January 25, 2021
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       Florida Senate - 2010                      CS for CS for SB 2044
       
       
       
       By the Committees on General Government Appropriations; and
       Banking and Insurance; and Senator Richter
       
       
       
       601-04884-10                                          20102044c2
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         215.555, F.S.; delaying the repeal of a provision
    4         exempting medical malpractice insurance premiums from
    5         emergency assessments to the Hurricane Catastrophe
    6         Fund; delaying the date on and after which medical
    7         malpractice insurance premiums become subject to
    8         emergency assessments; amending s. 624.408, F.S.;
    9         revising the minimum surplus as to policyholders which
   10         must be maintained by certain insurers; authorizing
   11         the Office of Insurance Regulation to reduce the
   12         surplus requirement under specified circumstances;
   13         amending s. 624.4085, F.S.; defining the term “surplus
   14         action level”; expanding the list of items that must
   15         be included in an insurer’s risk-based capital plan;
   16         specifying actions constituting a surplus action level
   17         event; requiring that an insurer submit to the office
   18         a risk-based capital plan upon the occurrence of such
   19         event; providing requirements for such plan;
   20         preserving the existing authority of the office;
   21         amending s. 624.4095, F.S.; excluding certain premiums
   22         for federal multiple-peril crop insurance from
   23         calculations for an insurer’s gross writing ratio;
   24         requiring insurers to disclose the gross written
   25         premiums for federal multiple-peril crop insurance in
   26         a financial statement; amending s. 626.7452, F.S.;
   27         removing an exception relating to the examination of
   28         managing general agents; amending s. 626.9744, F.S.;
   29         requiring insurers to use retail cost quotations or
   30         estimates based on current market prices in
   31         determining repair or replacement cost estimates;
   32         amending s. 627.0613, F.S.; requiring the office of
   33         the consumer advocate to objectively grade insurers
   34         annually based on the number of valid consumer
   35         complaints and other measurable and objective factors;
   36         defining the term “valid consumer complaint”; amending
   37         s. 627.062, F.S.; requiring that the office issue an
   38         approval rather than a notice of intent to approve
   39         following its approval of a file and use filing;
   40         prohibiting the Office of Insurance Regulation from,
   41         directly or indirectly, prohibiting an insurer from
   42         paying acquisition costs based on the full amount of
   43         the premium; prohibiting the Office of Insurance
   44         Regulation from, directly or indirectly, impeding the
   45         right of an insurer to acquire policyholders,
   46         advertise or appoint agents, or regulate agent
   47         commissions; authorizing an insurer to make a rate
   48         filing limited to changes in the cost of reinsurance,
   49         the cost of financing products used as a replacement
   50         for reinsurance, or changes in an inflation trend
   51         factor published annually by the Office of Insurance
   52         Regulation; providing that an insurer may use this
   53         provision only if the increase from such filing and
   54         any other rate filing does not exceed 10 percent for
   55         any policyholder in a policy year; deleting provisions
   56         relating to a rate filing for financing products
   57         relating to the Temporary Increase in Coverage Limits;
   58         revising the information that must be included in a
   59         rate filing relating to certain reinsurance or
   60         financing products; deleting a provision that
   61         prohibited an insurer from making certain rate filings
   62         within a certain period of time after a rate increase;
   63         deleting a provision prohibiting an insurer from
   64         filing for a rate increase within 6 months after it
   65         makes certain rate filings; specifying the information
   66         that an insurer must include in a rate filing based on
   67         the change in an inflation trend factor published by
   68         the Office of Insurance Regulation; requiring that the
   69         office annually publish one or more inflation trend
   70         factors; exempting the inflation trend factors from
   71         rulemaking; providing that an insurer is not required
   72         to adopt an inflation trend factor; requiring the
   73         Office of Insurance Regulation to propose a plan for
   74         developing a website, contingent upon an
   75         appropriation, which provides consumers with
   76         information necessary to make an informed decision
   77         when purchasing homeowners’ insurance; requiring that
   78         the Financial Services Commission review the proposed
   79         plan to implement the website; specifying matters that
   80         the Office of Insurance Regulation must consider in
   81         developing the website; deleting obsolete provisions
   82         relating to legislation enacted during the 2003
   83         Special Session D of the Legislature; amending s.
   84         627.0629, F.S.; providing legislative intent that
   85         insurers provide consumers with accurate pricing
   86         signals for alterations in order to minimize losses,
   87         but that mitigation discounts not result in a loss of
   88         income for the insurer; requiring rate filings for
   89         residential property insurance to include actuarially
   90         reasonable debits that provide proper pricing;
   91         deleting provisions that require the office to develop
   92         certain rate differentials for hurricane mitigation
   93         measures; providing for an increase in base rates if
   94         mitigation discounts exceed the aggregate reduction in
   95         expected losses; requiring the Office of Insurance
   96         Regulation to reevaluate discounts, debits, credits,
   97         and other rate differentials by a certain date;
   98         requiring the Office of Insurance Regulation, in
   99         consultation with the Department of Financial Services
  100         and the Department of Community Affairs, to develop a
  101         method for insurers to establish debits for certain
  102         hurricane mitigation measures by a certain date;
  103         requiring the Financial Services Commission to adopt
  104         rules relating to such debits by a certain date;
  105         deleting a provision that prohibits an insurer from
  106         including an expense or profit load in the cost of
  107         reinsurance to replace the Temporary Increase in
  108         Coverage Limits; amending s. 627.351, F.S.; renaming
  109         the “high-risk account” as the “coastal account”;
  110         providing that members of the Citizens Property
  111         Insurance Corporation Board of Governors are not
  112         prohibited from practicing in a certain profession if
  113         not prohibited by law or ordinance; prohibiting board
  114         members from voting on certain measures; changing the
  115         date on which the boundaries of high-risk areas
  116         eligible for certain wind-only coverages will be
  117         reduced if certain circumstances exist; providing a
  118         directive to the Division of Statutory Revision;
  119         amending s. 627.4133, F.S.; authorizing an insurer to
  120         cancel policies after 45 days’ notice if the Office of
  121         Insurance Regulation determines that the cancellation
  122         of policies is necessary to protect the interests of
  123         the public or policyholders; authorizing the Office of
  124         Insurance Regulation to place an insurer under
  125         administrative supervision or appoint a receiver upon
  126         the consent of the insurer under certain
  127         circumstances; creating s. 627.41341, F.S.; providing
  128         definitions; requiring the delivery of a “Notice of
  129         Change in Policy Terms” under certain circumstances;
  130         specifying requirements for such notice; specifying
  131         actions constituting proof of notice; authorizing
  132         policy renewals to contain a change in policy terms;
  133         providing that receipt of payment by an insurer is
  134         deemed acceptance of new policy terms by an insured;
  135         providing that the original policy remains in effect
  136         until the occurrence of specified events if an insurer
  137         fails to provide notice; providing intent; amending s.
  138         627.7011, F.S.; requiring that an insurer pay the
  139         actual cash value of an insured loss, less any
  140         applicable deductible, under certain circumstances;
  141         requiring that a policyholder enter into a contract
  142         for the performance of building and structural
  143         repairs; requiring that an insurer pay certain
  144         remaining amounts; prohibiting an insurer, contractor,
  145         or subcontractor from requiring a policyholder to
  146         advance payment for such repairs or expenses;
  147         providing exceptions; authorizing an insurer to waive
  148         a certain requirement for a contract; authorizing an
  149         insurer to limit its initial payment for certain
  150         losses; authorizing an insurer to require an insured
  151         to provide the receipts from the purchase of certain
  152         property; requiring that an insurer use such receipts
  153         for specified purposes; requiring that an insurer pay
  154         the replacement cost for contents coverage without
  155         reservation or holdback of any depreciation in value
  156         under certain circumstances; prohibiting an insurer
  157         from requiring that a policyholder advance payment for
  158         the replaced property; amending s. 627.7015, F.S.;
  159         requiring the Department of Financial Services to
  160         prepare a statement or information by rule which must
  161         be included in a notice by an insurer informing
  162         claimants of the right to participate in a mediation
  163         program; specifying documentation that an insurer and
  164         insured must provide to a mediator in a dispute over
  165         an estimate to repair or replace property; requiring
  166         the Department of Financial Services to adopt rules
  167         specifying the type of documentation that must be
  168         submitted during a mediation; defining the term “claim
  169         dispute” as it relates to disputes between an insurer
  170         and insured; repealing s. 627.7065, F.S., relating to
  171         the department’s database of information relating to
  172         sinkholes; amending s. 627.707, F.S.; revising
  173         standards for investigation of sinkhole claims by
  174         insurers; specifying requirements for contracts for
  175         repairs to prevent additional damage to buildings or
  176         structures; providing for applicability; amending s.
  177         627.7072, F.S.; specifying requirements for tests
  178         performed by professional engineers and professional
  179         geologists for certain purposes; providing for
  180         applicability; amending s. 627.7073, F.S.; revising
  181         requirements for sinkhole reports; providing for
  182         applicability; amending s. 627.7074, F.S.; revising
  183         requirements and procedures for alternative dispute
  184         resolution of sinkhole insurance claims; defining the
  185         term “substantially related matter”; providing
  186         criteria and procedures for disqualification of
  187         neutral evaluators; providing requirements and
  188         procedures for neutral evaluators to enlist assistance
  189         from other professionals under certain circumstances;
  190         providing for applicability; amending s. 627.711,
  191         F.S.; eliminating the requirement that a uniform
  192         mitigation verification form be certified by the
  193         Department of Financial Services; eliminating
  194         provisions authorizing hurricane mitigation inspectors
  195         certified by the My Safe Florida Home Program to sign
  196         a valid uniform mitigation verification form;
  197         requiring a person to personally perform an inspection
  198         in order to sign a mitigation verification form;
  199         authorizing an insurer to accept a form from a person
  200         possessing qualifications and experience acceptable to
  201         the insurer; requiring a person to personally perform
  202         an inspection in order to sign a mitigation
  203         verification form; defining the term “misconduct” for
  204         purposes of performing an inspection and completing
  205         the mitigation verification form; providing for
  206         sanctions to be imposed against a person who commits
  207         misconduct in performing inspections or completing the
  208         mitigation verification form; requiring that evidence
  209         of fraud in the completion of the mitigation
  210         verification form be reported to the Division of
  211         Insurance Fraud; requiring the division, if it finds
  212         that probable cause of misconduct exists, to send a
  213         copy of its report to the agency responsible for the
  214         licensure of the inspector who signed the report;
  215         providing that insurers need not accept a mitigation
  216         verification form that is signed by a person against
  217         whom probable cause of misconduct was found; creating
  218         s. 628.252, F.S.; requiring that every domestic
  219         property insurer notify the office of its intention to
  220         enter into certain agreements, contracts, and
  221         arrangements; prohibiting a domestic property insurer
  222         from entering into such agreements, contracts, or
  223         arrangements unless specified criteria are met;
  224         preserving the existing authority of the office;
  225         providing an appropriation to the Office of Insurance
  226         Regulation and authorizing an additional position;
  227         providing effective dates.
  228  
  229  Be It Enacted by the Legislature of the State of Florida:
  230  
  231         Section 1. Paragraph (b) of subsection (6) of section
  232  215.555, Florida Statutes, is amended to read:
  233         215.555 Florida Hurricane Catastrophe Fund.—
  234         (6) REVENUE BONDS.—
  235         (b) Emergency assessments.—
  236         1. If the board determines that the amount of revenue
  237  produced under subsection (5) is insufficient to fund the
  238  obligations, costs, and expenses of the fund and the
  239  corporation, including repayment of revenue bonds and that
  240  portion of the debt service coverage not met by reimbursement
  241  premiums, the board shall direct the Office of Insurance
  242  Regulation to levy, by order, an emergency assessment on direct
  243  premiums for all property and casualty lines of business in this
  244  state, including property and casualty business of surplus lines
  245  insurers regulated under part VIII of chapter 626, but not
  246  including any workers’ compensation premiums or medical
  247  malpractice premiums. As used in this subsection, the term
  248  “property and casualty business” includes all lines of business
  249  identified on Form 2, Exhibit of Premiums and Losses, in the
  250  annual statement required of authorized insurers by s. 624.424
  251  and any rule adopted under this section, except for those lines
  252  identified as accident and health insurance and except for
  253  policies written under the National Flood Insurance Program. The
  254  assessment shall be specified as a percentage of direct written
  255  premium and is subject to annual adjustments by the board in
  256  order to meet debt obligations. The same percentage shall apply
  257  to all policies in lines of business subject to the assessment
  258  issued or renewed during the 12-month period beginning on the
  259  effective date of the assessment.
  260         2. A premium is not subject to an annual assessment under
  261  this paragraph in excess of 6 percent of premium with respect to
  262  obligations arising out of losses attributable to any one
  263  contract year, and a premium is not subject to an aggregate
  264  annual assessment under this paragraph in excess of 10 percent
  265  of premium. An annual assessment under this paragraph shall
  266  continue as long as the revenue bonds issued with respect to
  267  which the assessment was imposed are outstanding, including any
  268  bonds the proceeds of which were used to refund the revenue
  269  bonds, unless adequate provision has been made for the payment
  270  of the bonds under the documents authorizing issuance of the
  271  bonds.
  272         3. Emergency assessments shall be collected from
  273  policyholders. Emergency assessments shall be remitted by
  274  insurers as a percentage of direct written premium for the
  275  preceding calendar quarter as specified in the order from the
  276  Office of Insurance Regulation. The office shall verify the
  277  accurate and timely collection and remittance of emergency
  278  assessments and shall report the information to the board in a
  279  form and at a time specified by the board. Each insurer
  280  collecting assessments shall provide the information with
  281  respect to premiums and collections as may be required by the
  282  office to enable the office to monitor and verify compliance
  283  with this paragraph.
  284         4. With respect to assessments of surplus lines premiums,
  285  each surplus lines agent shall collect the assessment at the
  286  same time as the agent collects the surplus lines tax required
  287  by s. 626.932, and the surplus lines agent shall remit the
  288  assessment to the Florida Surplus Lines Service Office created
  289  by s. 626.921 at the same time as the agent remits the surplus
  290  lines tax to the Florida Surplus Lines Service Office. The
  291  emergency assessment on each insured procuring coverage and
  292  filing under s. 626.938 shall be remitted by the insured to the
  293  Florida Surplus Lines Service Office at the time the insured
  294  pays the surplus lines tax to the Florida Surplus Lines Service
  295  Office. The Florida Surplus Lines Service Office shall remit the
  296  collected assessments to the fund or corporation as provided in
  297  the order levied by the Office of Insurance Regulation. The
  298  Florida Surplus Lines Service Office shall verify the proper
  299  application of such emergency assessments and shall assist the
  300  board in ensuring the accurate and timely collection and
  301  remittance of assessments as required by the board. The Florida
  302  Surplus Lines Service Office shall annually calculate the
  303  aggregate written premium on property and casualty business,
  304  other than workers’ compensation and medical malpractice,
  305  procured through surplus lines agents and insureds procuring
  306  coverage and filing under s. 626.938 and shall report the
  307  information to the board in a form and at a time specified by
  308  the board.
  309         5. Any assessment authority not used for a particular
  310  contract year may be used for a subsequent contract year. If,
  311  for a subsequent contract year, the board determines that the
  312  amount of revenue produced under subsection (5) is insufficient
  313  to fund the obligations, costs, and expenses of the fund and the
  314  corporation, including repayment of revenue bonds and that
  315  portion of the debt service coverage not met by reimbursement
  316  premiums, the board shall direct the Office of Insurance
  317  Regulation to levy an emergency assessment up to an amount not
  318  exceeding the amount of unused assessment authority from a
  319  previous contract year or years, plus an additional 4 percent
  320  provided that the assessments in the aggregate do not exceed the
  321  limits specified in subparagraph 2.
  322         6. The assessments otherwise payable to the corporation
  323  under this paragraph shall be paid to the fund unless and until
  324  the Office of Insurance Regulation and the Florida Surplus Lines
  325  Service Office have received from the corporation and the fund a
  326  notice, which shall be conclusive and upon which they may rely
  327  without further inquiry, that the corporation has issued bonds
  328  and the fund has no agreements in effect with local governments
  329  under paragraph (c). On or after the date of the notice and
  330  until the date the corporation has no bonds outstanding, the
  331  fund shall have no right, title, or interest in or to the
  332  assessments, except as provided in the fund’s agreement with the
  333  corporation.
  334         7. Emergency assessments are not premium and are not
  335  subject to the premium tax, to the surplus lines tax, to any
  336  fees, or to any commissions. An insurer is liable for all
  337  assessments that it collects and must treat the failure of an
  338  insured to pay an assessment as a failure to pay the premium. An
  339  insurer is not liable for uncollectible assessments.
  340         8. When an insurer is required to return an unearned
  341  premium, it shall also return any collected assessment
  342  attributable to the unearned premium. A credit adjustment to the
  343  collected assessment may be made by the insurer with regard to
  344  future remittances that are payable to the fund or corporation,
  345  but the insurer is not entitled to a refund.
  346         9. When a surplus lines insured or an insured who has
  347  procured coverage and filed under s. 626.938 is entitled to the
  348  return of an unearned premium, the Florida Surplus Lines Service
  349  Office shall provide a credit or refund to the agent or such
  350  insured for the collected assessment attributable to the
  351  unearned premium prior to remitting the emergency assessment
  352  collected to the fund or corporation.
  353         10. The exemption of medical malpractice insurance premiums
  354  from emergency assessments under this paragraph is repealed May
  355  31, 2013 2010, and medical malpractice insurance premiums shall
  356  be subject to emergency assessments attributable to loss events
  357  occurring in the contract years commencing on June 1, 2013 2010.
  358         Section 2. Section 624.408, Florida Statutes, is amended to
  359  read:
  360         624.408 Surplus as to policyholders required; new and
  361  existing insurers.—
  362         (1)(a) To maintain a certificate of authority to transact
  363  any one kind or combinations of kinds of insurance, as defined
  364  in part V of this chapter, an insurer in this state shall at all
  365  times maintain surplus as to policyholders at least not less
  366  than the greater of:
  367         (a)1. Except as provided in paragraphs (e), (f), and (g)
  368  subparagraph 5. and paragraph (b), $1.5 million;
  369         (b)2. For life insurers, 4 percent of the insurer’s total
  370  liabilities;
  371         (c)3. For life and health insurers, 4 percent of the
  372  insurer’s total liabilities plus 6 percent of the insurer’s
  373  liabilities relative to health insurance; or
  374         (d)4. For all insurers other than mortgage guaranty
  375  insurers, life insurers, and life and health insurers, 10
  376  percent of the insurer’s total liabilities.
  377         (e)5. For property and casualty insurers, $4 million,
  378  except property and casualty insurers authorized to underwrite
  379  any line of residential property insurance.
  380         (f)(b) For a residential any property and casualty insurer
  381  not holding a certificate of authority before July 1, 2010 on
  382  December 1, 1993, $15 million. the
  383         (g) For a residential property insurer having a certificate
  384  of authority before July 1, 2010, $5 million until July 1, 2015,
  385  and $15 million after July 1, 2015. The office may reduce this
  386  surplus requirement if the insurer is not writing new business,
  387  has premiums in force of less than $1 million per year in
  388  residential property insurance, or is a mutual insurance
  389  company. following amounts apply instead of the $4 million
  390  required by subparagraph (a)5.:
  391         1.On December 31, 2001, and until December 30, 2002, $3
  392  million.
  393         2.On December 31, 2002, and until December 30, 2003, $3.25
  394  million.
  395         3.On December 31, 2003, and until December 30, 2004, $3.6
  396  million.
  397         4.On December 31, 2004, and thereafter, $4 million.
  398         (2) For purposes of this section, liabilities do shall not
  399  include liabilities required under s. 625.041(4). For purposes
  400  of computing minimum surplus as to policyholders pursuant to s.
  401  625.305(1), liabilities shall include liabilities required under
  402  s. 625.041(4).
  403         (3) This section does not require any No insurer shall be
  404  required under this section to have surplus as to policyholders
  405  greater than $100 million.
  406         (4) A mortgage guaranty insurer shall maintain a minimum
  407  surplus as required by s. 635.042.
  408         Section 3. Present paragraph (q) of subsection (1) of
  409  section 624.4085, Florida Statutes, is redesignated as paragraph
  410  (r), and a new paragraph (q) is added to that subsection,
  411  paragraph (b) of subsection (3) of that section is amended, and
  412  subsections (7) through (13) of that section are redesignated as
  413  subsections (9) through (15), respectively, and new subsections
  414  (7) and (8) are added to that section, to read:
  415         624.4085 Risk-based capital requirements for insurers.—
  416         (1) As used in this section, the term:
  417         (q) “Surplus action level” means a loss of surplus on any
  418  quarterly or annual financial report which exceeds 15 percent,
  419  or which cumulatively for the calendar year exceeds 15 percent
  420  as of the most recent filed quarterly or annual report.
  421         (3)
  422         (b) If a company action level event occurs, the insurer
  423  shall prepare and submit to the office a risk-based capital
  424  plan, which must:
  425         1. Identify the conditions that contribute to the company
  426  action level event;
  427         2. Contain proposals of corrective actions that the insurer
  428  intends to take and that are reasonably expected to result in
  429  the elimination of the company action level event;
  430         3. Provide projections of the insurer’s financial results
  431  in the current year and at least the 4 succeeding years, both in
  432  the absence of proposed corrective actions and giving effect to
  433  the proposed corrective actions, including projections of
  434  statutory operating income, net income, capital, and surplus.
  435  The projections for both new and renewal business may include
  436  separate projections for each major line of business and, if
  437  separate projections are provided, must separately identify each
  438  significant income, expense, and benefit component;
  439         4. Identify the key assumptions affecting the insurer’s
  440  projections and the sensitivity of the projections to the
  441  assumptions; and
  442         5. Identify the quality of, and problems associated with,
  443  the insurer’s business, including, but not limited to, its
  444  assets, anticipated business growth and associated surplus
  445  strain, extraordinary exposure to risk, mix of business, and any
  446  use of reinsurance; and.
  447         6. Include, at the request of the office, for a residential
  448  property insurer that conducts any business with affiliates, a
  449  columnar worksheet, which shall include all affiliates who have
  450  contracted with, done business with, or otherwise received
  451  remuneration from the insurer and shall list the following
  452  financial information from the immediately preceding calendar
  453  year, listed separately for each affiliate:
  454         a. Total assets;
  455         b. Total liabilities;
  456         c. Surplus or shareholders equity;
  457         d. Net income after taxes or distributions made solely for
  458  satisfying tax liabilities;
  459         e. Total amounts received or receivable from parents,
  460  subsidiaries, and affiliates;
  461         f. Total amounts paid or payable to any parent,
  462  subsidiaries, and affiliates;
  463         g. Dividends paid or payable to shareholders of common
  464  stock;
  465         h. Debt service, including principle and interest, paid on
  466  debt incurred to capitalize or recapitalize insurance companies
  467  or fund other insurance-related activities; and
  468         i. Payments made for other contractual obligations to
  469  support insurance-related activities.
  470         (7)(a)A surplus action level event includes:
  471         1. The filing of a quarterly or annual statutory financial
  472  statement by an insurer, which indicates that the insurer’s
  473  total surplus has declined by more than 15 percent from the
  474  previous year’s annual statement, or cumulatively for the
  475  current year through the most recent quarterly financial
  476  statement;
  477         2. The notification by the office to the insurer of an
  478  adjusted quarterly or annual financial statement that indicates
  479  an event in subparagraph 1., unless the insurer challenges the
  480  adjusted quarterly or annual financial statement under
  481  subsection (9); or
  482         3. The notification by the office to the insurer that the
  483  office has, after a hearing, rejected the insurer’s challenge if
  484  an insurer challenges, under subsection (9), an adjusted
  485  quarterly or annual financial statement that indicates an event
  486  in subparagraph 1.
  487         (b) If a surplus action level event occurs, the insurer
  488  must prepare and submit to the office a risk-based capital plan,
  489  which must:
  490         1. Identify the conditions that contribute to the surplus
  491  action level event;
  492         2. Contain proposals of corrective actions that the insurer
  493  intends to take and that are reasonably expected to ultimately
  494  result in the elimination of additional surplus losses;
  495         3. Provide projections of the insurer’s financial results
  496  in the current year and at least the 2 succeeding years, both in
  497  the absence of proposed corrective actions and giving effect to
  498  the proposed corrective actions, including projections of
  499  statutory operating income, net income, capital, and surplus.
  500  The projections for both new and renewal business may include
  501  separate projections for each major line of business and, if
  502  separate projections are provided, must separately identify each
  503  significant income, expense, and benefit component;
  504         4. Identify the key assumptions affecting the insurer’s
  505  projections and the sensitivity of the projections to the
  506  assumptions;
  507         5. Identify the quality of, and problems associated with,
  508  the insurer’s business, including, but not limited to, its
  509  assets, anticipated business growth and associated surplus
  510  strain, extraordinary exposure to risk, mix of business, and any
  511  use of reinsurance;
  512         6. Include, at the request of the office, for a residential
  513  property insurer that conducts any business with affiliates, a
  514  columnar worksheet, which shall include all affiliates who have
  515  received remuneration from the insurer and shall list the
  516  following financial information from the immediately preceding
  517  calendar year listed separately for each affiliate:
  518         a. Total assets;
  519         b. Total liabilities;
  520         c. Surplus or shareholders equity;
  521         d. Net income after taxes or distributions made solely for
  522  satisfying tax liabilities;
  523         e. Total amounts received or receivable from parents,
  524  subsidiaries, and affiliates;
  525         f. Total amounts paid or payable to any parent,
  526  subsidiaries, and affiliates;
  527         g. Dividends paid or payable to shareholders of common
  528  stock;
  529         h. Debt service, including principle and interest, paid on
  530  debt incurred to capitalize or recapitalize insurance companies
  531  or fund other insurance-related activities; and
  532         i. Payments made for other contractual obligations to
  533  support insurance-related activities.
  534         7. Contain, at the request of the office, a recertification
  535  of reserves for the insurer prepared by an actuary.
  536         (c) The risk-based capital plan must be submitted:
  537         1. Within 45 days after the surplus action level event; or
  538         2. If the insurer challenges an adjusted quarterly or
  539  annual financial statement under subsection (9), within 45 days
  540  after notification to the insurer that the office has, after a
  541  hearing, rejected the insurer’s challenge.
  542         (8) This section does not limit any existing authority of
  543  the office.
  544         Section 4. Subsection (7) is added to section 624.4095,
  545  Florida Statutes, to read:
  546         624.4095 Premiums written; restrictions.—
  547         (7)For purposes of this section and s. 624.407, with
  548  regard to capital and surplus requirements, gross written
  549  premiums for federal multiple-peril crop insurance which are
  550  ceded to the Federal Crop Insurance Corporation or authorized
  551  reinsurers may not be included in the calculation of an
  552  insurer’s gross writing ratio. The liabilities for ceded
  553  reinsurance premiums payable for federal multiple-peril crop
  554  insurance ceded to the Federal Crop Insurance Corporation and
  555  authorized reinsurers shall be netted against the asset for
  556  amounts recoverable from reinsurers. Each insurer that writes
  557  other insurance products together with federal multiple-peril
  558  crop insurance shall disclose in the notes to its annual and
  559  quarterly financial statements, or in a supplement to those
  560  statements, the gross written premiums for federal multiple
  561  peril crop insurance.
  562         Section 5. Section 626.7452, Florida Statutes, is amended
  563  to read:
  564         626.7452 Managing general agents; examination authority.
  565  The acts of the managing general agent are considered to be the
  566  acts of the insurer on whose behalf it is acting. A managing
  567  general agent may be examined as if it were the insurer except
  568  in the case where the managing general agent solely represents a
  569  single domestic insurer.
  570         Section 6. Section 626.9744, Florida Statutes, is amended
  571  to read:
  572         626.9744 Claim settlement practices relating to property
  573  insurance.—Unless otherwise provided by the policy, if when a
  574  homeowner’s insurance policy provides for the adjustment and
  575  settlement of first-party losses based on repair or replacement
  576  cost, the following requirements apply:
  577         (1) When a loss requires repair or replacement of an item
  578  or part, any physical damage incurred in making such repair or
  579  replacement which is covered and not otherwise excluded by the
  580  policy shall be included in the loss to the extent of any
  581  applicable limits. The insured may not be required to pay for
  582  betterment required by ordinance or code except for the
  583  applicable deductible, unless specifically excluded or limited
  584  by the policy.
  585         (2) When a loss requires replacement of items and the
  586  replaced items do not match in quality, color, or size, the
  587  insurer shall make reasonable repairs or replacement of items in
  588  adjoining areas. In determining the extent of the repairs or
  589  replacement of items in adjoining areas, the insurer may
  590  consider the cost of repairing or replacing the undamaged
  591  portions of the property, the degree of uniformity that can be
  592  achieved without such cost, the remaining useful life of the
  593  undamaged portion, and other relevant factors.
  594         (3) In determining repair or replacement cost estimates,
  595  the insurer shall use only the following:
  596         (a)The retail cost using quotations obtained by the
  597  insurer or insured from licensed contractors or retail
  598  establishments in the local market area; or
  599         (b) Computer software or other databases that produce
  600  estimates based on market prices for products, materials, and
  601  labor in the local geographic region, if the pertinent portions
  602  of the valuation documents generated by a database are provided
  603  by the insurer to the first-party insured upon request.
  604         (4)(3) This section does shall not be construed to make the
  605  insurer a warrantor of the repairs made pursuant to this
  606  section.
  607         (5)(4)Nothing in This section does not shall be construed
  608  to authorize or preclude enforcement of policy provisions
  609  relating to settlement disputes.
  610         Section 7. Section 627.0613, Florida Statutes, is amended
  611  to read:
  612         627.0613 Consumer advocate.—The Chief Financial Officer
  613  must appoint a consumer advocate who must represent the general
  614  public of the state before the department and the office. The
  615  consumer advocate must report directly to the Chief Financial
  616  Officer, but is not otherwise under the authority of the
  617  department or of any employee of the department. The consumer
  618  advocate has such powers as are necessary to carry out the
  619  duties of the office of consumer advocate, including, but not
  620  limited to, the powers to:
  621         (1) Recommend to the department or office, by petition, the
  622  commencement of any proceeding or action; appear in any
  623  proceeding or action before the department or office; or appear
  624  in any proceeding before the Division of Administrative Hearings
  625  relating to subject matter under the jurisdiction of the
  626  department or office.
  627         (2) Have access to and use of all files, records, and data
  628  of the department or office.
  629         (3) Examine rate and form filings submitted to the office,
  630  hire consultants as necessary to aid in the review process, and
  631  recommend to the department or office any position deemed by the
  632  consumer advocate to be in the public interest.
  633         (4) By June 1, 2012, and each June 1 thereafter, prepare an
  634  annual report card for each authorized personal residential
  635  property insurer, on a form and using a letter-grade scale
  636  developed by the commission by rule, which objectively grades
  637  each insurer based on the following factors:
  638         (a) The number and nature of valid consumer complaints, as
  639  a market share ratio, received by the department against the
  640  insurer.
  641         (b) The disposition of all valid consumer complaints
  642  received by the department.
  643         (c) The average length of time for payment of claims by the
  644  insurer.
  645         (d) Any other measurable and objective factors the
  646  commission identifies as capable of assisting policyholders in
  647  making informed choices about homeowner’s insurance.
  648  
  649  For purposes of this subsection, the term “valid consumer
  650  complaint” a means written communication from a consumer which
  651  expresses dissatisfaction with a specific personal residential
  652  property insurer and whose conduct described in the
  653  communication is found to constitute a violation of the
  654  insurance laws of this state by the Division of Consumer
  655  Services of the Department of Financial Services.
  656         (5) Prepare an annual budget for presentation to the
  657  Legislature by the department, which budget must be adequate to
  658  carry out the duties of the office of consumer advocate.
  659         Section 8. Section 627.062, Florida Statutes, is amended to
  660  read:
  661         627.062 Rate standards.—
  662         (1) The rates for all classes of insurance to which the
  663  provisions of this part are applicable shall not be excessive,
  664  inadequate, or unfairly discriminatory.
  665         (2) As to all such classes of insurance:
  666         (a) Insurers or rating organizations shall establish and
  667  use rates, rating schedules, or rating manuals to allow the
  668  insurer a reasonable rate of return on such classes of insurance
  669  written in this state. A copy of rates, rating schedules, rating
  670  manuals, premium credits or discount schedules, and surcharge
  671  schedules, and changes thereto, shall be filed with the office
  672  under one of the following procedures except as provided in
  673  subparagraph 3.:
  674         1. If the filing is made at least 90 days before the
  675  proposed effective date and the filing is not implemented during
  676  the office’s review of the filing and any proceeding and
  677  judicial review, then such filing shall be considered a “file
  678  and use” filing. In such case, the office shall finalize its
  679  review by issuance of an approval a notice of intent to approve
  680  or a notice of intent to disapprove within 90 days after receipt
  681  of the filing. The approval notice of intent to approve and the
  682  notice of intent to disapprove constitute agency action for
  683  purposes of the Administrative Procedure Act. Requests for
  684  supporting information, requests for mathematical or mechanical
  685  corrections, or notification to the insurer by the office of its
  686  preliminary findings shall not toll the 90-day period during any
  687  such proceedings and subsequent judicial review. The rate shall
  688  be deemed approved if the office does not issue an approval a
  689  notice of intent to approve or a notice of intent to disapprove
  690  within 90 days after receipt of the filing.
  691         2. If the filing is not made in accordance with the
  692  provisions of subparagraph 1., such filing shall be made as soon
  693  as practicable, but no later than 30 days after the effective
  694  date, and shall be considered a “use and file” filing. An
  695  insurer making a “use and file” filing is potentially subject to
  696  an order by the office to return to policyholders portions of
  697  rates found to be excessive, as provided in paragraph (h).
  698         3. For all property insurance filings made or submitted
  699  after January 25, 2007, but before December 31, 2012 2010, an
  700  insurer seeking a rate that is greater than the rate most
  701  recently approved by the office shall make a “file and use”
  702  filing. For purposes of this subparagraph, motor vehicle
  703  collision and comprehensive coverages are not considered to be
  704  property coverages.
  705         (b) Upon receiving a rate filing, the office shall review
  706  the rate filing to determine if a rate is excessive, inadequate,
  707  or unfairly discriminatory. In making that determination, the
  708  office shall, in accordance with generally accepted and
  709  reasonable actuarial techniques, consider the following factors:
  710         1. Past and prospective loss experience within and without
  711  this state.
  712         2. Past and prospective expenses.
  713         3. The degree of competition among insurers for the risk
  714  insured.
  715         4. Investment income reasonably expected by the insurer,
  716  consistent with the insurer’s investment practices, from
  717  investable premiums anticipated in the filing, plus any other
  718  expected income from currently invested assets representing the
  719  amount expected on unearned premium reserves and loss reserves.
  720  The commission may adopt rules using reasonable techniques of
  721  actuarial science and economics to specify the manner in which
  722  insurers shall calculate investment income attributable to such
  723  classes of insurance written in this state and the manner in
  724  which such investment income shall be used to calculate
  725  insurance rates. Such manner shall contemplate allowances for an
  726  underwriting profit factor and full consideration of investment
  727  income which produce a reasonable rate of return; however,
  728  investment income from invested surplus may not be considered.
  729         5. The reasonableness of the judgment reflected in the
  730  filing.
  731         6. Dividends, savings, or unabsorbed premium deposits
  732  allowed or returned to Florida policyholders, members, or
  733  subscribers.
  734         7. The adequacy of loss reserves.
  735         8. The cost of reinsurance. The office shall not disapprove
  736  a rate as excessive solely due to the insurer having obtained
  737  catastrophic reinsurance to cover the insurer’s estimated 250
  738  year probable maximum loss or any lower level of loss.
  739         9. Trend factors, including trends in actual losses per
  740  insured unit for the insurer making the filing.
  741         10. Conflagration and catastrophe hazards, if applicable.
  742         11. Projected hurricane losses, if applicable, which must
  743  be estimated using a model or method found to be acceptable or
  744  reliable by the Florida Commission on Hurricane Loss Projection
  745  Methodology, and as further provided in s. 627.0628.
  746         12. A reasonable margin for underwriting profit and
  747  contingencies.
  748         13. The cost of medical services, if applicable.
  749         14. Other relevant factors which impact upon the frequency
  750  or severity of claims or upon expenses.
  751         (c) In the case of fire insurance rates, consideration
  752  shall be given to the availability of water supplies and the
  753  experience of the fire insurance business during a period of not
  754  less than the most recent 5-year period for which such
  755  experience is available.
  756         (d) If conflagration or catastrophe hazards are given
  757  consideration by an insurer in its rates or rating plan,
  758  including surcharges and discounts, the insurer shall establish
  759  a reserve for that portion of the premium allocated to such
  760  hazard and shall maintain the premium in a catastrophe reserve.
  761  Any removal of such premiums from the reserve for purposes other
  762  than paying claims associated with a catastrophe or purchasing
  763  reinsurance for catastrophes shall be subject to approval of the
  764  office. Any ceding commission received by an insurer purchasing
  765  reinsurance for catastrophes shall be placed in the catastrophe
  766  reserve.
  767         (e) After consideration of the rate factors provided in
  768  paragraphs (b), (c), and (d), a rate may be found by the office
  769  to be excessive, inadequate, or unfairly discriminatory based
  770  upon the following standards:
  771         1. Rates shall be deemed excessive if they are likely to
  772  produce a profit from Florida business that is unreasonably high
  773  in relation to the risk involved in the class of business or if
  774  expenses are unreasonably high in relation to services rendered.
  775         2. Rates shall be deemed excessive if, among other things,
  776  the rate structure established by a stock insurance company
  777  provides for replenishment of surpluses from premiums, when the
  778  replenishment is attributable to investment losses.
  779         3. Rates shall be deemed inadequate if they are clearly
  780  insufficient, together with the investment income attributable
  781  to them, to sustain projected losses and expenses in the class
  782  of business to which they apply.
  783         4. A rating plan, including discounts, credits, or
  784  surcharges, shall be deemed unfairly discriminatory if it fails
  785  to clearly and equitably reflect consideration of the
  786  policyholder’s participation in a risk management program
  787  adopted pursuant to s. 627.0625.
  788         5. A rate shall be deemed inadequate as to the premium
  789  charged to a risk or group of risks if discounts or credits are
  790  allowed which exceed a reasonable reflection of expense savings
  791  and reasonably expected loss experience from the risk or group
  792  of risks.
  793         6. A rate shall be deemed unfairly discriminatory as to a
  794  risk or group of risks if the application of premium discounts,
  795  credits, or surcharges among such risks does not bear a
  796  reasonable relationship to the expected loss and expense
  797  experience among the various risks.
  798         (f) In reviewing a rate filing, the office may require the
  799  insurer to provide at the insurer’s expense all information
  800  necessary to evaluate the condition of the company and the
  801  reasonableness of the filing according to the criteria
  802  enumerated in this section.
  803         (g) The office may at any time review a rate, rating
  804  schedule, rating manual, or rate change; the pertinent records
  805  of the insurer; and market conditions. If the office finds on a
  806  preliminary basis that a rate may be excessive, inadequate, or
  807  unfairly discriminatory, the office shall initiate proceedings
  808  to disapprove the rate and shall so notify the insurer. However,
  809  the office may not disapprove as excessive any rate for which it
  810  has given final approval or which has been deemed approved for a
  811  period of 1 year after the effective date of the filing unless
  812  the office finds that a material misrepresentation or material
  813  error was made by the insurer or was contained in the filing.
  814  Upon being so notified, the insurer or rating organization
  815  shall, within 60 days, file with the office all information
  816  which, in the belief of the insurer or organization, proves the
  817  reasonableness, adequacy, and fairness of the rate or rate
  818  change. The office shall issue a notice of intent to approve or
  819  a notice of intent to disapprove pursuant to the procedures of
  820  paragraph (a) within 90 days after receipt of the insurer’s
  821  initial response. In such instances and in any administrative
  822  proceeding relating to the legality of the rate, the insurer or
  823  rating organization shall carry the burden of proof by a
  824  preponderance of the evidence to show that the rate is not
  825  excessive, inadequate, or unfairly discriminatory. After the
  826  office notifies an insurer that a rate may be excessive,
  827  inadequate, or unfairly discriminatory, unless the office
  828  withdraws the notification, the insurer shall not alter the rate
  829  except to conform with the office’s notice until the earlier of
  830  120 days after the date the notification was provided or 180
  831  days after the date of the implementation of the rate. The
  832  office may, subject to chapter 120, disapprove without the 60
  833  day notification any rate increase filed by an insurer within
  834  the prohibited time period or during the time that the legality
  835  of the increased rate is being contested.
  836         (h) If In the event the office finds that a rate or rate
  837  change is excessive, inadequate, or unfairly discriminatory, the
  838  office shall issue an order of disapproval specifying that a new
  839  rate or rate schedule which responds to the findings of the
  840  office be filed by the insurer. The office shall further order,
  841  for any “use and file” filing made in accordance with
  842  subparagraph (a)2., that premiums charged each policyholder
  843  constituting the portion of the rate above that which was
  844  actuarially justified be returned to such policyholder in the
  845  form of a credit or refund. If the office finds that an
  846  insurer’s rate or rate change is inadequate, the new rate or
  847  rate schedule filed with the office in response to such a
  848  finding shall be applicable only to new or renewal business of
  849  the insurer written on or after the effective date of the
  850  responsive filing.
  851         (i)1. Except as otherwise specifically provided in this
  852  chapter, the office shall not, directly or indirectly, prohibit
  853  any insurer, including any residual market plan or joint
  854  underwriting association, from paying acquisition costs based on
  855  the full amount of premium, as defined in s. 627.403, applicable
  856  to any policy, or directly or indirectly prohibit any such
  857  insurer from including the full amount of acquisition costs in a
  858  rate filing.
  859         2. The office shall not, directly or indirectly, impede,
  860  abridge, or otherwise compromise an insurer’s right to acquire
  861  policyholders, advertise, or appoint agents, including the
  862  calculation, manner, or amount of such agent commissions, if
  863  any.
  864         (j) With respect to residential property insurance rate
  865  filings, the rate filing must account for mitigation measures
  866  undertaken by policyholders to reduce hurricane losses.
  867         (k)1.a. An insurer may make a separate filing limited
  868  solely to an adjustment of its rates for reinsurance, the cost
  869  of financing products used as a replacement for reinsurance, or
  870  financing costs incurred in the purchase of reinsurance, and an
  871  inflation trend factor published by the office pursuant to
  872  subparagraph 4. If an insurer chooses to make a separate filing
  873  under this paragraph, it must implement the rate in such a
  874  manner that all rate increases implemented as a result of the
  875  separate filing, together with rate increases associated with
  876  any other rate filing, do or financing products to replace or
  877  finance the payment of the amount covered by the Temporary
  878  Increase in Coverage Limits (TICL) portion of the Florida
  879  Hurricane Catastrophe Fund including replacement reinsurance for
  880  the TICL reductions made pursuant to s. 215.555(17)(e); the
  881  actual cost paid due to the application of the TICL premium
  882  factor pursuant to s. 215.555(17)(f); and the actual cost paid
  883  due to the application of the cash build-up factor pursuant to
  884  s. 215.555(5)(b) if the insurer:
  885         a.Elects to purchase financing products such as a
  886  liquidity instrument or line of credit, in which case the cost
  887  included in the filing for the liquidity instrument or line of
  888  credit may not result in a premium increase exceeding 3 percent
  889  for any individual policyholder. All costs contained in the
  890  filing may not result in an overall premium increase of more
  891  than 10 percent for any individual policyholder, excluding
  892  coverage changes and surcharges, within the same policy year.
  893         b. An insurer that makes a filing relating to reinsurance
  894  or financing products must include the following Includes in the
  895  filing: a copy of all of its reinsurance, liquidity instrument,
  896  or line of credit contracts; proof of the billing or payment for
  897  the contracts; and the calculation upon which the proposed rate
  898  change is based demonstrating demonstrates that the costs meet
  899  the criteria of this section and are not loaded for expenses or
  900  profit for the insurer making the filing.
  901         c. Any filing made pursuant this paragraph may include only
  902  the Includes no other changes to its rates which are expressly
  903  authorized by this paragraph in the filing.
  904         d.Has not implemented a rate increase within the 6 months
  905  immediately preceding the filing.
  906         e.Does not file for a rate increase under any other
  907  paragraph within 6 months after making a filing under this
  908  paragraph.
  909         d.f.An insurer that purchases reinsurance or financing
  910  products from an affiliated company may make a filing pursuant
  911  to in compliance with this paragraph does so only if the costs
  912  for such reinsurance or financing products are charged at or
  913  below charges made for comparable coverage by nonaffiliated
  914  reinsurers or financial entities making such coverage or
  915  financing products available in this state.
  916         e. An insurer that makes a filing as the result of a change
  917  in an inflation trend factor published by the office need
  918  support that filing only with rates and rating examples and an
  919  explanation demonstrating the insurer’s eligibility to adopt the
  920  inflation trend factor.
  921         2. An insurer may only make only one filing in any 12-month
  922  period under this paragraph.
  923         3. An insurer that elects to implement a rate change under
  924  this paragraph must file its rate filing with the office at
  925  least 45 days before the effective date of the rate change.
  926  After an insurer submits a complete filing that meets all of the
  927  requirements of this paragraph, the office has 45 days after the
  928  date of the filing to review the rate filing and determine if
  929  the rate is excessive, inadequate, or unfairly discriminatory.
  930         4.Beginning January 1, 2011, the office shall publish an
  931  annual informational memorandum to establish one or more
  932  inflation trend factors that may be stated separately for
  933  personal and residential property and for building coverage,
  934  contents coverage, additional living expense coverage, and
  935  liability coverage, if applicable. These factors shall represent
  936  an estimate of cost increases or decreases based upon publicly
  937  available relevant data and economic indices that are identified
  938  in the memorandum. Such factors are exempt from the rulemaking
  939  requirements of chapter 120, and insurers are not required to
  940  adopt the factors. The office may publish factors for any line
  941  of insurance, but is required to publish a factor only for
  942  residential property insurance.
  943  
  944  The provisions of this subsection do shall not apply to workers’
  945  compensation and employer’s liability insurance and to motor
  946  vehicle insurance.
  947         (3)(a) For individual risks that are not rated in
  948  accordance with the insurer’s rates, rating schedules, rating
  949  manuals, and underwriting rules filed with the office and which
  950  have been submitted to the insurer for individual rating, the
  951  insurer must maintain documentation on each risk subject to
  952  individual risk rating. The documentation must identify the
  953  named insured and specify the characteristics and classification
  954  of the risk supporting the reason for the risk being
  955  individually risk rated, including any modifications to existing
  956  approved forms to be used on the risk. The insurer must maintain
  957  these records for a period of at least 5 years after the
  958  effective date of the policy.
  959         (b) Individual risk rates and modifications to existing
  960  approved forms are not subject to this part or part II, except
  961  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
  962  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
  963  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
  964  627.4265, 627.427, and 627.428, but are subject to all other
  965  applicable provisions of this code and rules adopted thereunder.
  966         (c) This subsection does not apply to private passenger
  967  motor vehicle insurance.
  968         (4)(a)Contingent on specific appropriations made to
  969  implement this subsection, in order to enhance the ability of
  970  consumers to compare premiums and to increase the accuracy and
  971  usefulness of rate and product comparison information for
  972  homeowners insurance, the office shall develop or contract with
  973  a private entity to develop a comprehensive program for
  974  providing the consumer with all available information necessary
  975  to make an informed purchase of the insurance product that best
  976  serves the needs of the individual.
  977         (b)In developing the comprehensive program, the office
  978  shall rely as much as is practical on information that is
  979  currently available and shall consider:
  980         1.The most efficient means for developing, hosting, and
  981  operating a separate website that consolidates all consumer
  982  information for price comparisons, filed complaints, financial
  983  strength, underwriting, and receivership information and other
  984  data useful to consumers;
  985         2.Whether all admitted insurers should be required to
  986  submit additional information to populate the composite website
  987  and how often such submissions must be made;
  988         3.Whether all admitted insurers should be required to
  989  provide links from the website into each individual insurer’s
  990  website in order to enable consumers to access product rate
  991  information and apply for quotations;
  992         4. Developing a plan to publicize the existence,
  993  availability, and value of the website; and
  994         5.Any other provision that would make relevant homeowners
  995  insurance information more readily available so that consumers
  996  can make informed product comparisons and purchasing decisions.
  997         (c)Before establishing the program or website, the office
  998  shall conduct a cost-benefit analysis to determine the most
  999  effective approach for establishing and operating the program
 1000  and website. Based on the results of the analysis, the office
 1001  shall submit a proposed implementation plan for review and
 1002  approval by the Financial Services Commission. The
 1003  implementation plan shall include an estimated timeline for
 1004  establishing the program and website; a description of the data
 1005  and functionality to be provided by the site, a strategy for
 1006  publicizing the website to consumers; a recommended approach for
 1007  developing, hosting, and operating the website; and an estimate
 1008  of all major nonrecurring and recurring costs required to
 1009  establish and operate the website. Upon approval of the plan,
 1010  the office may initiate the establishment of the program.
 1011         (5)(4) The establishment of any rate, rating
 1012  classification, rating plan or schedule, or variation thereof in
 1013  violation of part IX of chapter 626 is also in violation of this
 1014  section. In order to enhance the ability of consumers to compare
 1015  premiums and to increase the accuracy and usefulness of rate
 1016  comparison information provided by the office to the public, the
 1017  office shall develop a proposed standard rating territory plan
 1018  to be used by all authorized property and casualty insurers for
 1019  residential property insurance. In adopting the proposed plan,
 1020  the office may consider geographical characteristics relevant to
 1021  risk, county lines, major roadways, existing rating territories
 1022  used by a significant segment of the market, and other relevant
 1023  factors. Such plan shall be submitted to the President of the
 1024  Senate and the Speaker of the House of Representatives by
 1025  January 15, 2006. The plan may not be implemented unless
 1026  authorized by further act of the Legislature.
 1027         (6)(5) With respect to a rate filing involving coverage of
 1028  the type for which the insurer is required to pay a
 1029  reimbursement premium to the Florida Hurricane Catastrophe Fund,
 1030  the insurer may fully recoup in its property insurance premiums
 1031  any reimbursement premiums paid to the Florida Hurricane
 1032  Catastrophe Fund, together with reasonable costs of other
 1033  reinsurance, but except as otherwise provided in this section,
 1034  may not recoup reinsurance costs that duplicate coverage
 1035  provided by the Florida Hurricane Catastrophe Fund. An insurer
 1036  may not recoup more than 1 year of reimbursement premium at a
 1037  time. Any under-recoupment from the prior year may be added to
 1038  the following year’s reimbursement premium, and any over
 1039  recoupment shall be subtracted from the following year’s
 1040  reimbursement premium.
 1041         (7)(6)(a) If an insurer requests an administrative hearing
 1042  pursuant to s. 120.57 related to a rate filing under this
 1043  section, the director of the Division of Administrative Hearings
 1044  shall expedite the hearing and assign an administrative law
 1045  judge who shall commence the hearing within 30 days after the
 1046  receipt of the formal request and shall enter a recommended
 1047  order within 30 days after the hearing or within 30 days after
 1048  receipt of the hearing transcript by the administrative law
 1049  judge, whichever is later. Each party shall be allowed 10 days
 1050  in which to submit written exceptions to the recommended order.
 1051  The office shall enter a final order within 30 days after the
 1052  entry of the recommended order. The provisions of this paragraph
 1053  may be waived upon stipulation of all parties.
 1054         (b) Upon entry of a final order, the insurer may request a
 1055  expedited appellate review pursuant to the Florida Rules of
 1056  Appellate Procedure. It is the intent of the Legislature that
 1057  the First District Court of Appeal grant an insurer’s request
 1058  for an expedited appellate review.
 1059         (8)(7)(a) The provisions of this subsection apply only with
 1060  respect to rates for medical malpractice insurance and shall
 1061  control to the extent of any conflict with other provisions of
 1062  this section.
 1063         (b) Any portion of a judgment entered or settlement paid as
 1064  a result of a statutory or common-law bad faith action and any
 1065  portion of a judgment entered which awards punitive damages
 1066  against an insurer may not be included in the insurer’s rate
 1067  base, and shall not be used to justify a rate or rate change.
 1068  Any common-law bad faith action identified as such, any portion
 1069  of a settlement entered as a result of a statutory or common-law
 1070  action, or any portion of a settlement wherein an insurer agrees
 1071  to pay specific punitive damages may not be used to justify a
 1072  rate or rate change. The portion of the taxable costs and
 1073  attorney’s fees which is identified as being related to the bad
 1074  faith and punitive damages in these judgments and settlements
 1075  may not be included in the insurer’s rate base and may not be
 1076  used utilized to justify a rate or rate change.
 1077         (c) Upon reviewing a rate filing and determining whether
 1078  the rate is excessive, inadequate, or unfairly discriminatory,
 1079  the office shall consider, in accordance with generally accepted
 1080  and reasonable actuarial techniques, past and present
 1081  prospective loss experience, either using loss experience solely
 1082  for this state or giving greater credibility to this state’s
 1083  loss data after applying actuarially sound methods of assigning
 1084  credibility to such data.
 1085         (d) Rates shall be deemed excessive if, among other
 1086  standards established by this section, the rate structure
 1087  provides for replenishment of reserves or surpluses from
 1088  premiums when the replenishment is attributable to investment
 1089  losses.
 1090         (e) The insurer must apply a discount or surcharge based on
 1091  the health care provider’s loss experience or shall establish an
 1092  alternative method giving due consideration to the provider’s
 1093  loss experience. The insurer must include in the filing a copy
 1094  of the surcharge or discount schedule or a description of the
 1095  alternative method used, and must provide a copy of such
 1096  schedule or description, as approved by the office, to
 1097  policyholders at the time of renewal and to prospective
 1098  policyholders at the time of application for coverage.
 1099         (f) Each medical malpractice insurer must make a rate
 1100  filing under this section, sworn to by at least two executive
 1101  officers of the insurer, at least once each calendar year.
 1102         (8)(a)1.No later than 60 days after the effective date of
 1103  medical malpractice legislation enacted during the 2003 Special
 1104  Session D of the Florida Legislature, the office shall calculate
 1105  a presumed factor that reflects the impact that the changes
 1106  contained in such legislation will have on rates for medical
 1107  malpractice insurance and shall issue a notice informing all
 1108  insurers writing medical malpractice coverage of such presumed
 1109  factor. In determining the presumed factor, the office shall use
 1110  generally accepted actuarial techniques and standards provided
 1111  in this section in determining the expected impact on losses,
 1112  expenses, and investment income of the insurer. To the extent
 1113  that the operation of a provision of medical malpractice
 1114  legislation enacted during the 2003 Special Session D of the
 1115  Florida Legislature is stayed pending a constitutional
 1116  challenge, the impact of that provision shall not be included in
 1117  the calculation of a presumed factor under this subparagraph.
 1118         2.No later than 60 days after the office issues its notice
 1119  of the presumed rate change factor under subparagraph 1., each
 1120  insurer writing medical malpractice coverage in this state shall
 1121  submit to the office a rate filing for medical malpractice
 1122  insurance, which will take effect no later than January 1, 2004,
 1123  and apply retroactively to policies issued or renewed on or
 1124  after the effective date of medical malpractice legislation
 1125  enacted during the 2003 Special Session D of the Florida
 1126  Legislature. Except as authorized under paragraph (b), the
 1127  filing shall reflect an overall rate reduction at least as great
 1128  as the presumed factor determined under subparagraph 1. With
 1129  respect to policies issued on or after the effective date of
 1130  such legislation and prior to the effective date of the rate
 1131  filing required by this subsection, the office shall order the
 1132  insurer to make a refund of the amount that was charged in
 1133  excess of the rate that is approved.
 1134         (b)Any insurer or rating organization that contends that
 1135  the rate provided for in paragraph (a) is excessive, inadequate,
 1136  or unfairly discriminatory shall separately state in its filing
 1137  the rate it contends is appropriate and shall state with
 1138  specificity the factors or data that it contends should be
 1139  considered in order to produce such appropriate rate. The
 1140  insurer or rating organization shall be permitted to use all of
 1141  the generally accepted actuarial techniques provided in this
 1142  section in making any filing pursuant to this subsection. The
 1143  office shall review each such exception and approve or
 1144  disapprove it prior to use. It shall be the insurer’s burden to
 1145  actuarially justify any deviations from the rates required to be
 1146  filed under paragraph (a). The insurer making a filing under
 1147  this paragraph shall include in the filing the expected impact
 1148  of medical malpractice legislation enacted during the 2003
 1149  Special Session D of the Florida Legislature on losses,
 1150  expenses, and rates.
 1151         (c)If any provision of medical malpractice legislation
 1152  enacted during the 2003 Special Session D of the Florida
 1153  Legislature is held invalid by a court of competent
 1154  jurisdiction, the office shall permit an adjustment of all
 1155  medical malpractice rates filed under this section to reflect
 1156  the impact of such holding on such rates so as to ensure that
 1157  the rates are not excessive, inadequate, or unfairly
 1158  discriminatory.
 1159         (d)Rates approved on or before July 1, 2003, for medical
 1160  malpractice insurance shall remain in effect until the effective
 1161  date of a new rate filing approved under this subsection.
 1162         (e)The calculation and notice by the office of the
 1163  presumed factor pursuant to paragraph (a) is not an order or
 1164  rule that is subject to chapter 120. If the office enters into a
 1165  contract with an independent consultant to assist the office in
 1166  calculating the presumed factor, such contract shall not be
 1167  subject to the competitive solicitation requirements of s.
 1168  287.057.
 1169         (9)(a) The chief executive officer or chief financial
 1170  officer of a property insurer and the chief actuary of a
 1171  property insurer must certify under oath and subject to the
 1172  penalty of perjury, on a form approved by the commission, the
 1173  following information, which must accompany a rate filing:
 1174         1. The signing officer and actuary have reviewed the rate
 1175  filing;
 1176         2. Based on the signing officer’s and actuary’s knowledge,
 1177  the rate filing does not contain any untrue statement of a
 1178  material fact or omit to state a material fact necessary in
 1179  order to make the statements made, in light of the circumstances
 1180  under which such statements were made, not misleading;
 1181         3. Based on the signing officer’s and actuary’s knowledge,
 1182  the information and other factors described in paragraph (2)(b),
 1183  including, but not limited to, investment income, fairly present
 1184  in all material respects the basis of the rate filing for the
 1185  periods presented in the filing; and
 1186         4. Based on the signing officer’s and actuary’s knowledge,
 1187  the rate filing reflects all premium savings that are reasonably
 1188  expected to result from legislative enactments and are in
 1189  accordance with generally accepted and reasonable actuarial
 1190  techniques.
 1191         (b) A signing officer or actuary knowingly making a false
 1192  certification under this subsection commits a violation of s.
 1193  626.9541(1)(e) and is subject to the penalties under s.
 1194  626.9521.
 1195         (c) Failure to provide such certification by the officer
 1196  and actuary shall result in the rate filing being disapproved
 1197  without prejudice to be refiled.
 1198         (d) A certification made pursuant to paragraph (a) is not
 1199  rendered false if, after making the subject rate filing, the
 1200  insurer provides the office with additional or supplementary
 1201  information pursuant to a formal or informal request from the
 1202  office or for any other reason.
 1203         (e)(d) The commission may adopt rules and forms pursuant to
 1204  ss. 120.536(1) and 120.54 to administer this subsection.
 1205         (10) The burden is on the office to establish that rates
 1206  are excessive for personal lines residential coverage with a
 1207  dwelling replacement cost of $1 million or more or for a single
 1208  condominium unit with a combined dwelling and contents
 1209  replacement cost of $1 million or more. Upon request of the
 1210  office, the insurer shall provide to the office such loss and
 1211  expense information as the office reasonably needs to meet this
 1212  burden.
 1213         (11) Any interest paid pursuant to s. 627.70131(5) may not
 1214  be included in the insurer’s rate base and may not be used to
 1215  justify a rate or rate change.
 1216         Section 9. Section 627.0629, Florida Statutes, is amended
 1217  to read:
 1218         627.0629 Residential property insurance; rate filings.—
 1219         (1)(a) It is the intent of the Legislature that insurers
 1220  must provide the most accurate pricing signals available savings
 1221  to encourage consumers to who install or implement windstorm
 1222  damage mitigation techniques, alterations, or solutions to their
 1223  properties to prevent windstorm losses. It is also the intent of
 1224  the Legislature that implementation of mitigation discounts not
 1225  result in a loss of income to the insurers granting the
 1226  discounts, so that the aggregate of mitigation discounts should
 1227  not exceed the aggregate of the expected reduction in loss that
 1228  is attributable to the mitigation efforts for which discounts
 1229  are granted. A rate filing for residential property insurance
 1230  must include actuarially reasonable discounts, credits, debits,
 1231  or other rate differentials, or appropriate reductions in
 1232  deductibles, which provide the proper pricing for all
 1233  properties. The rate filing must take into account the presence
 1234  or absence of on which fixtures or construction techniques
 1235  demonstrated to reduce the amount of loss in a windstorm have
 1236  been installed or implemented. The fixtures or construction
 1237  techniques shall include, but not be limited to, fixtures or
 1238  construction techniques that which enhance roof strength, roof
 1239  covering performance, roof-to-wall strength, wall-to-floor-to
 1240  foundation strength, opening protection, and window, door, and
 1241  skylight strength. Credits, debits, discounts, or other rate
 1242  differentials, or appropriate reductions or increases in
 1243  deductibles, which recognize the presence or absence of for
 1244  fixtures and construction techniques that which meet the minimum
 1245  requirements of the Florida Building Code must be included in
 1246  the rate filing. If an insurer demonstrates that the aggregate
 1247  of its mitigation discounts results in a reduction to revenue
 1248  which exceeds the reduction of the aggregate loss that is
 1249  expected to result from the mitigation, that insurer may recover
 1250  the lost revenue through an increase in its base rates. All
 1251  insurance companies must make a rate filing which includes the
 1252  credits, discounts, or other rate differentials or reductions in
 1253  deductibles by February 28, 2003. By July 1, 2007, the office
 1254  shall reevaluate the discounts, credits, other rate
 1255  differentials, and appropriate reductions in deductibles for
 1256  fixtures and construction techniques that meet the minimum
 1257  requirements of the Florida Building Code, based upon actual
 1258  experience or any other loss relativity studies available to the
 1259  office. The office shall determine the discounts, credits,
 1260  debits, other rate differentials, and appropriate reductions or
 1261  increases in deductibles that reflect the full actuarial value
 1262  of such revaluation, which may be used by insurers in rate
 1263  filings.
 1264         (b) By February 1, 2011, the Office of Insurance
 1265  Regulation, in consultation with the Department of Financial
 1266  Services and the Department of Community Affairs, shall develop
 1267  and make publicly available a proposed method for insurers to
 1268  establish discounts, credits, or other rate differentials for
 1269  hurricane mitigation measures which directly correlate to the
 1270  numerical rating assigned to a structure pursuant to the uniform
 1271  home grading scale adopted by the Financial Services Commission
 1272  pursuant to s. 215.55865, including any proposed changes to the
 1273  uniform home grading scale. By October 1, 2011, the commission
 1274  shall adopt rules requiring insurers to make rate filings for
 1275  residential property insurance which revise insurers’ discounts,
 1276  credits, or other rate differentials for hurricane mitigation
 1277  measures so that such rate differentials correlate directly to
 1278  the uniform home grading scale. The rules may include such
 1279  changes to the uniform home grading scale as the commission
 1280  determines are necessary, and may specify the minimum required
 1281  discounts, credits, or other rate differentials. Such rate
 1282  differentials must be consistent with generally accepted
 1283  actuarial principles and wind-loss mitigation studies. The rules
 1284  shall allow a period of at least 2 years after the effective
 1285  date of the revised mitigation discounts, credits, or other rate
 1286  differentials for a property owner to obtain an inspection or
 1287  otherwise qualify for the revised credit, during which time the
 1288  insurer shall continue to apply the mitigation credit that was
 1289  applied immediately prior to the effective date of the revised
 1290  credit. Discounts, credits, and other rate differentials
 1291  established for rate filings under this paragraph shall
 1292  supersede, after adoption, the discounts, credits, and other
 1293  rate differentials included in rate filings under paragraph (a).
 1294         (2)(a) A rate filing for residential property insurance
 1295  made on or before the implementation of paragraph (b) may
 1296  include rate factors that reflect the manner in which building
 1297  code enforcement in a particular jurisdiction addresses the risk
 1298  of wind damage.; However, such a rate filing must also provide
 1299  for variations from such rate factors on an individual basis
 1300  based on an inspection of a particular structure by a licensed
 1301  home inspector, which inspection may be at the cost of the
 1302  insured.
 1303         (b) A rate filing for residential property insurance made
 1304  more than 150 days after approval by the office of a building
 1305  code rating factor plan submitted by a statewide rating
 1306  organization shall include positive and negative rate factors
 1307  that reflect the manner in which building code enforcement in a
 1308  particular jurisdiction addresses risk of wind damage. The rate
 1309  filing shall include variations from standard rate factors on an
 1310  individual basis based on inspection of a particular structure
 1311  by a licensed home inspector. If an inspection is requested by
 1312  the insured, the insurer may require the insured to pay the
 1313  reasonable cost of the inspection. This paragraph applies to
 1314  structures constructed or renovated after the implementation of
 1315  this paragraph.
 1316         (c) The premium notice shall specify the amount by which
 1317  the rate has been adjusted as a result of this subsection and
 1318  shall also specify the maximum possible positive and negative
 1319  adjustments that are approved for use by the insurer under this
 1320  subsection.
 1321         (3) A rate filing made on or after July 1, 1995, for mobile
 1322  home owner’s insurance must include appropriate discounts,
 1323  credits, or other rate differentials for mobile homes
 1324  constructed to comply with American Society of Civil Engineers
 1325  Standard ANSI/ASCE 7-88, adopted by the United States Department
 1326  of Housing and Urban Development on July 13, 1994, and that also
 1327  comply with all applicable tie-down requirements provided by
 1328  state law.
 1329         (4) The Legislature finds that separate consideration and
 1330  notice of hurricane insurance premiums will assist consumers by
 1331  providing greater assurance that hurricane premiums are lawful
 1332  and by providing more complete information regarding the
 1333  components of property insurance premiums. Effective January 1,
 1334  1997, A rate filing for residential property insurance shall be
 1335  separated into two components, rates for hurricane coverage and
 1336  rates for all other coverages. A premium notice reflecting a
 1337  rate implemented on the basis of such a filing shall separately
 1338  indicate the premium for hurricane coverage and the premium for
 1339  all other coverages.
 1340         (5) In order to provide an appropriate transition period,
 1341  an insurer may, in its sole discretion, implement an approved
 1342  rate filing for residential property insurance over a period of
 1343  years. An insurer electing to phase in its rate filing must
 1344  provide an informational notice to the office setting out its
 1345  schedule for implementation of the phased-in rate filing. An
 1346  insurer may include in its rate the actual cost of private
 1347  market reinsurance that corresponds to available coverage of the
 1348  Temporary Increase in Coverage Limits, TICL, from the Florida
 1349  Hurricane Catastrophe Fund. The insurer may also include the
 1350  cost of reinsurance to replace the TICL reduction implemented
 1351  pursuant to s. 215.555(17)(d)9. However, this cost for
 1352  reinsurance may not include any expense or profit load or result
 1353  in a total annual base rate increase in excess of 10 percent.
 1354         (6) Any rate filing that is based in whole or part on data
 1355  from a computer model may not exceed 15 percent unless there is
 1356  a public hearing.
 1357         (7) An insurer may implement appropriate discounts or other
 1358  rate differentials of up to 10 percent of the annual premium to
 1359  mobile home owners who provide to the insurer evidence of a
 1360  current inspection of tie-downs for the mobile home, certifying
 1361  that the tie-downs have been properly installed and are in good
 1362  condition.
 1363         (8) EVALUATION OF RESIDENTIAL PROPERTY STRUCTURAL
 1364  SOUNDNESS.—
 1365         (a) It is the intent of the Legislature to provide a
 1366  program whereby homeowners may obtain an evaluation of the wind
 1367  resistance of their homes with respect to preventing damage from
 1368  hurricanes, together with a recommendation of reasonable steps
 1369  that may be taken to upgrade their homes to better withstand
 1370  hurricane force winds.
 1371         (b) To the extent that funds are provided for this purpose
 1372  in the General Appropriations Act, the Legislature hereby
 1373  authorizes the establishment of a program to be administered by
 1374  the Citizens Property Insurance Corporation for homeowners
 1375  insured in the high-risk account.
 1376         (c) The program shall provide grants to homeowners, for the
 1377  purpose of providing homeowner applicants with funds to conduct
 1378  an evaluation of the integrity of their homes with respect to
 1379  withstanding hurricane force winds, recommendations to retrofit
 1380  the homes to better withstand damage from such winds, and the
 1381  estimated cost to make the recommended retrofits.
 1382         (d) The Department of Community Affairs shall establish by
 1383  rule standards to govern the quality of the evaluation, the
 1384  quality of the recommendations for retrofitting, the eligibility
 1385  of the persons conducting the evaluation, and the selection of
 1386  applicants under the program. In establishing the rule, the
 1387  Department of Community Affairs shall consult with the advisory
 1388  committee to minimize the possibility of fraud or abuse in the
 1389  evaluation and retrofitting process, and to ensure that funds
 1390  spent by homeowners acting on the recommendations achieve
 1391  positive results.
 1392         (e) The Citizens Property Insurance Corporation shall
 1393  identify areas of this state with the greatest wind risk to
 1394  residential properties and recommend annually to the Department
 1395  of Community Affairs priority target areas for such evaluations
 1396  and inclusion with the associated residential construction
 1397  mitigation program.
 1398         (9) A property insurance rate filing that includes any
 1399  adjustments related to premiums paid to the Florida Hurricane
 1400  Catastrophe Fund must include a complete calculation of the
 1401  insurer’s catastrophe load, and the information in the filing
 1402  may not be limited solely to recovery of moneys paid to the
 1403  fund.
 1404         Section 10. Paragraphs (b), (c), (d), and (y) of subsection
 1405  (6) of section 627.351, Florida Statutes, are amended to read:
 1406         627.351 Insurance risk apportionment plans.—
 1407         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1408         (b)1. All insurers authorized to write one or more subject
 1409  lines of business in this state are subject to assessment by the
 1410  corporation and, for the purposes of this subsection, are
 1411  referred to collectively as “assessable insurers.” Insurers
 1412  writing one or more subject lines of business in this state
 1413  pursuant to part VIII of chapter 626 are not assessable
 1414  insurers, but insureds who procure one or more subject lines of
 1415  business in this state pursuant to part VIII of chapter 626 are
 1416  subject to assessment by the corporation and are referred to
 1417  collectively as “assessable insureds.” An authorized insurer’s
 1418  assessment liability begins shall begin on the first day of the
 1419  calendar year following the year in which the insurer was issued
 1420  a certificate of authority to transact insurance for subject
 1421  lines of business in this state and terminates shall terminate 1
 1422  year after the end of the first calendar year during which the
 1423  insurer no longer holds a certificate of authority to transact
 1424  insurance for subject lines of business in this state.
 1425         2.a. All revenues, assets, liabilities, losses, and
 1426  expenses of the corporation are shall be divided into three
 1427  separate accounts as follows:
 1428         (I) A personal lines account for personal residential
 1429  policies issued by the corporation or issued by the Residential
 1430  Property and Casualty Joint Underwriting Association and renewed
 1431  by the corporation which provides that provide comprehensive,
 1432  multiperil coverage on risks that are not located in areas
 1433  eligible for coverage in the Florida Windstorm Underwriting
 1434  Association as those areas were defined on January 1, 2002, and
 1435  for such policies that do not provide coverage for the peril of
 1436  wind on risks that are located in such areas;
 1437         (II) A commercial lines account for commercial residential
 1438  and commercial nonresidential policies issued by the corporation
 1439  or issued by the Residential Property and Casualty Joint
 1440  Underwriting Association and renewed by the corporation which
 1441  that provide coverage for basic property perils on risks which
 1442  that are not located in areas eligible for coverage in the
 1443  Florida Windstorm Underwriting Association as those areas were
 1444  defined on January 1, 2002, and for such policies that do not
 1445  provide coverage for the peril of wind on risks that are located
 1446  in such areas; and
 1447         (III) A coastal high-risk account for personal residential
 1448  policies and commercial residential and commercial
 1449  nonresidential property policies issued by the corporation or
 1450  transferred to the corporation which provides that provide
 1451  coverage for the peril of wind on risks that are located in
 1452  areas eligible for coverage in the Florida Windstorm
 1453  Underwriting Association as those areas were defined on January
 1454  1, 2002. The corporation may offer policies that provide
 1455  multiperil coverage and the corporation shall continue to offer
 1456  policies that provide coverage only for the peril of wind for
 1457  risks located in areas eligible for coverage in the coastal
 1458  high-risk account. In issuing multiperil coverage, the
 1459  corporation may use its approved policy forms and rates for the
 1460  personal lines account. An applicant or insured who is eligible
 1461  to purchase a multiperil policy from the corporation may
 1462  purchase a multiperil policy from an authorized insurer without
 1463  prejudice to the applicant’s or insured’s eligibility to
 1464  prospectively purchase a policy that provides coverage only for
 1465  the peril of wind from the corporation. An applicant or insured
 1466  who is eligible for a corporation policy that provides coverage
 1467  only for the peril of wind may elect to purchase or retain such
 1468  policy and also purchase or retain coverage excluding wind from
 1469  an authorized insurer without prejudice to the applicant’s or
 1470  insured’s eligibility to prospectively purchase a policy that
 1471  provides multiperil coverage from the corporation. It is the
 1472  goal of the Legislature that there would be an overall average
 1473  savings of 10 percent or more for a policyholder who currently
 1474  has a wind-only policy with the corporation, and an ex-wind
 1475  policy with a voluntary insurer or the corporation, and who then
 1476  obtains a multiperil policy from the corporation. It is the
 1477  intent of the Legislature that the offer of multiperil coverage
 1478  in the coastal high-risk account be made and implemented in a
 1479  manner that does not adversely affect the tax-exempt status of
 1480  the corporation or creditworthiness of or security for currently
 1481  outstanding financing obligations or credit facilities of the
 1482  coastal high-risk account, the personal lines account, or the
 1483  commercial lines account. The coastal high-risk account must
 1484  also include quota share primary insurance under subparagraph
 1485  (c)2. The area eligible for coverage under the coastal high-risk
 1486  account also includes the area within Port Canaveral, which is
 1487  bordered on the south by the City of Cape Canaveral, bordered on
 1488  the west by the Banana River, and bordered on the north by
 1489  Federal Government property.
 1490         b. The three separate accounts must be maintained as long
 1491  as financing obligations entered into by the Florida Windstorm
 1492  Underwriting Association or Residential Property and Casualty
 1493  Joint Underwriting Association are outstanding, in accordance
 1494  with the terms of the corresponding financing documents. If When
 1495  the financing obligations are no longer outstanding, in
 1496  accordance with the terms of the corresponding financing
 1497  documents, the corporation may use a single account for all
 1498  revenues, assets, liabilities, losses, and expenses of the
 1499  corporation. Consistent with the requirement of this
 1500  subparagraph and prudent investment policies that minimize the
 1501  cost of carrying debt, the board shall exercise its best efforts
 1502  to retire existing debt or to obtain approval of necessary
 1503  parties to amend the terms of existing debt, so as to structure
 1504  the most efficient plan to consolidate the three separate
 1505  accounts into a single account. By February 1, 2007, the board
 1506  shall submit a report to the Financial Services Commission, the
 1507  President of the Senate, and the Speaker of the House of
 1508  Representatives which includes an analysis of consolidating the
 1509  accounts, the actions the board has taken to minimize the cost
 1510  of carrying debt, and its recommendations for executing the most
 1511  efficient plan.
 1512         c. Creditors of the Residential Property and Casualty Joint
 1513  Underwriting Association and of the accounts specified in sub
 1514  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1515  recourse to, the accounts referred to in sub-sub-subparagraphs
 1516  a.(I) and (II) and shall have no claim against, or recourse to,
 1517  the account referred to in sub-sub-subparagraph a.(III).
 1518  Creditors of the Florida Windstorm Underwriting Association
 1519  shall have a claim against, and recourse to, the account
 1520  referred to in sub-sub-subparagraph a.(III) and shall have no
 1521  claim against, or recourse to, the accounts referred to in sub
 1522  sub-subparagraphs a.(I) and (II).
 1523         d. Revenues, assets, liabilities, losses, and expenses not
 1524  attributable to particular accounts shall be prorated among the
 1525  accounts.
 1526         e. The Legislature finds that the revenues of the
 1527  corporation are revenues that are necessary to meet the
 1528  requirements set forth in documents authorizing the issuance of
 1529  bonds under this subsection.
 1530         f. No part of the income of the corporation may inure to
 1531  the benefit of any private person.
 1532         3. With respect to a deficit in an account:
 1533         a. After accounting for the Citizens policyholder surcharge
 1534  imposed under sub-subparagraph i., if when the remaining
 1535  projected deficit incurred in a particular calendar year is not
 1536  greater than 6 percent of the aggregate statewide direct written
 1537  premium for the subject lines of business for the prior calendar
 1538  year, the entire deficit shall be recovered through regular
 1539  assessments of assessable insurers under paragraph (p) and
 1540  assessable insureds.
 1541         b. After accounting for the Citizens policyholder surcharge
 1542  imposed under sub-subparagraph i., when the remaining projected
 1543  deficit incurred in a particular calendar year exceeds 6 percent
 1544  of the aggregate statewide direct written premium for the
 1545  subject lines of business for the prior calendar year, the
 1546  corporation shall levy regular assessments on assessable
 1547  insurers under paragraph (q) (p) and on assessable insureds in
 1548  an amount equal to the greater of 6 percent of the deficit or 6
 1549  percent of the aggregate statewide direct written premium for
 1550  the subject lines of business for the prior calendar year. Any
 1551  remaining deficit shall be recovered through emergency
 1552  assessments under sub-subparagraph d.
 1553         c. Each assessable insurer’s share of the amount being
 1554  assessed under sub-subparagraph a. or sub-subparagraph b. must
 1555  shall be in the proportion that the assessable insurer’s direct
 1556  written premium for the subject lines of business for the year
 1557  preceding the assessment bears to the aggregate statewide direct
 1558  written premium for the subject lines of business for that year.
 1559  The assessment percentage applicable to each assessable insured
 1560  is the ratio of the amount being assessed under sub-subparagraph
 1561  a. or sub-subparagraph b. to the aggregate statewide direct
 1562  written premium for the subject lines of business for the prior
 1563  year. Assessments levied by the corporation on assessable
 1564  insurers under sub-subparagraphs a. and b. shall be paid as
 1565  required by the corporation’s plan of operation and paragraph
 1566  (q) (p). Assessments levied by the corporation on assessable
 1567  insureds under sub-subparagraphs a. and b. shall be collected by
 1568  the surplus lines agent at the time the surplus lines agent
 1569  collects the surplus lines tax required by s. 626.932 and shall
 1570  be paid to the Florida Surplus Lines Service Office at the time
 1571  the surplus lines agent pays the surplus lines tax to the
 1572  Florida Surplus Lines Service Office. Upon receipt of regular
 1573  assessments from surplus lines agents, the Florida Surplus Lines
 1574  Service Office shall transfer the assessments directly to the
 1575  corporation as determined by the corporation.
 1576         d. Upon a determination by the board of governors that a
 1577  deficit in an account exceeds the amount that will be recovered
 1578  through regular assessments under sub-subparagraph a. or sub
 1579  subparagraph b., plus the amount that is expected to be
 1580  recovered through surcharges under sub-subparagraph i., as to
 1581  the remaining projected deficit the board shall levy, after
 1582  verification by the office, emergency assessments, for as many
 1583  years as necessary to cover the deficits, to be collected by
 1584  assessable insurers and the corporation and collected from
 1585  assessable insureds upon issuance or renewal of policies for
 1586  subject lines of business, excluding National Flood Insurance
 1587  policies. The amount of the emergency assessment collected in a
 1588  particular year shall be a uniform percentage of that year’s
 1589  direct written premium for subject lines of business and all
 1590  accounts of the corporation, excluding National Flood Insurance
 1591  Program policy premiums, as annually determined by the board and
 1592  verified by the office. The office shall verify the arithmetic
 1593  calculations involved in the board’s determination within 30
 1594  days after receipt of the information on which the determination
 1595  was based. Notwithstanding any other provision of law, the
 1596  corporation and each assessable insurer that writes subject
 1597  lines of business shall collect emergency assessments from its
 1598  policyholders without such obligation being affected by any
 1599  credit, limitation, exemption, or deferment. Emergency
 1600  assessments levied by the corporation on assessable insureds
 1601  shall be collected by the surplus lines agent at the time the
 1602  surplus lines agent collects the surplus lines tax required by
 1603  s. 626.932 and shall be paid to the Florida Surplus Lines
 1604  Service Office at the time the surplus lines agent pays the
 1605  surplus lines tax to the Florida Surplus Lines Service Office.
 1606  The emergency assessments so collected shall be transferred
 1607  directly to the corporation on a periodic basis as determined by
 1608  the corporation and shall be held by the corporation solely in
 1609  the applicable account. The aggregate amount of emergency
 1610  assessments levied for an account under this sub-subparagraph in
 1611  any calendar year may, at the discretion of the board of
 1612  governors, be less than but may not exceed the greater of 10
 1613  percent of the amount needed to cover the deficit, plus
 1614  interest, fees, commissions, required reserves, and other costs
 1615  associated with financing of the original deficit, or 10 percent
 1616  of the aggregate statewide direct written premium for subject
 1617  lines of business and for all accounts of the corporation for
 1618  the prior year, plus interest, fees, commissions, required
 1619  reserves, and other costs associated with financing the deficit.
 1620         e. The corporation may pledge the proceeds of assessments,
 1621  projected recoveries from the Florida Hurricane Catastrophe
 1622  Fund, other insurance and reinsurance recoverables, policyholder
 1623  surcharges and other surcharges, and other funds available to
 1624  the corporation as the source of revenue for and to secure bonds
 1625  issued under paragraph (p), bonds or other indebtedness issued
 1626  under subparagraph (c)3., or lines of credit or other financing
 1627  mechanisms issued or created under this subsection, or to retire
 1628  any other debt incurred as a result of deficits or events giving
 1629  rise to deficits, or in any other way that the board determines
 1630  will efficiently recover such deficits. The purpose of the lines
 1631  of credit or other financing mechanisms is to provide additional
 1632  resources to assist the corporation in covering claims and
 1633  expenses attributable to a catastrophe. As used in this
 1634  subsection, the term “assessments” includes regular assessments
 1635  under sub-subparagraph a., sub-subparagraph b., or subparagraph
 1636  (p)1. and emergency assessments under sub-subparagraph d.
 1637  Emergency assessments collected under sub-subparagraph d. are
 1638  not part of an insurer’s rates, are not premium, and are not
 1639  subject to premium tax, fees, or commissions; however, failure
 1640  to pay the emergency assessment shall be treated as failure to
 1641  pay premium. The emergency assessments under sub-subparagraph d.
 1642  shall continue as long as any bonds issued or other indebtedness
 1643  incurred with respect to a deficit for which the assessment was
 1644  imposed remain outstanding, unless adequate provision has been
 1645  made for the payment of such bonds or other indebtedness
 1646  pursuant to the documents governing such bonds or other
 1647  indebtedness.
 1648         f. As used in this subsection for purposes of any deficit
 1649  incurred on or after January 25, 2007, the term “subject lines
 1650  of business” means insurance written by assessable insurers or
 1651  procured by assessable insureds for all property and casualty
 1652  lines of business in this state, but not including workers’
 1653  compensation or medical malpractice. As used in the sub
 1654  subparagraph, the term “property and casualty lines of business”
 1655  includes all lines of business identified on Form 2, Exhibit of
 1656  Premiums and Losses, in the annual statement required of
 1657  authorized insurers by s. 624.424 and any rule adopted under
 1658  this section, except for those lines identified as accident and
 1659  health insurance and except for policies written under the
 1660  National Flood Insurance Program or the Federal Crop Insurance
 1661  Program. For purposes of this sub-subparagraph, the term
 1662  “workers’ compensation” includes both workers’ compensation
 1663  insurance and excess workers’ compensation insurance.
 1664         g. The Florida Surplus Lines Service Office shall determine
 1665  annually the aggregate statewide written premium in subject
 1666  lines of business procured by assessable insureds and shall
 1667  report that information to the corporation in a form and at a
 1668  time the corporation specifies to ensure that the corporation
 1669  can meet the requirements of this subsection and the
 1670  corporation’s financing obligations.
 1671         h. The Florida Surplus Lines Service Office shall verify
 1672  the proper application by surplus lines agents of assessment
 1673  percentages for regular assessments and emergency assessments
 1674  levied under this subparagraph on assessable insureds and shall
 1675  assist the corporation in ensuring the accurate, timely
 1676  collection and payment of assessments by surplus lines agents as
 1677  required by the corporation.
 1678         i. If a deficit is incurred in any account in 2008 or
 1679  thereafter, the board of governors shall levy a Citizens
 1680  policyholder surcharge against all policyholders of the
 1681  corporation for a 12-month period, which shall be collected at
 1682  the time of issuance or renewal of a policy, as a uniform
 1683  percentage of the premium for the policy of up to 15 percent of
 1684  such premium, which funds shall be used to offset the deficit.
 1685  Citizens policyholder surcharges under this sub-subparagraph are
 1686  not considered premium and are not subject to commissions, fees,
 1687  or premium taxes. However, failure to pay such surcharges shall
 1688  be treated as failure to pay premium.
 1689         j. If the amount of any assessments or surcharges collected
 1690  from corporation policyholders, assessable insurers or their
 1691  policyholders, or assessable insureds exceeds the amount of the
 1692  deficits, such excess amounts shall be remitted to and retained
 1693  by the corporation in a reserve to be used by the corporation,
 1694  as determined by the board of governors and approved by the
 1695  office, to pay claims or reduce any past, present, or future
 1696  plan-year deficits or to reduce outstanding debt.
 1697         (c) The plan of operation of the corporation:
 1698         1. Must provide for adoption of residential property and
 1699  casualty insurance policy forms and commercial residential and
 1700  nonresidential property insurance forms, which forms must be
 1701  approved by the office prior to use. The corporation shall adopt
 1702  the following policy forms:
 1703         a. Standard personal lines policy forms that are
 1704  comprehensive multiperil policies providing full coverage of a
 1705  residential property equivalent to the coverage provided in the
 1706  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1707         b. Basic personal lines policy forms that are policies
 1708  similar to an HO-8 policy or a dwelling fire policy that provide
 1709  coverage meeting the requirements of the secondary mortgage
 1710  market, but which coverage is more limited than the coverage
 1711  under a standard policy.
 1712         c. Commercial lines residential and nonresidential policy
 1713  forms that are generally similar to the basic perils of full
 1714  coverage obtainable for commercial residential structures and
 1715  commercial nonresidential structures in the admitted voluntary
 1716  market.
 1717         d. Personal lines and commercial lines residential property
 1718  insurance forms that cover the peril of wind only. The forms are
 1719  applicable only to residential properties located in areas
 1720  eligible for coverage under the coastal high-risk account
 1721  referred to in sub-subparagraph (b)2.a.
 1722         e. Commercial lines nonresidential property insurance forms
 1723  that cover the peril of wind only. The forms are applicable only
 1724  to nonresidential properties located in areas eligible for
 1725  coverage under the coastal high-risk account referred to in sub
 1726  subparagraph (b)2.a.
 1727         f. The corporation may adopt variations of the policy forms
 1728  listed in sub-subparagraphs a.-e. that contain more restrictive
 1729  coverage.
 1730         2.a. Must provide that the corporation adopt a program in
 1731  which the corporation and authorized insurers enter into quota
 1732  share primary insurance agreements for hurricane coverage, as
 1733  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1734  property insurance forms for eligible risks which cover the
 1735  peril of wind only. As used in this subsection, the term:
 1736         (I) “Quota share primary insurance” means an arrangement in
 1737  which the primary hurricane coverage of an eligible risk is
 1738  provided in specified percentages by the corporation and an
 1739  authorized insurer. The corporation and authorized insurer are
 1740  each solely responsible for a specified percentage of hurricane
 1741  coverage of an eligible risk as set forth in a quota share
 1742  primary insurance agreement between the corporation and an
 1743  authorized insurer and the insurance contract. The
 1744  responsibility of the corporation or authorized insurer to pay
 1745  its specified percentage of hurricane losses of an eligible
 1746  risk, as set forth in the quota share primary insurance
 1747  agreement, may not be altered by the inability of the other
 1748  party to the agreement to pay its specified percentage of
 1749  hurricane losses. Eligible risks that are provided hurricane
 1750  coverage through a quota share primary insurance arrangement
 1751  must be provided policy forms that set forth the obligations of
 1752  the corporation and authorized insurer under the arrangement,
 1753  clearly specify the percentages of quota share primary insurance
 1754  provided by the corporation and authorized insurer, and
 1755  conspicuously and clearly state that neither the authorized
 1756  insurer nor the corporation may be held responsible beyond its
 1757  specified percentage of coverage of hurricane losses.
 1758         (II) “Eligible risks” means personal lines residential and
 1759  commercial lines residential risks that meet the underwriting
 1760  criteria of the corporation and are located in areas that were
 1761  eligible for coverage by the Florida Windstorm Underwriting
 1762  Association on January 1, 2002.
 1763         b. The corporation may enter into quota share primary
 1764  insurance agreements with authorized insurers at corporation
 1765  coverage levels of 90 percent and 50 percent.
 1766         c. If the corporation determines that additional coverage
 1767  levels are necessary to maximize participation in quota share
 1768  primary insurance agreements by authorized insurers, the
 1769  corporation may establish additional coverage levels. However,
 1770  the corporation’s quota share primary insurance coverage level
 1771  may not exceed 90 percent.
 1772         d. Any quota share primary insurance agreement entered into
 1773  between an authorized insurer and the corporation must provide
 1774  for a uniform specified percentage of coverage of hurricane
 1775  losses, by county or territory as set forth by the corporation
 1776  board, for all eligible risks of the authorized insurer covered
 1777  under the quota share primary insurance agreement.
 1778         e. Any quota share primary insurance agreement entered into
 1779  between an authorized insurer and the corporation is subject to
 1780  review and approval by the office. However, such agreement shall
 1781  be authorized only as to insurance contracts entered into
 1782  between an authorized insurer and an insured who is already
 1783  insured by the corporation for wind coverage.
 1784         f. For all eligible risks covered under quota share primary
 1785  insurance agreements, the exposure and coverage levels for both
 1786  the corporation and authorized insurers shall be reported by the
 1787  corporation to the Florida Hurricane Catastrophe Fund. For all
 1788  policies of eligible risks covered under quota share primary
 1789  insurance agreements, the corporation and the authorized insurer
 1790  shall maintain complete and accurate records for the purpose of
 1791  exposure and loss reimbursement audits as required by Florida
 1792  Hurricane Catastrophe Fund rules. The corporation and the
 1793  authorized insurer shall each maintain duplicate copies of
 1794  policy declaration pages and supporting claims documents.
 1795         g. The corporation board shall establish in its plan of
 1796  operation standards for quota share agreements which ensure that
 1797  there is no discriminatory application among insurers as to the
 1798  terms of quota share agreements, pricing of quota share
 1799  agreements, incentive provisions if any, and consideration paid
 1800  for servicing policies or adjusting claims.
 1801         h. The quota share primary insurance agreement between the
 1802  corporation and an authorized insurer must set forth the
 1803  specific terms under which coverage is provided, including, but
 1804  not limited to, the sale and servicing of policies issued under
 1805  the agreement by the insurance agent of the authorized insurer
 1806  producing the business, the reporting of information concerning
 1807  eligible risks, the payment of premium to the corporation, and
 1808  arrangements for the adjustment and payment of hurricane claims
 1809  incurred on eligible risks by the claims adjuster and personnel
 1810  of the authorized insurer. Entering into a quota sharing
 1811  insurance agreement between the corporation and an authorized
 1812  insurer shall be voluntary and at the discretion of the
 1813  authorized insurer.
 1814         3. May provide that the corporation may employ or otherwise
 1815  contract with individuals or other entities to provide
 1816  administrative or professional services that may be appropriate
 1817  to effectuate the plan. The corporation shall have the power to
 1818  borrow funds, by issuing bonds or by incurring other
 1819  indebtedness, and shall have other powers reasonably necessary
 1820  to effectuate the requirements of this subsection, including,
 1821  without limitation, the power to issue bonds and incur other
 1822  indebtedness in order to refinance outstanding bonds or other
 1823  indebtedness. The corporation may, but is not required to, seek
 1824  judicial validation of its bonds or other indebtedness under
 1825  chapter 75. The corporation may issue bonds or incur other
 1826  indebtedness, or have bonds issued on its behalf by a unit of
 1827  local government pursuant to subparagraph (p)2., in the absence
 1828  of a hurricane or other weather-related event, upon a
 1829  determination by the corporation, subject to approval by the
 1830  office, that such action would enable it to efficiently meet the
 1831  financial obligations of the corporation and that such
 1832  financings are reasonably necessary to effectuate the
 1833  requirements of this subsection. The corporation is authorized
 1834  to take all actions needed to facilitate tax-free status for any
 1835  such bonds or indebtedness, including formation of trusts or
 1836  other affiliated entities. The corporation shall have the
 1837  authority to pledge assessments, projected recoveries from the
 1838  Florida Hurricane Catastrophe Fund, other reinsurance
 1839  recoverables, market equalization and other surcharges, and
 1840  other funds available to the corporation as security for bonds
 1841  or other indebtedness. In recognition of s. 10, Art. I of the
 1842  State Constitution, prohibiting the impairment of obligations of
 1843  contracts, it is the intent of the Legislature that no action be
 1844  taken whose purpose is to impair any bond indenture or financing
 1845  agreement or any revenue source committed by contract to such
 1846  bond or other indebtedness.
 1847         4.a. Must require that the corporation operate subject to
 1848  the supervision and approval of a board of governors consisting
 1849  of eight individuals who are residents of this state, from
 1850  different geographical areas of this state. The Governor, the
 1851  Chief Financial Officer, the President of the Senate, and the
 1852  Speaker of the House of Representatives shall each appoint two
 1853  members of the board. At least one of the two members appointed
 1854  by each appointing officer must have demonstrated expertise in
 1855  insurance, and is deemed to be within the scope of the exemption
 1856  provided in s. 112.313(7)(b). The Chief Financial Officer shall
 1857  designate one of the appointees as chair. All board members
 1858  serve at the pleasure of the appointing officer. All members of
 1859  the board of governors are subject to removal at will by the
 1860  officers who appointed them. All board members, including the
 1861  chair, must be appointed to serve for 3-year terms beginning
 1862  annually on a date designated by the plan. However, for the
 1863  first term beginning on or after July 1, 2009, each appointing
 1864  officer shall appoint one member of the board for a 2-year term
 1865  and one member for a 3-year term. Any board vacancy shall be
 1866  filled for the unexpired term by the appointing officer. The
 1867  Chief Financial Officer shall appoint a technical advisory group
 1868  to provide information and advice to the board of governors in
 1869  connection with the board’s duties under this subsection. The
 1870  executive director and senior managers of the corporation shall
 1871  be engaged by the board and serve at the pleasure of the board.
 1872  Any executive director appointed on or after July 1, 2006, is
 1873  subject to confirmation by the Senate. The executive director is
 1874  responsible for employing other staff as the corporation may
 1875  require, subject to review and concurrence by the board.
 1876         b. The board shall create a Market Accountability Advisory
 1877  Committee to assist the corporation in developing awareness of
 1878  its rates and its customer and agent service levels in
 1879  relationship to the voluntary market insurers writing similar
 1880  coverage. The members of the advisory committee shall consist of
 1881  the following 11 persons, one of whom must be elected chair by
 1882  the members of the committee: four representatives, one
 1883  appointed by the Florida Association of Insurance Agents, one by
 1884  the Florida Association of Insurance and Financial Advisors, one
 1885  by the Professional Insurance Agents of Florida, and one by the
 1886  Latin American Association of Insurance Agencies; three
 1887  representatives appointed by the insurers with the three highest
 1888  voluntary market share of residential property insurance
 1889  business in the state; one representative from the Office of
 1890  Insurance Regulation; one consumer appointed by the board who is
 1891  insured by the corporation at the time of appointment to the
 1892  committee; one representative appointed by the Florida
 1893  Association of Realtors; and one representative appointed by the
 1894  Florida Bankers Association. All members must serve for 3-year
 1895  terms and may serve for consecutive terms. The committee shall
 1896  report to the corporation at each board meeting on insurance
 1897  market issues which may include rates and rate competition with
 1898  the voluntary market; service, including policy issuance, claims
 1899  processing, and general responsiveness to policyholders,
 1900  applicants, and agents; and matters relating to depopulation.
 1901         5. Must provide a procedure for determining the eligibility
 1902  of a risk for coverage, as follows:
 1903         a. Subject to the provisions of s. 627.3517, with respect
 1904  to personal lines residential risks, if the risk is offered
 1905  coverage from an authorized insurer at the insurer’s approved
 1906  rate under either a standard policy including wind coverage or,
 1907  if consistent with the insurer’s underwriting rules as filed
 1908  with the office, a basic policy including wind coverage, for a
 1909  new application to the corporation for coverage, the risk is not
 1910  eligible for any policy issued by the corporation unless the
 1911  premium for coverage from the authorized insurer is more than 15
 1912  percent greater than the premium for comparable coverage from
 1913  the corporation. If the risk is not able to obtain any such
 1914  offer, the risk is eligible for either a standard policy
 1915  including wind coverage or a basic policy including wind
 1916  coverage issued by the corporation; however, if the risk could
 1917  not be insured under a standard policy including wind coverage
 1918  regardless of market conditions, the risk shall be eligible for
 1919  a basic policy including wind coverage unless rejected under
 1920  subparagraph 8. However, with regard to a policyholder of the
 1921  corporation or a policyholder removed from the corporation
 1922  through an assumption agreement until the end of the assumption
 1923  period, the policyholder remains eligible for coverage from the
 1924  corporation regardless of any offer of coverage from an
 1925  authorized insurer or surplus lines insurer. The corporation
 1926  shall determine the type of policy to be provided on the basis
 1927  of objective standards specified in the underwriting manual and
 1928  based on generally accepted underwriting practices.
 1929         (I) If the risk accepts an offer of coverage through the
 1930  market assistance plan or an offer of coverage through a
 1931  mechanism established by the corporation before a policy is
 1932  issued to the risk by the corporation or during the first 30
 1933  days of coverage by the corporation, and the producing agent who
 1934  submitted the application to the plan or to the corporation is
 1935  not currently appointed by the insurer, the insurer shall:
 1936         (A) Pay to the producing agent of record of the policy, for
 1937  the first year, an amount that is the greater of the insurer’s
 1938  usual and customary commission for the type of policy written or
 1939  a fee equal to the usual and customary commission of the
 1940  corporation; or
 1941         (B) Offer to allow the producing agent of record of the
 1942  policy to continue servicing the policy for a period of not less
 1943  than 1 year and offer to pay the agent the greater of the
 1944  insurer’s or the corporation’s usual and customary commission
 1945  for the type of policy written.
 1946  
 1947  If the producing agent is unwilling or unable to accept
 1948  appointment, the new insurer shall pay the agent in accordance
 1949  with sub-sub-sub-subparagraph (A).
 1950         (II) When the corporation enters into a contractual
 1951  agreement for a take-out plan, the producing agent of record of
 1952  the corporation policy is entitled to retain any unearned
 1953  commission on the policy, and the insurer shall:
 1954         (A) Pay to the producing agent of record of the corporation
 1955  policy, for the first year, an amount that is the greater of the
 1956  insurer’s usual and customary commission for the type of policy
 1957  written or a fee equal to the usual and customary commission of
 1958  the corporation; or
 1959         (B) Offer to allow the producing agent of record of the
 1960  corporation policy to continue servicing the policy for a period
 1961  of not less than 1 year and offer to pay the agent the greater
 1962  of the insurer’s or the corporation’s usual and customary
 1963  commission for the type of policy written.
 1964  
 1965  If the producing agent is unwilling or unable to accept
 1966  appointment, the new insurer shall pay the agent in accordance
 1967  with sub-sub-sub-subparagraph (A).
 1968         b. With respect to commercial lines residential risks, for
 1969  a new application to the corporation for coverage, if the risk
 1970  is offered coverage under a policy including wind coverage from
 1971  an authorized insurer at its approved rate, the risk is not
 1972  eligible for any policy issued by the corporation unless the
 1973  premium for coverage from the authorized insurer is more than 15
 1974  percent greater than the premium for comparable coverage from
 1975  the corporation. If the risk is not able to obtain any such
 1976  offer, the risk is eligible for a policy including wind coverage
 1977  issued by the corporation. However, with regard to a
 1978  policyholder of the corporation or a policyholder removed from
 1979  the corporation through an assumption agreement until the end of
 1980  the assumption period, the policyholder remains eligible for
 1981  coverage from the corporation regardless of any offer of
 1982  coverage from an authorized insurer or surplus lines insurer.
 1983         (I) If the risk accepts an offer of coverage through the
 1984  market assistance plan or an offer of coverage through a
 1985  mechanism established by the corporation before a policy is
 1986  issued to the risk by the corporation or during the first 30
 1987  days of coverage by the corporation, and the producing agent who
 1988  submitted the application to the plan or the corporation is not
 1989  currently appointed by the insurer, the insurer shall:
 1990         (A) Pay to the producing agent of record of the policy, for
 1991  the first year, an amount that is the greater of the insurer’s
 1992  usual and customary commission for the type of policy written or
 1993  a fee equal to the usual and customary commission of the
 1994  corporation; or
 1995         (B) Offer to allow the producing agent of record of the
 1996  policy to continue servicing the policy for a period of not less
 1997  than 1 year and offer to pay the agent the greater of the
 1998  insurer’s or the corporation’s usual and customary commission
 1999  for the type of policy written.
 2000  
 2001  If the producing agent is unwilling or unable to accept
 2002  appointment, the new insurer shall pay the agent in accordance
 2003  with sub-sub-sub-subparagraph (A).
 2004         (II) When the corporation enters into a contractual
 2005  agreement for a take-out plan, the producing agent of record of
 2006  the corporation policy is entitled to retain any unearned
 2007  commission on the policy, and the insurer shall:
 2008         (A) Pay to the producing agent of record of the corporation
 2009  policy, for the first year, an amount that is the greater of the
 2010  insurer’s usual and customary commission for the type of policy
 2011  written or a fee equal to the usual and customary commission of
 2012  the corporation; or
 2013         (B) Offer to allow the producing agent of record of the
 2014  corporation policy to continue servicing the policy for a period
 2015  of not less than 1 year and offer to pay the agent the greater
 2016  of the insurer’s or the corporation’s usual and customary
 2017  commission for the type of policy written.
 2018  
 2019  If the producing agent is unwilling or unable to accept
 2020  appointment, the new insurer shall pay the agent in accordance
 2021  with sub-sub-sub-subparagraph (A).
 2022         c. For purposes of determining comparable coverage under
 2023  sub-subparagraphs a. and b., the comparison shall be based on
 2024  those forms and coverages that are reasonably comparable. The
 2025  corporation may rely on a determination of comparable coverage
 2026  and premium made by the producing agent who submits the
 2027  application to the corporation, made in the agent’s capacity as
 2028  the corporation’s agent. A comparison may be made solely of the
 2029  premium with respect to the main building or structure only on
 2030  the following basis: the same coverage A or other building
 2031  limits; the same percentage hurricane deductible that applies on
 2032  an annual basis or that applies to each hurricane for commercial
 2033  residential property; the same percentage of ordinance and law
 2034  coverage, if the same limit is offered by both the corporation
 2035  and the authorized insurer; the same mitigation credits, to the
 2036  extent the same types of credits are offered both by the
 2037  corporation and the authorized insurer; the same method for loss
 2038  payment, such as replacement cost or actual cash value, if the
 2039  same method is offered both by the corporation and the
 2040  authorized insurer in accordance with underwriting rules; and
 2041  any other form or coverage that is reasonably comparable as
 2042  determined by the board. If an application is submitted to the
 2043  corporation for wind-only coverage in the coastal high-risk
 2044  account, the premium for the corporation’s wind-only policy plus
 2045  the premium for the ex-wind policy that is offered by an
 2046  authorized insurer to the applicant shall be compared to the
 2047  premium for multiperil coverage offered by an authorized
 2048  insurer, subject to the standards for comparison specified in
 2049  this subparagraph. If the corporation or the applicant requests
 2050  from the authorized insurer a breakdown of the premium of the
 2051  offer by types of coverage so that a comparison may be made by
 2052  the corporation or its agent and the authorized insurer refuses
 2053  or is unable to provide such information, the corporation may
 2054  treat the offer as not being an offer of coverage from an
 2055  authorized insurer at the insurer’s approved rate.
 2056         6. Must include rules for classifications of risks and
 2057  rates therefor.
 2058         7. Must provide that if premium and investment income for
 2059  an account attributable to a particular calendar year are in
 2060  excess of projected losses and expenses for the account
 2061  attributable to that year, such excess shall be held in surplus
 2062  in the account. Such surplus shall be available to defray
 2063  deficits in that account as to future years and shall be used
 2064  for that purpose prior to assessing assessable insurers and
 2065  assessable insureds as to any calendar year.
 2066         8. Must provide objective criteria and procedures to be
 2067  uniformly applied for all applicants in determining whether an
 2068  individual risk is so hazardous as to be uninsurable. In making
 2069  this determination and in establishing the criteria and
 2070  procedures, the following shall be considered:
 2071         a. Whether the likelihood of a loss for the individual risk
 2072  is substantially higher than for other risks of the same class;
 2073  and
 2074         b. Whether the uncertainty associated with the individual
 2075  risk is such that an appropriate premium cannot be determined.
 2076  
 2077  The acceptance or rejection of a risk by the corporation shall
 2078  be construed as the private placement of insurance, and the
 2079  provisions of chapter 120 shall not apply.
 2080         9. Must provide that the corporation shall make its best
 2081  efforts to procure catastrophe reinsurance at reasonable rates,
 2082  to cover its projected 100-year probable maximum loss as
 2083  determined by the board of governors.
 2084         10. The policies issued by the corporation must provide
 2085  that, if the corporation or the market assistance plan obtains
 2086  an offer from an authorized insurer to cover the risk at its
 2087  approved rates, the risk is no longer eligible for renewal
 2088  through the corporation, except as otherwise provided in this
 2089  subsection.
 2090         11. Corporation policies and applications must include a
 2091  notice that the corporation policy could, under this section, be
 2092  replaced with a policy issued by an authorized insurer that does
 2093  not provide coverage identical to the coverage provided by the
 2094  corporation. The notice shall also specify that acceptance of
 2095  corporation coverage creates a conclusive presumption that the
 2096  applicant or policyholder is aware of this potential.
 2097         12. May establish, subject to approval by the office,
 2098  different eligibility requirements and operational procedures
 2099  for any line or type of coverage for any specified county or
 2100  area if the board determines that such changes to the
 2101  eligibility requirements and operational procedures are
 2102  justified due to the voluntary market being sufficiently stable
 2103  and competitive in such area or for such line or type of
 2104  coverage and that consumers who, in good faith, are unable to
 2105  obtain insurance through the voluntary market through ordinary
 2106  methods would continue to have access to coverage from the
 2107  corporation. When coverage is sought in connection with a real
 2108  property transfer, such requirements and procedures shall not
 2109  provide for an effective date of coverage later than the date of
 2110  the closing of the transfer as established by the transferor,
 2111  the transferee, and, if applicable, the lender.
 2112         13. Must provide that, with respect to the coastal high
 2113  risk account, any assessable insurer with a surplus as to
 2114  policyholders of $25 million or less writing 25 percent or more
 2115  of its total countrywide property insurance premiums in this
 2116  state may petition the office, within the first 90 days of each
 2117  calendar year, to qualify as a limited apportionment company. A
 2118  regular assessment levied by the corporation on a limited
 2119  apportionment company for a deficit incurred by the corporation
 2120  for the coastal high-risk account in 2006 or thereafter may be
 2121  paid to the corporation on a monthly basis as the assessments
 2122  are collected by the limited apportionment company from its
 2123  insureds pursuant to s. 627.3512, but the regular assessment
 2124  must be paid in full within 12 months after being levied by the
 2125  corporation. A limited apportionment company shall collect from
 2126  its policyholders any emergency assessment imposed under sub
 2127  subparagraph (b)3.d. The plan shall provide that, if the office
 2128  determines that any regular assessment will result in an
 2129  impairment of the surplus of a limited apportionment company,
 2130  the office may direct that all or part of such assessment be
 2131  deferred as provided in subparagraph (p)4. However, there shall
 2132  be no limitation or deferment of an emergency assessment to be
 2133  collected from policyholders under sub-subparagraph (b)3.d.
 2134         14. Must provide that the corporation appoint as its
 2135  licensed agents only those agents who also hold an appointment
 2136  as defined in s. 626.015(3) with an insurer who at the time of
 2137  the agent’s initial appointment by the corporation is authorized
 2138  to write and is actually writing personal lines residential
 2139  property coverage, commercial residential property coverage, or
 2140  commercial nonresidential property coverage within the state.
 2141         15. Must provide, by July 1, 2007, a premium payment plan
 2142  option to its policyholders which allows at a minimum for
 2143  quarterly and semiannual payment of premiums. A monthly payment
 2144  plan may, but is not required to, be offered.
 2145         16. Must limit coverage on mobile homes or manufactured
 2146  homes built prior to 1994 to actual cash value of the dwelling
 2147  rather than replacement costs of the dwelling.
 2148         17. May provide such limits of coverage as the board
 2149  determines, consistent with the requirements of this subsection.
 2150         18. May require commercial property to meet specified
 2151  hurricane mitigation construction features as a condition of
 2152  eligibility for coverage.
 2153         (d)1. All prospective employees for senior management
 2154  positions, as defined by the plan of operation, are subject to
 2155  background checks as a prerequisite for employment. The office
 2156  shall conduct background checks on such prospective employees
 2157  pursuant to ss. 624.34, 624.404(3), and 628.261.
 2158         2. On or before July 1 of each year, employees of the
 2159  corporation are required to sign and submit a statement
 2160  attesting that they do not have a conflict of interest, as
 2161  defined in part III of chapter 112. As a condition of
 2162  employment, all prospective employees are required to sign and
 2163  submit to the corporation a conflict-of-interest statement.
 2164         3. Senior managers and members of the board of governors
 2165  are subject to the provisions of part III of chapter 112,
 2166  including, but not limited to, the code of ethics and public
 2167  disclosure and reporting of financial interests, pursuant to s.
 2168  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2169  vote on any measure that would inure to his or her special
 2170  private gain or loss; that he or she knows would inure to the
 2171  special private gain or loss of any principal by whom he or she
 2172  is retained or to the parent organization or subsidiary of a
 2173  corporate principal by which he or she is retained, other than
 2174  an agency as defined in s. 112.312; or that he or she knows
 2175  would inure to the special private gain or loss of a relative or
 2176  business associate of the public officer. Before the vote is
 2177  taken, such member shall publicly state to the assembly the
 2178  nature of the his or her interest in the matter from which he or
 2179  she is abstaining from voting and, within 15 days after the vote
 2180  occurs, disclose the nature of his or her interest as a public
 2181  record in a memorandum filed with the person responsible for
 2182  recording the minutes of the meeting, who shall incorporate the
 2183  memorandum in the minutes. Senior managers and board members are
 2184  also required to file such disclosures with the Commission on
 2185  Ethics and the Office of Insurance Regulation. The executive
 2186  director of the corporation or his or her designee shall notify
 2187  each existing and newly appointed and existing appointed member
 2188  of the board of governors and senior managers of their duty to
 2189  comply with the reporting requirements of part III of chapter
 2190  112. At least quarterly, the executive director or his or her
 2191  designee shall submit to the Commission on Ethics a list of
 2192  names of the senior managers and members of the board of
 2193  governors who are subject to the public disclosure requirements
 2194  under s. 112.3145.
 2195         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2196  provision of law, an employee or board member may not knowingly
 2197  accept, directly or indirectly, any gift or expenditure from a
 2198  person or entity, or an employee or representative of such
 2199  person or entity, that has a contractual relationship with the
 2200  corporation or who is under consideration for a contract. An
 2201  employee or board member who fails to comply with subparagraph
 2202  3. or this subparagraph is subject to penalties provided under
 2203  ss. 112.317 and 112.3173.
 2204         5. Any senior manager of the corporation who is employed on
 2205  or after January 1, 2007, regardless of the date of hire, who
 2206  subsequently retires or terminates employment is prohibited from
 2207  representing another person or entity before the corporation for
 2208  2 years after retirement or termination of employment from the
 2209  corporation.
 2210         6. Any senior manager of the corporation who is employed on
 2211  or after January 1, 2007, regardless of the date of hire, who
 2212  subsequently retires or terminates employment is prohibited from
 2213  having any employment or contractual relationship for 2 years
 2214  with an insurer that has entered into a take-out bonus agreement
 2215  with the corporation.
 2216         (y) It is the intent of the Legislature that the amendments
 2217  to this subsection enacted in 2002 should, over time, reduce the
 2218  probable maximum windstorm losses in the residual markets and
 2219  should reduce the potential assessments to be levied on property
 2220  insurers and policyholders statewide. In furtherance of this
 2221  intent:
 2222         1. The board shall, on or before February 1 of each year,
 2223  provide a report to the President of the Senate and the Speaker
 2224  of the House of Representatives showing the reduction or
 2225  increase in the 100-year probable maximum loss attributable to
 2226  wind-only coverages and the quota share program under this
 2227  subsection combined, as compared to the benchmark 100-year
 2228  probable maximum loss of the Florida Windstorm Underwriting
 2229  Association. For purposes of this paragraph, the benchmark 100
 2230  year probable maximum loss of the Florida Windstorm Underwriting
 2231  Association shall be the calculation dated February 2001 and
 2232  based on November 30, 2000, exposures. In order to ensure
 2233  comparability of data, the board shall use the same methods for
 2234  calculating its probable maximum loss as were used to calculate
 2235  the benchmark probable maximum loss.
 2236         2. Beginning December 1, 2012 2010, if the report under
 2237  subparagraph 1. for any year indicates that the 100-year
 2238  probable maximum loss attributable to wind-only coverages and
 2239  the quota share program combined does not reflect a reduction of
 2240  at least 25 percent from the benchmark, the board shall reduce
 2241  the boundaries of the high-risk area eligible for wind-only
 2242  coverages under this subsection in a manner calculated to reduce
 2243  such probable maximum loss to an amount at least 25 percent
 2244  below the benchmark.
 2245         3. Beginning February 1, 2015, if the report under
 2246  subparagraph 1. for any year indicates that the 100-year
 2247  probable maximum loss attributable to wind-only coverages and
 2248  the quota share program combined does not reflect a reduction of
 2249  at least 50 percent from the benchmark, the boundaries of the
 2250  high-risk area eligible for wind-only coverages under this
 2251  subsection shall be reduced by the elimination of any area that
 2252  is not seaward of a line 1,000 feet inland from the Intracoastal
 2253  Waterway.
 2254         Section 11. The Division of Statutory Revision is directed
 2255  to prepare a reviser’s bill for introduction at the next regular
 2256  session of the Legislature to change the term “high-risk
 2257  account” to “coastal account” to conform the Florida Statutes to
 2258  the amendment to s. 627.351(6)(b)2.a.(III), Florida Statutes,
 2259  made by the this act.
 2260         Section 12. Subsection (2) of section 627.4133, Florida
 2261  Statutes, is amended to read:
 2262         627.4133 Notice of cancellation, nonrenewal, or renewal
 2263  premium.—
 2264         (2) With respect to any personal lines or commercial
 2265  residential property insurance policy, including, but not
 2266  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2267  condominium association, condominium unit owner’s, apartment
 2268  building, or other policy covering a residential structure or
 2269  its contents:
 2270         (a) The insurer shall give the named insured at least 45
 2271  days’ advance written notice of the renewal premium.
 2272         (b) The insurer shall give the named insured written notice
 2273  of nonrenewal, cancellation, or termination at least 100 days
 2274  before prior to the effective date of the nonrenewal,
 2275  cancellation, or termination. However, the insurer shall give at
 2276  least 100 days’ written notice, or written notice by June 1,
 2277  whichever is earlier, for any nonrenewal, cancellation, or
 2278  termination that would be effective between June 1 and November
 2279  30. The notice must include the reason or reasons for the
 2280  nonrenewal, cancellation, or termination, except that:
 2281         1. The insurer must shall give the named insured written
 2282  notice of nonrenewal, cancellation, or termination at least 180
 2283  days before prior to the effective date of the nonrenewal,
 2284  cancellation, or termination for a named insured whose
 2285  residential structure has been insured by that insurer or an
 2286  affiliated insurer for at least a 5-year period immediately
 2287  prior to the date of the written notice.
 2288         2. When cancellation is for nonpayment of premium, at least
 2289  10 days’ written notice of cancellation accompanied by the
 2290  reason therefor must shall be given. As used in this
 2291  subparagraph, the term “nonpayment of premium” means failure of
 2292  the named insured to discharge when due any of her or his
 2293  obligations in connection with the payment of premiums on a
 2294  policy or any installment of such premium, whether the premium
 2295  is payable directly to the insurer or its agent or indirectly
 2296  under any premium finance plan or extension of credit, or
 2297  failure to maintain membership in an organization if such
 2298  membership is a condition precedent to insurance coverage.
 2299  “Nonpayment of premium” also means the failure of a financial
 2300  institution to honor an insurance applicant’s check after
 2301  delivery to a licensed agent for payment of a premium, even if
 2302  the agent has previously delivered or transferred the premium to
 2303  the insurer. If a dishonored check represents the initial
 2304  premium payment, the contract and all contractual obligations
 2305  are shall be void ab initio unless the nonpayment is cured
 2306  within the earlier of 5 days after actual notice by certified
 2307  mail is received by the applicant or 15 days after notice is
 2308  sent to the applicant by certified mail or registered mail, and
 2309  if the contract is void, any premium received by the insurer
 2310  from a third party must shall be refunded to that party in full.
 2311         3. When such cancellation or termination occurs during the
 2312  first 90 days during which the insurance is in force and the
 2313  insurance is canceled or terminated for reasons other than
 2314  nonpayment of premium, at least 20 days’ written notice of
 2315  cancellation or termination accompanied by the reason therefor
 2316  must shall be given except if where there has been a material
 2317  misstatement or misrepresentation or failure to comply with the
 2318  underwriting requirements established by the insurer.
 2319         4. The requirement for providing written notice of
 2320  nonrenewal by June 1 of any nonrenewal that would be effective
 2321  between June 1 and November 30 does not apply to the following
 2322  situations, but the insurer remains subject to the requirement
 2323  to provide such notice at least 100 days before prior to the
 2324  effective date of nonrenewal:
 2325         a. A policy that is nonrenewed due to a revision in the
 2326  coverage for sinkhole losses and catastrophic ground cover
 2327  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2328  2007-1, Laws of Florida.
 2329         b. A policy that is nonrenewed by Citizens Property
 2330  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2331  that has been assumed by an authorized insurer offering
 2332  replacement or renewal coverage to the policyholder is exempt
 2333  from the notice requirements of paragraph (a) and this
 2334  paragraph. In such cases, Citizens Property Insurance
 2335  Corporation shall give the named insured written notice of
 2336  nonrenewal at least 45 days before the effective date of the
 2337  nonrenewal.
 2338  
 2339  After the policy has been in effect for 90 days, the policy may
 2340  shall not be canceled by the insurer except if when there has
 2341  been a material misstatement, a nonpayment of premium, a failure
 2342  to comply with underwriting requirements established by the
 2343  insurer within 90 days of the date of effectuation of coverage,
 2344  or a substantial change in the risk covered by the policy or if
 2345  when the cancellation is for all insureds under such policies
 2346  for a given class of insureds. This paragraph does not apply to
 2347  individually rated risks having a policy term of less than 90
 2348  days.
 2349         5.Notwithstanding any other provision of law, an insurer
 2350  may cancel or nonrenew a property insurance policy upon a
 2351  minimum of 45 days notice if the office finds that the early
 2352  cancellation of some or all of the insurer’s policies is
 2353  necessary to protect the best interests of the public or
 2354  policyholders and the office approves the insurer’s plan for
 2355  early cancellation or nonrenewal of some or all of its policies.
 2356  The office may base such a finding upon the financial condition
 2357  of the insurer, lack of adequate reinsurance coverage for
 2358  hurricane risk, or other relevant factors. The office may
 2359  condition its finding on the consent of the insurer to be placed
 2360  in administrative supervision pursuant to s. 624.81 or consent
 2361  to the appointment of a receiver under chapter 631.
 2362         (c) If the insurer fails to provide the notice required by
 2363  this subsection, other than the 10-day notice, the coverage
 2364  provided to the named insured shall remain in effect until the
 2365  effective date of replacement coverage or until the expiration
 2366  of a period of days after the notice is given equal to the
 2367  required notice period, whichever occurs first. The premium for
 2368  the coverage shall remain the same during any such extension
 2369  period except that, in the event of failure to provide notice of
 2370  nonrenewal, if the rate filing then in effect would have
 2371  resulted in a premium reduction, the premium during such
 2372  extension must shall be calculated based on the later rate
 2373  filing.
 2374         (d)1. Upon a declaration of an emergency pursuant to s.
 2375  252.36 and the filing of an order by the Commissioner of
 2376  Insurance Regulation, an insurer may not cancel or nonrenew a
 2377  personal residential or commercial residential property
 2378  insurance policy covering a dwelling or residential property
 2379  located in this state which has been damaged as a result of a
 2380  hurricane or wind loss that is the subject of the declaration of
 2381  emergency for a period of 90 days after the dwelling or
 2382  residential property has been repaired. A structure is deemed to
 2383  be repaired when substantially completed and restored to the
 2384  extent that it is insurable by another authorized insurer that
 2385  is writing policies in this state.
 2386         2. However, an insurer or agent may cancel or nonrenew such
 2387  a policy before prior to the repair of the dwelling or
 2388  residential property:
 2389         a. Upon 10 days’ notice for nonpayment of premium; or
 2390         b. Upon 45 days’ notice:
 2391         (I) For a material misstatement or fraud related to the
 2392  claim;
 2393         (II) If the insurer determines that the insured has
 2394  unreasonably caused a delay in the repair of the dwelling; or
 2395         (III) If the insurer has paid policy limits.
 2396         3. If the insurer elects to nonrenew a policy covering a
 2397  property that has been damaged, the insurer shall provide at
 2398  least 90 days’ notice to the insured that the insurer intends to
 2399  nonrenew the policy 90 days after the dwelling or residential
 2400  property has been repaired. Nothing in this paragraph shall
 2401  prevent the insurer from canceling or nonrenewing the policy 90
 2402  days after the repairs are complete for the same reasons the
 2403  insurer would otherwise have canceled or nonrenewed the policy
 2404  but for the limitations of subparagraph 1. The Financial
 2405  Services Commission may adopt rules, and the Commissioner of
 2406  Insurance Regulation may issue orders, necessary to implement
 2407  this paragraph.
 2408         4. This paragraph shall also applies apply to personal
 2409  residential and commercial residential policies covering
 2410  property that was damaged as the result of Tropical Storm
 2411  Bonnie, Hurricane Charley, Hurricane Frances, Hurricane Ivan, or
 2412  Hurricane Jeanne.
 2413         (e) If any cancellation or nonrenewal of a policy subject
 2414  to this subsection is to take effect during the duration of a
 2415  hurricane as defined in s. 627.4025(2)(c), the effective date of
 2416  such cancellation or nonrenewal is extended until the end of the
 2417  duration of such hurricane. The insurer may collect premium at
 2418  the prior rates or the rates then in effect for the period of
 2419  time for which coverage is extended. This paragraph does not
 2420  apply to any property with respect to which replacement coverage
 2421  has been obtained and which is in effect for a claim occurring
 2422  during the duration of the hurricane.
 2423         Section 13. Section 627.43141, Florida Statutes, is created
 2424  to read:
 2425         627.43141 Notice of change in policy terms.—
 2426         (1) As used in this section, the term:
 2427         (a) “Change in policy terms” means the modification,
 2428  addition, or deletion of any term, coverage, duty, or condition
 2429  from the previous policy. The correction of typographical or
 2430  scrivener’s errors or the application of mandated legislative
 2431  changes is not a change in policy terms.
 2432         (b) “Policy” means a written contract of personal lines
 2433  property insurance or a written agreement for insurance, or the
 2434  certificate of such insurance, by whatever name called, and
 2435  includes all clauses, riders, endorsements, and papers that are
 2436  a part of such policy. The term does not include a binder as
 2437  defined in s. 627.420 unless the duration of the binder period
 2438  exceeds 60 days.
 2439         (c) “Renewal” means the issuance and delivery by an insurer
 2440  of a policy superseding at the end of the policy period a policy
 2441  previously issued and delivered by the same insurer or the
 2442  issuance and delivery of a certificate or notice extending the
 2443  term of a policy beyond its policy period or term. Any policy
 2444  that has a policy period or term of less than 6 months or any
 2445  policy that does not have a fixed expiration date shall, for
 2446  purposes of this section, be considered as written for
 2447  successive policy periods or terms of 6 months.
 2448         (2) A renewal policy may contain a change in policy terms.
 2449  If a renewal policy contains a change in policy terms, the
 2450  insurer shall give the named insured a written notice of the
 2451  change in policy terms, which must be enclosed along with the
 2452  written notice of renewal premium required by ss. 627.4133 and
 2453  627.728. Such notice should be entitled “Notice of Change in
 2454  Policy Terms.”
 2455         (3) Although not required, proof of mailing or registered
 2456  mailing through the United States Postal Service of the Notice
 2457  of Change in Policy Terms to the named insured at the address
 2458  shown in the policy is sufficient proof of notice.
 2459         (4) Receipt of payment of the premium for the renewal
 2460  policy by the insurer is deemed to be acceptance of the new
 2461  policy terms by the named insured.
 2462         (5) If an insurer fails to provide the notice required in
 2463  subsection (2), the original policy terms shall remain in effect
 2464  until the next renewal and the proper service of the notice or
 2465  until the effective date of replacement coverage obtained by the
 2466  named insured, whichever occurs first.
 2467         (6) The intent of this section is to:
 2468         (a) Allow an insurer to make a change in policy terms
 2469  without nonrenewing policyholders that the insurer wishes to
 2470  continue insuring.
 2471         (b) Alleviate concern and confusion to the policyholder
 2472  caused by the required policy nonrenewal for the limited issue
 2473  when an insurer intends to renew the insurance policy but the
 2474  new policy contains a change in policy terms.
 2475         (c) Encourage policyholders to discuss their coverages with
 2476  their insurance agents.
 2477         Section 14. Section 627.7011, Florida Statutes, is amended
 2478  to read:
 2479         627.7011 Homeowners’ policies; offer of replacement cost
 2480  coverage and law and ordinance coverage.—
 2481         (1) Before Prior to issuing or renewing a homeowner’s
 2482  insurance policy on or after October 1, 2005, or prior to the
 2483  first renewal of a homeowner’s insurance policy on or after
 2484  October 1, 2005, the insurer must offer each of the following:
 2485         (a) A policy or endorsement providing that any loss which
 2486  is repaired or replaced will be adjusted on the basis of
 2487  replacement costs not exceeding policy limits as to the
 2488  dwelling, rather than actual cash value, but not including costs
 2489  necessary to meet applicable laws and ordinances regulating the
 2490  construction, use, or repair of any property or requiring the
 2491  tearing down of any property, including the costs of removing
 2492  debris.
 2493         (b) A policy or endorsement providing that, subject to
 2494  other policy provisions, any loss which is repaired or replaced
 2495  at any location will be adjusted on the basis of replacement
 2496  costs not exceeding policy limits as to the dwelling, rather
 2497  than actual cash value, and also including costs necessary to
 2498  meet applicable laws and ordinances regulating the construction,
 2499  use, or repair of any property or requiring the tearing down of
 2500  any property, including the costs of removing debris.; However,
 2501  such additional costs necessary to meet applicable laws and
 2502  ordinances may be limited to either 25 percent or 50 percent of
 2503  the dwelling limit, as selected by the policyholder, and such
 2504  coverage shall apply only to repairs of the damaged portion of
 2505  the structure unless the total damage to the structure exceeds
 2506  50 percent of the replacement cost of the structure.
 2507  
 2508  An insurer is not required to make the offers required by this
 2509  subsection with respect to the issuance or renewal of a
 2510  homeowner’s policy that contains the provisions specified in
 2511  paragraph (b) for law and ordinance coverage limited to 25
 2512  percent of the dwelling limit, except that the insurer must
 2513  offer the law and ordinance coverage limited to 50 percent of
 2514  the dwelling limit. This subsection does not prohibit the offer
 2515  of a guaranteed replacement cost policy.
 2516         (2) Unless the insurer obtains the policyholder’s written
 2517  refusal of the policies or endorsements specified in subsection
 2518  (1), any policy covering the dwelling is deemed to include the
 2519  law and ordinance coverage limited to 25 percent of the dwelling
 2520  limit. The rejection or selection of alternative coverage shall
 2521  be made on a form approved by the office. The form shall fully
 2522  advise the applicant of the nature of the coverage being
 2523  rejected. If this form is signed by a named insured, it will be
 2524  conclusively presumed that there was an informed, knowing
 2525  rejection of the coverage or election of the alternative
 2526  coverage on behalf of all insureds. Unless the policyholder
 2527  requests in writing the coverage specified in this section, it
 2528  need not be provided in or supplemental to any other policy that
 2529  renews, insures, extends, changes, supersedes, or replaces an
 2530  existing policy when the policyholder has rejected the coverage
 2531  specified in this section or has selected alternative coverage.
 2532  The insurer must provide such policyholder with notice of the
 2533  availability of such coverage in a form approved by the office
 2534  at least once every 3 years. The failure to provide such notice
 2535  constitutes a violation of this code, but does not affect the
 2536  coverage provided under the policy.
 2537  (3)(a)If In the event of a loss occurs for which a dwelling or
 2538  personal property is insured on the basis of replacement costs,
 2539  the insurer initially must shall pay at least the actual cash
 2540  value of the insured loss, less any applicable deductible. A
 2541  policyholder shall subsequently enter into a contract for the
 2542  performance of building and structural repairs. The insurer
 2543  shall pay any remaining amounts necessary to perform such
 2544  repairs as the work is performed and expenses are incurred
 2545  replacement cost without reservation or holdback of any
 2546  depreciation in value, whether or not the insured replaces or
 2547  repairs the dwelling or property. With the exception of
 2548  incidental expenses to mitigate further damage, the insurer or
 2549  any contractor or subcontractor may not require the policyholder
 2550  to advance payment for such repairs or expenses. The insurer may
 2551  waive the requirement for a contract as provided in this
 2552  paragraph.
 2553         (b) If a loss occurs for which personal property is insured
 2554  on the basis of replacement costs, the insurer may limit an
 2555  initial payment to 50 percent of the replacement cost value of
 2556  the personal property to be replaced, less any applicable
 2557  deductible. An insurer may require that an insured provide the
 2558  receipts from the purchase of property financed by the initial
 2559  50 percent payment mandated under this paragraph, and the
 2560  insurer shall use such receipts to make any remaining payments
 2561  requested by the insured for the replacement of remaining
 2562  insured personal property. If a total loss occurs, the insurer
 2563  shall pay the replacement cost for contents coverage without
 2564  reservation or holdback of any depreciation in value. The
 2565  insurer may not require the policyholder to advance payment for
 2566  the replaced property.
 2567         (4) A Any homeowner’s insurance policy issued or renewed on
 2568  or after October 1, 2005, must include in bold type no smaller
 2569  than 18 points the following statement:
 2570  
 2571         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2572         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2573         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2574         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2575         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2576         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2577  The intent of this subsection is to encourage policyholders to
 2578  purchase sufficient coverage to protect them in case events
 2579  excluded from the standard homeowners policy, such as law and
 2580  ordinance enforcement and flood, combine with covered events to
 2581  produce damage or loss to the insured property. The intent is
 2582  also to encourage policyholders to discuss these issues with
 2583  their insurance agent.
 2584         (5) Nothing in This section does not shall be construed to
 2585  apply to policies not considered to be “homeowners’ policies,”
 2586  as that term is commonly understood in the insurance industry.
 2587  This section specifically does not apply to mobile home
 2588  policies. Nothing in This section does not limit shall be
 2589  construed as limiting the ability of any insurer to reject or
 2590  nonrenew any insured or applicant on the grounds that the
 2591  structure does not meet underwriting criteria applicable to
 2592  replacement cost or law and ordinance policies or for other
 2593  lawful reasons.
 2594         (6) This section does not prohibit an insurer from limiting
 2595  its liability under a policy or endorsement providing that loss
 2596  will be adjusted on the basis of replacement costs to the lesser
 2597  of:
 2598         (a) The limit of liability shown on the policy declarations
 2599  page;
 2600         (b) The reasonable and necessary cost to repair the
 2601  damaged, destroyed, or stolen covered property; or
 2602         (c) The reasonable and necessary cost to replace the
 2603  damaged, destroyed, or stolen covered property.
 2604         (7) This section does not prohibit an insurer from
 2605  exercising its right to repair damaged property in compliance
 2606  with its policy and s. 627.702(7).
 2607         Section 15. Section 627.7015, Florida Statutes, is amended
 2608  to read:
 2609         627.7015 Alternative procedure for resolution of disputed
 2610  property insurance claims.—
 2611         (1) PURPOSE AND SCOPE.—This section sets forth a
 2612  nonadversarial alternative dispute resolution procedure for a
 2613  mediated claim resolution conference prompted by the need for
 2614  effective, fair, and timely handling of property insurance
 2615  claims. There is a particular need for an informal,
 2616  nonthreatening forum for helping parties who elect this
 2617  procedure to resolve their claims disputes because most
 2618  homeowner’s and commercial residential insurance policies
 2619  obligate insureds to participate in a potentially expensive and
 2620  time-consuming adversarial appraisal process before prior to
 2621  litigation. The procedure set forth in this section is designed
 2622  to bring the parties together for a mediated claims settlement
 2623  conference without any of the trappings or drawbacks of an
 2624  adversarial process. Before resorting to these procedures,
 2625  insureds and insurers are encouraged to resolve claims as
 2626  quickly and fairly as possible. This section is available with
 2627  respect to claims under personal lines and commercial
 2628  residential policies for all claimants and insurers prior to
 2629  commencing the appraisal process, or commencing litigation. If
 2630  requested by the insured, participation by legal counsel shall
 2631  be permitted. Mediation under this section is also available to
 2632  litigants referred to the department by a county court or
 2633  circuit court. This section does not apply to commercial
 2634  coverages, to private passenger motor vehicle insurance
 2635  coverages, or to disputes relating to liability coverages in
 2636  policies of property insurance.
 2637         (2) At the time a first-party claim dispute within the
 2638  scope of this section is filed, the insurer shall notify all
 2639  first-party claimants of their right to participate in the
 2640  mediation program under this section. The department shall
 2641  prepare a statement or information relating to the mediation
 2642  program which an insurer must include in the notice. The content
 2643  of the statement or information must be adopted by rule of the
 2644  department consumer information pamphlet for distribution to
 2645  persons participating in mediation under this section.
 2646         (3) The costs of mediation shall be reasonable, and the
 2647  insurer shall bear all of the cost of conducting mediation
 2648  conferences, except as otherwise provided in this section. If an
 2649  insured fails to appear at the conference, the conference shall
 2650  be rescheduled upon the insured’s payment of the costs of a
 2651  rescheduled conference. If the insurer fails to appear at the
 2652  conference, the insurer shall pay the insured’s actual cash
 2653  expenses incurred in attending the conference if the insurer’s
 2654  failure to attend was not due to a good cause acceptable to the
 2655  department. An insurer will be deemed to have failed to appear
 2656  if the insurer’s representative lacks authority to settle the
 2657  full value of the claim. The insurer shall incur an additional
 2658  fee for a rescheduled conference necessitated by the insurer’s
 2659  failure to appear at a scheduled conference. The fees assessed
 2660  by the administrator shall include a charge necessary to defray
 2661  the expenses of the department related to its duties under this
 2662  section and shall be deposited in the Insurance Regulatory Trust
 2663  Fund.
 2664         (4) In a dispute over the cost to replace or repair insured
 2665  property, the insurer and insured shall each provide
 2666  documentation to the mediator which supports his or her estimate
 2667  to repair or replace the property. The documentation must be
 2668  provided before the beginning of the mediation conference. The
 2669  insurer’s documentation must include its reports or other
 2670  evidence relating to the loss and show that the insurer’s
 2671  estimates were created in compliance with s. 626.9744(3). The
 2672  insured must submit quotes obtained from licensed contractors in
 2673  the local market area, retail price quotes for products and
 2674  materials, or other documentation specific to the loss which
 2675  clearly documents the actual cost to repair or replace the
 2676  property.
 2677         (5)(4) The department shall adopt by rule a property
 2678  insurance mediation program to be administered by the department
 2679  or its designee. The department may also adopt special rules
 2680  that which are applicable in cases of an emergency within the
 2681  state. The rules shall be modeled after practices and procedures
 2682  set forth in mediation rules of procedure adopted by the Supreme
 2683  Court. The rules shall provide for:
 2684         (a) Reasonable requirement for processing and scheduling of
 2685  requests for mediation.
 2686         (b) Qualifications of mediators as provided in s. 627.745
 2687  and in the Florida Rules of Certified and Court Appointed
 2688  Mediators, and for such other individuals as are qualified by
 2689  education, training, or experience as the department determines
 2690  to be appropriate.
 2691         (c) Provisions governing who may attend mediation
 2692  conferences.
 2693         (d) Selection of mediators.
 2694         (e) Criteria for the conduct of mediation conferences.
 2695         (f) Right to legal counsel.
 2696         (g) The types of documentation required to be submitted
 2697  during the mediation process.
 2698         (6)(5) All statements made and documents produced at a
 2699  mediation conference shall be deemed to be settlement
 2700  negotiations in anticipation of litigation within the scope of
 2701  s. 90.408. All parties to the mediation must negotiate in good
 2702  faith and must have the authority to immediately settle the
 2703  claim. Mediators are deemed to be agents of the department and
 2704  shall have the immunity from suit provided in s. 44.107.
 2705         (7)(6) Mediation is nonbinding.; However, if a written
 2706  settlement is reached, the insured has 3 business days within
 2707  which the insured may rescind the settlement unless the insured
 2708  has cashed or deposited any check or draft disbursed to the
 2709  insured for the disputed matters as a result of the conference.
 2710  If a settlement agreement is reached and is not rescinded, it
 2711  shall be binding and act as a release of all specific claims
 2712  that were presented in that mediation conference.
 2713         (8)(7) If the insurer fails to comply with subsection (2)
 2714  by failing to notify a first-party claimant of its right to
 2715  participate in the mediation program under this section or if
 2716  the insurer requests the mediation, and the mediation results
 2717  are rejected by either party, the insured may shall not be
 2718  required to submit to or participate in any contractual loss
 2719  appraisal process of the property loss damage as a precondition
 2720  to legal action for breach of contract against the insurer for
 2721  its failure to pay the policyholder’s claims covered by the
 2722  policy.
 2723         (9)(8) The department may designate an entity or person to
 2724  serve as administrator to carry out any of the provisions of
 2725  this section and may take this action by means of a written
 2726  contract or agreement.
 2727         (10)(9)As used in For purposes of this section, the term
 2728  “claim dispute” refers to any dispute between an insurer and an
 2729  insured relating to a material issue of fact other than a
 2730  dispute:
 2731         (a) With respect to which the insurer has a reasonable
 2732  basis to suspect fraud;
 2733         (b) Where, based on agreed-upon facts as to the cause of
 2734  loss, there is no coverage under the policy;
 2735         (c) With respect to which the insurer has a reasonable
 2736  basis to believe that the claimant has intentionally made a
 2737  material misrepresentation of fact which is relevant to the
 2738  claim, and the entire request for payment of a loss has been
 2739  denied on the basis of the material misrepresentation; or
 2740         (d) With respect to which the amount in controversy is less
 2741  than $500, unless the parties agree to mediate a dispute
 2742  involving a lesser amount; or.
 2743         (e)With respect to which the date of loss occurred more
 2744  than 5 years before the request for mediation, unless the
 2745  parties agree to mediate a dispute involving a longer period.
 2746         Section 16. Section 627.7065, Florida Statutes, is
 2747  repealed.
 2748         Section 17. Effective June 1, 2010, and applying only to
 2749  insurance claims made on or after that date, subsection (1),
 2750  paragraph (b) of subsection (2), and subsections (5), (7), and
 2751  (8) of section 627.707, Florida Statutes, are amended to read:
 2752         627.707 Standards for investigation of sinkhole claims by
 2753  insurers; nonrenewals.—Upon receipt of a claim for a sinkhole
 2754  loss, an insurer must meet the following standards in
 2755  investigating a claim:
 2756         (1) The insurer must make an inspection of the insured’s
 2757  premises to determine if there has been physical damage to the
 2758  structure which is consistent with may be the result of sinkhole
 2759  loss activity.
 2760         (2) Following the insurer’s initial inspection, the insurer
 2761  shall engage a professional engineer or a professional geologist
 2762  to conduct testing as provided in s. 627.7072 to determine the
 2763  cause of the loss within a reasonable professional probability
 2764  and issue a report as provided in s. 627.7073, if:
 2765         (b) The policyholder demands testing in accordance with
 2766  this section or s. 627.7072 and coverage under the policy is
 2767  available if sinkhole loss is verified.
 2768         (5)(a) Subject to paragraph (b), if a sinkhole loss is
 2769  verified, the insurer shall pay to stabilize the land and
 2770  building and repair the foundation in accordance with the
 2771  recommendations of the professional engineer as provided under
 2772  s. 627.7073, with notice to and in consultation with the
 2773  policyholder, subject to the coverage and terms of the policy.
 2774  The insurer shall pay for other repairs to the structure and
 2775  contents in accordance with the terms of the policy.
 2776         (b)1. After a The insurer may limit its payment to the
 2777  actual cash value of the sinkhole loss, not including
 2778  underpinning or grouting or any other repair technique performed
 2779  below the existing foundation of the building, until the
 2780  policyholder enters into a contract for the performance of
 2781  building stabilization or foundation repairs, the claim shall be
 2782  paid up to the full cost of the stabilization or foundation
 2783  repairs and up to full replacement cost for above-ground repairs
 2784  as set forth in this paragraph, less the insured’s deductible.
 2785  After the policyholder enters into a contract for the
 2786  performance of building stabilization or foundation repairs, the
 2787  insurer may:
 2788         a. Limit its initial payment to 10 percent of the estimated
 2789  costs to implement the building stabilization and foundation
 2790  repairs.
 2791         b. Limit its initial payment to the actual cash value of
 2792  the sinkhole loss for above-ground repairs to the structure.
 2793         2. However, after the policyholder enters into the contract
 2794  for the performance of building stabilization or foundation
 2795  repairs, the insurer shall pay the amounts necessary to begin
 2796  and perform such stabilization and repairs as the work is
 2797  performed and the expenses are incurred. Final payments for the
 2798  structural or building stabilization and foundation repair work
 2799  shall be remitted within 30 days after such work is completed in
 2800  accordance with the terms of the policy and the report’s
 2801  recommendations and after final bills or receipts have been
 2802  submitted to the insurer. The insurer may not require the
 2803  policyholder to advance payment for such repairs. If repair
 2804  covered by a personal lines residential property insurance
 2805  policy has begun and the professional engineer selected or
 2806  approved by the insurer determines that the repair cannot be
 2807  completed within the policy limits, the insurer must either
 2808  complete the professional engineer’s recommended repair or
 2809  tender the policy limits to the policyholder without a reduction
 2810  for the repair expenses incurred.
 2811         (c) The policyholder shall enter into such contract for
 2812  repairs within 90 days after the insurance company approves
 2813  coverage for a sinkhole loss to prevent additional damage to the
 2814  building or structure. The 90-day period may be extended for an
 2815  additional reasonable time period if the policyholder is unable
 2816  to find a qualified person or entity to contract for such
 2817  repairs within the 90-day period based upon factors beyond the
 2818  policyholder’s control or if the policyholder is actively
 2819  seeking to retain a professional engineer or geologist as
 2820  provided in s. 627.7073(1)(c). This period shall be tolled if
 2821  either party invokes neutral evaluation.
 2822         (d) The stabilization and all other repairs to the
 2823  structure and contents must be completed within 12 months after
 2824  entering into the contract for repairs as described in paragraph
 2825  (c) unless:
 2826         1. There is a mutual agreement between the insurer and the
 2827  insured;
 2828         2. The stabilization and all other repairs cannot be
 2829  completed due to factors beyond the control of the insured which
 2830  reasonably prevent completion;
 2831         3. The claim is involved with the neutral evaluation
 2832  process under s. 627.7074;
 2833         4. The claim is in litigation; or
 2834         5. The claim is under appraisal.
 2835         (e)(c) Upon the insurer’s obtaining the written approval of
 2836  the policyholder and any lienholder, the insurer may make
 2837  payment directly to the persons selected by the policyholder to
 2838  perform the land and building stabilization and foundation
 2839  repairs. The decision by the insurer to make payment to such
 2840  persons does not hold the insurer liable for the work performed.
 2841         (7) If the insurer obtains, pursuant to s. 627.7073,
 2842  written certification that there is no sinkhole loss or that the
 2843  cause of the damage was not sinkhole activity, and if the
 2844  policyholder has submitted the sinkhole claim without good faith
 2845  grounds for submitting such claim, the policyholder shall
 2846  reimburse the insurer for 50 percent of the actual costs of the
 2847  analyses and services provided under ss. 627.7072 and 627.7073;
 2848  however, a policyholder is not required to reimburse an insurer
 2849  more than $2,500 with respect to any claim. A policyholder is
 2850  required to pay reimbursement under this subsection only if the
 2851  insurer, prior to ordering the analysis under s. 627.7072,
 2852  informs the policyholder in writing of the policyholder’s
 2853  potential liability for reimbursement and gives the policyholder
 2854  the opportunity to withdraw the claim.
 2855         (8) No insurer shall nonrenew any policy of property
 2856  insurance on the basis of filing of claims for partial loss
 2857  caused by sinkhole damage or clay shrinkage as long as the total
 2858  of such payments does not exceed the current policy limits of
 2859  coverage for property damage for the policy in effect on the
 2860  date of the loss, and provided the insured has repaired the
 2861  structure in accordance with the engineering recommendations
 2862  upon which any payment or policy proceeds were based.
 2863         Section 18. Effective June 1, 2010, and applying only to
 2864  insurance claims made on or after that date, section 627.7072,
 2865  Florida Statutes, is amended to read:
 2866         627.7072 Testing standards for sinkholes.—
 2867         (1) The professional engineer and professional geologist
 2868  shall perform such tests as sufficient, in their professional
 2869  opinion, to determine the presence or absence of sinkhole loss
 2870  or other cause of damage within reasonable professional
 2871  probability and for the professional engineer to make
 2872  recommendations regarding necessary building stabilization and
 2873  foundation repair.
 2874         (2) The professional engineer and professional geologist
 2875  shall perform tests under this section in accordance with
 2876  Florida Geological Survey Special Publication 57 to determine
 2877  the presence or absence of sinkhole loss or other cause of
 2878  damage within a reasonable professional probability.
 2879         Section 19. Effective June 1, 2010, and applying only to
 2880  insurance claims made on or after that date, section 627.7073,
 2881  Florida Statutes, is amended to read:
 2882         627.7073 Sinkhole reports.—
 2883         (1) Upon completion of testing as provided in s. 627.7072,
 2884  the professional engineer or professional geologist shall issue
 2885  a report and certification to the insurer, with an additional
 2886  copy and certification for the insurer to forward to and the
 2887  policyholder as provided in this section.
 2888         (a) Sinkhole loss is verified if, based upon tests
 2889  performed in accordance with s. 627.7072, a professional
 2890  engineer or a professional geologist issues a written report and
 2891  certification stating:
 2892         1. That the cause of the actual physical and structural
 2893  damage is sinkhole activity within a reasonable professional
 2894  probability.
 2895         2. That the analyses conducted were of sufficient scope to
 2896  identify sinkhole activity as the cause of damage within a
 2897  reasonable professional probability.
 2898         3. A description of the tests performed.
 2899         4. A recommendation by the professional engineer of methods
 2900  for stabilizing the land and building and for making repairs to
 2901  the foundation.
 2902         (b) If sinkhole activity is eliminated as the cause of
 2903  damage to the structure, the professional engineer or
 2904  professional geologist shall issue a written report and
 2905  certification to the policyholder and the insurer stating:
 2906         1. That the cause of the damage is not sinkhole activity
 2907  within a reasonable professional probability.
 2908         2. That the analyses and tests conducted were of sufficient
 2909  scope to eliminate sinkhole activity as the cause of damage
 2910  within a reasonable professional probability.
 2911         3. A statement of the cause of the damage within a
 2912  reasonable professional probability.
 2913         4. A description of the tests performed.
 2914         (c) If the policyholder disagrees with the findings,
 2915  opinions, or recommendations of the professional engineer or
 2916  professional geologist engaged by the insurer, the policyholder
 2917  may engage a professional engineer or professional geologist, at
 2918  the policyholder’s expense, to conduct testing under s.
 2919  627.7072; to render findings, opinions, and recommendations as
 2920  to the cause of distress to the property and the appropriate
 2921  method of land and building stabilization and foundation repair;
 2922  certify such findings, opinions, and recommendations in a report
 2923  that meets the requirements of this section; and forward a copy
 2924  of the report to the insurer. Unless the policyholder engages a
 2925  professional engineer or professional geologist as described in
 2926  this paragraph who disputes the findings of the insurer’s
 2927  engineer or geologist, the respective findings, opinions, and
 2928  recommendations of the professional engineer or professional
 2929  geologist as to the cause of distress to the property and the
 2930  findings, opinions, and recommendations of the insurer’s
 2931  professional engineer as to land and building stabilization and
 2932  foundation repair as required by s. 627.707(2), shall be
 2933  presumed correct, and such presumption shall shift the burden of
 2934  proof under s. 90.304.
 2935         (2)(a) Any insurer that has paid a claim for a sinkhole
 2936  loss shall file a copy of the report and certification, prepared
 2937  pursuant to subsection (1), including the legal description of
 2938  the real property, and the name of the property owner, and the
 2939  amount paid by the insurer, with the county clerk of court, who
 2940  shall record the report and certification. The insurer shall
 2941  also file a copy of any report prepared on behalf of the insured
 2942  or the insured’s representative which has been provided to the
 2943  insurer which indicates that sinkhole loss caused the damage
 2944  claimed. The insurer shall bear the cost of filing and recording
 2945  of one or more reports the report and certifications
 2946  certification. There shall be no cause of action or liability
 2947  against an insurer for compliance with this section. The
 2948  recording of the report and certification does not:
 2949         1. Constitute a lien, encumbrance, or restriction on the
 2950  title to the real property or constitute a defect in the title
 2951  to the real property;
 2952         2. Create any cause of action or liability against any
 2953  grantor of the real property for breach of any warranty of good
 2954  title or warranty against encumbrances; or
 2955         3. Create any cause of action or liability against any
 2956  title insurer that insures the title to the real property.
 2957         (b) The seller of real property upon which a sinkhole claim
 2958  has been made by the seller and paid by the insurer shall
 2959  disclose to the buyer of such property that a claim has been
 2960  paid, the amount of the payment, and whether or not the full
 2961  amount of the proceeds were used to repair the sinkhole damage.
 2962  The seller shall also provide to the buyer a copy of the report
 2963  prepared pursuant to subsection (1) and any report prepared on
 2964  behalf of the insured.
 2965         Section 20. Effective June 1, 2010, and applying only to
 2966  insurance claims made on or after that date, section 627.7074,
 2967  Florida Statutes, is amended to read:
 2968         627.7074 Alternative procedure for resolution of disputed
 2969  sinkhole insurance claims.—
 2970         (1) As used in this section, the term:
 2971         (a) “Neutral evaluation” means the alternative dispute
 2972  resolution provided for in this section.
 2973         (b) “Neutral evaluator” means a professional engineer or a
 2974  professional geologist who has completed a course of study in
 2975  alternative dispute resolution designed or approved by the
 2976  department for use in the neutral evaluation process, who is
 2977  determined to be fair and impartial.
 2978         (2)(a) The department shall certify and maintain a list of
 2979  persons who are neutral evaluators.
 2980         (b) The department shall prepare a consumer information
 2981  pamphlet for distribution by insurers to policyholders which
 2982  clearly describes the neutral evaluation process and includes
 2983  information and forms necessary for the policyholder to request
 2984  a neutral evaluation.
 2985         (3) Neutral evaluation is available to either party if a
 2986  sinkhole report has been issued pursuant to s. 627.7073. Neutral
 2987  evaluation shall, at a minimum, determine causation, all methods
 2988  of stabilization and repair both above and below ground, and
 2989  information necessary to carry out subsection (13). Following
 2990  the receipt of the report provided under s. 627.7073 or the
 2991  denial of a claim for a sinkhole loss, the insurer shall notify
 2992  the policyholder of his or her right to participate in the
 2993  neutral evaluation program under this section. Neutral
 2994  evaluation supersedes the alternative dispute resolution process
 2995  under s. 627.7015 but does not invalidate the appraisal clause
 2996  if an appraisal clause is provided by the insurance policy. The
 2997  appraisal process must be performed in accordance with the terms
 2998  of the applicable policy and the requirements of this section.
 2999  The insurer shall provide to the policyholder the consumer
 3000  information pamphlet prepared by the department pursuant to
 3001  paragraph (2)(b).
 3002         (4) Neutral evaluation is nonbinding, but mandatory if
 3003  requested by either party. A request for neutral evaluation may
 3004  be filed with the department by the policyholder or the insurer
 3005  on a form approved by the department. The insurance carrier must
 3006  request neutral evaluation within 1 year after the
 3007  policyholder’s written notice to the insurer’s claims adjuster
 3008  who is primarily responsible for adjusting the loss of a
 3009  disputed issue relating to the sinkhole claim. The request for
 3010  neutral evaluation must state the reason for the request and
 3011  must include an explanation of all the issues in dispute at the
 3012  time of the request. Filing a request for neutral evaluation
 3013  tolls the applicable time requirements for filing suit for a
 3014  period of 60 days following the conclusion of the neutral
 3015  evaluation process or the time prescribed in s. 95.11, whichever
 3016  is later.
 3017         (5) Neutral evaluation shall be conducted as an informal
 3018  process in which formal rules of evidence and procedure need not
 3019  be observed. A party to neutral evaluation is not required to
 3020  attend neutral evaluation if a representative of the party
 3021  attends and has the authority to make a binding decision on
 3022  behalf of the party. All parties shall participate in the
 3023  evaluation in good faith. If an appraisal clause is present in
 3024  the policy, a remaining dispute as to the amount of the loss may
 3025  be resolved in the applicable policy’s appraisal process in
 3026  compliance with the terms of such policy, by other proceedings
 3027  agreed to by the parties, or by trial.
 3028         (6) The insurer shall pay the costs associated with the
 3029  neutral evaluation.
 3030         (7)(a) Upon receipt of a request for neutral evaluation,
 3031  the department shall provide the parties a list of certified
 3032  neutral evaluators. the parties shall mutually select a neutral
 3033  evaluator from the list and promptly inform the department. If
 3034  the parties cannot agree to a neutral evaluator within 10
 3035  business days, the department allow the parties to submit
 3036  requests to disqualify neutral evaluators on the list for cause.
 3037  For purposes of this subsection, a ground for cause is required
 3038  to be found by the department only if:
 3039         1. A familial relationship exists between the neutral
 3040  evaluator and either party or a representative of either party
 3041  within the third degree;
 3042         2. The proposed neutral evaluator has, in a professional
 3043  capacity, previously represented either party or a
 3044  representative of either party in the same or a substantially
 3045  related matter;
 3046         3. The proposed neutral evaluator has, in a professional
 3047  capacity, represented another person in the same or a
 3048  substantially related matter and that person’s interests are
 3049  materially adverse to the interests of the parties;
 3050         4. The proposed neutral evaluator works in the same firm or
 3051  corporation as a person who has, in a professional capacity,
 3052  previously represented either party or a representative of
 3053  either party in the same or a substantially related matter; or
 3054         5. The proposed neutral evaluator has, within the preceding
 3055  5 years, worked as an employee of any party to the case.
 3056         (b) The parties shall mutually appoint a neutral evaluator
 3057  from the department list and promptly inform the department. If
 3058  the parties cannot agree to a neutral evaluator within 10
 3059  business days, the department shall appoint a neutral evaluator
 3060  from the department’s list of certified neutral evaluators. The
 3061  department shall allow each party to disqualify one neutral
 3062  evaluator without cause. Upon selection or appointment, the
 3063  department shall promptly refer the request to the neutral
 3064  evaluator.
 3065         (c) Within 5 business days after the referral, the neutral
 3066  evaluator shall notify the policyholder and the insurer of the
 3067  date, time, and place of the neutral evaluation conference. The
 3068  conference may be held by telephone, if feasible and desirable.
 3069  The neutral evaluation conference shall be held within 90 45
 3070  days after the receipt of the request by the department. If the
 3071  neutral evaluator fails to hold a neutral evaluation conference
 3072  in accordance with this paragraph, the neutral evaluator’s fee
 3073  will be reduced by 10 percent unless the delay was due to
 3074  factors beyond the control of the neutral evaluator.
 3075         (d) As used in this subsection, the term “substantially
 3076  related matter” means participation by the neutral evaluator on
 3077  the same claim, property, or any adjacent property.
 3078         (8) The department shall adopt rules of procedure for the
 3079  neutral evaluation process.
 3080         (9) For policyholders not represented by an attorney, a
 3081  consumer affairs specialist of the department or an employee
 3082  designated as the primary contact for consumers on issues
 3083  relating to sinkholes under s. 20.121 shall be available for
 3084  consultation to the extent that he or she may lawfully do so.
 3085         (10) Evidence of an offer to settle a claim during the
 3086  neutral evaluation process, as well as any relevant conduct or
 3087  statements made in negotiations concerning the offer to settle a
 3088  claim, is inadmissible to prove liability or absence of
 3089  liability for the claim or its value, except as provided in
 3090  subsection (14) (13).
 3091         (11) Regardless of when invoked, any court proceeding
 3092  related to the subject matter of the neutral evaluation shall be
 3093  stayed pending completion of the neutral evaluation and for 5
 3094  days after the filing of the neutral evaluator’s report with the
 3095  court.
 3096         (12) If the neutral evaluator, based upon his or her
 3097  professional training and credentials, is qualified only to
 3098  determine the causation issue or the method of repair issue, the
 3099  department shall allow the neutral evaluator to enlist the
 3100  assistance of another professional from the qualified neutral
 3101  evaluators list, not previously stricken by parties with respect
 3102  to the subject evaluation, who, based upon his or her
 3103  professional training and credentials, is able to provide an
 3104  opinion as to the other disputed issue. Any professional who, if
 3105  appointed as the neutral evaluator, would be disqualified for
 3106  any reason listed in subsection (7) must be disqualified. In
 3107  addition, the neutral evaluator may use the service of other
 3108  experts or professionals as necessary to ensure that all items
 3109  in dispute are addressed in order to complete the neutral
 3110  evaluation. Any professional retained by the neutral evaluator
 3111  to provide an opinion may be disqualified for any of the reasons
 3112  listed in subsection (7). The neutral evaluator may request that
 3113  the entity that performed testing pursuant to s. 627.7072
 3114  perform such additional reasonable testing deemed necessary in
 3115  the professional opinion of the neutral evaluator to complete
 3116  the neutral evaluation.
 3117         (13)(12) For all matters that are not resolved by the
 3118  parties at the conclusion of the neutral evaluation, the neutral
 3119  evaluator shall prepare a report stating that in his or her
 3120  opinion the sinkhole loss has been verified or eliminated within
 3121  a reasonable degree of professional probability and, if
 3122  verified, whether the sinkhole loss has caused structural or
 3123  cosmetic damage to the building and, if so, the need for and
 3124  estimated costs of stabilizing the land and any covered
 3125  structures or buildings and other appropriate remediation or
 3126  structural repairs that are necessary due to the sinkhole loss.
 3127  The evaluator’s report shall be sent to all parties in
 3128  attendance at the neutral evaluation and to the department.
 3129         (14)(13) The recommendation of the neutral evaluator is not
 3130  binding on any party, and the parties retain access to court.
 3131  The neutral evaluator’s written recommendation is admissible in
 3132  any subsequent action or proceeding relating to the claim or to
 3133  the cause of action giving rise to the claim.
 3134         (15)(14) If the neutral evaluator first verifies the
 3135  existence of a sinkhole and, second, recommends the need for and
 3136  estimates costs of stabilizing the land and any covered
 3137  structures or buildings and other appropriate remediation or
 3138  structural repairs, which costs exceed the amount that the
 3139  insurer has offered to pay the policyholder, the insurer is
 3140  liable to the policyholder for up to $2,500 in attorney’s fees
 3141  for the attorney’s participation in the neutral evaluation
 3142  process. For purposes of this subsection, the term “offer to
 3143  pay” means a written offer signed by the insurer or its legal
 3144  representative and delivered to the policyholder within 10 days
 3145  after the insurer receives notice that a request for neutral
 3146  evaluation has been made under this section.
 3147         (16)(15) If the insurer timely agrees in writing to comply
 3148  and timely complies with the recommendation of the neutral
 3149  evaluator, but the policyholder declines to resolve the matter
 3150  in accordance with the recommendation of the neutral evaluator
 3151  pursuant to this section:
 3152         (a) The insurer is not liable for extracontractual damages
 3153  related to a claim for a sinkhole loss but only as related to
 3154  the issues determined by the neutral evaluation process. This
 3155  section does not affect or impair claims for extracontractual
 3156  damages unrelated to the issues determined by the neutral
 3157  evaluation process contained in this section; and
 3158         (b) The insurer is not liable for attorney’s fees under s.
 3159  627.428 or other provisions of the insurance code unless the
 3160  policyholder obtains a judgment that is more favorable than the
 3161  recommendation of the neutral evaluator.
 3162         (17) If the insurer agrees to comply with the neutral
 3163  evaluator’s report, payment for stabilizing the land and
 3164  building and repairing the foundation shall be made in
 3165  accordance with the terms and conditions of the applicable
 3166  insurance policy.
 3167         Section 21. Section 627.711, Florida Statutes, is amended
 3168  to read:
 3169         627.711 Notice of premium discounts for hurricane loss
 3170  mitigation; uniform mitigation verification inspection form.—
 3171         (1) Using a form prescribed by the Office of Insurance
 3172  Regulation, the insurer shall clearly notify the applicant or
 3173  policyholder of any personal lines residential property
 3174  insurance policy, at the time of the issuance of the policy and
 3175  at each renewal, of the availability and the range of each
 3176  premium discount, credit, other rate differential, or reduction
 3177  in deductibles, and combinations of discounts, credits, rate
 3178  differentials, or reductions in deductibles, for properties on
 3179  which fixtures or construction techniques demonstrated to reduce
 3180  the amount of loss in a windstorm can be or have been installed
 3181  or implemented. The prescribed form shall describe generally
 3182  what actions the policyholders may be able to take to reduce
 3183  their windstorm premium. The prescribed form and a list of such
 3184  ranges approved by the office for each insurer licensed in the
 3185  state and providing such discounts, credits, other rate
 3186  differentials, or reductions in deductibles for properties
 3187  described in this subsection shall be available for electronic
 3188  viewing and download from the Department of Financial Services’
 3189  or the Office of Insurance Regulation’s Internet website. The
 3190  Financial Services Commission may adopt rules to implement this
 3191  subsection.
 3192         (2) By July 1, 2007, The Financial Services Commission
 3193  shall develop by rule a uniform mitigation verification
 3194  inspection form that shall be used by all insurers when
 3195  submitted by policyholders for the purpose of factoring
 3196  discounts for wind insurance. In developing the form, the
 3197  commission shall seek input from insurance, construction, and
 3198  building code representatives. Further, the commission shall
 3199  provide guidance as to the length of time the inspection results
 3200  are valid. An insurer shall accept as valid a uniform mitigation
 3201  verification form certified by the Department of Financial
 3202  Services or signed by:
 3203         (a) A hurricane mitigation inspector certified by the My
 3204  Safe Florida Home program;
 3205         (b)(c) A general, building, or residential contractor
 3206  licensed under s. 489.111;
 3207         (c)(d) A professional engineer licensed under s. 471.015
 3208  who has passed the appropriate equivalency test of the building
 3209  code training program as required by s. 553.841; or
 3210         (d)(e) A professional architect licensed under s. 481.213.;
 3211  or
 3212         (f)Any other individual or entity recognized by the
 3213  insurer as possessing the necessary qualifications to properly
 3214  complete a uniform mitigation verification form.
 3215  
 3216  An insurer may, but is not required to, accept a form from any
 3217  other person possessing qualifications and experience acceptable
 3218  to the insurer.
 3219         (3)A person who is authorized to sign a mitigation
 3220  verification form must inspect the structures referenced by the
 3221  form personally, not through employees or other persons, and
 3222  must certify or attest to personal inspection of the structures
 3223  referenced by the form.
 3224         (4) An individual or entity that signs a uniform mitigation
 3225  form may not commit misconduct in performing hurricane
 3226  mitigation inspections or in completing a uniform mitigation
 3227  form which causes financial harm to an insured or the insurer or
 3228  jeopardizes an insured’s health and safety. Misconduct occurs
 3229  when an authorized mitigation inspector signs a uniform
 3230  mitigation verification form that:
 3231         (a) Falsely indicates that he or she personally inspected
 3232  the structures referenced by the form;
 3233         (b) Falsely indicates the existence of a feature that
 3234  entitles an insured to a mitigation discount that the inspector
 3235  knows does not exist or did not personally inspect;
 3236         (c) Contains erroneous information due to the gross
 3237  negligence of the inspector; or
 3238         (d) Contains demonstrably false information regarding the
 3239  existence of mitigation features that could give an insured a
 3240  false evaluation of the ability of the structure to withstand
 3241  major damage from a hurricane endangering the safety of the
 3242  insured’s life and property.
 3243         (5) The licensing board of an authorized mitigation
 3244  inspector that violates subsection (4) may commence disciplinary
 3245  proceedings and impose administrative fines and other sanctions
 3246  authorized under the inspector’s licensing act.
 3247         (6) An insurer, person, or other entity that obtains
 3248  evidence of fraud or evidence that an inspector has made false
 3249  statements in the completion of a mitigation inspection form
 3250  shall file a report with the Division of Insurance Fraud, along
 3251  with all of the evidence in its possession which supports the
 3252  allegation of fraud or falsity. An insurer, person, or other
 3253  entity making the report is immune from liability, pursuant to
 3254  s. 626.989(4), for any statements made in the report, during the
 3255  investigation, or in connection with the report. The Division of
 3256  Insurance Fraud shall issue an investigative report if it finds
 3257  that probable cause exists to believe that the inspector made
 3258  intentionally false or fraudulent statements in the inspection
 3259  form. Upon conclusion of the investigation and a finding of
 3260  probable cause that a violation has occurred, the Division of
 3261  Insurance Fraud shall send a copy of the investigative report to
 3262  the office and a copy to the agency responsible for the
 3263  professional licensure of the inspector, whether or not a
 3264  prosecutor takes action based upon the report.
 3265         (7)(3) An individual or entity who knowingly provides or
 3266  utters a false or fraudulent mitigation verification form with
 3267  the intent to obtain or receive a discount on an insurance
 3268  premium to which the individual or entity is not entitled
 3269  commits a misdemeanor of the first degree, punishable as
 3270  provided in s. 775.082 or s. 775.083.
 3271         Section 22. Section 628.252, Florida Statutes, is created
 3272  to read:
 3273         628.252 Servicing affiliates of domestic property
 3274  insurers.—Every domestic property insurer shall notify the
 3275  office of its intention to enter into with affiliates all
 3276  management agreements, service contracts, and cost-sharing
 3277  arrangements. A domestic property insurer may not enter into
 3278  such an agreement, contract, or arrangement unless the insurer
 3279  has it has provided the office with at least 30 days’ written
 3280  notice of its intention to enter into such agreement, contract,
 3281  or arrangement, or such shorter period as the office, in its
 3282  discretion, may permit and the office has not disapproved such
 3283  agreement, contract, or arrangement within such period. This
 3284  section does not limit any existing authority of the office.
 3285         Section 23. The sums of $263,200 in nonrecurring funds and
 3286  $47,500 in recurring funds from the Insurance Regulatory Trust
 3287  Fund are appropriated and one full-time equivalent position and
 3288  associated salary rate is authorized to the Office of Insurance
 3289  Regulation to implement the provisions of the act relating to
 3290  the design, development, and operation of a comprehensive
 3291  website for consumers which provides comparisons of homeowners’
 3292  insurance rates and products.
 3293         Section 24. Except as otherwise expressly provided in this
 3294  act and except for this section, which shall take effect June 1,
 3295  2010, this act shall take effect July 1, 2010.

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