  homeowner's policy shall be delivered or issued for delivery

15  in this state unless an appropriate outline of coverage has

16  been delivered prior to issuance of the policy or accompanies

17  the policy when issued.

18         (2)  The outline of coverage for a private passenger

19  motor vehicle insurance policy shall contain all of the

20  following:

21         (a)  A brief description of the principal benefits and

22  coverage provided in the policy, broken down by each class or

23  type of coverage provided under the policy for which a premium

24  is charged, and itemization of the applicable premium.

25         (b)  A summary statement of the principal exclusions

26  and limitations or reductions contained in the policy by class

27  or type, including, but not limited to, deductibles,

28  coinsurance, and any other limitations or reductions.

29         (c)  A summary statement of any renewal or cancellation

30  provisions.

31  


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    CS for SB 1486                                 First Engrossed



 1         (d)  A description of the credit or surcharge plan that

 2  is being applied.  The description may display numerical or

 3  alphabetical codes on the declarations page or premium notice

 4  to enable the insured to determine the reason or reasons why

 5  her or his policy is being surcharged or is receiving a

 6  credit.

 7         (e)  A list of any additional coverage provided through

 8  any rider or endorsement which accompanies the policy.  The

 9  list shall contain a descriptive reference to each additional

10  coverage, rather than solely a reference to a form or code

11  number.

12         (f)  For a private passenger motor vehicle insurance

13  policy, The extent of coverage provided to the insured in the

14  event of collision damage to a rental vehicle rented by the

15  insured. The proof-of-insurance card required by s. 316.646

16  must also specify whether rental car coverage is provided, and

17  may refer to the outline of coverage as to the details or

18  extent of coverage.

19         (3)  A basic homeowners', mobile homeowners', dwelling,

20  or condominium unit owners' policy may not be delivered or

21  issued for delivery in this state unless a comprehensive

22  checklist of coverage on a form adopted by the commission and

23  an appropriate outline of coverage have been delivered prior

24  to issuance of the policy or accompanies the policy when

25  issued. The commission shall, by rule, adopt a form for the

26  checklist for each type of policy to which this subsection

27  applies. Each form shall indicate that it was adopted by the

28  commission.

29         (a)  The checklist must contain a list of the standard

30  provisions and elements that may typically be included in

31  these policies, whether or not they are included in the


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    CS for SB 1486                                 First Engrossed



 1  particular policy being issued, in a format that allows the

 2  insurer to place a check mark next to the provisions elements

 3  that are included so that the consumer can see both what is

 4  included and what is not included in the policy. As an

 5  alternative to checking the boxes on the checklist, an insurer

 6  may delete the check boxes from the form and replace them with

 7  text indicating whether the provision's elements are included

 8  or not. Limits of liability shall be listed for each item. The

 9  checklist must include, but is not limited to, the following:

10         1.  Property coverage for the principal premises shown

11  in the declarations.

12         2.  Property coverage for other structures on the

13  residence premises.

14         3.  Whether the principal premises and other structures

15  are insured against the following perils:

16         a.  Fire.

17         b.  Lightning.

18         c.  Explosion.

19         d.  Hurricane loss.

20         e.  Nonhurricane wind loss.

21         f.  Collapse.

22         g.  Mold.

23         h.  Sinkhole loss.

24         i.  Vandalism.

25         4.  Personal property coverage.

26         5.  Whether personal property is insured against the

27  following perils:

28         a.  Fire.

29         b.  Lightning.

30         c.  Hurricane loss.

31         d.  Nonhurricane wind loss.


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    CS for SB 1486                                 First Engrossed



 1         e.  Collapse.

 2         f.  Mold.

 3         g.  Sinkhole loss.

 4         h.  Theft.

 5         6.  The following additional coverages:

 6         a.  Debris removal.

 7         b.  Loss assessment.

 8         c.  Additional living expenses.

 9         7.  Personal liability coverage.

10         8.  Medical payments coverage.

11         9.  Discounts applied to the premium.

12         10.  Deductibles for loss due to hurricane and loss to

13  other perils.

14         11.  Building ordinance or law coverage.

15         12.  Replacement cost coverage.

16         13.  Actual cash value coverage.

17         (b)  The forms shall allow insurers to place other

18  coverages on the checklists which may or may not be included

19  in the insurer's policies.

20         (c)  The outline of coverage must contain:

21         1.  A brief description of the principal benefits and

22  coverage provided in the policy, broken down by each class or

23  type of coverage provided under the policy for which a premium

24  is charged, and itemization of the applicable premium.

25         2.  A summary statement of the principal exclusions and

26  limitations or reductions contained in the policy by class or

27  type, including, but not limited to, deductibles, coinsurance,

28  and any other limitations or reductions.

29         3.  A summary statement of any renewal or cancellation

30  provisions.

31  


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    CS for SB 1486                                 First Engrossed



 1         4.  A description of the credit or surcharge plan that

 2  is being applied. The description may display numerical or

 3  alphabetical codes on the declarations page or premium notice

 4  to enable the insured to determine the reason or reasons why

 5  her or his policy is being surcharged or is receiving a

 6  credit.

 7         5.  A summary of any additional coverage provided

 8  through any rider or endorsement that accompanies the policy.

 9         (4)(3)  The outline of coverage  for a private

10  passenger motor vehicle policy is required only on the initial

11  policy issued by an insurer. The outline of coverage and the

12  checklist for a basic homeowners', mobile homeowners',

13  dwelling, or condominium unit owners' policy is required on

14  the initial policy and each renewal thereof issued by an

15  insurer.

16         (5)(4)  An insurer must insert the following language

17  on the outline of coverage:

18  

19  " The following outline of coverage  or checklist  is for

20  informational purposes only. Florida law prohibits this

21  outline  or checklist  from changing any of the provisions of

22  the insurance contract which is the subject of this

23  outline.  Any endorsement regarding changes in types of

24  coverage, exclusions, limitations, reductions, deductibles,

25  coinsurance, renewal provisions, cancellation provisions,

26  surcharges, or credits will be sent separately."

27         (6)(5)  Neither this section nor the outline of

28  coverage or checklist mandated by this section alters or

29  modifies the terms of the insurance contract, creates a cause

30  of action, or is admissible in any civil action.

31  


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    CS for SB 1486                                 First Engrossed



 1         Section 12.  Effective October 1, 2005, subsections

 2  (3), (4), (8), and (9) of section 627.701, Florida Statutes,

 3  as amended by section 4 of chapter 2004-480, Laws of Florida,

 4  are amended to read:

 5         627.701  Liability of insureds; coinsurance;

 6  deductibles.--

 7         (3)(a)  A policy of residential property insurance

 8  shall include a deductible amount applicable to hurricane or

 9  wind losses no lower than $500 and no higher than 2 percent of

10  the policy dwelling limits with respect to personal lines

11  residential risks, and no higher than 3 percent of the policy

12  limits with respect to commercial lines residential risks;

13  however, if a risk was covered on August 24, 1992, under a

14  policy having a higher deductible than the deductibles allowed

15  by this paragraph, a policy covering such risk may include a

16  deductible no higher than the deductible in effect on August

17  24, 1992. Notwithstanding the other provisions of this

18  paragraph, a personal lines residential policy covering a risk

19  valued at $50,000 or less may include a deductible amount

20  attributable to hurricane or wind losses no lower than $250,

21  and a personal lines residential policy covering a risk valued

22  at $100,000 or more may include a deductible amount

23  attributable to hurricane or wind losses no higher than 10 5

24  percent of the policy limits unless subject to a higher

25  deductible on August 24, 1992; however, no maximum deductible

26  is required with respect to a personal lines residential

27  policy covering a risk valued at more than $500,000.  An

28  insurer may require a higher deductible, provided such

29  deductible is the same as or similar to a deductible program

30  lawfully in effect on June 14, 1995.  In addition to the

31  deductible amounts authorized by this paragraph, an insurer


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    CS for SB 1486                                 First Engrossed



 1  may also offer policies with a copayment provision under

 2  which, after exhaustion of the deductible, the policyholder is

 3  responsible for 10 percent of the next $10,000 of insured

 4  hurricane or wind losses.

 5         (b)1.  Except as otherwise provided in this paragraph,

 6  prior to issuing a personal lines residential property

 7  insurance policy on or after January 1, 2006 April 1, 1996, or

 8  prior to the first renewal of a residential property insurance

 9  policy on or after January 1, 2006 April 1, 1996, the insurer

10  must offer alternative deductible amounts applicable to

11  hurricane or wind losses equal to $500, and 2 percent, 5

12  percent, and 10 percent of the policy dwelling limits, unless

13  the specific percentage 2 percent deductible is less than

14  $500. The written notice of the offer shall specify the

15  hurricane or wind deductible to be applied in the event that

16  the applicant or policyholder fails to affirmatively choose a

17  hurricane deductible. The insurer must provide such

18  policyholder with notice of the availability of the deductible

19  amounts specified in this paragraph in a form approved by the

20  office in conjunction with each renewal of the policy. The

21  failure to provide such notice constitutes a violation of this

22  code but does not affect the coverage provided under the

23  policy.

24         2.  This paragraph does not apply with respect to a

25  deductible program lawfully in effect on June 14, 1995, or to

26  any similar deductible program, if the deductible program

27  requires a minimum deductible amount of no less than 2 percent

28  of the policy limits.

29         3.  With respect to a policy covering a risk with

30  dwelling limits of at least $100,000, but less than $250,000,

31  the insurer may, in lieu of offering a policy with a $500


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    CS for SB 1486                                 First Engrossed



 1  hurricane or wind deductible as required by subparagraph 1.,

 2  offer a policy that the insurer guarantees it will not

 3  nonrenew for reasons of reducing hurricane loss for one

 4  renewal period and that contains up to a 2 percent hurricane

 5  or wind deductible as required by subparagraph 1.

 6         4.  With respect to a policy covering a risk with

 7  dwelling limits of $250,000 or more, the insurer need not

 8  offer the $500 hurricane or wind deductible as required by

 9  subparagraph 1., but must, except as otherwise provided in

10  this subsection, offer the other 2 percent hurricane

11  deductibles or wind deductible as required by subparagraph 1.

12         (c)  In order to provide for the transition from wind

13  deductibles to hurricane deductibles as required by this

14  subsection, an insurer is required to provide wind deductibles

15  meeting the requirements of this subsection until the

16  effective date of the insurer's first rate filing made after

17  January 1, 1997, and is thereafter required to provide

18  hurricane deductibles meeting the requirements of this

19  subsection.

20         (4)(a)  Any policy that contains a separate hurricane

21  deductible must on its face include in boldfaced type no

22  smaller than 18 points the following statement: "THIS POLICY

23  CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY

24  RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy

25  containing a coinsurance provision applicable to hurricane

26  losses must on its face include in boldfaced type no smaller

27  than 18 points the following statement: "THIS POLICY CONTAINS

28  A CO-PAY PROVISION THAT MAY RESULT IN HIGH OUT-OF-POCKET

29  EXPENSES TO YOU."

30         (b)  Beginning October 1, 2005, for any personal lines

31  residential property insurance policy containing a separate


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    CS for SB 1486                                 First Engrossed



 1  hurricane deductible, the insurer shall compute and

 2  prominently display the actual dollar value of the hurricane

 3  deductible on the declarations page of the policy at issuance

 4  and, for renewal, on the renewal declarations page of the

 5  policy or on the premium renewal notice.

 6         (c)  Beginning October 1, 2005, for any personal lines

 7  residential property insurance policy containing an inflation

 8  guard rider, the insurer shall compute and prominently display

 9  the actual dollar value of the hurricane deductible on the

10  declarations page of the policy at issuance and, for renewal,

11  on the renewal declarations page of the policy or on the

12  premium renewal notice. In addition, beginning October 1,

13  2005, for any personal lines residential property insurance

14  policy containing an inflation guard rider, the insurer shall

15  notify the policyholder of the possibility that the hurricane

16  deductible may be higher than indicated when loss occurs due

17  to application of the inflation guard rider. Such notification

18  shall be made on the declarations page of the policy at

19  issuance and, for renewal, on the renewal declarations page of

20  the policy or on the premium renewal notice.

21         (8)(a)  The Legislature finds that property insurance

22  coverage has become unaffordable for a significant number of

23  mobile home owners, as evidenced by reports that up to 100,000

24  mobile home owners have terminated their insurance coverage

25  because they cannot afford to pay approved rates charged in

26  the voluntary or residual markets. The Legislature further

27  finds that additional flexibility in available coverages will

28  enable mobile home owners to obtain affordable insurance and

29  increase capacity.

30         (b)  Notwithstanding the provisions of subsection (3),

31  with respect to mobile home policies:


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    CS for SB 1486                                 First Engrossed



 1         1.  The deductible for hurricane coverage may not

 2  exceed 10 percent of the property value if the property is not

 3  subject to any liens and may not exceed 5 percent of the

 4  property value if the property is subject to any liens.

 5         2.  The insurer need not make the offers required by

 6  paragraph (3)(b).

 7         (8)(9)  Notwithstanding the other provisions of this

 8  section or of other law, but only as to hurricane coverage as

 9  defined in s. 627.4025 for commercial lines residential

10  coverages, an insurer may offer a deductible in an amount not

11  exceeding 5 percent of the insured value with respect to a

12  condominium association or cooperative association policy, or

13  in an amount not exceeding 10 percent of the insured value

14  with respect to any other commercial lines residential policy,

15  if, at the time of such offer and at each renewal, the insurer

16  also offers to the policyholder a deductible in the amount of

17  3 percent of the insured value. Nothing in this subsection

18  prohibits any deductible otherwise authorized by this section.

19  All forms by which the offers authorized in this subsection

20  are made or required to be made shall be on forms that are

21  adopted or approved by the commission or office.

22         Section 13.  Subsection (5) of section 627.701, Florida

23  Statutes, as amended by section 4 of chapter 2004-480, Laws of

24  Florida, is amended to read:

25         627.701  Liability of Insureds; coinsurance;

26  deductibles.--

27         (5)(a)  The hurricane deductible of any personal lines

28  residential property insurance policy issued or renewed on or

29  after May 1, 2005, shall be applied as follows:

30         1.(a)  The hurricane deductible shall apply on an

31  annual basis to all covered hurricane losses that occur during


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    CS for SB 1486                                 First Engrossed



 1  the calendar year for losses that are covered under one or

 2  more policies issued by the same insurer or an insurer in the

 3  same insurer group.

 4         2.(b)  If a hurricane deductible applies separately to

 5  each of one or more structures insured under a single policy,

 6  the requirements of this paragraph subsection apply with

 7  respect to the deductible for each structure.

 8         3.(c)  If there was a hurricane loss for a prior

 9  hurricane or hurricanes during the calendar year, the insurer

10  may apply a deductible to a subsequent hurricane which that is

11  the greater of the remaining amount of the hurricane

12  deductible or the amount of the deductible that applies to

13  perils other than a hurricane. Insurers may require

14  policyholders to report hurricane losses that are below the

15  hurricane deductible or to maintain receipts or other records

16  of such hurricane losses in order to apply such losses to

17  subsequent hurricane claims.

18         4.(d)  If there are hurricane losses in a calendar year

19  on more than one policy issued by the same insurer or an

20  insurer in the same insurer group, the hurricane deductible

21  shall be the highest amount stated in any one of the policies.

22  If a policyholder who had a hurricane loss under the prior

23  policy is provided or offered a lower hurricane deductible

24  under the new or renewal policy, the insurer must notify the

25  policyholder, in writing, at the time the lower hurricane

26  deductible is provided or offered, that the lower hurricane

27  deductible will not apply until January 1 of the following

28  calendar year.

29         (b)  For commercial residential property insurance

30  policies issued or renewed on or after January 1, 2006, the

31  


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    CS for SB 1486                                 First Engrossed



 1  insurer must offer the policyholder the following alternative

 2  hurricane deductibles:

 3         1.  A hurricane deductible that applies on an annual

 4  basis as provided in paragraph (a); and

 5         2.  A hurricane deductible that applies to each

 6  hurricane.

 7         Section 14.  Effective October 1, 2005, section

 8  627.7011, Florida Statutes, is amended to read:

 9         627.7011  Homeowners' policies; offer of replacement

10  cost coverage and law and ordinance coverage.--

11         (1)  Prior to issuing a homeowner's insurance policy on

12  or after October 1, 2005 June 1, 1994, or prior to the first

13  renewal of a homeowner's insurance policy on or after October

14  1, 2005 June 1, 1994, the insurer must offer each of the

15  following:

16         (a)  A policy or endorsement providing that any loss

17  which is repaired or replaced will be adjusted on the basis of

18  replacement costs not exceeding policy limits as to the

19  dwelling, rather than actual cash value, but not including

20  costs necessary to meet applicable laws and ordinances

21  regulating the construction, use, or repair of any property or

22  requiring the tearing down of any property, including the

23  costs of removing debris.

24         (b)  A policy or endorsement providing that, subject to

25  other policy provisions, any loss which is repaired or

26  replaced at any location will be adjusted on the basis of

27  replacement costs not exceeding policy limits as to the

28  dwelling, rather than actual cash value, and also including

29  costs necessary to meet applicable laws and ordinances

30  regulating the construction, use, or repair of any property or

31  requiring the tearing down of any property, including the


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    CS for SB 1486                                 First Engrossed



 1  costs of removing debris; however, such additional costs

 2  necessary to meet applicable laws and ordinances may be

 3  limited to either 25 percent or 50 percent of the dwelling

 4  limit, as selected by the policyholder, and such coverage

 5  shall apply only to repairs of the damaged portion of the

 6  structure unless the total damage to the structure exceeds 50

 7  percent of the replacement cost of the structure.

 8  

 9  An insurer is not required to make the offers required by this

10  subsection with respect to the issuance or renewal of a

11  homeowner's policy that contains the provisions specified in

12  paragraph (b) for law and ordinance coverage limited to 25

13  percent of the dwelling limit, except that the insurer must

14  offer the law and ordinance coverage limited to 50 percent of

15  the dwelling limit. This subsection does not prohibit the

16  offer of a guaranteed replacement cost policy.

17         (2)  Unless the insurer obtains the policyholder's

18  written refusal of the policies or endorsements specified in

19  subsection (1), any policy covering the dwelling is deemed to

20  include the coverage specified in paragraph (1)(b). The

21  rejection or selection of alternative coverage shall be made

22  on a form approved by the office. The form shall fully advise

23  the applicant of the nature of the coverage being rejected. If

24  this form is signed by a named insured, it will be

25  conclusively presumed that there was an informed, knowing

26  rejection of the coverage or election of the alternative

27  coverage on behalf of all insureds. Unless the policyholder

28  requests in writing the coverage specified in this section, it

29  need not be provided in or supplemental to any other policy

30  that renews, insures, extends, changes, supersedes, or

31  replaces an existing policy when the policyholder has rejected


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    CS for SB 1486                                 First Engrossed



 1  the coverage specified in this section or has selected

 2  alternative coverage. The insurer must provide such

 3  policyholder with notice of the availability of such coverage

 4  in a form approved by the office at least once every 3 years.

 5  The failure to provide such notice constitutes a violation of

 6  this code, but does not affect the coverage provided under the

 7  policy.

 8         (3)  In the event of a loss for which a dwelling or

 9  personal property is insured on the basis of replacement

10  costs, the insurer shall pay the replacement cost without

11  reservation or holdback of any depreciation in value, whether

12  or not the insured replaces or repairs the dwelling or

13  property.

14         (4)  Any homeowner's insurance policy issued or renewed

15  on or after October 1, 2005, must include in bold type no

16  smaller than 18 points the following statement:

17         "LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE

18  THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO CONSIDER

19  THE PURCHASE OF FLOOD INSURANCE FROM THE NATIONAL FLOOD

20  INSURANCE PROGRAM. WITHOUT THIS COVERAGE, YOU MAY HAVE

21  UNCOVERED LOSSES. PLEASE DISCUSS THESE COVERAGES WITH YOUR

22  INSURANCE AGENT."

23  

24  The intent of this subsection is to encourage policyholders to

25  purchase sufficient coverage to protect them in case events

26  excluded from the standard homeowners policy, such as law and

27  ordinance enforcement and flood, combine with covered events

28  to produce damage or loss to the insured property. The intent

29  is also to encourage policyholders to discuss these issues

30  with their insurance agent.

31  


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    CS for SB 1486                                 First Engrossed



 1         (5)(3)  Nothing in this section shall be construed to

 2  apply to policies not considered to be "homeowners' policies,"

 3  as that term is commonly understood in the insurance industry.

 4  This section specifically does not apply to mobile home

 5  policies. Nothing in this section shall be construed as

 6  limiting the ability of any insurer to reject or nonrenew any

 7  insured or applicant on the grounds that the structure does

 8  not meet underwriting criteria applicable to replacement cost

 9  or law and ordinance policies or for other lawful reasons.

10         Section 15.  Effective July 1, 2005, subsections (1)

11  and (7) of section 627.7015, Florida Statutes, are amended,

12  and subsection (2) of that section is reenacted, to read:

13         627.7015  Alternative procedure for resolution of

14  disputed property insurance claims.--

15         (1)  PURPOSE AND SCOPE.--This section sets forth a

16  nonadversarial alternative dispute resolution procedure for a

17  mediated claim resolution conference prompted by the need for

18  effective, fair, and timely handling of property insurance

19  claims. There is a particular need for an informal,

20  nonthreatening forum for helping parties who elect this

21  procedure to resolve their claims disputes because most

22  homeowner's and commercial residential insurance policies

23  obligate insureds to participate in a potentially expensive

24  and time-consuming adversarial appraisal process prior to

25  litigation. The procedure set forth in this section is

26  designed to bring the parties together for a mediated claims

27  settlement conference without any of the trappings or

28  drawbacks of an adversarial process. Before resorting to these

29  procedures, insureds and insurers are encouraged to resolve

30  claims as quickly and fairly as possible. This section is

31  available with respect to claims under personal lines and


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    CS for SB 1486                                 First Engrossed



 1  commercial residential policies for all claimants and insurers

 2  prior to commencing the appraisal process, or commencing

 3  litigation. If requested by the insured, participation by

 4  legal counsel shall be permitted. Mediation under this section

 5  is also available to litigants referred to the department by a

 6  county court or circuit court. This section does not apply to

 7  commercial coverages, to private passenger motor vehicle

 8  insurance coverages, or to disputes relating to liability

 9  coverages in policies of property insurance.

10         (2)  At the time a first-party claim within the scope

11  of this section is filed, the insurer shall notify all

12  first-party claimants of their right to participate in the

13  mediation program under this section. The department shall

14  prepare a consumer information pamphlet for distribution to

15  persons participating in mediation under this section.

16         (7)  If the insurer fails to comply with subsection (2)

17  by failing to notify a first-party claimant of its right to

18  participate in the mediation program under this section or if

19  the insurer requests the mediation, and the mediation results

20  are rejected by either party, the insured shall not be

21  required to submit to or participate in any contractual loss

22  appraisal process of the property loss damage as a

23  precondition to legal action for breach of contract against

24  the insurer for its failure to pay the policyholder's claims

25  covered by the policy.

26         Section 16.  Subsection (1) of section 627.702, Florida

27  Statutes, is amended to read:

28         627.702  Valued policy law.--

29         (1)(a)  In the event of the total loss of any building,

30  structure, mobile home as defined in s. 320.01(2), or

31  manufactured building as defined in s. 553.36(12), located in


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    CS for SB 1486                                 First Engrossed



 1  this state and insured by any insurer as to a covered peril,

 2  in the absence of any change increasing the risk without the

 3  insurer's consent and in the absence of fraudulent or criminal

 4  fault on the part of the insured or one acting in her or his

 5  behalf, the insurer's liability, if any, under the policy for

 6  such total loss, if caused by a covered peril, shall be in the

 7  amount of money for which such property was so insured as

 8  specified in the policy and for which a premium has been

 9  charged and paid.

10         (b)  The intent of this subsection is not to deprive an

11  insurer of any proper defense under the policy, to create new

12  or additional coverage under the policy, or to require an

13  insurer to pay for a loss caused by a peril other than the

14  covered peril. In furtherance of such legislative intent, when

15  a loss was caused in part by a covered peril and in part by a

16  noncovered peril, paragraph (a) does not apply. In such

17  circumstances, the insurer's liability under this section

18  shall be limited to the amount of the loss caused by the

19  covered peril. However, if the covered perils alone would have

20  caused the total loss, paragraph (a) shall apply. The insurer

21  is never liable for more than the amount necessary to repair,

22  rebuild, or replace the structure following the total loss,

23  after considering all other benefits actually paid for the

24  total loss.

25         (c)  It is the intent of the Legislature that the

26  amendment to this section shall not be applied retroactively

27  and shall apply only to claims filed after effective date of

28  such amendment.

29         Section 17.  Section 627.706, Florida Statutes, is

30  amended to read:

31         627.706  Sinkhole insurance; definitions.--


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    CS for SB 1486                                 First Engrossed



 1         (1)  Every insurer authorized to transact property

 2  insurance in this state shall make available coverage for

 3  insurable sinkhole losses on any structure, including contents

 4  of personal property contained therein, to the extent provided

 5  in the form to which the sinkhole coverage attaches.

 6         (2)  As used in ss. 627.706-627.7074, and as used in

 7  connection with any policy providing coverage for sinkhole

 8  losses:

 9         (a)  "Sinkhole" means a landform created by subsidence

10  of soil, sediment, or rock as underlying strata are dissolved

11  by ground water. A sinkhole may form by collapse into

12  subterranean voids created by dissolution of limestone or

13  dolostone or by subsidence as these strata are dissolved.

14         (b)(2)  "Sinkhole loss" means structural damage to the

15  building, including the foundation, caused by sinkhole

16  activity. Contents coverage shall apply only if there is

17  structural damage to the building caused by sinkhole activity.

18         (c)(3)  "Sinkhole activity loss" means actual physical

19  damage to the property covered arising out of or caused by

20  sudden settlement or systematic weakening collapse of the

21  earth supporting such property only when such settlement or

22  systematic weakening collapse results from movement or

23  raveling of soils, sediments, or rock materials into

24  subterranean voids created by the effect action of water on a

25  limestone or similar rock formation.

26         (d)  "Engineer" means a person, as defined in s.

27  471.005, who has a bachelor degree or higher in engineering

28  with a specialty in the geotechnical engineering field. An

29  engineer must have geotechnical experience and expertise in

30  the identification of sinkhole activity as well as other

31  potential causes of damage to the structure.


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    CS for SB 1486                                 First Engrossed



 1         (e)  "Professional geologist" means a person, as

 2  defined by s. 492.102, who has a bachelor degree or higher in

 3  geology or related earth science with expertise in the geology

 4  of Florida. A professional geologist must have geological

 5  experience and expertise in the identification of sinkhole

 6  activity as well as other potential geologic causes of damage

 7  to the structure.

 8         (3)(4)  Every insurer authorized to transact property

 9  insurance in this state shall make a proper filing with the

10  office for the purpose of extending the appropriate forms of

11  property insurance to include coverage for insurable sinkhole

12  losses.

13         Section 18.  Section 627.7065, Florida Statutes, is

14  created to read:

15         627.7065  Database of information relating to

16  sinkholes; the Department of Financial Services and the

17  Department of Environmental Protection.--

18         (1)  The Legislature finds that there has been a

19  dramatic increase in the number of sinkholes and insurance

20  claims for sinkhole damage in the state during the past 10

21  years. Accordingly, the Legislature recognizes the need to

22  track current and past sinkhole activity and to make the

23  information available for prevention and remediation

24  activities. The Legislature further finds that the Florida

25  Geological Survey of the Department of Environmental

26  Protection has created a partial database of some sinkholes

27  identified in Florida, although the database is not reflective

28  of all sinkholes or insurance claims for sinkhole damage. The

29  Legislature determines that creating a complete electronic

30  database of sinkhole activity serves an important purpose in

31  


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    CS for SB 1486                                 First Engrossed



 1  protecting the public and in studying property claims

 2  activities in the insurance industry.

 3         (2)  The Department of Financial Services, including

 4  the employee of the Division of Consumer Services designated

 5  as the primary contact for consumers on issues relating to

 6  sinkholes, and the Office of the Insurance Consumer Advocate

 7  shall consult with the Florida Geological Survey and the

 8  Department of Environmental Protection to implement a

 9  statewide automated database of sinkholes and related activity

10  identified in the state.

11         (3)  Representatives of the Department of Financial

12  Services, with the agreement of the Department of

13  Environmental Protection, shall determine the form and content

14  of the database. The content may include standards for

15  reporting and investigating sinkholes for inclusion in the

16  database and requirements for insurers to report to the

17  departments the receipt of claims involving sinkhole loss and

18  other similar activities. The Department of Financial Services

19  may require insurers to report present and past data of

20  sinkhole claims. The database also may include information of

21  damage due to ground settling and other subsidence activity.

22         (4)  The Department of Financial Services may manage

23  the database or may contract for its management and

24  maintenance. The Department of Environmental Protection shall

25  investigate reports of sinkhole activity and include its

26  findings and investigations in the database.

27         (5)  The Department of Environmental Protection, in

28  consultation with the Department of Financial Services, shall

29  present a report of activities relating to the sinkhole

30  database, including recommendations regarding the database and

31  similar matters, to the Governor, the Speaker of the House of


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    CS for SB 1486                                 First Engrossed



 1  Representatives, the President of the Senate, and the Chief

 2  Financial Officer by December 31, 2005. The report may

 3  consider the need for the Legislature to create an entity to

 4  study the increase in sinkhole activity in the state and other

 5  similar issues relating to sinkhole damage, including

 6  recommendations and costs for staffing the entity. The report

 7  may include other information, as appropriate.

 8         (6)  The Department of Financial Services, in

 9  consultation with the Department of Environmental Protection,

10  may adopt rules to implement this section.

11         Section 19.  Section 627.707, Florida Statutes, is

12  amended to read:

13         627.707  Minimum Standards for investigation of

14  sinkhole claims by insurers; nonrenewals.--

15         (1)  Upon receipt of a claim for a sinkhole loss, an

16  insurer must meet the following minimum standards in

17  investigating a claim:

18         (1)(a)  Upon receipt of a claim for a sinkhole loss,

19  The insurer must make an inspection of the insured's premises

20  to determine if there has been physical damage to the

21  structure which may might be the result of sinkhole activity.

22         (b)  If, upon the investigation pursuant to paragraph

23  (a), the insurer discovers damage to a structure which is

24  consistent with sinkhole activity or if the structure is

25  located in close proximity to a structure in which sinkhole

26  damage has been verified, then prior to denying a claim, the

27  insurer must obtain a written certification from an individual

28  qualified to determine the existence of sinkhole activity,

29  stating that the cause of the claim is not sinkhole activity,

30  and that the analysis conducted was of sufficient scope to

31  eliminate sinkhole activity as the cause of damage within a


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    CS for SB 1486                                 First Engrossed



 1  reasonable professional probability. The written certification

 2  must also specify the professional discipline and professional

 3  licensure or registration under which the analysis was

 4  conducted.

 5         (2)  Following the insurer's initial inspection, the

 6  insurer shall engage an engineer or a professional geologist

 7  to conduct testing as provided in s. 627.7072 to determine the

 8  cause of the loss within a reasonable professional probability

 9  and issue a report as provided in s. 627.7073, if:

10         (a)  The insurer is unable to identify a valid cause of

11  the damage or discovers damage to the structure which is

12  consistent with sinkhole loss; or

13         (b)  The policyholder demands testing in accordance

14  with this section or s. 627.7072.

15         (3)  Following the initial inspection of the insured

16  premises, the insurer shall provide written notice to the

17  policyholder disclosing the following information:

18         (a)  What the insurer has determined to be the cause of

19  damage, if the insurer has made such a determination.

20         (b)  A statement of the circumstances under which the

21  insurer is required to engage an engineer or a professional

22  geologist to verify or eliminate sinkhole loss and to engage

23  an engineer to make recommendations regarding land and

24  building stabilization and foundation repair.

25         (c)  A statement regarding the right of the

26  policyholder to request testing by an engineer or a

27  professional geologist and the circumstances under which the

28  policyholder may demand certain testing.

29         (4)  If the insurer determines that there is no

30  sinkhole loss, the insurer may deny the claim. If the insurer

31  denies the claim, without performing testing under s.


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    CS for SB 1486                                 First Engrossed



 1  627.7072, the policyholder may demand testing by the insurer

 2  under s. 627.7072. The policyholder's demand for testing must

 3  be communicated to the insurer in writing after the

 4  policyholder's receipt of the insurer's denial of the claim.

 5         (5)(a)  Subject to paragraph (b), if a sinkhole loss is

 6  verified, the insurer shall pay to stabilize the land and

 7  building and repair the foundation in accordance with the

 8  recommendations of the engineer as provided under s. 627.7073,

 9  and in consultation with the policyholder, subject to the

10  coverage and terms of the policy. The insurer shall pay for

11  other repairs to the structure and contents in accordance with

12  the terms of the policy.

13         (b)  The insurer may limit its payment to the actual

14  cash value of the sinkhole loss, not including underpinning or

15  grouting or any other repair technique performed below the

16  existing foundation of the building, until the policyholder

17  enters into a contract for the performance of building

18  stabilization or foundation repairs. After the policyholder

19  enters into the contract, the insurer shall pay the amounts

20  necessary to begin and perform such repairs as the work is

21  performed and the expenses are incurred. The insurer may not

22  require the policyholder to advance payment for such repairs.

23  If repair has begun and the engineer selected or approved by

24  the insurer determines that the repair cannot be completed

25  within the policy limits, the insurer must either complete the

26  engineer's recommended repair or tender the policy limits to

27  the policyholder without a reduction for the repair expenses

28  incurred.

29         (6)  Except as provided in subsection (7), the fees and

30  costs of the engineer or the professional geologist shall be

31  paid by the insurer.


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    CS for SB 1486                                 First Engrossed



 1         (7)(c)  If the insurer obtains, pursuant to s. 627.7073

 2  paragraph (b), written certification that there is no sinkhole

 3  loss or that the cause of the damage claim was not sinkhole

 4  activity, and if the policyholder has submitted the sinkhole

 5  claim without good faith grounds for submitting such claim,

 6  the policyholder shall reimburse the insurer for 50 percent of

 7  the actual costs cost of the analyses and services provided

 8  analysis under ss. 627.7072 and 627.7073 paragraph (b);

 9  however, a policyholder is not required to reimburse an

10  insurer more than $2,500 with respect to any claim. A

11  policyholder is required to pay reimbursement under this

12  subsection paragraph only if the insurer, prior to ordering

13  the analysis under s. 627.7072 paragraph (b), informs the

14  policyholder in writing of the policyholder's potential

15  liability for reimbursement and gives the policyholder the

16  opportunity to withdraw the claim.

17         (8)(2)  No insurer shall nonrenew any policy of

18  property insurance on the basis of filing of claims for

19  partial loss caused by sinkhole damage or clay shrinkage as

20  long as the total of such payments does not exceed the current

21  policy limits of coverage for property damage, and provided

22  the insured has repaired the structure in accordance with the

23  engineering recommendations upon which any payment or policy

24  proceeds were based.

25         (9)  The insurer may engage a structural engineer to

26  make recommendations as to the repair of the structure.

27         Section 20.  Section 627.7072, Florida Statutes, is

28  created to read:

29         627.7072  Testing standards for sinkholes.--

30         (1)  The engineer and professional geologist shall

31  perform such tests as sufficient, in their professional


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    CS for SB 1486                                 First Engrossed



 1  opinion, to determine the presence or absence of sinkhole loss

 2  or other cause of damage within reasonable professional

 3  probability and for the engineer to make recommendations

 4  regarding necessary building stabilization, and foundation

 5  repair.

 6         (2)  Testing by a professional geologist shall be

 7  conducted in compliance with the Florida Geological Survey

 8  Special Publication No. 57 (2005).

 9         Section 21.  Section 627.7073, Florida Statutes, is

10  created to read:

11         627.7073  Sinkhole reports.--

12         (1)  Upon completion of testing as provided in s.

13  627.7072, the engineer and professional geologist shall issue

14  a report and certification to the insurer and the policyholder

15  as provided in this section.

16         (a)  Sinkhole loss is verified if, based upon tests

17  performed in accordance with s. 627.7072, an engineer and a

18  professional geologist issue a written report and

19  certification stating:

20         1.  That the cause of the actual physical and

21  structural damage is sinkhole activity within a reasonable

22  professional probability.

23         2.  That the analyses conducted were of sufficient

24  scope to identify sinkhole activity as the cause of damage

25  within a reasonable professional probability.

26         3.  A description of the tests performed.

27         4.  A recommendation by the engineer of methods for

28  stabilizing the land and building and for making repairs to

29  the foundation.

30         (b)  If sinkhole activity is eliminated as the cause of

31  damage to the structure, the engineer and professional


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    CS for SB 1486                                 First Engrossed



 1  geologist shall issue a written report and certification to

 2  the policyholder and the insurer stating:

 3         1.  That the cause of the damage is not sinkhole

 4  activity within a reasonable professional probability.

 5         2.  That the analyses and tests conducted were of

 6  sufficient scope to eliminate sinkhole activity as the cause

 7  of damage within a reasonable professional probability.

 8         3.  A statement of the cause of the damage within a

 9  reasonable professional probability.

10         4.  A description of the tests performed.

11         (c)  The respective findings, opinions, and

12  recommendations of the engineer and professional geologist as

13  to the verification or elimination of a sinkhole loss and the

14  findings, opinions, and recommendations of the engineer as to

15  land and building stabilization and foundation repair shall be

16  presumed correct.

17         (2)  Any insurer that has paid a claim for a sinkhole

18  loss shall file a copy of the report and certification,

19  prepared pursuant to subsection (1), with the county property

20  appraiser who shall record the report and certification with

21  the parcel number. The insurer shall bear the cost of filing

22  and recording the report and certification. There shall be no

23  cause of action or liability against an insurer for compliance

24  with this section. The seller of real property upon which a

25  sinkhole claim has been made shall disclose to the buyer of

26  such property that a claim has been paid and whether or not

27  the full amount of the proceeds were used to repair the

28  sinkhole damage.

29         Section 22.  Effective October 1, 2005, and applicable

30  to policies issued or renewed on or after that date, section

31  627.711, Florida Statutes, is created to read:


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    CS for SB 1486                                 First Engrossed



 1         627.711  Notice of premium discounts for hurricane loss

 2  mitigation.--Using a form prescribed by the Office of

 3  Insurance Regulation, the insurer shall clearly notify the

 4  applicant or policyholder of any personal lines residential

 5  property insurance policy, at the time of the issuance of the

 6  policy and at each renewal, of the availability and the range

 7  of each premium discount, credit, other rate differential, or

 8  reduction in deductibles for properties on which fixtures or

 9  construction techniques demonstrated to reduce the amount of

10  loss in a windstorm can or have been installed or implemented.

11  The prescribed form shall describe generally what actions the

12  policyholders may be able to take to reduce their windstorm

13  premium. The prescribed form and a list of such ranges

14  approved by the office for each insurer licensed in the state

15  and providing such discounts, credits, other rate

16  differentials, or reductions in deductibles for properties

17  described in this subsection shall be available for electronic

18  viewing and download from the Department of Financial

19  Services' or the Office of Insurance Regulation's Internet

20  website. The Financial Services Commission may adopt rules to

21  implement this subsection.

22         Section 23.  (1)(a)  Upon an insurer's receiving a

23  communication with respect to a claim, the insurer shall,

24  within 14 calendar days, review and acknowledge receipt of

25  such communication unless payment is made within that period

26  of time or unless the failure to acknowledge is caused by

27  factors beyond the control of the insurer which reasonably

28  prevent such acknowledgement. If the acknowledgement is not in

29  writing, a notification indicating acknowledgement shall be

30  made in the insurer's claim file and dated. A communication

31  


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    CS for SB 1486                                 First Engrossed



 1  made to or by an agent of an insurer with respect to a claim

 2  shall constitute communication to or by the insurer.

 3         (b)  As used in this subsection, the term "agent" means

 4  any person to whom an insurer has granted authority or

 5  responsibility to receive or make such communications with

 6  respect to claims on behalf of the insurer.

 7         (c)  This subsection shall not apply to claimants

 8  represented by counsel beyond those communications necessary

 9  to provide forms and instructions.

10         (2)  Such acknowledgement shall be responsive to the

11  communication. If the communication constitutes a notification

12  of a claim, unless the acknowledgement reasonably advises the

13  claimant that the claim appears not to be covered by the

14  insurer, the acknowledgement shall provide necessary claim

15  forms, and instructions, including an appropriate telephone

16  number.

17         (3)  Unless otherwise provided by the policy of

18  insurance or by law, within 10 working days after an insurer

19  receives proof of loss statements the insurer shall begin such

20  investigation as is reasonably necessary unless the failure to

21  begin such investigation is caused by factors beyond the

22  control of the insurer which reasonably prevent the

23  commencement of such investigation.

24         (4)  For purposes of this section, the term "insurer"

25  means any residential property insurer.

26         Section 24.  Task Force on Long-Term Solutions for

27  Florida's Hurricane Insurance Market.--

28         (1)  TASK FORCE CREATED.--There is created the Task

29  Force on Long-Term Solutions for Florida's Hurricane Insurance

30  Market.

31  


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    CS for SB 1486                                 First Engrossed



 1         (2)  ADMINISTRATION.--The task force shall be

 2  administratively housed within the Office of the Chief

 3  Financial Officer, but shall operate independently of any

 4  state officer or agency. The Office of the Chief Financial

 5  Officer shall provide such administrative support as the task

 6  force deems necessary to accomplish its mission and shall

 7  provide necessary funding for the task force within its

 8  existing resources. The Executive Office of the Governor, the

 9  Department of Financial Services, and the Office of Insurance

10  Regulation shall provide substantive staff support for the

11  task force.

12         (3)  MEMBERSHIP.--The members of the task force shall

13  be appointed as follows:

14         (a)  The Governor shall appoint three members who have

15  expertise in financial matters, one of whom is a

16  representative of the mortgage lending industry, one of whom

17  is a representative of the real estate or construction

18  industry, and one of whom is a representative of insurance

19  consumers.

20         (b)  The Chief Financial Officer shall appoint three

21  members who have expertise in financial matters, one of whom

22  is a representative of a national property insurer or of a

23  Florida-only subsidiary of a national property insurer, one of

24  whom is a representative of a domestic property insurer in

25  this state, and one of whom is a representative of insurance

26  agents.

27         (c)  The President of the Senate shall appoint three

28  members.

29         (d)  The Speaker of the House of Representatives shall

30  appoint three members.

31  


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    CS for SB 1486                                 First Engrossed



 1         (e)  The Commissioner of Insurance Regulation shall

 2  serve as an ex officio voting member of the task force. 

 3  

 4  Members of the task force shall serve without compensation but

 5  are entitled to receive reimbursement for per diem and travel

 6  expenses as provided in section 112.061, Florida Statutes.

 7         (4)  PURPOSE AND INTENT.--The Legislature recognizes

 8  that the continued availability of hurricane insurance

 9  coverage for property owners in this state is essential to the

10  state's economic survival. The Legislature further recognizes

11  that legislative efforts to resolve problems in the hurricane

12  insurance market in 2005 may not be sufficient to address this

13  state's long-term needs and that further action may be

14  necessary in subsequent legislative sessions. The purpose of

15  the task force is to make recommendations to the legislative

16  and executive branches of this state's government relating to

17  the creation and maintenance of insurance capacity in the

18  private sector and public sector which is sufficient to ensure

19  that all property owners in this state are able to obtain

20  appropriate insurance coverage for hurricane losses, as

21  further described in this section.

22         (5)  SPECIFIC TASKS.--The task force shall conduct such

23  research and hearings as it deems necessary to achieve the

24  purposes specified in subsection (4) and shall develop

25  information on relevant issues, including, but not limited to,

26  the following issues:

27         (a)  Whether this state currently has sufficient

28  hurricane insurance capacity to ensure the continuation of a

29  healthy, competitive marketplace, taking into consideration

30  both private-sector resources and public-sector resources.

31  


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    CS for SB 1486                                 First Engrossed



 1         (b)  Identifying the future demands on this state's

 2  hurricane insurance capacity, taking into account population

 3  growth, coastal growth, and anticipated future hurricane

 4  activity.

 5         (c)  Whether the Florida Hurricane Catastrophe Fund

 6  fulfilled its purpose of creating additional insurance

 7  capacity sufficient to ameliorate the current dangers to the

 8  state's economy and to the public health, safety, and welfare

 9  in its response to the 2004 hurricane season.

10         (d)  The extent to which the growth in Citizens

11  Property Insurance Corporation is attributable to insufficient

12  insurance capacity.

13         (e)  The extent to which the growth trends of Citizens

14  Property Insurance Corporation create long-term problems for

15  property owners, buyers, and sellers in this state and for

16  other persons and businesses that depend on a viable market.

17         (f)  The operation and role of Citizens Property

18  Insurance Corporation, including:

19         1.  How to ensure that the corporation operates as an

20  insurer of last resort which does not compete with insurers in

21  the voluntary market, but which charges rates that are not

22  excessive, inadequate, or unfairly discriminatory;

23         2.  Whether the bonuses paid by the corporation to

24  carriers taking policies out of the corporation provide a

25  cost-effective means of reducing the potential liability of

26  the corporation;

27         3.  Whether the "Consumer Choice" law should be

28  repealed or amended to ensure that the corporation serves as

29  the insurer of last resort;

30         4.  Whether coverage amounts should be limited;

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    CS for SB 1486                                 First Engrossed



 1         5.  Whether the corporation has hired an adequate level

 2  of permanent claims and adjusting staff in addition to

 3  outsourcing its claims-adjusting functions to independent

 4  adjusting firms;

 5         6.  The effect of reducing or expanding the areas that

 6  are eligible for coverage in the high-risk, wind-only account;

 7         7.  Whether the corporation should purchase reinsurance

 8  or take other actions that reduce the potential for debt

 9  financing and deficit assessments; and

10         8.  An evaluation of the infrastructure and

11  administration of the corporation and how to improve customer

12  service, claims handling, and communication and the exchange

13  of information with agents of policyholders of the

14  corporation.

15         (6)  REPORT AND RECOMMENDATIONS.--By April 1, 2006, the

16  task force shall provide a report containing findings relating

17  to the tasks identified in subsection (5) and recommendations

18  consistent with the purposes of this section and also

19  consistent with such findings. The task force shall submit the

20  report to the Governor, the Chief Financial Officer, the

21  President of the Senate, and the Speaker of the House of

22  Representatives. The task force may also submit such interim

23  reports as it deems appropriate.

24         (7)  ADDITIONAL ACTIVITIES.--The task force shall

25  monitor the implementation of hurricane insurance-related

26  legislation enacted during the 2005 Regular Session and shall

27  make such additional recommendations as it deems appropriate

28  for further legislative action during the 2004-2006

29  legislative biennium.

30         (8)  EXPIRATION.--The task force shall expire at the

31  end of the 2004-2006 legislative biennium. 


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    CS for SB 1486                                 First Engrossed



 1         Section 25.  The Office of Insurance Regulation shall,

 2  by January 1, 2006, submit a report to the President of the

 3  Senate, the Speaker of the House of Representatives, the

 4  minority party leaders of the Senate and the House of

 5  Representatives, and the chairs of the standing committees of

 6  the Senate and the House of Representatives having

 7  jurisdiction over matters relating to property and casualty

 8  insurance. The report shall include findings and

 9  recommendations on requiring residential property insurers to

10  provide law and ordinance coverage for residential property

11  insurance policies, the increase or decrease in insurance

12  costs associated with requiring such coverage, and such other

13  related information as the Office of Insurance Regulation

14  determines is appropriate for the Legislature to consider.

15         Section 26.  Notwithstanding that revenues of Citizens

16  Property Insurance Corporation are not state revenues, the

17  Auditor General shall perform an operational audit, as defined

18  in section 11.45(1), Florida Statutes, of the Citizens

19  Property Insurance Corporation created under section

20  627.351(6), Florida Statutes. The scope of the audit shall

21  also include:

22         (1)  An analysis of the corporation's infrastructure,

23  customer service, claims handling, accessibility of

24  policyholder information to the agent of record, take-out

25  programs, take-out bonuses, and financing arrangements.

26         (2)  An evaluation of costs associated with the

27  administration and servicing of the policies issued by the

28  corporation to determine alternatives by which costs can be

29  reduced, customer service improved, and claims handling

30  improved.

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    CS for SB 1486                                 First Engrossed



 1  The audit shall contain policy alternatives for the

 2  Legislature to consider. The Auditor General shall submit a

 3  report to the Governor, the President of the Senate, and the

 4  Speaker of the House of Representatives no later than February

 5  1, 2006.

 6         Section 27.  The board of governors of the Citizens

 7  Property Insurance Corporation created under section

 8  627.351(6), Florida Statutes, shall, by February 1, 2006,

 9  submit a report to the President of the Senate, the Speaker of

10  the House of Representatives, the minority party leaders of

11  the Senate and the House of Representatives, and the chairs of

12  the standing committees of the Senate and the House of

13  Representatives having jurisdiction over matters relating to

14  property and casualty insurance. The report shall include the

15  board's findings and recommendations on the following issues:

16         (1)  The number of policies and the aggregate premium

17  of the Citizens Property Insurance Corporation, before and

18  after enactment of this act, and projections for future policy

19  and premium growth.

20         (2)  Increases or decreases in availability of

21  residential property coverage in the voluntary market and the

22  effectiveness of this act in improving the availability of

23  residential property coverage in the voluntary market in the

24  state.

25         (3)  The board's efforts to depopulate the corporation

26  and the willingness of insurers in the voluntary market to

27  avail themselves of depopulation incentives.

28         (4)  Further actions that could be taken by the

29  Legislature to improve availability of residential property

30  coverage in the voluntary and residual markets.

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    CS for SB 1486                                 First Engrossed



 1         (5)  Actions that the board has taken to restructure

 2  the corporation and recommendations for legislative action to

 3  restructure the corporation, including, but not limited to,

 4  actions relating to claims handling and customer service.

 5         (6)  Projected surpluses or deficits and possible means

 6  of providing funding to ensure the continued solvency of the

 7  corporation.

 8         (7)  The corporation's efforts to procure catastrophe

 9  reinsurance to cover its projected 100-year probable maximum

10  loss with specification as to what best efforts were made by

11  the corporation to procure such reinsurance.

12         (8)  Such other issues as the board determines are

13  worthy of the Legislature's consideration.

14         Section 28.  For the 2005-2006 fiscal year, there is

15  appropriated $350,000 in recurring funds from the Insurance

16  Regulatory Trust Fund and four positions are authorized to the

17  Office of the Consumer Advocate within the Department of

18  Financial Services for the purposes provided in section

19  627.0613, Florida Statutes.

20         Section 29.  The amendment to section 627.0628, Florida

21  Statutes, and the creation of section 627.06281, Florida

22  Statutes, as provided in this act shall take effect on the

23  same date that House Bill 1939, Senate Bill 1478, or similar

24  legislation takes effect, if such legislation is adopted in

25  the same legislative session or an extension thereof and

26  becomes a law.

27         Section 30.  Except as otherwise expressly provided in

28  this act, this act shall take effect upon becoming a law.

29  

30  

31  


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