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       ENROLLED
       2010 Legislature            CS for CS for SB 2044, 2nd Engrossed
       
       
       
       
       
       
                                                             20102044er
    1  
    2         An act relating to insurance; amending s. 215.555,
    3         F.S.; delaying the repeal of a provision exempting
    4         medical malpractice insurance premiums from emergency
    5         assessments to the Hurricane Catastrophe Fund;
    6         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. 626.221, F.S.;
   27         exempting certain individuals from the requirement to
   28         pass an examination before being issued a license as
   29         an agent, customer representative, or adjuster;
   30         amending s. 624.424, F.S.; revising the frequency that
   31         an insurer may use the same accountant or partner to
   32         prepare an annual audited financial report; amending
   33         s. 626.7452, F.S.; removing an exception relating to
   34         the examination of managing general agents; amending
   35         s. 626.854, F.S.; providing statements that may be
   36         considered deceptive or misleading if made in any
   37         public adjuster’s advertisement or solicitation;
   38         providing a definition for the term “written
   39         advertisement”; requiring that a disclaimer be
   40         included in any public adjuster’s written
   41         advertisement; providing requirements for such
   42         disclaimer; providing limitations on the amount of
   43         compensation that may be received for a reopened or
   44         supplemental claim; requiring certain persons who act
   45         on behalf of an insurer to provide notice to the
   46         insurer, claimant, public adjuster, or legal
   47         representative for an onsite inspection of the insured
   48         property; authorizing the insured or claimant to deny
   49         access to the property if notice is not provided;
   50         requiring the public adjuster to ensure prompt notice
   51         of certain property loss claims; providing that an
   52         insurer be allowed to interview the insured directly
   53         about the loss claim; prohibiting the insurer from
   54         obstructing or preventing the public adjuster from
   55         communicating with the insured; requiring that the
   56         insurer communicate with the public adjuster in an
   57         effort to reach agreement as to the scope of the
   58         covered loss under the insurance policy; prohibiting a
   59         public adjuster from restricting or preventing persons
   60         acting on behalf of the insured from having reasonable
   61         access to the insured or the insured’s property;
   62         prohibiting a public adjuster from restricting or
   63         preventing the insured’s adjuster from having
   64         reasonable access to or inspecting the insured’s
   65         property; authorizing the insured’s adjuster to be
   66         present for the inspection; prohibiting a licensed
   67         contractor or subcontractor from adjusting a claim on
   68         behalf of an insured if such contractor or
   69         subcontractor is not a licensed public adjuster;
   70         providing an exception; amending s. 626.8651, F.S.;
   71         requiring that a public adjuster apprentice complete a
   72         minimum number of hours of continuing education to
   73         qualify for licensure; amending s. 626.8796, F.S.;
   74         providing requirements for a public adjuster contract;
   75         creating s. 626.70132, F.S.; requiring that notice of
   76         a claim, supplemental claim, or reopened claim be
   77         given to the insurer within a specified period after a
   78         windstorm or hurricane occurs; providing a definition
   79         for the terms “supplemental claim” or “reopened
   80         claim”; providing applicability; amending s. 627.0613,
   81         F.S.; requiring the office of the consumer advocate to
   82         objectively grade insurers annually based on the
   83         number of valid consumer complaints and other
   84         measurable and objective factors; defining the term
   85         “valid consumer complaint”; amending s. 627.062, F.S.;
   86         requiring that the office issue an approval rather
   87         than a notice of intent to approve following its
   88         approval of a file and use filing; prohibiting the
   89         Office of Insurance Regulation from, directly or
   90         indirectly, prohibiting an insurer from paying
   91         acquisition costs based on the full amount of the
   92         premium; prohibiting the Office of Insurance
   93         Regulation from, directly or indirectly, impeding the
   94         right of an insurer to acquire policyholders,
   95         advertise or appoint agents, or regulate agent
   96         commissions; authorizing an insurer to make a rate
   97         filing limited to changes in the cost of reinsurance,
   98         the cost of financing products used as a replacement
   99         for reinsurance, or changes in an inflation trend
  100         factor published annually by the Office of Insurance
  101         Regulation; providing that an insurer may use this
  102         provision only if the increase from such filing and
  103         any other rate filing does not exceed 10 percent for
  104         any policyholder in a policy year; deleting provisions
  105         relating to a rate filing for financing products
  106         relating to the Temporary Increase in Coverage Limits;
  107         revising the information that must be included in a
  108         rate filing relating to certain reinsurance or
  109         financing products; deleting a provision that
  110         prohibited an insurer from making certain rate filings
  111         within a certain period of time after a rate increase;
  112         deleting a provision prohibiting an insurer from
  113         filing for a rate increase within 6 months after it
  114         makes certain rate filings; specifying the information
  115         that an insurer must include in a rate filing based on
  116         the change in an inflation trend factor published by
  117         the Office of Insurance Regulation; requiring that the
  118         office annually publish one or more inflation trend
  119         factors; exempting the inflation trend factors from
  120         rulemaking; providing that an insurer is not required
  121         to adopt an inflation trend factor; requiring the
  122         Office of Insurance Regulation to propose a plan for
  123         developing a website, contingent upon an
  124         appropriation, which provides consumers with
  125         information necessary to make an informed decision
  126         when purchasing homeowners’ insurance; requiring that
  127         the Financial Services Commission review the proposed
  128         plan to implement the website; specifying matters that
  129         the Office of Insurance Regulation must consider in
  130         developing the website; deleting obsolete provisions
  131         relating to legislation enacted during the 2003
  132         Special Session D of the Legislature; amending s.
  133         627.0629, F.S.; providing legislative intent that
  134         insurers provide consumers with accurate pricing
  135         signals for alterations in order to minimize losses,
  136         but that mitigation discounts not result in a loss of
  137         income for the insurer; requiring rate filings for
  138         residential property insurance to include actuarially
  139         reasonable debits that provide proper pricing;
  140         deleting provisions that require the office to develop
  141         certain rate differentials for hurricane mitigation
  142         measures; providing for an increase in base rates if
  143         mitigation discounts exceed the aggregate reduction in
  144         expected losses; requiring the Office of Insurance
  145         Regulation to reevaluate discounts, debits, credits,
  146         and other rate differentials by a certain date;
  147         requiring the Office of Insurance Regulation, in
  148         consultation with the Department of Financial Services
  149         and the Department of Community Affairs, to develop a
  150         method for insurers to establish debits for certain
  151         hurricane mitigation measures by a certain date;
  152         requiring the Financial Services Commission to adopt
  153         rules relating to such debits by a certain date;
  154         deleting a provision that prohibits an insurer from
  155         including an expense or profit load in the cost of
  156         reinsurance to replace the Temporary Increase in
  157         Coverage Limits; amending s. 627.351, F.S.; renaming
  158         the “high-risk account” as the “coastal account”;
  159         revising the conditions under which the Citizens
  160         policyholder surcharge may be imposed; providing that
  161         members of the Citizens Property Insurance Corporation
  162         Board of Governors are not prohibited from practicing
  163         in a certain profession if not prohibited by law or
  164         ordinance; prohibiting board members from voting on
  165         certain measures; changing the date on which the
  166         boundaries of high-risk areas eligible for certain
  167         wind-only coverages will be reduced if certain
  168         circumstances exist; providing a directive to the
  169         Division of Statutory Revision; amending s. 627.4133,
  170         F.S.; authorizing an insurer to cancel policies after
  171         45 days’ notice if the Office of Insurance Regulation
  172         determines that the cancellation of policies is
  173         necessary to protect the interests of the public or
  174         policyholders; authorizing the Office of Insurance
  175         Regulation to place an insurer under administrative
  176         supervision or appoint a receiver upon the consent of
  177         the insurer under certain circumstances; creating s.
  178         627.41341, F.S.; providing definitions; requiring the
  179         delivery of a “Notice of Change in Policy Terms” under
  180         certain circumstances; specifying requirements for
  181         such notice; specifying actions constituting proof of
  182         notice; authorizing policy renewals to contain a
  183         change in policy terms; providing that receipt of
  184         payment by an insurer is deemed acceptance of new
  185         policy terms by an insured; providing that the
  186         original policy remains in effect until the occurrence
  187         of specified events if an insurer fails to provide
  188         notice; providing intent; amending s. 627.7011, F.S.;
  189         requiring that an insurer pay the actual cash value of
  190         an insured loss, less any applicable deductible, under
  191         certain circumstances; requiring that a policyholder
  192         enter into a contract for the performance of building
  193         and structural repairs; requiring that an insurer pay
  194         certain remaining amounts; restricting insurers and
  195         contractors from requiring advance payments for
  196         certain repairs and expenses; authorizing an insured
  197         to make a claim for replacement costs within a certain
  198         period after the insurer pays actual cash value to
  199         make a claim for replacement costs; requiring an
  200         insurer to pay the replacement costs if a total loss
  201         occurs; amending s. 627.70131, F.S.; specifying
  202         application of certain time periods to initial or
  203         supplemental property insurance claim notices and
  204         payments; amending s. 627.711, F.S.; revising the list
  205         of persons qualified to sign certain mitigation
  206         verification forms for certain purposes; authorizing
  207         insurers to accept forms from certain other persons;
  208         providing requirements for persons authorized to sign
  209         mitigation forms; prohibiting misconduct in performing
  210         hurricane mitigation inspection or completing uniform
  211         mitigation forms causing certain harm; specifying what
  212         constitutes misconduct; authorizing certain licensing
  213         boards to commence disciplinary proceedings and impose
  214         administrative fines and sanctions; providing for
  215         liability of mitigation inspectors; requiring certain
  216         entities to file reports of evidence of fraud;
  217         providing for immunity from liability for reporting
  218         fraud; providing for investigative reports from the
  219         Division of Insurance Fraud; providing penalties;
  220         authorizing insurers to require independent
  221         verification of uniform mitigation verification forms;
  222         creating s. 628.252, F.S.; requiring that every
  223         domestic property insurer notify the office of its
  224         intention to enter into certain agreements, contracts,
  225         and arrangements; prohibiting a domestic property
  226         insurer from entering into such agreements, contracts,
  227         or arrangements unless specified criteria are met;
  228         preserving the existing authority of the office;
  229         providing an appropriation to the Office of Insurance
  230         Regulation and authorizing an additional position;
  231         providing effective dates.
  232  
  233  Be It Enacted by the Legislature of the State of Florida:
  234  
  235         Section 1. Paragraph (b) of subsection (6) of section
  236  215.555, Florida Statutes, is amended to read:
  237         215.555 Florida Hurricane Catastrophe Fund.—
  238         (6) REVENUE BONDS.—
  239         (b) Emergency assessments.—
  240         1. If the board determines that the amount of revenue
  241  produced under subsection (5) is insufficient to fund the
  242  obligations, costs, and expenses of the fund and the
  243  corporation, including repayment of revenue bonds and that
  244  portion of the debt service coverage not met by reimbursement
  245  premiums, the board shall direct the Office of Insurance
  246  Regulation to levy, by order, an emergency assessment on direct
  247  premiums for all property and casualty lines of business in this
  248  state, including property and casualty business of surplus lines
  249  insurers regulated under part VIII of chapter 626, but not
  250  including any workers’ compensation premiums or medical
  251  malpractice premiums. As used in this subsection, the term
  252  “property and casualty business” includes all lines of business
  253  identified on Form 2, Exhibit of Premiums and Losses, in the
  254  annual statement required of authorized insurers by s. 624.424
  255  and any rule adopted under this section, except for those lines
  256  identified as accident and health insurance and except for
  257  policies written under the National Flood Insurance Program. The
  258  assessment shall be specified as a percentage of direct written
  259  premium and is subject to annual adjustments by the board in
  260  order to meet debt obligations. The same percentage shall apply
  261  to all policies in lines of business subject to the assessment
  262  issued or renewed during the 12-month period beginning on the
  263  effective date of the assessment.
  264         2. A premium is not subject to an annual assessment under
  265  this paragraph in excess of 6 percent of premium with respect to
  266  obligations arising out of losses attributable to any one
  267  contract year, and a premium is not subject to an aggregate
  268  annual assessment under this paragraph in excess of 10 percent
  269  of premium. An annual assessment under this paragraph shall
  270  continue as long as the revenue bonds issued with respect to
  271  which the assessment was imposed are outstanding, including any
  272  bonds the proceeds of which were used to refund the revenue
  273  bonds, unless adequate provision has been made for the payment
  274  of the bonds under the documents authorizing issuance of the
  275  bonds.
  276         3. Emergency assessments shall be collected from
  277  policyholders. Emergency assessments shall be remitted by
  278  insurers as a percentage of direct written premium for the
  279  preceding calendar quarter as specified in the order from the
  280  Office of Insurance Regulation. The office shall verify the
  281  accurate and timely collection and remittance of emergency
  282  assessments and shall report the information to the board in a
  283  form and at a time specified by the board. Each insurer
  284  collecting assessments shall provide the information with
  285  respect to premiums and collections as may be required by the
  286  office to enable the office to monitor and verify compliance
  287  with this paragraph.
  288         4. With respect to assessments of surplus lines premiums,
  289  each surplus lines agent shall collect the assessment at the
  290  same time as the agent collects the surplus lines tax required
  291  by s. 626.932, and the surplus lines agent shall remit the
  292  assessment to the Florida Surplus Lines Service Office created
  293  by s. 626.921 at the same time as the agent remits the surplus
  294  lines tax to the Florida Surplus Lines Service Office. The
  295  emergency assessment on each insured procuring coverage and
  296  filing under s. 626.938 shall be remitted by the insured to the
  297  Florida Surplus Lines Service Office at the time the insured
  298  pays the surplus lines tax to the Florida Surplus Lines Service
  299  Office. The Florida Surplus Lines Service Office shall remit the
  300  collected assessments to the fund or corporation as provided in
  301  the order levied by the Office of Insurance Regulation. The
  302  Florida Surplus Lines Service Office shall verify the proper
  303  application of such emergency assessments and shall assist the
  304  board in ensuring the accurate and timely collection and
  305  remittance of assessments as required by the board. The Florida
  306  Surplus Lines Service Office shall annually calculate the
  307  aggregate written premium on property and casualty business,
  308  other than workers’ compensation and medical malpractice,
  309  procured through surplus lines agents and insureds procuring
  310  coverage and filing under s. 626.938 and shall report the
  311  information to the board in a form and at a time specified by
  312  the board.
  313         5. Any assessment authority not used for a particular
  314  contract year may be used for a subsequent contract year. If,
  315  for a subsequent contract year, the board determines that the
  316  amount of revenue produced under subsection (5) is insufficient
  317  to fund the obligations, costs, and expenses of the fund and the
  318  corporation, including repayment of revenue bonds and that
  319  portion of the debt service coverage not met by reimbursement
  320  premiums, the board shall direct the Office of Insurance
  321  Regulation to levy an emergency assessment up to an amount not
  322  exceeding the amount of unused assessment authority from a
  323  previous contract year or years, plus an additional 4 percent
  324  provided that the assessments in the aggregate do not exceed the
  325  limits specified in subparagraph 2.
  326         6. The assessments otherwise payable to the corporation
  327  under this paragraph shall be paid to the fund unless and until
  328  the Office of Insurance Regulation and the Florida Surplus Lines
  329  Service Office have received from the corporation and the fund a
  330  notice, which shall be conclusive and upon which they may rely
  331  without further inquiry, that the corporation has issued bonds
  332  and the fund has no agreements in effect with local governments
  333  under paragraph (c). On or after the date of the notice and
  334  until the date the corporation has no bonds outstanding, the
  335  fund shall have no right, title, or interest in or to the
  336  assessments, except as provided in the fund’s agreement with the
  337  corporation.
  338         7. Emergency assessments are not premium and are not
  339  subject to the premium tax, to the surplus lines tax, to any
  340  fees, or to any commissions. An insurer is liable for all
  341  assessments that it collects and must treat the failure of an
  342  insured to pay an assessment as a failure to pay the premium. An
  343  insurer is not liable for uncollectible assessments.
  344         8. When an insurer is required to return an unearned
  345  premium, it shall also return any collected assessment
  346  attributable to the unearned premium. A credit adjustment to the
  347  collected assessment may be made by the insurer with regard to
  348  future remittances that are payable to the fund or corporation,
  349  but the insurer is not entitled to a refund.
  350         9. When a surplus lines insured or an insured who has
  351  procured coverage and filed under s. 626.938 is entitled to the
  352  return of an unearned premium, the Florida Surplus Lines Service
  353  Office shall provide a credit or refund to the agent or such
  354  insured for the collected assessment attributable to the
  355  unearned premium prior to remitting the emergency assessment
  356  collected to the fund or corporation.
  357         10. The exemption of medical malpractice insurance premiums
  358  from emergency assessments under this paragraph is repealed May
  359  31, 2013 2010, and medical malpractice insurance premiums shall
  360  be subject to emergency assessments attributable to loss events
  361  occurring in the contract years commencing on June 1, 2013 2010.
  362         Section 2. Section 624.408, Florida Statutes, is amended to
  363  read:
  364         624.408 Surplus as to policyholders required; new and
  365  existing insurers.—
  366         (1)(a) To maintain a certificate of authority to transact
  367  any one kind or combinations of kinds of insurance, as defined
  368  in part V of this chapter, an insurer in this state shall at all
  369  times maintain surplus as to policyholders at least not less
  370  than the greater of:
  371         (a)1. Except as provided in paragraphs (e), (f), and (g)
  372  subparagraph 5. and paragraph (b), $1.5 million;
  373         (b)2. For life insurers, 4 percent of the insurer’s total
  374  liabilities;
  375         (c)3. For life and health insurers, 4 percent of the
  376  insurer’s total liabilities plus 6 percent of the insurer’s
  377  liabilities relative to health insurance; or
  378         (d)4. For all insurers other than mortgage guaranty
  379  insurers, life insurers, and life and health insurers, 10
  380  percent of the insurer’s total liabilities.
  381         (e)5. For property and casualty insurers, $4 million,
  382  except property and casualty insurers authorized to underwrite
  383  any line of residential property insurance.
  384         (f)(b) For a residential any property and casualty insurer
  385  not holding a certificate of authority before July 1, 2010 on
  386  December 1, 1993, $15 million. the
  387         (g) For a residential property insurer having a certificate
  388  of authority before July 1, 2010, $5 million until July 1, 2015,
  389  $10 million after July 1, 2015, and $15 million after July 1,
  390  2020. The office may reduce this surplus requirement if the
  391  insurer is not writing new business, has premiums in force of
  392  less than $1 million per year in residential property insurance,
  393  or is a mutual insurance company. following amounts apply
  394  instead of the $4 million required by subparagraph (a)5.:
  395         1.On December 31, 2001, and until December 30, 2002, $3
  396  million.
  397         2.On December 31, 2002, and until December 30, 2003, $3.25
  398  million.
  399         3.On December 31, 2003, and until December 30, 2004, $3.6
  400  million.
  401         4.On December 31, 2004, and thereafter, $4 million.
  402         (2) For purposes of this section, liabilities do shall not
  403  include liabilities required under s. 625.041(4). For purposes
  404  of computing minimum surplus as to policyholders pursuant to s.
  405  625.305(1), liabilities shall include liabilities required under
  406  s. 625.041(4).
  407         (3) This section does not require any No insurer shall be
  408  required under this section to have surplus as to policyholders
  409  greater than $100 million.
  410         (4) A mortgage guaranty insurer shall maintain a minimum
  411  surplus as required by s. 635.042.
  412         Section 3. Present paragraph (q) of subsection (1) of
  413  section 624.4085, Florida Statutes, is redesignated as paragraph
  414  (r), and a new paragraph (q) is added to that subsection,
  415  paragraph (b) of subsection (3) of that section is amended, and
  416  subsections (7) through (13) of that section are redesignated as
  417  subsections (9) through (15), respectively, and new subsections
  418  (7) and (8) are added to that section, to read:
  419         624.4085 Risk-based capital requirements for insurers.—
  420         (1) As used in this section, the term:
  421         (q) “Surplus action level” means a loss of surplus on any
  422  quarterly or annual financial report which exceeds 15 percent,
  423  or which cumulatively for the calendar year exceeds 15 percent
  424  as of the most recent filed quarterly or annual report.
  425         (3)
  426         (b) If a company action level event occurs, the insurer
  427  shall prepare and submit to the office a risk-based capital
  428  plan, which must:
  429         1. Identify the conditions that contribute to the company
  430  action level event;
  431         2. Contain proposals of corrective actions that the insurer
  432  intends to take and that are reasonably expected to result in
  433  the elimination of the company action level event;
  434         3. Provide projections of the insurer’s financial results
  435  in the current year and at least the 4 succeeding years, both in
  436  the absence of proposed corrective actions and giving effect to
  437  the proposed corrective actions, including projections of
  438  statutory operating income, net income, capital, and surplus.
  439  The projections for both new and renewal business may include
  440  separate projections for each major line of business and, if
  441  separate projections are provided, must separately identify each
  442  significant income, expense, and benefit component;
  443         4. Identify the key assumptions affecting the insurer’s
  444  projections and the sensitivity of the projections to the
  445  assumptions; and
  446         5. Identify the quality of, and problems associated with,
  447  the insurer’s business, including, but not limited to, its
  448  assets, anticipated business growth and associated surplus
  449  strain, extraordinary exposure to risk, mix of business, and any
  450  use of reinsurance; and.
  451         6. Include, at the request of the office, for a residential
  452  property insurer that conducts any business with affiliates, a
  453  columnar worksheet, which shall include all affiliates who have
  454  contracted with, done business with, or otherwise received
  455  remuneration from the insurer and shall list the following
  456  financial information from the immediately preceding calendar
  457  year, listed separately for each affiliate:
  458         a. Total assets;
  459         b. Total liabilities;
  460         c. Surplus or shareholders equity;
  461         d. Net income after taxes or distributions made solely for
  462  satisfying tax liabilities;
  463         e. Total amounts received or receivable from parents,
  464  subsidiaries, and affiliates;
  465         f. Total amounts paid or payable to any parent,
  466  subsidiaries, and affiliates;
  467         g. Dividends paid or payable to shareholders of common
  468  stock;
  469         h. Debt service, including principle and interest, paid on
  470  debt incurred to capitalize or recapitalize insurance companies
  471  or fund other insurance-related activities; and
  472         i. Payments made for other contractual obligations to
  473  support insurance-related activities.
  474         (7)(a)A surplus action level event includes:
  475         1. The filing of a quarterly or annual statutory financial
  476  statement by an insurer, which indicates that the insurer’s
  477  total surplus has declined by more than 15 percent from the
  478  previous year’s annual statement, or cumulatively for the
  479  current year through the most recent quarterly financial
  480  statement;
  481         2. The notification by the office to the insurer of an
  482  adjusted quarterly or annual financial statement that indicates
  483  an event in subparagraph 1., unless the insurer challenges the
  484  adjusted quarterly or annual financial statement under
  485  subsection (9); or
  486         3. The notification by the office to the insurer that the
  487  office has, after a hearing, rejected the insurer’s challenge if
  488  an insurer challenges, under subsection (9), an adjusted
  489  quarterly or annual financial statement that indicates an event
  490  in subparagraph 1.
  491         (b) If a surplus action level event occurs, the insurer
  492  must prepare and submit to the office a risk-based capital plan,
  493  which must:
  494         1. Identify the conditions that contribute to the surplus
  495  action level event;
  496         2. Contain proposals of corrective actions that the insurer
  497  intends to take and that are reasonably expected to ultimately
  498  result in the elimination of additional surplus losses;
  499         3. Provide projections of the insurer’s financial results
  500  in the current year and at least the 2 succeeding years, both in
  501  the absence of proposed corrective actions and giving effect to
  502  the proposed corrective actions, including projections of
  503  statutory operating income, net income, capital, and surplus.
  504  The projections for both new and renewal business may include
  505  separate projections for each major line of business and, if
  506  separate projections are provided, must separately identify each
  507  significant income, expense, and benefit component;
  508         4. Identify the key assumptions affecting the insurer’s
  509  projections and the sensitivity of the projections to the
  510  assumptions;
  511         5. Identify the quality of, and problems associated with,
  512  the insurer’s business, including, but not limited to, its
  513  assets, anticipated business growth and associated surplus
  514  strain, extraordinary exposure to risk, mix of business, and any
  515  use of reinsurance;
  516         6. Include, at the request of the office, for a residential
  517  property insurer that conducts any business with affiliates, a
  518  columnar worksheet, which shall include all affiliates who have
  519  received remuneration from the insurer and shall list the
  520  following financial information from the immediately preceding
  521  calendar year listed separately for each affiliate:
  522         a. Total assets;
  523         b. Total liabilities;
  524         c. Surplus or shareholders equity;
  525         d. Net income after taxes or distributions made solely for
  526  satisfying tax liabilities;
  527         e. Total amounts received or receivable from parents,
  528  subsidiaries, and affiliates;
  529         f. Total amounts paid or payable to any parent,
  530  subsidiaries, and affiliates;
  531         g. Dividends paid or payable to shareholders of common
  532  stock;
  533         h. Debt service, including principle and interest, paid on
  534  debt incurred to capitalize or recapitalize insurance companies
  535  or fund other insurance-related activities; and
  536         i. Payments made for other contractual obligations to
  537  support insurance-related activities.
  538         7. Contain, at the request of the office, a recertification
  539  of reserves for the insurer prepared by an actuary.
  540         (c) The risk-based capital plan must be submitted:
  541         1. Within 45 days after the surplus action level event; or
  542         2. If the insurer challenges an adjusted quarterly or
  543  annual financial statement under subsection (9), within 45 days
  544  after notification to the insurer that the office has, after a
  545  hearing, rejected the insurer’s challenge.
  546         (8) This section does not limit any existing authority of
  547  the office.
  548         Section 4. Subsection (7) is added to section 624.4095,
  549  Florida Statutes, to read:
  550         624.4095 Premiums written; restrictions.—
  551         (7)For purposes of this section, s. 624.407, and s.
  552  624.408, with regard to capital and surplus requirements, gross
  553  written premiums for federal multiple-peril crop insurance which
  554  are ceded to the Federal Crop Insurance Corporation or
  555  authorized reinsurers may not be included in the calculation of
  556  an insurer’s gross writing ratio. The liabilities for ceded
  557  reinsurance premiums payable for federal multiple-peril crop
  558  insurance ceded to the Federal Crop Insurance Corporation and
  559  authorized reinsurers shall be netted against the asset for
  560  amounts recoverable from reinsurers. Each insurer that writes
  561  other insurance products together with federal multiple-peril
  562  crop insurance shall disclose in the notes to its annual and
  563  quarterly financial statements, or in a supplement to those
  564  statements, the gross written premiums for federal multiple
  565  peril crop insurance.
  566         Section 5. Paragraph (n) is added to subsection (2) of
  567  section 626.221, Florida Statutes, to read:
  568         626.221 Examination requirement; exemptions.—
  569         (2) However, no such examination shall be necessary in any
  570  of the following cases:
  571         (n)An applicant for license as a customer representative
  572  with respect to property insurance who has earned the
  573  designation of Certified Insurance Representative (CIR) from the
  574  National Association of Christian Catastrophe Insurance
  575  Adjusters.
  576         Section 6. Subsection (8) of section 624.424, Florida
  577  Statutes, is amended to read:
  578         624.424 Annual statement and other information.—
  579         (8)(a) All authorized insurers must have conducted an
  580  annual audit by an independent certified public accountant and
  581  must file an audited financial report with the office on or
  582  before June 1 for the preceding year ending December 31. The
  583  office may require an insurer to file an audited financial
  584  report earlier than June 1 upon 90 days’ advance notice to the
  585  insurer. The office may immediately suspend an insurer’s
  586  certificate of authority by order if an insurer’s failure to
  587  file required reports, financial statements, or information
  588  required by this subsection or rule adopted pursuant thereto
  589  creates a significant uncertainty as to the insurer’s continuing
  590  eligibility for a certificate of authority.
  591         (b) Any authorized insurer otherwise subject to this
  592  section having direct premiums written in this state of less
  593  than $1 million in any calendar year and fewer than 1,000
  594  policyholders or certificateholders of directly written policies
  595  nationwide at the end of such calendar year is exempt from this
  596  section for such year unless the office makes a specific finding
  597  that compliance is necessary in order for the office to carry
  598  out its statutory responsibilities. However, any insurer having
  599  assumed premiums pursuant to contracts or treaties or
  600  reinsurance of $1 million or more is not exempt. Any insurer
  601  subject to an exemption must submit by March 1 following the
  602  year to which the exemption applies an affidavit sworn to by a
  603  responsible officer of the insurer specifying the amount of
  604  direct premiums written in this state and number of
  605  policyholders or certificateholders.
  606         (c) The board of directors of an insurer shall hire the
  607  certified public accountant that prepares the audit required by
  608  this subsection and the board shall establish an audit committee
  609  of three or more directors of the insurer or an affiliated
  610  company. The audit committee shall be responsible for discussing
  611  audit findings and interacting with the certified public
  612  accountant with regard to her or his findings. The audit
  613  committee shall be comprised solely of members who are free from
  614  any relationship that, in the opinion of its board of directors,
  615  would interfere with the exercise of independent judgment as a
  616  committee member. The audit committee shall report to the board
  617  any findings of adverse financial conditions or significant
  618  deficiencies in internal controls that have been noted by the
  619  accountant. The insurer may request the office to waive this
  620  requirement of the audit committee membership based upon unusual
  621  hardship to the insurer.
  622         (d) An insurer may not use the same accountant or partner
  623  of an accounting firm responsible for preparing the report
  624  required by this subsection for more than 5 7 consecutive years.
  625  Following this period, the insurer may not use such accountant
  626  or partner for a period of 5 2 years, but may use another
  627  accountant or partner of the same firm. An insurer may request
  628  the office to waive this prohibition based upon an unusual
  629  hardship to the insurer and a determination that the accountant
  630  is exercising independent judgment that is not unduly influenced
  631  by the insurer considering such factors as the number of
  632  partners, expertise of the partners or the number of insurance
  633  clients of the accounting firm; the premium volume of the
  634  insurer; and the number of jurisdictions in which the insurer
  635  transacts business.
  636         (e) The commission shall adopt rules to implement this
  637  subsection, which rules must be in substantial conformity with
  638  the 1998 Model Rule Requiring Annual Audited Financial Reports
  639  adopted by the National Association of Insurance Commissioners
  640  or subsequent amendments, except where inconsistent with the
  641  requirements of this subsection. Any exception to, waiver of, or
  642  interpretation of accounting requirements of the commission must
  643  be in writing and signed by an authorized representative of the
  644  office. No insurer may raise as a defense in any action, any
  645  exception to, waiver of, or interpretation of accounting
  646  requirements, unless previously issued in writing by an
  647  authorized representative of the office.
  648         Section 7. Section 626.7452, Florida Statutes, is amended
  649  to read:
  650         626.7452 Managing general agents; examination authority.
  651  The acts of the managing general agent are considered to be the
  652  acts of the insurer on whose behalf it is acting. A managing
  653  general agent may be examined as if it were the insurer except
  654  in the case where the managing general agent solely represents a
  655  single domestic insurer.
  656         Section 8. Effective June 1, 2010, subsection (11) of
  657  section 626.854, Florida Statutes, is amended to read:
  658         626.854 “Public adjuster” defined; prohibitions.—The
  659  Legislature finds that it is necessary for the protection of the
  660  public to regulate public insurance adjusters and to prevent the
  661  unauthorized practice of law.
  662         (11)(a) If a public adjuster enters into a contract with an
  663  insured or claimant to reopen a claim or to file a supplemental
  664  claim that seeks additional payments for a claim that has been
  665  previously paid in part or in full or settled by the insurer,
  666  the public adjuster may not charge, agree to, or accept any
  667  compensation, payment, commission, fee, or other thing of value
  668  based on a previous settlement or previous claim payments by the
  669  insurer for the same cause of loss. The charge, compensation,
  670  payment, commission, fee, or other thing of value may be based
  671  only on the claim payments or settlement obtained through the
  672  work of the public adjuster after entering into the contract
  673  with the insured or claimant. Compensation for a reopened or
  674  supplemental claim may not exceed 20 percent of the reopened or
  675  supplemental claim payment. The contracts described in this
  676  paragraph are not subject to the limitations in paragraph (b).
  677         (b) A public adjuster may not charge, agree to, or accept
  678  any compensation, payment, commission, fee, or other thing of
  679  value in excess of:
  680         1. Ten percent of the amount of insurance claim payments by
  681  the insurer for claims based on events that are the subject of a
  682  declaration of a state of emergency by the Governor. This
  683  provision applies to claims made during the period of 1 year
  684  after the declaration of emergency. After the period of 1 year,
  685  the limitations in subparagraph 2. apply.
  686         2. Twenty percent of the amount of all other insurance
  687  claim payments by the insurer for claims that are not based on
  688  events that are the subject of a declaration of a state of
  689  emergency by the Governor.
  690  
  691  The provisions of subsections (5)-(13) apply only to residential
  692  property insurance policies and condominium association policies
  693  as defined in s. 718.111(11).
  694         Section 9. Effective January 1, 2011, section 626.854,
  695  Florida Statutes, as amended by this act, is amended to read:
  696         626.854 “Public adjuster” defined; prohibitions.—The
  697  Legislature finds that it is necessary for the protection of the
  698  public to regulate public insurance adjusters and to prevent the
  699  unauthorized practice of law.
  700         (1) A “public adjuster” is any person, except a duly
  701  licensed attorney at law as hereinafter in s. 626.860 provided,
  702  who, for money, commission, or any other thing of value,
  703  prepares, completes, or files an insurance claim form for an
  704  insured or third-party claimant or who, for money, commission,
  705  or any other thing of value, acts or aids in any manner on
  706  behalf of an insured or third-party claimant in negotiating for
  707  or effecting the settlement of a claim or claims for loss or
  708  damage covered by an insurance contract or who advertises for
  709  employment as an adjuster of such claims, and also includes any
  710  person who, for money, commission, or any other thing of value,
  711  solicits, investigates, or adjusts such claims on behalf of any
  712  such public adjuster.
  713         (2) This definition does not apply to:
  714         (a) A licensed health care provider or employee thereof who
  715  prepares or files a health insurance claim form on behalf of a
  716  patient.
  717         (b) A person who files a health claim on behalf of another
  718  and does so without compensation.
  719         (3) A public adjuster may not give legal advice. A public
  720  adjuster may not act on behalf of or aid any person in
  721  negotiating or settling a claim relating to bodily injury,
  722  death, or noneconomic damages.
  723         (4) For purposes of this section, the term “insured”
  724  includes only the policyholder and any beneficiaries named or
  725  similarly identified in the policy.
  726         (5) A public adjuster may not directly or indirectly
  727  through any other person or entity solicit an insured or
  728  claimant by any means except on Monday through Saturday of each
  729  week and only between the hours of 8 a.m. and 8 p.m. on those
  730  days.
  731         (6) A public adjuster may not directly or indirectly
  732  through any other person or entity initiate contact or engage in
  733  face-to-face or telephonic solicitation or enter into a contract
  734  with any insured or claimant under an insurance policy until at
  735  least 48 hours after the occurrence of an event that may be the
  736  subject of a claim under the insurance policy unless contact is
  737  initiated by the insured or claimant.
  738         (7) An insured or claimant may cancel a public adjuster’s
  739  contract to adjust a claim without penalty or obligation within
  740  3 business days after the date on which the contract is executed
  741  or within 3 business days after the date on which the insured or
  742  claimant has notified the insurer of the claim, by phone or in
  743  writing, whichever is later. The public adjuster’s contract
  744  shall disclose to the insured or claimant his or her right to
  745  cancel the contract and advise the insured or claimant that
  746  notice of cancellation must be submitted in writing and sent by
  747  certified mail, return receipt requested, or other form of
  748  mailing which provides proof thereof, to the public adjuster at
  749  the address specified in the contract; provided, during any
  750  state of emergency as declared by the Governor and for a period
  751  of 1 year after the date of loss, the insured or claimant shall
  752  have 5 business days after the date on which the contract is
  753  executed to cancel a public adjuster’s contract.
  754         (8) It is an unfair and deceptive insurance trade practice
  755  pursuant to s. 626.9541 for a public adjuster or any other
  756  person to circulate or disseminate any advertisement,
  757  announcement, or statement containing any assertion,
  758  representation, or statement with respect to the business of
  759  insurance which is untrue, deceptive, or misleading.
  760         (a) For purposes of this section, the following statements,
  761  if made in any public adjuster’s advertisement or solicitation,
  762  shall be considered deceptive or misleading:
  763         1. A statement or representation that invites an insured
  764  policyholder to submit a claim when the policyholder does not
  765  have covered damage to insured property.
  766         2. Any statement or representation that invites an insured
  767  policyholder to submit a claim by offering monetary or other
  768  valuable inducement.
  769         3. A statement or representation that invites an insured
  770  policyholder to submit a claim by stating that there is “no
  771  risk” to the policyholder by submitting such claim.
  772         4. Any statement or representation, or use of a logo or
  773  shield, that would imply or could be mistakenly construed that
  774  the solicitation was issued or distributed by a governmental
  775  agency or is sanctioned or endorsed by a governmental agency.
  776         (b) For purposes of this paragraph, the term “written
  777  advertisement” includes only newspapers, magazines, flyers, and
  778  bulk mailers. The following disclaimer, which is not required to
  779  be printed on standard size business cards, shall be added in
  780  bold print and capital letters in typeface no smaller than the
  781  typeface of the body of the text to all written advertisements
  782  by any public adjuster:
  783         “THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD
  784         A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU
  785         ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU
  786         MAY DISREGARD THIS ADVERTISEMENT.”
  787         (9) A public adjuster, a public adjuster apprentice, or any
  788  person or entity acting on behalf of a public adjuster or public
  789  adjuster apprentice may not give or offer to give a monetary
  790  loan or advance to a client or prospective client.
  791         (10) A public adjuster, public adjuster apprentice, or any
  792  individual or entity acting on behalf of a public adjuster or
  793  public adjuster apprentice may not give or offer to give,
  794  directly or indirectly, any article of merchandise having a
  795  value in excess of $25 to any individual for the purpose of
  796  advertising or as an inducement to entering into a contract with
  797  a public adjuster.
  798         (11)(a) If a public adjuster enters into a contract with an
  799  insured or claimant to reopen a claim or to file a supplemental
  800  claim that seeks additional payments for a claim that has been
  801  previously paid in part or in full or settled by the insurer,
  802  the public adjuster may not charge, agree to, or accept any
  803  compensation, payment, commission, fee, or other thing of value
  804  based on a previous settlement or previous claim payments by the
  805  insurer for the same cause of loss. The charge, compensation,
  806  payment, commission, fee, or other thing of value may be based
  807  only on the claim payments or settlement obtained through the
  808  work of the public adjuster after entering into the contract
  809  with the insured or claimant. Compensation for a reopened or
  810  supplemental claim may not exceed 20 percent of the reopened or
  811  supplemental claim payment. The contracts described in this
  812  paragraph are not subject to the limitations in paragraph (b).
  813         (b) A public adjuster may not charge, agree to, or accept
  814  any compensation, payment, commission, fee, or other thing of
  815  value in excess of:
  816         1. Ten percent of the amount of insurance claim payments by
  817  the insurer for claims based on events that are the subject of a
  818  declaration of a state of emergency by the Governor. This
  819  provision applies to claims made during the period of 1 year
  820  after the declaration of emergency. After the period of 1 year,
  821  the limitations in subparagraph 2. apply.
  822         2. Twenty percent of the amount of insurance claim payments
  823  by the insurer for claims that are not based on events that are
  824  the subject of a declaration of a state of emergency by the
  825  Governor.
  826         (12) Each public adjuster shall provide to the claimant or
  827  insured a written estimate of the loss to assist in the
  828  submission of a proof of loss or any other claim for payment of
  829  insurance proceeds. The public adjuster shall retain such
  830  written estimate for at least 5 years and shall make such
  831  estimate available to the claimant or insured and the department
  832  upon request.
  833         (13) A public adjuster, public adjuster apprentice, or any
  834  person acting on behalf of a public adjuster or apprentice may
  835  not accept referrals of business from any person with whom the
  836  public adjuster conducts business if there is any form or manner
  837  of agreement to compensate the person, whether directly or
  838  indirectly, for referring business to the public adjuster. A
  839  public adjuster may not compensate any person, except for
  840  another public adjuster, whether directly or indirectly, for the
  841  principal purpose of referring business to the public adjuster.
  842         (14) A company employee adjuster, independent adjuster,
  843  attorney, investigator, or other persons acting on behalf of an
  844  insurer that needs access to an insured or claimant or to the
  845  insured property that is the subject of a claim shall provide at
  846  least 48 hours’ notice to the insured or claimant, public
  847  adjuster, or legal representative before scheduling a meeting
  848  with the claimant or an onsite inspection of the insured
  849  property. The insured or claimant may deny access to the
  850  property if this notice has not been provided. The insured or
  851  claimant may waive this 48-hour notice.
  852         (15)(a) A public adjuster shall ensure prompt notice of any
  853  property loss claim submitted to an insurer by or through a
  854  public adjuster or on which a public adjuster represents the
  855  insured at the time the claim or notice of loss is submitted to
  856  the insurer. The public adjuster shall ensure that notice is
  857  given to the insurer, the public adjuster’s contract is provided
  858  to the insurer, the property is made available for inspection of
  859  the loss or damage by the insurer, and the insurer is given an
  860  opportunity to interview the insured directly about the loss and
  861  claim. The insurer shall be allowed to obtain necessary
  862  information to investigate and respond to the claim. The insurer
  863  may not exclude the public adjuster from its in-person meetings
  864  with the insured. The insurer shall meet or communicate with the
  865  public adjuster in an effort to reach agreement as to the scope
  866  of the covered loss under the insurance policy. This section
  867  does not impair the terms and conditions of the insurance policy
  868  in effect at the time the claim is filed.
  869         (b) A public adjuster may not restrict or prevent an
  870  insurer, company employee adjuster, independent adjuster,
  871  attorney, investigator, or other person acting on behalf of the
  872  insurer from having reasonable access at reasonable times to any
  873  insured or claimant or to the insured property that is the
  874  subject of a claim.
  875         (c) A public adjuster may not act or fail to reasonably act
  876  in any manner that would obstruct or prevent an insurer or
  877  insurer’s adjuster from timely gaining access to conduct an
  878  inspection of any part of the insured property for which there
  879  is a claim for loss or damage to the property. The public
  880  adjuster that represents the insured may be present for the
  881  insurer’s inspection of the property loss or damage but, if the
  882  lack of availability of the public adjuster would otherwise
  883  delay the access to or the inspection of the insured property by
  884  the insurer, the public adjuster or the insured must allow the
  885  insurer to gain access to the insured property to facilitate the
  886  insurer’s prompt inspection of the loss or damage without the
  887  participation or presence of the public adjuster or insured.
  888         (16) A licensed contractor under part I of chapter 489, or
  889  a subcontractor, may not adjust a claim on behalf of an insured
  890  without being licensed and compliant as a public adjuster under
  891  this chapter. However, if asked by the residential property
  892  owner who has suffered loss or damage covered by a property
  893  insurance policy, or the insurer of such property, a licensed
  894  contractor may discuss or explain a bid for construction or
  895  repair of covered property if the contractor is doing so for
  896  usual and customary fees applicable to the work to be performed
  897  as stated in the contract between the contractor and the
  898  insured.
  899  
  900  The provisions of subsections (5)-(16) (5)-(13) apply only to
  901  residential property insurance policies and condominium unit
  902  owner association policies as defined in s. 718.111(11).
  903         Section 10. Effective January 1, 2011, present subsections
  904  (7) through (11) of section 626.8651, Florida Statutes, are
  905  redesignated as subsections (8) through (12), respectively, and
  906  a new subsection (7) is added to that section, to read:
  907         626.8651 Public adjuster apprentice license;
  908  qualifications.—
  909         (7) A public adjuster apprentice shall complete a minimum
  910  of 8 hours of continuing education specific to the practice of a
  911  public adjuster, 2 hours of which must relate to ethics, in
  912  order to qualify for licensure as a public adjuster. The
  913  continuing education must be in subjects designed to inform the
  914  licensee regarding the current insurance laws of this state for
  915  the purpose of enabling him or her to engage in business as an
  916  insurance adjuster fairly and without injury to the public and
  917  to adjust all claims in accordance with the insurance contract
  918  and the laws of this state.
  919         Section 11. Effective January 1, 2011, section 626.8796,
  920  Florida Statutes, is amended to read:
  921         626.8796 Public adjuster contracts; fraud statement.—
  922         (1) All contracts for public adjuster services must be in
  923  writing and must prominently display the following statement on
  924  the contract: “Pursuant to s. 817.234, Florida Statutes, any
  925  person who, with the intent to injure, defraud, or deceive any
  926  insurer or insured, prepares, presents, or causes to be
  927  presented a proof of loss or estimate of cost or repair of
  928  damaged property in support of a claim under an insurance policy
  929  knowing that the proof of loss or estimate of claim or repairs
  930  contains any false, incomplete, or misleading information
  931  concerning any fact or thing material to the claim commits a
  932  felony of the third degree, punishable as provided in s.
  933  775.082, s. 775.083, or s. 775.084, Florida Statutes.”
  934         (2) A public adjuster contract must contain the following
  935  information: full name, permanent business address, and license
  936  number of the public adjuster, the full name of the public
  937  adjusting firm, and the insured’s full name and street address,
  938  together with a brief description of the loss. The contract must
  939  state the percentage of compensation for the public adjuster’s
  940  services, the type of claim, including an emergency claim,
  941  nonemergency claim, or supplemental claim, the signatures of the
  942  public adjuster and all named insureds, and the signature date.
  943  If all named insureds signatures are not available, the public
  944  adjuster shall submit an affidavit signed by the available named
  945  insureds attesting that they have authority to enter into the
  946  contract and to settle all claim issues on behalf of all named
  947  insureds. An unaltered copy of the executed contract must be
  948  remitted to the insurer within 30 days after execution.
  949         Section 12. Effective June 1, 2010, section 626.70132,
  950  Florida Statutes, is created to read:
  951         626.70132 Duty to file windstorm or hurricane claim.—A
  952  claim, supplemental claim, or reopened claim under an insurance
  953  policy that provides personal lines residential coverage, as
  954  defined in s. 627.4025, for loss or damage caused by the peril
  955  of windstorm or hurricane is barred unless notice of the claim,
  956  supplemental claim, or reopened claim was given to the insurer
  957  in accordance with the terms of the policy within 3 years after
  958  the hurricane first made landfall or the windstorm caused the
  959  covered damage. For purposes of this section, the term
  960  “supplemental claim” or “reopened claim” means any additional
  961  claim for recovery from the insurer for losses from the same
  962  hurricane or windstorm for which the insurer has previously
  963  adjusted pursuant to the initial claim. This section may not be
  964  interpreted to affect any applicable limitation on civil actions
  965  provided in s. 95.11 for claims, supplemental claims, or
  966  reopened claims timely filed under this section.
  967         Section 13. Section 627.0613, Florida Statutes, is amended
  968  to read:
  969         627.0613 Consumer advocate.—The Chief Financial Officer
  970  must appoint a consumer advocate who must represent the general
  971  public of the state before the department and the office. The
  972  consumer advocate must report directly to the Chief Financial
  973  Officer, but is not otherwise under the authority of the
  974  department or of any employee of the department. The consumer
  975  advocate has such powers as are necessary to carry out the
  976  duties of the office of consumer advocate, including, but not
  977  limited to, the powers to:
  978         (1) Recommend to the department or office, by petition, the
  979  commencement of any proceeding or action; appear in any
  980  proceeding or action before the department or office; or appear
  981  in any proceeding before the Division of Administrative Hearings
  982  relating to subject matter under the jurisdiction of the
  983  department or office.
  984         (2) Have access to and use of all files, records, and data
  985  of the department or office.
  986         (3) Examine rate and form filings submitted to the office,
  987  hire consultants as necessary to aid in the review process, and
  988  recommend to the department or office any position deemed by the
  989  consumer advocate to be in the public interest.
  990         (4) By June 1, 2012, and each June 1 thereafter, prepare an
  991  annual report card for each authorized personal residential
  992  property insurer, on a form and using a letter-grade scale
  993  developed by the commission by rule, which objectively grades
  994  each insurer based on the following factors:
  995         (a) The number and nature of valid consumer complaints, as
  996  a market share ratio, received by the department against the
  997  insurer.
  998         (b) The disposition of all valid consumer complaints
  999  received by the department.
 1000         (c) The average length of time for payment of claims by the
 1001  insurer.
 1002         (d) Any other measurable and objective factors the
 1003  commission identifies as capable of assisting policyholders in
 1004  making informed choices about homeowner’s insurance.
 1005  
 1006  For purposes of this subsection, the term “valid consumer
 1007  complaint” means a written communication, or oral communication
 1008  that is subsequently converted to a written form, from a
 1009  consumer that expresses dissatisfaction involving a personal
 1010  residential insurance policy with a specific personal
 1011  residential property insurer. However, a valid complaint does
 1012  not arise if in the disposition thereof by the department the
 1013  insurer or agent position is upheld, the policy provision is
 1014  upheld, the coverage is explained, additional information is
 1015  provided, the complaint is withdrawn, the complaint is referred
 1016  outside the department, or if an inquiry has missing or
 1017  insufficient information, is not within the jurisdiction of the
 1018  department or requests mediation of a claim that is not eligible
 1019  for mediation.
 1020         (5) Prepare an annual budget for presentation to the
 1021  Legislature by the department, which budget must be adequate to
 1022  carry out the duties of the office of consumer advocate.
 1023         Section 14. Section 627.062, Florida Statutes, is amended
 1024  to read:
 1025         627.062 Rate standards.—
 1026         (1) The rates for all classes of insurance to which the
 1027  provisions of this part are applicable shall not be excessive,
 1028  inadequate, or unfairly discriminatory.
 1029         (2) As to all such classes of insurance:
 1030         (a) Insurers or rating organizations shall establish and
 1031  use rates, rating schedules, or rating manuals to allow the
 1032  insurer a reasonable rate of return on such classes of insurance
 1033  written in this state. A copy of rates, rating schedules, rating
 1034  manuals, premium credits or discount schedules, and surcharge
 1035  schedules, and changes thereto, shall be filed with the office
 1036  under one of the following procedures except as provided in
 1037  subparagraph 3.:
 1038         1. If the filing is made at least 90 days before the
 1039  proposed effective date and the filing is not implemented during
 1040  the office’s review of the filing and any proceeding and
 1041  judicial review, then such filing shall be considered a “file
 1042  and use” filing. In such case, the office shall finalize its
 1043  review by issuance of an approval a notice of intent to approve
 1044  or a notice of intent to disapprove within 90 days after receipt
 1045  of the filing. The approval notice of intent to approve and the
 1046  notice of intent to disapprove constitute agency action for
 1047  purposes of the Administrative Procedure Act. Requests for
 1048  supporting information, requests for mathematical or mechanical
 1049  corrections, or notification to the insurer by the office of its
 1050  preliminary findings shall not toll the 90-day period during any
 1051  such proceedings and subsequent judicial review. The rate shall
 1052  be deemed approved if the office does not issue an approval a
 1053  notice of intent to approve or a notice of intent to disapprove
 1054  within 90 days after receipt of the filing.
 1055         2. If the filing is not made in accordance with the
 1056  provisions of subparagraph 1., such filing shall be made as soon
 1057  as practicable, but no later than 30 days after the effective
 1058  date, and shall be considered a “use and file” filing. An
 1059  insurer making a “use and file” filing is potentially subject to
 1060  an order by the office to return to policyholders portions of
 1061  rates found to be excessive, as provided in paragraph (h).
 1062         3. For all property insurance filings made or submitted
 1063  after January 25, 2007, but before December 31, 2011 2010, an
 1064  insurer seeking a rate that is greater than the rate most
 1065  recently approved by the office shall make a “file and use”
 1066  filing. For purposes of this subparagraph, motor vehicle
 1067  collision and comprehensive coverages are not considered to be
 1068  property coverages.
 1069         (b) Upon receiving a rate filing, the office shall review
 1070  the rate filing to determine if a rate is excessive, inadequate,
 1071  or unfairly discriminatory. In making that determination, the
 1072  office shall, in accordance with generally accepted and
 1073  reasonable actuarial techniques, consider the following factors:
 1074         1. Past and prospective loss experience within and without
 1075  this state.
 1076         2. Past and prospective expenses.
 1077         3. The degree of competition among insurers for the risk
 1078  insured.
 1079         4. Investment income reasonably expected by the insurer,
 1080  consistent with the insurer’s investment practices, from
 1081  investable premiums anticipated in the filing, plus any other
 1082  expected income from currently invested assets representing the
 1083  amount expected on unearned premium reserves and loss reserves.
 1084  The commission may adopt rules using reasonable techniques of
 1085  actuarial science and economics to specify the manner in which
 1086  insurers shall calculate investment income attributable to such
 1087  classes of insurance written in this state and the manner in
 1088  which such investment income shall be used to calculate
 1089  insurance rates. Such manner shall contemplate allowances for an
 1090  underwriting profit factor and full consideration of investment
 1091  income which produce a reasonable rate of return; however,
 1092  investment income from invested surplus may not be considered.
 1093         5. The reasonableness of the judgment reflected in the
 1094  filing.
 1095         6. Dividends, savings, or unabsorbed premium deposits
 1096  allowed or returned to Florida policyholders, members, or
 1097  subscribers.
 1098         7. The adequacy of loss reserves.
 1099         8. The cost of reinsurance. The office shall not disapprove
 1100  a rate as excessive solely due to the insurer having obtained
 1101  catastrophic reinsurance to cover the insurer’s estimated 250
 1102  year probable maximum loss or any lower level of loss.
 1103         9. Trend factors, including trends in actual losses per
 1104  insured unit for the insurer making the filing.
 1105         10. Conflagration and catastrophe hazards, if applicable.
 1106         11. Projected hurricane losses, if applicable, which must
 1107  be estimated using a model or method found to be acceptable or
 1108  reliable by the Florida Commission on Hurricane Loss Projection
 1109  Methodology, and as further provided in s. 627.0628.
 1110         12. A reasonable margin for underwriting profit and
 1111  contingencies.
 1112         13. The cost of medical services, if applicable.
 1113         14. Other relevant factors which impact upon the frequency
 1114  or severity of claims or upon expenses.
 1115         (c) In the case of fire insurance rates, consideration
 1116  shall be given to the availability of water supplies and the
 1117  experience of the fire insurance business during a period of not
 1118  less than the most recent 5-year period for which such
 1119  experience is available.
 1120         (d) If conflagration or catastrophe hazards are given
 1121  consideration by an insurer in its rates or rating plan,
 1122  including surcharges and discounts, the insurer shall establish
 1123  a reserve for that portion of the premium allocated to such
 1124  hazard and shall maintain the premium in a catastrophe reserve.
 1125  Any removal of such premiums from the reserve for purposes other
 1126  than paying claims associated with a catastrophe or purchasing
 1127  reinsurance for catastrophes shall be subject to approval of the
 1128  office. Any ceding commission received by an insurer purchasing
 1129  reinsurance for catastrophes shall be placed in the catastrophe
 1130  reserve.
 1131         (e) After consideration of the rate factors provided in
 1132  paragraphs (b), (c), and (d), a rate may be found by the office
 1133  to be excessive, inadequate, or unfairly discriminatory based
 1134  upon the following standards:
 1135         1. Rates shall be deemed excessive if they are likely to
 1136  produce a profit from Florida business that is unreasonably high
 1137  in relation to the risk involved in the class of business or if
 1138  expenses are unreasonably high in relation to services rendered.
 1139         2. Rates shall be deemed excessive if, among other things,
 1140  the rate structure established by a stock insurance company
 1141  provides for replenishment of surpluses from premiums, when the
 1142  replenishment is attributable to investment losses.
 1143         3. Rates shall be deemed inadequate if they are clearly
 1144  insufficient, together with the investment income attributable
 1145  to them, to sustain projected losses and expenses in the class
 1146  of business to which they apply.
 1147         4. A rating plan, including discounts, credits, or
 1148  surcharges, shall be deemed unfairly discriminatory if it fails
 1149  to clearly and equitably reflect consideration of the
 1150  policyholder’s participation in a risk management program
 1151  adopted pursuant to s. 627.0625.
 1152         5. A rate shall be deemed inadequate as to the premium
 1153  charged to a risk or group of risks if discounts or credits are
 1154  allowed which exceed a reasonable reflection of expense savings
 1155  and reasonably expected loss experience from the risk or group
 1156  of risks.
 1157         6. A rate shall be deemed unfairly discriminatory as to a
 1158  risk or group of risks if the application of premium discounts,
 1159  credits, or surcharges among such risks does not bear a
 1160  reasonable relationship to the expected loss and expense
 1161  experience among the various risks.
 1162         (f) In reviewing a rate filing, the office may require the
 1163  insurer to provide at the insurer’s expense all information
 1164  necessary to evaluate the condition of the company and the
 1165  reasonableness of the filing according to the criteria
 1166  enumerated in this section.
 1167         (g) The office may at any time review a rate, rating
 1168  schedule, rating manual, or rate change; the pertinent records
 1169  of the insurer; and market conditions. If the office finds on a
 1170  preliminary basis that a rate may be excessive, inadequate, or
 1171  unfairly discriminatory, the office shall initiate proceedings
 1172  to disapprove the rate and shall so notify the insurer. However,
 1173  the office may not disapprove as excessive any rate for which it
 1174  has given final approval or which has been deemed approved for a
 1175  period of 1 year after the effective date of the filing unless
 1176  the office finds that a material misrepresentation or material
 1177  error was made by the insurer or was contained in the filing.
 1178  Upon being so notified, the insurer or rating organization
 1179  shall, within 60 days, file with the office all information
 1180  which, in the belief of the insurer or organization, proves the
 1181  reasonableness, adequacy, and fairness of the rate or rate
 1182  change. The office shall issue a notice of intent to approve or
 1183  a notice of intent to disapprove pursuant to the procedures of
 1184  paragraph (a) within 90 days after receipt of the insurer’s
 1185  initial response. In such instances and in any administrative
 1186  proceeding relating to the legality of the rate, the insurer or
 1187  rating organization shall carry the burden of proof by a
 1188  preponderance of the evidence to show that the rate is not
 1189  excessive, inadequate, or unfairly discriminatory. After the
 1190  office notifies an insurer that a rate may be excessive,
 1191  inadequate, or unfairly discriminatory, unless the office
 1192  withdraws the notification, the insurer shall not alter the rate
 1193  except to conform with the office’s notice until the earlier of
 1194  120 days after the date the notification was provided or 180
 1195  days after the date of the implementation of the rate. The
 1196  office may, subject to chapter 120, disapprove without the 60
 1197  day notification any rate increase filed by an insurer within
 1198  the prohibited time period or during the time that the legality
 1199  of the increased rate is being contested.
 1200         (h) If In the event the office finds that a rate or rate
 1201  change is excessive, inadequate, or unfairly discriminatory, the
 1202  office shall issue an order of disapproval specifying that a new
 1203  rate or rate schedule which responds to the findings of the
 1204  office be filed by the insurer. The office shall further order,
 1205  for any “use and file” filing made in accordance with
 1206  subparagraph (a)2., that premiums charged each policyholder
 1207  constituting the portion of the rate above that which was
 1208  actuarially justified be returned to such policyholder in the
 1209  form of a credit or refund. If the office finds that an
 1210  insurer’s rate or rate change is inadequate, the new rate or
 1211  rate schedule filed with the office in response to such a
 1212  finding shall be applicable only to new or renewal business of
 1213  the insurer written on or after the effective date of the
 1214  responsive filing.
 1215         (i)1. Except as otherwise specifically provided in this
 1216  chapter, the office shall not, directly or indirectly, prohibit
 1217  any insurer, including any residual market plan or joint
 1218  underwriting association, from paying acquisition costs based on
 1219  the full amount of premium, as defined in s. 627.403, applicable
 1220  to any policy, or directly or indirectly prohibit any such
 1221  insurer from including the full amount of acquisition costs in a
 1222  rate filing.
 1223         2. The office shall not, directly or indirectly, impede,
 1224  abridge, or otherwise compromise an insurer’s right to acquire
 1225  policyholders, advertise, or appoint agents, including the
 1226  calculation, manner, or amount of such agent commissions, if
 1227  any.
 1228         (j) With respect to residential property insurance rate
 1229  filings, the rate filing must account for mitigation measures
 1230  undertaken by policyholders to reduce hurricane losses.
 1231         (k)1.a. An insurer may make a separate filing limited
 1232  solely to an adjustment of its rates for reinsurance, the cost
 1233  of financing products used as a replacement for reinsurance, or
 1234  financing costs incurred in the purchase of reinsurance, and an
 1235  inflation trend factor published by the office pursuant to
 1236  subparagraph 4. If an insurer chooses to make a separate filing
 1237  under this paragraph, it must implement the rate in such a
 1238  manner that all rate increases implemented as a result of the
 1239  separate filing, together with rate increases associated with
 1240  any other rate filing, do or financing products to replace or
 1241  finance the payment of the amount covered by the Temporary
 1242  Increase in Coverage Limits (TICL) portion of the Florida
 1243  Hurricane Catastrophe Fund including replacement reinsurance for
 1244  the TICL reductions made pursuant to s. 215.555(17)(e); the
 1245  actual cost paid due to the application of the TICL premium
 1246  factor pursuant to s. 215.555(17)(f); and the actual cost paid
 1247  due to the application of the cash build-up factor pursuant to
 1248  s. 215.555(5)(b) if the insurer:
 1249         a.Elects to purchase financing products such as a
 1250  liquidity instrument or line of credit, in which case the cost
 1251  included in the filing for the liquidity instrument or line of
 1252  credit may not result in a premium increase exceeding 3 percent
 1253  for any individual policyholder. All costs contained in the
 1254  filing may not result in an overall premium increase of more
 1255  than 10 percent for any individual policyholder, excluding
 1256  coverage changes and surcharges, within the same policy year.
 1257         b. An insurer that makes a filing relating to reinsurance
 1258  or financing products must include the following Includes in the
 1259  filing: a copy of all of its reinsurance, liquidity instrument,
 1260  or line of credit contracts; proof of the billing or payment for
 1261  the contracts; and the calculation upon which the proposed rate
 1262  change is based demonstrating demonstrates that the costs meet
 1263  the criteria of this section and are not loaded for expenses or
 1264  profit for the insurer making the filing.
 1265         c. Any filing made pursuant this paragraph may include only
 1266  the Includes no other changes to its rates which are expressly
 1267  authorized by this paragraph in the filing.
 1268         d.Has not implemented a rate increase within the 6 months
 1269  immediately preceding the filing.
 1270         e.Does not file for a rate increase under any other
 1271  paragraph within 6 months after making a filing under this
 1272  paragraph.
 1273         d.f.An insurer that purchases reinsurance or financing
 1274  products from an affiliated company may make a filing pursuant
 1275  to in compliance with this paragraph does so only if the costs
 1276  for such reinsurance or financing products are charged at or
 1277  below charges made for comparable coverage by nonaffiliated
 1278  reinsurers or financial entities making such coverage or
 1279  financing products available in this state.
 1280         e. An insurer that makes a filing as the result of a change
 1281  in an inflation trend factor published by the office need
 1282  support that filing only with rates and rating examples and an
 1283  explanation demonstrating the insurer’s eligibility to adopt the
 1284  inflation trend factor.
 1285         2. An insurer may only make only one filing in any 12-month
 1286  period under this paragraph.
 1287         3. An insurer that elects to implement a rate change under
 1288  this paragraph must file its rate filing with the office at
 1289  least 45 days before the effective date of the rate change.
 1290  After an insurer submits a complete filing that meets all of the
 1291  requirements of this paragraph, the office has 45 days after the
 1292  date of the filing to review the rate filing and determine if
 1293  the rate is excessive, inadequate, or unfairly discriminatory.
 1294         4.Beginning January 1, 2011, the office shall publish an
 1295  annual informational memorandum to establish one or more
 1296  inflation trend factors that may be stated separately for
 1297  personal and residential property and for building coverage,
 1298  contents coverage, additional living expense coverage, and
 1299  liability coverage, if applicable. These factors shall represent
 1300  an estimate of cost increases or decreases based upon publicly
 1301  available relevant data and economic indices that are identified
 1302  in the memorandum. Such factors are exempt from the rulemaking
 1303  requirements of chapter 120, and insurers are not required to
 1304  adopt the factors. The office may publish factors for any line
 1305  of insurance, but is required to publish a factor only for
 1306  residential property insurance.
 1307  
 1308  The provisions of this subsection do shall not apply to workers’
 1309  compensation and employer’s liability insurance and to motor
 1310  vehicle insurance.
 1311         (3)(a) For individual risks that are not rated in
 1312  accordance with the insurer’s rates, rating schedules, rating
 1313  manuals, and underwriting rules filed with the office and which
 1314  have been submitted to the insurer for individual rating, the
 1315  insurer must maintain documentation on each risk subject to
 1316  individual risk rating. The documentation must identify the
 1317  named insured and specify the characteristics and classification
 1318  of the risk supporting the reason for the risk being
 1319  individually risk rated, including any modifications to existing
 1320  approved forms to be used on the risk. The insurer must maintain
 1321  these records for a period of at least 5 years after the
 1322  effective date of the policy.
 1323         (b) Individual risk rates and modifications to existing
 1324  approved forms are not subject to this part or part II, except
 1325  for paragraph (a) and ss. 627.402, 627.403, 627.4035, 627.404,
 1326  627.405, 627.406, 627.407, 627.4085, 627.409, 627.4132,
 1327  627.4133, 627.415, 627.416, 627.417, 627.419, 627.425, 627.426,
 1328  627.4265, 627.427, and 627.428, but are subject to all other
 1329  applicable provisions of this code and rules adopted thereunder.
 1330         (c) This subsection does not apply to private passenger
 1331  motor vehicle insurance.
 1332         (4)(a)Contingent on specific appropriations made to
 1333  implement this subsection, in order to enhance the ability of
 1334  consumers to compare premiums and to increase the accuracy and
 1335  usefulness of rate and product comparison information for
 1336  homeowners insurance, the office shall develop or contract with
 1337  a private entity to develop a comprehensive program for
 1338  providing the consumer with all available information necessary
 1339  to make an informed purchase of the insurance product that best
 1340  serves the needs of the individual.
 1341         (b)In developing the comprehensive program, the office
 1342  shall rely as much as is practical on information that is
 1343  currently available and shall consider:
 1344         1.The most efficient means for developing, hosting, and
 1345  operating a separate website that consolidates all consumer
 1346  information for price comparisons, filed complaints, financial
 1347  strength, underwriting, and receivership information and other
 1348  data useful to consumers;
 1349         2.Whether all admitted insurers should be required to
 1350  submit additional information to populate the composite website
 1351  and how often such submissions must be made;
 1352         3.Whether all admitted insurers should be required to
 1353  provide links from the website into each individual insurer’s
 1354  website in order to enable consumers to access product rate
 1355  information and apply for quotations;
 1356         4. Developing a plan to publicize the existence,
 1357  availability, and value of the website; and
 1358         5.Any other provision that would make relevant homeowners
 1359  insurance information more readily available so that consumers
 1360  can make informed product comparisons and purchasing decisions.
 1361         (c)Before establishing the program or website, the office
 1362  shall conduct a cost-benefit analysis to determine the most
 1363  effective approach for establishing and operating the program
 1364  and website. Based on the results of the analysis, the office
 1365  shall submit a proposed implementation plan for review and
 1366  approval by the Financial Services Commission. The
 1367  implementation plan shall include an estimated timeline for
 1368  establishing the program and website; a description of the data
 1369  and functionality to be provided by the site, a strategy for
 1370  publicizing the website to consumers; a recommended approach for
 1371  developing, hosting, and operating the website; and an estimate
 1372  of all major nonrecurring and recurring costs required to
 1373  establish and operate the website. Upon approval of the plan,
 1374  the office may initiate the establishment of the program.
 1375         (5)(4) The establishment of any rate, rating
 1376  classification, rating plan or schedule, or variation thereof in
 1377  violation of part IX of chapter 626 is also in violation of this
 1378  section. In order to enhance the ability of consumers to compare
 1379  premiums and to increase the accuracy and usefulness of rate
 1380  comparison information provided by the office to the public, the
 1381  office shall develop a proposed standard rating territory plan
 1382  to be used by all authorized property and casualty insurers for
 1383  residential property insurance. In adopting the proposed plan,
 1384  the office may consider geographical characteristics relevant to
 1385  risk, county lines, major roadways, existing rating territories
 1386  used by a significant segment of the market, and other relevant
 1387  factors. Such plan shall be submitted to the President of the
 1388  Senate and the Speaker of the House of Representatives by
 1389  January 15, 2006. The plan may not be implemented unless
 1390  authorized by further act of the Legislature.
 1391         (6)(5) With respect to a rate filing involving coverage of
 1392  the type for which the insurer is required to pay a
 1393  reimbursement premium to the Florida Hurricane Catastrophe Fund,
 1394  the insurer may fully recoup in its property insurance premiums
 1395  any reimbursement premiums paid to the Florida Hurricane
 1396  Catastrophe Fund, together with reasonable costs of other
 1397  reinsurance, but except as otherwise provided in this section,
 1398  may not recoup reinsurance costs that duplicate coverage
 1399  provided by the Florida Hurricane Catastrophe Fund. An insurer
 1400  may not recoup more than 1 year of reimbursement premium at a
 1401  time. Any under-recoupment from the prior year may be added to
 1402  the following year’s reimbursement premium, and any over
 1403  recoupment shall be subtracted from the following year’s
 1404  reimbursement premium.
 1405         (7)(6)(a) If an insurer requests an administrative hearing
 1406  pursuant to s. 120.57 related to a rate filing under this
 1407  section, the director of the Division of Administrative Hearings
 1408  shall expedite the hearing and assign an administrative law
 1409  judge who shall commence the hearing within 30 days after the
 1410  receipt of the formal request and shall enter a recommended
 1411  order within 30 days after the hearing or within 30 days after
 1412  receipt of the hearing transcript by the administrative law
 1413  judge, whichever is later. Each party shall be allowed 10 days
 1414  in which to submit written exceptions to the recommended order.
 1415  The office shall enter a final order within 30 days after the
 1416  entry of the recommended order. The provisions of this paragraph
 1417  may be waived upon stipulation of all parties.
 1418         (b) Upon entry of a final order, the insurer may request a
 1419  expedited appellate review pursuant to the Florida Rules of
 1420  Appellate Procedure. It is the intent of the Legislature that
 1421  the First District Court of Appeal grant an insurer’s request
 1422  for an expedited appellate review.
 1423         (8)(7)(a) The provisions of this subsection apply only with
 1424  respect to rates for medical malpractice insurance and shall
 1425  control to the extent of any conflict with other provisions of
 1426  this section.
 1427         (b) Any portion of a judgment entered or settlement paid as
 1428  a result of a statutory or common-law bad faith action and any
 1429  portion of a judgment entered which awards punitive damages
 1430  against an insurer may not be included in the insurer’s rate
 1431  base, and shall not be used to justify a rate or rate change.
 1432  Any common-law bad faith action identified as such, any portion
 1433  of a settlement entered as a result of a statutory or common-law
 1434  action, or any portion of a settlement wherein an insurer agrees
 1435  to pay specific punitive damages may not be used to justify a
 1436  rate or rate change. The portion of the taxable costs and
 1437  attorney’s fees which is identified as being related to the bad
 1438  faith and punitive damages in these judgments and settlements
 1439  may not be included in the insurer’s rate base and may not be
 1440  used utilized to justify a rate or rate change.
 1441         (c) Upon reviewing a rate filing and determining whether
 1442  the rate is excessive, inadequate, or unfairly discriminatory,
 1443  the office shall consider, in accordance with generally accepted
 1444  and reasonable actuarial techniques, past and present
 1445  prospective loss experience, either using loss experience solely
 1446  for this state or giving greater credibility to this state’s
 1447  loss data after applying actuarially sound methods of assigning
 1448  credibility to such data.
 1449         (d) Rates shall be deemed excessive if, among other
 1450  standards established by this section, the rate structure
 1451  provides for replenishment of reserves or surpluses from
 1452  premiums when the replenishment is attributable to investment
 1453  losses.
 1454         (e) The insurer must apply a discount or surcharge based on
 1455  the health care provider’s loss experience or shall establish an
 1456  alternative method giving due consideration to the provider’s
 1457  loss experience. The insurer must include in the filing a copy
 1458  of the surcharge or discount schedule or a description of the
 1459  alternative method used, and must provide a copy of such
 1460  schedule or description, as approved by the office, to
 1461  policyholders at the time of renewal and to prospective
 1462  policyholders at the time of application for coverage.
 1463         (f) Each medical malpractice insurer must make a rate
 1464  filing under this section, sworn to by at least two executive
 1465  officers of the insurer, at least once each calendar year.
 1466         (8)(a)1.No later than 60 days after the effective date of
 1467  medical malpractice legislation enacted during the 2003 Special
 1468  Session D of the Florida Legislature, the office shall calculate
 1469  a presumed factor that reflects the impact that the changes
 1470  contained in such legislation will have on rates for medical
 1471  malpractice insurance and shall issue a notice informing all
 1472  insurers writing medical malpractice coverage of such presumed
 1473  factor. In determining the presumed factor, the office shall use
 1474  generally accepted actuarial techniques and standards provided
 1475  in this section in determining the expected impact on losses,
 1476  expenses, and investment income of the insurer. To the extent
 1477  that the operation of a provision of medical malpractice
 1478  legislation enacted during the 2003 Special Session D of the
 1479  Florida Legislature is stayed pending a constitutional
 1480  challenge, the impact of that provision shall not be included in
 1481  the calculation of a presumed factor under this subparagraph.
 1482         2.No later than 60 days after the office issues its notice
 1483  of the presumed rate change factor under subparagraph 1., each
 1484  insurer writing medical malpractice coverage in this state shall
 1485  submit to the office a rate filing for medical malpractice
 1486  insurance, which will take effect no later than January 1, 2004,
 1487  and apply retroactively to policies issued or renewed on or
 1488  after the effective date of medical malpractice legislation
 1489  enacted during the 2003 Special Session D of the Florida
 1490  Legislature. Except as authorized under paragraph (b), the
 1491  filing shall reflect an overall rate reduction at least as great
 1492  as the presumed factor determined under subparagraph 1. With
 1493  respect to policies issued on or after the effective date of
 1494  such legislation and prior to the effective date of the rate
 1495  filing required by this subsection, the office shall order the
 1496  insurer to make a refund of the amount that was charged in
 1497  excess of the rate that is approved.
 1498         (b)Any insurer or rating organization that contends that
 1499  the rate provided for in paragraph (a) is excessive, inadequate,
 1500  or unfairly discriminatory shall separately state in its filing
 1501  the rate it contends is appropriate and shall state with
 1502  specificity the factors or data that it contends should be
 1503  considered in order to produce such appropriate rate. The
 1504  insurer or rating organization shall be permitted to use all of
 1505  the generally accepted actuarial techniques provided in this
 1506  section in making any filing pursuant to this subsection. The
 1507  office shall review each such exception and approve or
 1508  disapprove it prior to use. It shall be the insurer’s burden to
 1509  actuarially justify any deviations from the rates required to be
 1510  filed under paragraph (a). The insurer making a filing under
 1511  this paragraph shall include in the filing the expected impact
 1512  of medical malpractice legislation enacted during the 2003
 1513  Special Session D of the Florida Legislature on losses,
 1514  expenses, and rates.
 1515         (c)If any provision of medical malpractice legislation
 1516  enacted during the 2003 Special Session D of the Florida
 1517  Legislature is held invalid by a court of competent
 1518  jurisdiction, the office shall permit an adjustment of all
 1519  medical malpractice rates filed under this section to reflect
 1520  the impact of such holding on such rates so as to ensure that
 1521  the rates are not excessive, inadequate, or unfairly
 1522  discriminatory.
 1523         (d)Rates approved on or before July 1, 2003, for medical
 1524  malpractice insurance shall remain in effect until the effective
 1525  date of a new rate filing approved under this subsection.
 1526         (e)The calculation and notice by the office of the
 1527  presumed factor pursuant to paragraph (a) is not an order or
 1528  rule that is subject to chapter 120. If the office enters into a
 1529  contract with an independent consultant to assist the office in
 1530  calculating the presumed factor, such contract shall not be
 1531  subject to the competitive solicitation requirements of s.
 1532  287.057.
 1533         (9)(a) The chief executive officer or chief financial
 1534  officer of a property insurer and the chief actuary of a
 1535  property insurer must certify under oath and subject to the
 1536  penalty of perjury, on a form approved by the commission, the
 1537  following information, which must accompany a rate filing:
 1538         1. The signing officer and actuary have reviewed the rate
 1539  filing;
 1540         2. Based on the signing officer’s and actuary’s knowledge,
 1541  the rate filing does not contain any untrue statement of a
 1542  material fact or omit to state a material fact necessary in
 1543  order to make the statements made, in light of the circumstances
 1544  under which such statements were made, not misleading;
 1545         3. Based on the signing officer’s and actuary’s knowledge,
 1546  the information and other factors described in paragraph (2)(b),
 1547  including, but not limited to, investment income, fairly present
 1548  in all material respects the basis of the rate filing for the
 1549  periods presented in the filing; and
 1550         4. Based on the signing officer’s and actuary’s knowledge,
 1551  the rate filing reflects all premium savings that are reasonably
 1552  expected to result from legislative enactments and are in
 1553  accordance with generally accepted and reasonable actuarial
 1554  techniques.
 1555         (b) A signing officer or actuary knowingly making a false
 1556  certification under this subsection commits a violation of s.
 1557  626.9541(1)(e) and is subject to the penalties under s.
 1558  626.9521.
 1559         (c) Failure to provide such certification by the officer
 1560  and actuary shall result in the rate filing being disapproved
 1561  without prejudice to be refiled.
 1562         (d) A certification made pursuant to paragraph (a) is not
 1563  rendered false if, after making the subject rate filing, the
 1564  insurer provides the office with additional or supplementary
 1565  information pursuant to a formal or informal request from the
 1566  office.
 1567         (e)(d) The commission may adopt rules and forms pursuant to
 1568  ss. 120.536(1) and 120.54 to administer this subsection.
 1569         (10) The burden is on the office to establish that rates
 1570  are excessive for personal lines residential coverage with a
 1571  dwelling replacement cost of $1 million or more or for a single
 1572  condominium unit with a combined dwelling and contents
 1573  replacement cost of $1 million or more. Upon request of the
 1574  office, the insurer shall provide to the office such loss and
 1575  expense information as the office reasonably needs to meet this
 1576  burden.
 1577         (11) Any interest paid pursuant to s. 627.70131(5) may not
 1578  be included in the insurer’s rate base and may not be used to
 1579  justify a rate or rate change.
 1580         Section 15. Section 627.0629, Florida Statutes, is amended
 1581  to read:
 1582         627.0629 Residential property insurance; rate filings.—
 1583         (1)(a) It is the intent of the Legislature that insurers
 1584  must provide the most accurate pricing signals available savings
 1585  to encourage consumers to who install or implement windstorm
 1586  damage mitigation techniques, alterations, or solutions to their
 1587  properties to prevent windstorm losses. It is also the intent of
 1588  the Legislature that implementation of mitigation discounts not
 1589  result in a loss of income to the insurers granting the
 1590  discounts, so that the aggregate of mitigation discounts should
 1591  not exceed the aggregate of the expected reduction in loss that
 1592  is attributable to the mitigation efforts for which discounts
 1593  are granted. A rate filing for residential property insurance
 1594  must include actuarially reasonable discounts, credits, debits,
 1595  or other rate differentials, or appropriate reductions in
 1596  deductibles, which provide the proper pricing for all
 1597  properties. The rate filing must take into account the presence
 1598  or absence of on which fixtures or construction techniques
 1599  demonstrated to reduce the amount of loss in a windstorm have
 1600  been installed or implemented. The fixtures or construction
 1601  techniques shall include, but not be limited to, fixtures or
 1602  construction techniques that which enhance roof strength, roof
 1603  covering performance, roof-to-wall strength, wall-to-floor-to
 1604  foundation strength, opening protection, and window, door, and
 1605  skylight strength. Credits, debits, discounts, or other rate
 1606  differentials, or appropriate reductions or increases in
 1607  deductibles, which recognize the presence or absence of for
 1608  fixtures and construction techniques that which meet the minimum
 1609  requirements of the Florida Building Code must be included in
 1610  the rate filing. If an insurer demonstrates that the aggregate
 1611  of its mitigation discounts results in a reduction to revenue
 1612  which exceeds the reduction of the aggregate loss that is
 1613  expected to result from the mitigation, that insurer may recover
 1614  the lost revenue through an increase in its base rates. All
 1615  insurance companies must make a rate filing which includes the
 1616  credits, discounts, or other rate differentials or reductions in
 1617  deductibles by February 28, 2003. By July 1, 2007, the office
 1618  shall reevaluate the discounts, credits, other rate
 1619  differentials, and appropriate reductions in deductibles for
 1620  fixtures and construction techniques that meet the minimum
 1621  requirements of the Florida Building Code, based upon actual
 1622  experience or any other loss relativity studies available to the
 1623  office. The office shall determine the discounts, credits,
 1624  debits, other rate differentials, and appropriate reductions or
 1625  increases in deductibles that reflect the full actuarial value
 1626  of such revaluation, which may be used by insurers in rate
 1627  filings.
 1628         (b) By February 1, 2011, the Office of Insurance
 1629  Regulation, in consultation with the Department of Financial
 1630  Services and the Department of Community Affairs, shall develop
 1631  and make publicly available a proposed method for insurers to
 1632  establish discounts, credits, or other rate differentials for
 1633  hurricane mitigation measures which directly correlate to the
 1634  numerical rating assigned to a structure pursuant to the uniform
 1635  home grading scale adopted by the Financial Services Commission
 1636  pursuant to s. 215.55865, including any proposed changes to the
 1637  uniform home grading scale. By October 1, 2011, the commission
 1638  shall adopt rules requiring insurers to make rate filings for
 1639  residential property insurance which revise insurers’ discounts,
 1640  credits, or other rate differentials for hurricane mitigation
 1641  measures so that such rate differentials correlate directly to
 1642  the uniform home grading scale. The rules may include such
 1643  changes to the uniform home grading scale as the commission
 1644  determines are necessary, and may specify the minimum required
 1645  discounts, credits, or other rate differentials. Such rate
 1646  differentials must be consistent with generally accepted
 1647  actuarial principles and wind-loss mitigation studies. The rules
 1648  shall allow a period of at least 2 years after the effective
 1649  date of the revised mitigation discounts, credits, or other rate
 1650  differentials for a property owner to obtain an inspection or
 1651  otherwise qualify for the revised credit, during which time the
 1652  insurer shall continue to apply the mitigation credit that was
 1653  applied immediately prior to the effective date of the revised
 1654  credit. Discounts, credits, and other rate differentials
 1655  established for rate filings under this paragraph shall
 1656  supersede, after adoption, the discounts, credits, and other
 1657  rate differentials included in rate filings under paragraph (a).
 1658         (2)(a) A rate filing for residential property insurance
 1659  made on or before the implementation of paragraph (b) may
 1660  include rate factors that reflect the manner in which building
 1661  code enforcement in a particular jurisdiction addresses the risk
 1662  of wind damage.; However, such a rate filing must also provide
 1663  for variations from such rate factors on an individual basis
 1664  based on an inspection of a particular structure by a licensed
 1665  home inspector, which inspection may be at the cost of the
 1666  insured.
 1667         (b) A rate filing for residential property insurance made
 1668  more than 150 days after approval by the office of a building
 1669  code rating factor plan submitted by a statewide rating
 1670  organization shall include positive and negative rate factors
 1671  that reflect the manner in which building code enforcement in a
 1672  particular jurisdiction addresses risk of wind damage. The rate
 1673  filing shall include variations from standard rate factors on an
 1674  individual basis based on inspection of a particular structure
 1675  by a licensed home inspector. If an inspection is requested by
 1676  the insured, the insurer may require the insured to pay the
 1677  reasonable cost of the inspection. This paragraph applies to
 1678  structures constructed or renovated after the implementation of
 1679  this paragraph.
 1680         (c) The premium notice shall specify the amount by which
 1681  the rate has been adjusted as a result of this subsection and
 1682  shall also specify the maximum possible positive and negative
 1683  adjustments that are approved for use by the insurer under this
 1684  subsection.
 1685         (3) A rate filing made on or after July 1, 1995, for mobile
 1686  home owner’s insurance must include appropriate discounts,
 1687  credits, or other rate differentials for mobile homes
 1688  constructed to comply with American Society of Civil Engineers
 1689  Standard ANSI/ASCE 7-88, adopted by the United States Department
 1690  of Housing and Urban Development on July 13, 1994, and that also
 1691  comply with all applicable tie-down requirements provided by
 1692  state law.
 1693         (4) The Legislature finds that separate consideration and
 1694  notice of hurricane insurance premiums will assist consumers by
 1695  providing greater assurance that hurricane premiums are lawful
 1696  and by providing more complete information regarding the
 1697  components of property insurance premiums. Effective January 1,
 1698  1997, A rate filing for residential property insurance shall be
 1699  separated into two components, rates for hurricane coverage and
 1700  rates for all other coverages. A premium notice reflecting a
 1701  rate implemented on the basis of such a filing shall separately
 1702  indicate the premium for hurricane coverage and the premium for
 1703  all other coverages.
 1704         (5) In order to provide an appropriate transition period,
 1705  an insurer may, in its sole discretion, implement an approved
 1706  rate filing for residential property insurance over a period of
 1707  years. An insurer electing to phase in its rate filing must
 1708  provide an informational notice to the office setting out its
 1709  schedule for implementation of the phased-in rate filing. An
 1710  insurer may include in its rate the actual cost of private
 1711  market reinsurance that corresponds to available coverage of the
 1712  Temporary Increase in Coverage Limits, TICL, from the Florida
 1713  Hurricane Catastrophe Fund. The insurer may also include the
 1714  cost of reinsurance to replace the TICL reduction implemented
 1715  pursuant to s. 215.555(17)(d)9. However, this cost for
 1716  reinsurance may not include any expense or profit load or result
 1717  in a total annual base rate increase in excess of 10 percent.
 1718         (6) Any rate filing that is based in whole or part on data
 1719  from a computer model may not exceed 15 percent unless there is
 1720  a public hearing.
 1721         (7) An insurer may implement appropriate discounts or other
 1722  rate differentials of up to 10 percent of the annual premium to
 1723  mobile home owners who provide to the insurer evidence of a
 1724  current inspection of tie-downs for the mobile home, certifying
 1725  that the tie-downs have been properly installed and are in good
 1726  condition.
 1727         (8) EVALUATION OF RESIDENTIAL PROPERTY STRUCTURAL
 1728  SOUNDNESS.—
 1729         (a) It is the intent of the Legislature to provide a
 1730  program whereby homeowners may obtain an evaluation of the wind
 1731  resistance of their homes with respect to preventing damage from
 1732  hurricanes, together with a recommendation of reasonable steps
 1733  that may be taken to upgrade their homes to better withstand
 1734  hurricane force winds.
 1735         (b) To the extent that funds are provided for this purpose
 1736  in the General Appropriations Act, the Legislature hereby
 1737  authorizes the establishment of a program to be administered by
 1738  the Citizens Property Insurance Corporation for homeowners
 1739  insured in the high-risk account.
 1740         (c) The program shall provide grants to homeowners, for the
 1741  purpose of providing homeowner applicants with funds to conduct
 1742  an evaluation of the integrity of their homes with respect to
 1743  withstanding hurricane force winds, recommendations to retrofit
 1744  the homes to better withstand damage from such winds, and the
 1745  estimated cost to make the recommended retrofits.
 1746         (d) The Department of Community Affairs shall establish by
 1747  rule standards to govern the quality of the evaluation, the
 1748  quality of the recommendations for retrofitting, the eligibility
 1749  of the persons conducting the evaluation, and the selection of
 1750  applicants under the program. In establishing the rule, the
 1751  Department of Community Affairs shall consult with the advisory
 1752  committee to minimize the possibility of fraud or abuse in the
 1753  evaluation and retrofitting process, and to ensure that funds
 1754  spent by homeowners acting on the recommendations achieve
 1755  positive results.
 1756         (e) The Citizens Property Insurance Corporation shall
 1757  identify areas of this state with the greatest wind risk to
 1758  residential properties and recommend annually to the Department
 1759  of Community Affairs priority target areas for such evaluations
 1760  and inclusion with the associated residential construction
 1761  mitigation program.
 1762         (9) A property insurance rate filing that includes any
 1763  adjustments related to premiums paid to the Florida Hurricane
 1764  Catastrophe Fund must include a complete calculation of the
 1765  insurer’s catastrophe load, and the information in the filing
 1766  may not be limited solely to recovery of moneys paid to the
 1767  fund.
 1768         Section 16. Paragraphs (b), (c), (d), and (y) of subsection
 1769  (6) of section 627.351, Florida Statutes, are amended to read:
 1770         627.351 Insurance risk apportionment plans.—
 1771         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1772         (b)1. All insurers authorized to write one or more subject
 1773  lines of business in this state are subject to assessment by the
 1774  corporation and, for the purposes of this subsection, are
 1775  referred to collectively as “assessable insurers.” Insurers
 1776  writing one or more subject lines of business in this state
 1777  pursuant to part VIII of chapter 626 are not assessable
 1778  insurers, but insureds who procure one or more subject lines of
 1779  business in this state pursuant to part VIII of chapter 626 are
 1780  subject to assessment by the corporation and are referred to
 1781  collectively as “assessable insureds.” An authorized insurer’s
 1782  assessment liability begins shall begin on the first day of the
 1783  calendar year following the year in which the insurer was issued
 1784  a certificate of authority to transact insurance for subject
 1785  lines of business in this state and terminates shall terminate 1
 1786  year after the end of the first calendar year during which the
 1787  insurer no longer holds a certificate of authority to transact
 1788  insurance for subject lines of business in this state.
 1789         2.a. All revenues, assets, liabilities, losses, and
 1790  expenses of the corporation are shall be divided into three
 1791  separate accounts as follows:
 1792         (I) A personal lines account for personal residential
 1793  policies issued by the corporation or issued by the Residential
 1794  Property and Casualty Joint Underwriting Association and renewed
 1795  by the corporation which provides that provide comprehensive,
 1796  multiperil coverage on risks that are not located in areas
 1797  eligible for coverage in the Florida Windstorm Underwriting
 1798  Association as those areas were defined on January 1, 2002, and
 1799  for such policies that do not provide coverage for the peril of
 1800  wind on risks that are located in such areas;
 1801         (II) A commercial lines account for commercial residential
 1802  and commercial nonresidential policies issued by the corporation
 1803  or issued by the Residential Property and Casualty Joint
 1804  Underwriting Association and renewed by the corporation which
 1805  that provide coverage for basic property perils on risks which
 1806  that are not located in areas eligible for coverage in the
 1807  Florida Windstorm Underwriting Association as those areas were
 1808  defined on January 1, 2002, and for such policies that do not
 1809  provide coverage for the peril of wind on risks that are located
 1810  in such areas; and
 1811         (III) A coastal high-risk account for personal residential
 1812  policies and commercial residential and commercial
 1813  nonresidential property policies issued by the corporation or
 1814  transferred to the corporation which provides that provide
 1815  coverage for the peril of wind on risks that are located in
 1816  areas eligible for coverage in the Florida Windstorm
 1817  Underwriting Association as those areas were defined on January
 1818  1, 2002. The corporation may offer policies that provide
 1819  multiperil coverage and the corporation shall continue to offer
 1820  policies that provide coverage only for the peril of wind for
 1821  risks located in areas eligible for coverage in the coastal
 1822  high-risk account. In issuing multiperil coverage, the
 1823  corporation may use its approved policy forms and rates for the
 1824  personal lines account. An applicant or insured who is eligible
 1825  to purchase a multiperil policy from the corporation may
 1826  purchase a multiperil policy from an authorized insurer without
 1827  prejudice to the applicant’s or insured’s eligibility to
 1828  prospectively purchase a policy that provides coverage only for
 1829  the peril of wind from the corporation. An applicant or insured
 1830  who is eligible for a corporation policy that provides coverage
 1831  only for the peril of wind may elect to purchase or retain such
 1832  policy and also purchase or retain coverage excluding wind from
 1833  an authorized insurer without prejudice to the applicant’s or
 1834  insured’s eligibility to prospectively purchase a policy that
 1835  provides multiperil coverage from the corporation. It is the
 1836  goal of the Legislature that there would be an overall average
 1837  savings of 10 percent or more for a policyholder who currently
 1838  has a wind-only policy with the corporation, and an ex-wind
 1839  policy with a voluntary insurer or the corporation, and who then
 1840  obtains a multiperil policy from the corporation. It is the
 1841  intent of the Legislature that the offer of multiperil coverage
 1842  in the coastal high-risk account be made and implemented in a
 1843  manner that does not adversely affect the tax-exempt status of
 1844  the corporation or creditworthiness of or security for currently
 1845  outstanding financing obligations or credit facilities of the
 1846  coastal high-risk account, the personal lines account, or the
 1847  commercial lines account. The coastal high-risk account must
 1848  also include quota share primary insurance under subparagraph
 1849  (c)2. The area eligible for coverage under the coastal high-risk
 1850  account also includes the area within Port Canaveral, which is
 1851  bordered on the south by the City of Cape Canaveral, bordered on
 1852  the west by the Banana River, and bordered on the north by
 1853  Federal Government property.
 1854         b. The three separate accounts must be maintained as long
 1855  as financing obligations entered into by the Florida Windstorm
 1856  Underwriting Association or Residential Property and Casualty
 1857  Joint Underwriting Association are outstanding, in accordance
 1858  with the terms of the corresponding financing documents. If When
 1859  the financing obligations are no longer outstanding, in
 1860  accordance with the terms of the corresponding financing
 1861  documents, the corporation may use a single account for all
 1862  revenues, assets, liabilities, losses, and expenses of the
 1863  corporation. Consistent with the requirement of this
 1864  subparagraph and prudent investment policies that minimize the
 1865  cost of carrying debt, the board shall exercise its best efforts
 1866  to retire existing debt or to obtain approval of necessary
 1867  parties to amend the terms of existing debt, so as to structure
 1868  the most efficient plan to consolidate the three separate
 1869  accounts into a single account. By February 1, 2007, the board
 1870  shall submit a report to the Financial Services Commission, the
 1871  President of the Senate, and the Speaker of the House of
 1872  Representatives which includes an analysis of consolidating the
 1873  accounts, the actions the board has taken to minimize the cost
 1874  of carrying debt, and its recommendations for executing the most
 1875  efficient plan.
 1876         c. Creditors of the Residential Property and Casualty Joint
 1877  Underwriting Association and of the accounts specified in sub
 1878  sub-subparagraphs a.(I) and (II) may have a claim against, and
 1879  recourse to, the accounts referred to in sub-sub-subparagraphs
 1880  a.(I) and (II) and shall have no claim against, or recourse to,
 1881  the account referred to in sub-sub-subparagraph a.(III).
 1882  Creditors of the Florida Windstorm Underwriting Association
 1883  shall have a claim against, and recourse to, the account
 1884  referred to in sub-sub-subparagraph a.(III) and shall have no
 1885  claim against, or recourse to, the accounts referred to in sub
 1886  sub-subparagraphs a.(I) and (II).
 1887         d. Revenues, assets, liabilities, losses, and expenses not
 1888  attributable to particular accounts shall be prorated among the
 1889  accounts.
 1890         e. The Legislature finds that the revenues of the
 1891  corporation are revenues that are necessary to meet the
 1892  requirements set forth in documents authorizing the issuance of
 1893  bonds under this subsection.
 1894         f. No part of the income of the corporation may inure to
 1895  the benefit of any private person.
 1896         3. With respect to a deficit in an account:
 1897         a. After accounting for the Citizens policyholder surcharge
 1898  imposed under sub-subparagraph i., if when the remaining
 1899  projected deficit incurred in a particular calendar year is not
 1900  greater than 6 percent of the aggregate statewide direct written
 1901  premium for the subject lines of business for the prior calendar
 1902  year, the entire deficit shall be recovered through regular
 1903  assessments of assessable insurers under paragraph (p) and
 1904  assessable insureds.
 1905         b. After accounting for the Citizens policyholder surcharge
 1906  imposed under sub-subparagraph i., when the remaining projected
 1907  deficit incurred in a particular calendar year exceeds 6 percent
 1908  of the aggregate statewide direct written premium for the
 1909  subject lines of business for the prior calendar year, the
 1910  corporation shall levy regular assessments on assessable
 1911  insurers under paragraph (q) (p) and on assessable insureds in
 1912  an amount equal to the greater of 6 percent of the deficit or 6
 1913  percent of the aggregate statewide direct written premium for
 1914  the subject lines of business for the prior calendar year. Any
 1915  remaining deficit shall be recovered through emergency
 1916  assessments under sub-subparagraph d.
 1917         c. Each assessable insurer’s share of the amount being
 1918  assessed under sub-subparagraph a. or sub-subparagraph b. must
 1919  shall be in the proportion that the assessable insurer’s direct
 1920  written premium for the subject lines of business for the year
 1921  preceding the assessment bears to the aggregate statewide direct
 1922  written premium for the subject lines of business for that year.
 1923  The assessment percentage applicable to each assessable insured
 1924  is the ratio of the amount being assessed under sub-subparagraph
 1925  a. or sub-subparagraph b. to the aggregate statewide direct
 1926  written premium for the subject lines of business for the prior
 1927  year. Assessments levied by the corporation on assessable
 1928  insurers under sub-subparagraphs a. and b. shall be paid as
 1929  required by the corporation’s plan of operation and paragraph
 1930  (q) (p). Assessments levied by the corporation on assessable
 1931  insureds under sub-subparagraphs a. and b. shall be collected by
 1932  the surplus lines agent at the time the surplus lines agent
 1933  collects the surplus lines tax required by s. 626.932 and shall
 1934  be paid to the Florida Surplus Lines Service Office at the time
 1935  the surplus lines agent pays the surplus lines tax to the
 1936  Florida Surplus Lines Service Office. Upon receipt of regular
 1937  assessments from surplus lines agents, the Florida Surplus Lines
 1938  Service Office shall transfer the assessments directly to the
 1939  corporation as determined by the corporation.
 1940         d. Upon a determination by the board of governors that a
 1941  deficit in an account exceeds the amount that will be recovered
 1942  through regular assessments under sub-subparagraph a. or sub
 1943  subparagraph b., plus the amount that is expected to be
 1944  recovered through surcharges under sub-subparagraph i., as to
 1945  the remaining projected deficit the board shall levy, after
 1946  verification by the office, emergency assessments, for as many
 1947  years as necessary to cover the deficits, to be collected by
 1948  assessable insurers and the corporation and collected from
 1949  assessable insureds upon issuance or renewal of policies for
 1950  subject lines of business, excluding National Flood Insurance
 1951  policies. The amount of the emergency assessment collected in a
 1952  particular year shall be a uniform percentage of that year’s
 1953  direct written premium for subject lines of business and all
 1954  accounts of the corporation, excluding National Flood Insurance
 1955  Program policy premiums, as annually determined by the board and
 1956  verified by the office. The office shall verify the arithmetic
 1957  calculations involved in the board’s determination within 30
 1958  days after receipt of the information on which the determination
 1959  was based. Notwithstanding any other provision of law, the
 1960  corporation and each assessable insurer that writes subject
 1961  lines of business shall collect emergency assessments from its
 1962  policyholders without such obligation being affected by any
 1963  credit, limitation, exemption, or deferment. Emergency
 1964  assessments levied by the corporation on assessable insureds
 1965  shall be collected by the surplus lines agent at the time the
 1966  surplus lines agent collects the surplus lines tax required by
 1967  s. 626.932 and shall be paid to the Florida Surplus Lines
 1968  Service Office at the time the surplus lines agent pays the
 1969  surplus lines tax to the Florida Surplus Lines Service Office.
 1970  The emergency assessments so collected shall be transferred
 1971  directly to the corporation on a periodic basis as determined by
 1972  the corporation and shall be held by the corporation solely in
 1973  the applicable account. The aggregate amount of emergency
 1974  assessments levied for an account under this sub-subparagraph in
 1975  any calendar year may, at the discretion of the board of
 1976  governors, be less than but may not exceed the greater of 10
 1977  percent of the amount needed to cover the deficit, plus
 1978  interest, fees, commissions, required reserves, and other costs
 1979  associated with financing of the original deficit, or 10 percent
 1980  of the aggregate statewide direct written premium for subject
 1981  lines of business and for all accounts of the corporation for
 1982  the prior year, plus interest, fees, commissions, required
 1983  reserves, and other costs associated with financing the deficit.
 1984         e. The corporation may pledge the proceeds of assessments,
 1985  projected recoveries from the Florida Hurricane Catastrophe
 1986  Fund, other insurance and reinsurance recoverables, policyholder
 1987  surcharges and other surcharges, and other funds available to
 1988  the corporation as the source of revenue for and to secure bonds
 1989  issued under paragraph (p), bonds or other indebtedness issued
 1990  under subparagraph (c)3., or lines of credit or other financing
 1991  mechanisms issued or created under this subsection, or to retire
 1992  any other debt incurred as a result of deficits or events giving
 1993  rise to deficits, or in any other way that the board determines
 1994  will efficiently recover such deficits. The purpose of the lines
 1995  of credit or other financing mechanisms is to provide additional
 1996  resources to assist the corporation in covering claims and
 1997  expenses attributable to a catastrophe. As used in this
 1998  subsection, the term “assessments” includes regular assessments
 1999  under sub-subparagraph a., sub-subparagraph b., or subparagraph
 2000  (p)1. and emergency assessments under sub-subparagraph d.
 2001  Emergency assessments collected under sub-subparagraph d. are
 2002  not part of an insurer’s rates, are not premium, and are not
 2003  subject to premium tax, fees, or commissions; however, failure
 2004  to pay the emergency assessment shall be treated as failure to
 2005  pay premium. The emergency assessments under sub-subparagraph d.
 2006  shall continue as long as any bonds issued or other indebtedness
 2007  incurred with respect to a deficit for which the assessment was
 2008  imposed remain outstanding, unless adequate provision has been
 2009  made for the payment of such bonds or other indebtedness
 2010  pursuant to the documents governing such bonds or other
 2011  indebtedness.
 2012         f. As used in this subsection for purposes of any deficit
 2013  incurred on or after January 25, 2007, the term “subject lines
 2014  of business” means insurance written by assessable insurers or
 2015  procured by assessable insureds for all property and casualty
 2016  lines of business in this state, but not including workers’
 2017  compensation or medical malpractice. As used in the sub
 2018  subparagraph, the term “property and casualty lines of business”
 2019  includes all lines of business identified on Form 2, Exhibit of
 2020  Premiums and Losses, in the annual statement required of
 2021  authorized insurers by s. 624.424 and any rule adopted under
 2022  this section, except for those lines identified as accident and
 2023  health insurance and except for policies written under the
 2024  National Flood Insurance Program or the Federal Crop Insurance
 2025  Program. For purposes of this sub-subparagraph, the term
 2026  “workers’ compensation” includes both workers’ compensation
 2027  insurance and excess workers’ compensation insurance.
 2028         g. The Florida Surplus Lines Service Office shall determine
 2029  annually the aggregate statewide written premium in subject
 2030  lines of business procured by assessable insureds and shall
 2031  report that information to the corporation in a form and at a
 2032  time the corporation specifies to ensure that the corporation
 2033  can meet the requirements of this subsection and the
 2034  corporation’s financing obligations.
 2035         h. The Florida Surplus Lines Service Office shall verify
 2036  the proper application by surplus lines agents of assessment
 2037  percentages for regular assessments and emergency assessments
 2038  levied under this subparagraph on assessable insureds and shall
 2039  assist the corporation in ensuring the accurate, timely
 2040  collection and payment of assessments by surplus lines agents as
 2041  required by the corporation.
 2042         i.(I) If a deficit is incurred in any account in 2008 or
 2043  thereafter, the board of governors shall levy a Citizens
 2044  policyholder surcharge against all policyholders of the
 2045  corporation. for a 12-month period, which
 2046         (II) The Citizens policyholder surcharge shall be levied
 2047  collected at the time of issuance or renewal of a policy, as a
 2048  uniform percentage of the premium for the policy of up to 15
 2049  percent of such premium, which funds shall be used to offset the
 2050  deficit.
 2051         (III) The Citizens policyholder surcharge is payable upon
 2052  cancellation or termination of the policy, upon renewal of the
 2053  policy, or upon issuance of a new policy by Citizens within the
 2054  first 12 months after the date of the levy or the period of time
 2055  necessary to fully collect the Citizens policyholder surcharge
 2056  amount.
 2057         (IV) The corporation may not levy any regular assessments
 2058  under paragraph (q) pursuant to sub-subparagraph a. or sub
 2059  subparagraph b. with respect to a particular year’s deficit
 2060  until the corporation has first levied a Citizens policyholder
 2061  surcharge under this sub-subparagraph in the full amount
 2062  authorized by this sub-subparagraph.
 2063         (V) Citizens policyholder surcharges under this sub
 2064  subparagraph are not considered premium and are not subject to
 2065  commissions, fees, or premium taxes. However, failure to pay
 2066  such surcharges shall be treated as failure to pay premium.
 2067         j. If the amount of any assessments or surcharges collected
 2068  from corporation policyholders, assessable insurers or their
 2069  policyholders, or assessable insureds exceeds the amount of the
 2070  deficits, such excess amounts shall be remitted to and retained
 2071  by the corporation in a reserve to be used by the corporation,
 2072  as determined by the board of governors and approved by the
 2073  office, to pay claims or reduce any past, present, or future
 2074  plan-year deficits or to reduce outstanding debt.
 2075         (c) The plan of operation of the corporation:
 2076         1. Must provide for adoption of residential property and
 2077  casualty insurance policy forms and commercial residential and
 2078  nonresidential property insurance forms, which forms must be
 2079  approved by the office prior to use. The corporation shall adopt
 2080  the following policy forms:
 2081         a. Standard personal lines policy forms that are
 2082  comprehensive multiperil policies providing full coverage of a
 2083  residential property equivalent to the coverage provided in the
 2084  private insurance market under an HO-3, HO-4, or HO-6 policy.
 2085         b. Basic personal lines policy forms that are policies
 2086  similar to an HO-8 policy or a dwelling fire policy that provide
 2087  coverage meeting the requirements of the secondary mortgage
 2088  market, but which coverage is more limited than the coverage
 2089  under a standard policy.
 2090         c. Commercial lines residential and nonresidential policy
 2091  forms that are generally similar to the basic perils of full
 2092  coverage obtainable for commercial residential structures and
 2093  commercial nonresidential structures in the admitted voluntary
 2094  market.
 2095         d. Personal lines and commercial lines residential property
 2096  insurance forms that cover the peril of wind only. The forms are
 2097  applicable only to residential properties located in areas
 2098  eligible for coverage under the coastal high-risk account
 2099  referred to in sub-subparagraph (b)2.a.
 2100         e. Commercial lines nonresidential property insurance forms
 2101  that cover the peril of wind only. The forms are applicable only
 2102  to nonresidential properties located in areas eligible for
 2103  coverage under the coastal high-risk account referred to in sub
 2104  subparagraph (b)2.a.
 2105         f. The corporation may adopt variations of the policy forms
 2106  listed in sub-subparagraphs a.-e. that contain more restrictive
 2107  coverage.
 2108         2.a. Must provide that the corporation adopt a program in
 2109  which the corporation and authorized insurers enter into quota
 2110  share primary insurance agreements for hurricane coverage, as
 2111  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 2112  property insurance forms for eligible risks which cover the
 2113  peril of wind only. As used in this subsection, the term:
 2114         (I) “Quota share primary insurance” means an arrangement in
 2115  which the primary hurricane coverage of an eligible risk is
 2116  provided in specified percentages by the corporation and an
 2117  authorized insurer. The corporation and authorized insurer are
 2118  each solely responsible for a specified percentage of hurricane
 2119  coverage of an eligible risk as set forth in a quota share
 2120  primary insurance agreement between the corporation and an
 2121  authorized insurer and the insurance contract. The
 2122  responsibility of the corporation or authorized insurer to pay
 2123  its specified percentage of hurricane losses of an eligible
 2124  risk, as set forth in the quota share primary insurance
 2125  agreement, may not be altered by the inability of the other
 2126  party to the agreement to pay its specified percentage of
 2127  hurricane losses. Eligible risks that are provided hurricane
 2128  coverage through a quota share primary insurance arrangement
 2129  must be provided policy forms that set forth the obligations of
 2130  the corporation and authorized insurer under the arrangement,
 2131  clearly specify the percentages of quota share primary insurance
 2132  provided by the corporation and authorized insurer, and
 2133  conspicuously and clearly state that neither the authorized
 2134  insurer nor the corporation may be held responsible beyond its
 2135  specified percentage of coverage of hurricane losses.
 2136         (II) “Eligible risks” means personal lines residential and
 2137  commercial lines residential risks that meet the underwriting
 2138  criteria of the corporation and are located in areas that were
 2139  eligible for coverage by the Florida Windstorm Underwriting
 2140  Association on January 1, 2002.
 2141         b. The corporation may enter into quota share primary
 2142  insurance agreements with authorized insurers at corporation
 2143  coverage levels of 90 percent and 50 percent.
 2144         c. If the corporation determines that additional coverage
 2145  levels are necessary to maximize participation in quota share
 2146  primary insurance agreements by authorized insurers, the
 2147  corporation may establish additional coverage levels. However,
 2148  the corporation’s quota share primary insurance coverage level
 2149  may not exceed 90 percent.
 2150         d. Any quota share primary insurance agreement entered into
 2151  between an authorized insurer and the corporation must provide
 2152  for a uniform specified percentage of coverage of hurricane
 2153  losses, by county or territory as set forth by the corporation
 2154  board, for all eligible risks of the authorized insurer covered
 2155  under the quota share primary insurance agreement.
 2156         e. Any quota share primary insurance agreement entered into
 2157  between an authorized insurer and the corporation is subject to
 2158  review and approval by the office. However, such agreement shall
 2159  be authorized only as to insurance contracts entered into
 2160  between an authorized insurer and an insured who is already
 2161  insured by the corporation for wind coverage.
 2162         f. For all eligible risks covered under quota share primary
 2163  insurance agreements, the exposure and coverage levels for both
 2164  the corporation and authorized insurers shall be reported by the
 2165  corporation to the Florida Hurricane Catastrophe Fund. For all
 2166  policies of eligible risks covered under quota share primary
 2167  insurance agreements, the corporation and the authorized insurer
 2168  shall maintain complete and accurate records for the purpose of
 2169  exposure and loss reimbursement audits as required by Florida
 2170  Hurricane Catastrophe Fund rules. The corporation and the
 2171  authorized insurer shall each maintain duplicate copies of
 2172  policy declaration pages and supporting claims documents.
 2173         g. The corporation board shall establish in its plan of
 2174  operation standards for quota share agreements which ensure that
 2175  there is no discriminatory application among insurers as to the
 2176  terms of quota share agreements, pricing of quota share
 2177  agreements, incentive provisions if any, and consideration paid
 2178  for servicing policies or adjusting claims.
 2179         h. The quota share primary insurance agreement between the
 2180  corporation and an authorized insurer must set forth the
 2181  specific terms under which coverage is provided, including, but
 2182  not limited to, the sale and servicing of policies issued under
 2183  the agreement by the insurance agent of the authorized insurer
 2184  producing the business, the reporting of information concerning
 2185  eligible risks, the payment of premium to the corporation, and
 2186  arrangements for the adjustment and payment of hurricane claims
 2187  incurred on eligible risks by the claims adjuster and personnel
 2188  of the authorized insurer. Entering into a quota sharing
 2189  insurance agreement between the corporation and an authorized
 2190  insurer shall be voluntary and at the discretion of the
 2191  authorized insurer.
 2192         3. May provide that the corporation may employ or otherwise
 2193  contract with individuals or other entities to provide
 2194  administrative or professional services that may be appropriate
 2195  to effectuate the plan. The corporation shall have the power to
 2196  borrow funds, by issuing bonds or by incurring other
 2197  indebtedness, and shall have other powers reasonably necessary
 2198  to effectuate the requirements of this subsection, including,
 2199  without limitation, the power to issue bonds and incur other
 2200  indebtedness in order to refinance outstanding bonds or other
 2201  indebtedness. The corporation may, but is not required to, seek
 2202  judicial validation of its bonds or other indebtedness under
 2203  chapter 75. The corporation may issue bonds or incur other
 2204  indebtedness, or have bonds issued on its behalf by a unit of
 2205  local government pursuant to subparagraph (p)2., in the absence
 2206  of a hurricane or other weather-related event, upon a
 2207  determination by the corporation, subject to approval by the
 2208  office, that such action would enable it to efficiently meet the
 2209  financial obligations of the corporation and that such
 2210  financings are reasonably necessary to effectuate the
 2211  requirements of this subsection. The corporation is authorized
 2212  to take all actions needed to facilitate tax-free status for any
 2213  such bonds or indebtedness, including formation of trusts or
 2214  other affiliated entities. The corporation shall have the
 2215  authority to pledge assessments, projected recoveries from the
 2216  Florida Hurricane Catastrophe Fund, other reinsurance
 2217  recoverables, market equalization and other surcharges, and
 2218  other funds available to the corporation as security for bonds
 2219  or other indebtedness. In recognition of s. 10, Art. I of the
 2220  State Constitution, prohibiting the impairment of obligations of
 2221  contracts, it is the intent of the Legislature that no action be
 2222  taken whose purpose is to impair any bond indenture or financing
 2223  agreement or any revenue source committed by contract to such
 2224  bond or other indebtedness.
 2225         4.a. Must require that the corporation operate subject to
 2226  the supervision and approval of a board of governors consisting
 2227  of eight individuals who are residents of this state, from
 2228  different geographical areas of this state. The Governor, the
 2229  Chief Financial Officer, the President of the Senate, and the
 2230  Speaker of the House of Representatives shall each appoint two
 2231  members of the board. At least one of the two members appointed
 2232  by each appointing officer must have demonstrated expertise in
 2233  insurance, and is deemed to be within the scope of the exemption
 2234  provided in s. 112.313(7)(b). The Chief Financial Officer shall
 2235  designate one of the appointees as chair. All board members
 2236  serve at the pleasure of the appointing officer. All members of
 2237  the board of governors are subject to removal at will by the
 2238  officers who appointed them. All board members, including the
 2239  chair, must be appointed to serve for 3-year terms beginning
 2240  annually on a date designated by the plan. However, for the
 2241  first term beginning on or after July 1, 2009, each appointing
 2242  officer shall appoint one member of the board for a 2-year term
 2243  and one member for a 3-year term. Any board vacancy shall be
 2244  filled for the unexpired term by the appointing officer. The
 2245  Chief Financial Officer shall appoint a technical advisory group
 2246  to provide information and advice to the board of governors in
 2247  connection with the board’s duties under this subsection. The
 2248  executive director and senior managers of the corporation shall
 2249  be engaged by the board and serve at the pleasure of the board.
 2250  Any executive director appointed on or after July 1, 2006, is
 2251  subject to confirmation by the Senate. The executive director is
 2252  responsible for employing other staff as the corporation may
 2253  require, subject to review and concurrence by the board.
 2254         b. The board shall create a Market Accountability Advisory
 2255  Committee to assist the corporation in developing awareness of
 2256  its rates and its customer and agent service levels in
 2257  relationship to the voluntary market insurers writing similar
 2258  coverage. The members of the advisory committee shall consist of
 2259  the following 11 persons, one of whom must be elected chair by
 2260  the members of the committee: four representatives, one
 2261  appointed by the Florida Association of Insurance Agents, one by
 2262  the Florida Association of Insurance and Financial Advisors, one
 2263  by the Professional Insurance Agents of Florida, and one by the
 2264  Latin American Association of Insurance Agencies; three
 2265  representatives appointed by the insurers with the three highest
 2266  voluntary market share of residential property insurance
 2267  business in the state; one representative from the Office of
 2268  Insurance Regulation; one consumer appointed by the board who is
 2269  insured by the corporation at the time of appointment to the
 2270  committee; one representative appointed by the Florida
 2271  Association of Realtors; and one representative appointed by the
 2272  Florida Bankers Association. All members must serve for 3-year
 2273  terms and may serve for consecutive terms. The committee shall
 2274  report to the corporation at each board meeting on insurance
 2275  market issues which may include rates and rate competition with
 2276  the voluntary market; service, including policy issuance, claims
 2277  processing, and general responsiveness to policyholders,
 2278  applicants, and agents; and matters relating to depopulation.
 2279         5. Must provide a procedure for determining the eligibility
 2280  of a risk for coverage, as follows:
 2281         a. Subject to the provisions of s. 627.3517, with respect
 2282  to personal lines residential risks, if the risk is offered
 2283  coverage from an authorized insurer at the insurer’s approved
 2284  rate under either a standard policy including wind coverage or,
 2285  if consistent with the insurer’s underwriting rules as filed
 2286  with the office, a basic policy including wind coverage, for a
 2287  new application to the corporation for coverage, the risk is not
 2288  eligible for any policy issued by the corporation unless the
 2289  premium for coverage from the authorized insurer is more than 15
 2290  percent greater than the premium for comparable coverage from
 2291  the corporation. If the risk is not able to obtain any such
 2292  offer, the risk is eligible for either a standard policy
 2293  including wind coverage or a basic policy including wind
 2294  coverage issued by the corporation; however, if the risk could
 2295  not be insured under a standard policy including wind coverage
 2296  regardless of market conditions, the risk shall be eligible for
 2297  a basic policy including wind coverage unless rejected under
 2298  subparagraph 8. However, with regard to a policyholder of the
 2299  corporation or a policyholder removed from the corporation
 2300  through an assumption agreement until the end of the assumption
 2301  period, the policyholder remains eligible for coverage from the
 2302  corporation regardless of any offer of coverage from an
 2303  authorized insurer or surplus lines insurer. The corporation
 2304  shall determine the type of policy to be provided on the basis
 2305  of objective standards specified in the underwriting manual and
 2306  based on generally accepted underwriting practices.
 2307         (I) If the risk accepts an offer of coverage through the
 2308  market assistance plan or an offer of coverage through a
 2309  mechanism established by the corporation before a policy is
 2310  issued to the risk by the corporation or during the first 30
 2311  days of coverage by the corporation, and the producing agent who
 2312  submitted the application to the plan or to the corporation is
 2313  not currently appointed by the insurer, the insurer shall:
 2314         (A) Pay to the producing agent of record of the policy, for
 2315  the first year, an amount that is the greater of the insurer’s
 2316  usual and customary commission for the type of policy written or
 2317  a fee equal to the usual and customary commission of the
 2318  corporation; or
 2319         (B) Offer to allow the producing agent of record of the
 2320  policy to continue servicing the policy for a period of not less
 2321  than 1 year and offer to pay the agent the greater of the
 2322  insurer’s or the corporation’s usual and customary commission
 2323  for the type of policy written.
 2324  
 2325  If the producing agent is unwilling or unable to accept
 2326  appointment, the new insurer shall pay the agent in accordance
 2327  with sub-sub-sub-subparagraph (A).
 2328         (II) When the corporation enters into a contractual
 2329  agreement for a take-out plan, the producing agent of record of
 2330  the corporation policy is entitled to retain any unearned
 2331  commission on the policy, and the insurer shall:
 2332         (A) Pay to the producing agent of record of the corporation
 2333  policy, for the first year, an amount that is the greater of the
 2334  insurer’s usual and customary commission for the type of policy
 2335  written or a fee equal to the usual and customary commission of
 2336  the corporation; or
 2337         (B) Offer to allow the producing agent of record of the
 2338  corporation policy to continue servicing the policy for a period
 2339  of not less than 1 year and offer to pay the agent the greater
 2340  of the insurer’s or the corporation’s usual and customary
 2341  commission for the type of policy written.
 2342  
 2343  If the producing agent is unwilling or unable to accept
 2344  appointment, the new insurer shall pay the agent in accordance
 2345  with sub-sub-sub-subparagraph (A).
 2346         b. With respect to commercial lines residential risks, for
 2347  a new application to the corporation for coverage, if the risk
 2348  is offered coverage under a policy including wind coverage from
 2349  an authorized insurer at its approved rate, the risk is not
 2350  eligible for any policy issued by the corporation unless the
 2351  premium for coverage from the authorized insurer is more than 15
 2352  percent greater than the premium for comparable coverage from
 2353  the corporation. If the risk is not able to obtain any such
 2354  offer, the risk is eligible for a policy including wind coverage
 2355  issued by the corporation. However, with regard to a
 2356  policyholder of the corporation or a policyholder removed from
 2357  the corporation through an assumption agreement until the end of
 2358  the assumption period, the policyholder remains eligible for
 2359  coverage from the corporation regardless of any offer of
 2360  coverage from an authorized insurer or surplus lines insurer.
 2361         (I) If the risk accepts an offer of coverage through the
 2362  market assistance plan or an offer of coverage through a
 2363  mechanism established by the corporation before a policy is
 2364  issued to the risk by the corporation or during the first 30
 2365  days of coverage by the corporation, and the producing agent who
 2366  submitted the application to the plan or the corporation is not
 2367  currently appointed by the insurer, the insurer shall:
 2368         (A) Pay to the producing agent of record of the policy, for
 2369  the first year, an amount that is the greater of the insurer’s
 2370  usual and customary commission for the type of policy written or
 2371  a fee equal to the usual and customary commission of the
 2372  corporation; or
 2373         (B) Offer to allow the producing agent of record of the
 2374  policy to continue servicing the policy for a period of not less
 2375  than 1 year and offer to pay the agent the greater of the
 2376  insurer’s or the corporation’s usual and customary commission
 2377  for the type of policy written.
 2378  
 2379  If the producing agent is unwilling or unable to accept
 2380  appointment, the new insurer shall pay the agent in accordance
 2381  with sub-sub-sub-subparagraph (A).
 2382         (II) When the corporation enters into a contractual
 2383  agreement for a take-out plan, the producing agent of record of
 2384  the corporation policy is entitled to retain any unearned
 2385  commission on the policy, and the insurer shall:
 2386         (A) Pay to the producing agent of record of the corporation
 2387  policy, for the first year, an amount that is the greater of the
 2388  insurer’s usual and customary commission for the type of policy
 2389  written or a fee equal to the usual and customary commission of
 2390  the corporation; or
 2391         (B) Offer to allow the producing agent of record of the
 2392  corporation policy to continue servicing the policy for a period
 2393  of not less than 1 year and offer to pay the agent the greater
 2394  of the insurer’s or the corporation’s usual and customary
 2395  commission for the type of policy written.
 2396  
 2397  If the producing agent is unwilling or unable to accept
 2398  appointment, the new insurer shall pay the agent in accordance
 2399  with sub-sub-sub-subparagraph (A).
 2400         c. For purposes of determining comparable coverage under
 2401  sub-subparagraphs a. and b., the comparison shall be based on
 2402  those forms and coverages that are reasonably comparable. The
 2403  corporation may rely on a determination of comparable coverage
 2404  and premium made by the producing agent who submits the
 2405  application to the corporation, made in the agent’s capacity as
 2406  the corporation’s agent. A comparison may be made solely of the
 2407  premium with respect to the main building or structure only on
 2408  the following basis: the same coverage A or other building
 2409  limits; the same percentage hurricane deductible that applies on
 2410  an annual basis or that applies to each hurricane for commercial
 2411  residential property; the same percentage of ordinance and law
 2412  coverage, if the same limit is offered by both the corporation
 2413  and the authorized insurer; the same mitigation credits, to the
 2414  extent the same types of credits are offered both by the
 2415  corporation and the authorized insurer; the same method for loss
 2416  payment, such as replacement cost or actual cash value, if the
 2417  same method is offered both by the corporation and the
 2418  authorized insurer in accordance with underwriting rules; and
 2419  any other form or coverage that is reasonably comparable as
 2420  determined by the board. If an application is submitted to the
 2421  corporation for wind-only coverage in the coastal high-risk
 2422  account, the premium for the corporation’s wind-only policy plus
 2423  the premium for the ex-wind policy that is offered by an
 2424  authorized insurer to the applicant shall be compared to the
 2425  premium for multiperil coverage offered by an authorized
 2426  insurer, subject to the standards for comparison specified in
 2427  this subparagraph. If the corporation or the applicant requests
 2428  from the authorized insurer a breakdown of the premium of the
 2429  offer by types of coverage so that a comparison may be made by
 2430  the corporation or its agent and the authorized insurer refuses
 2431  or is unable to provide such information, the corporation may
 2432  treat the offer as not being an offer of coverage from an
 2433  authorized insurer at the insurer’s approved rate.
 2434         6. Must include rules for classifications of risks and
 2435  rates therefor.
 2436         7. Must provide that if premium and investment income for
 2437  an account attributable to a particular calendar year are in
 2438  excess of projected losses and expenses for the account
 2439  attributable to that year, such excess shall be held in surplus
 2440  in the account. Such surplus shall be available to defray
 2441  deficits in that account as to future years and shall be used
 2442  for that purpose prior to assessing assessable insurers and
 2443  assessable insureds as to any calendar year.
 2444         8. Must provide objective criteria and procedures to be
 2445  uniformly applied for all applicants in determining whether an
 2446  individual risk is so hazardous as to be uninsurable. In making
 2447  this determination and in establishing the criteria and
 2448  procedures, the following shall be considered:
 2449         a. Whether the likelihood of a loss for the individual risk
 2450  is substantially higher than for other risks of the same class;
 2451  and
 2452         b. Whether the uncertainty associated with the individual
 2453  risk is such that an appropriate premium cannot be determined.
 2454  
 2455  The acceptance or rejection of a risk by the corporation shall
 2456  be construed as the private placement of insurance, and the
 2457  provisions of chapter 120 shall not apply.
 2458         9. Must provide that the corporation shall make its best
 2459  efforts to procure catastrophe reinsurance at reasonable rates,
 2460  to cover its projected 100-year probable maximum loss as
 2461  determined by the board of governors.
 2462         10. The policies issued by the corporation must provide
 2463  that, if the corporation or the market assistance plan obtains
 2464  an offer from an authorized insurer to cover the risk at its
 2465  approved rates, the risk is no longer eligible for renewal
 2466  through the corporation, except as otherwise provided in this
 2467  subsection.
 2468         11. Corporation policies and applications must include a
 2469  notice that the corporation policy could, under this section, be
 2470  replaced with a policy issued by an authorized insurer that does
 2471  not provide coverage identical to the coverage provided by the
 2472  corporation. The notice shall also specify that acceptance of
 2473  corporation coverage creates a conclusive presumption that the
 2474  applicant or policyholder is aware of this potential.
 2475         12. May establish, subject to approval by the office,
 2476  different eligibility requirements and operational procedures
 2477  for any line or type of coverage for any specified county or
 2478  area if the board determines that such changes to the
 2479  eligibility requirements and operational procedures are
 2480  justified due to the voluntary market being sufficiently stable
 2481  and competitive in such area or for such line or type of
 2482  coverage and that consumers who, in good faith, are unable to
 2483  obtain insurance through the voluntary market through ordinary
 2484  methods would continue to have access to coverage from the
 2485  corporation. When coverage is sought in connection with a real
 2486  property transfer, such requirements and procedures shall not
 2487  provide for an effective date of coverage later than the date of
 2488  the closing of the transfer as established by the transferor,
 2489  the transferee, and, if applicable, the lender.
 2490         13. Must provide that, with respect to the coastal high
 2491  risk account, any assessable insurer with a surplus as to
 2492  policyholders of $25 million or less writing 25 percent or more
 2493  of its total countrywide property insurance premiums in this
 2494  state may petition the office, within the first 90 days of each
 2495  calendar year, to qualify as a limited apportionment company. A
 2496  regular assessment levied by the corporation on a limited
 2497  apportionment company for a deficit incurred by the corporation
 2498  for the coastal high-risk account in 2006 or thereafter may be
 2499  paid to the corporation on a monthly basis as the assessments
 2500  are collected by the limited apportionment company from its
 2501  insureds pursuant to s. 627.3512, but the regular assessment
 2502  must be paid in full within 12 months after being levied by the
 2503  corporation. A limited apportionment company shall collect from
 2504  its policyholders any emergency assessment imposed under sub
 2505  subparagraph (b)3.d. The plan shall provide that, if the office
 2506  determines that any regular assessment will result in an
 2507  impairment of the surplus of a limited apportionment company,
 2508  the office may direct that all or part of such assessment be
 2509  deferred as provided in subparagraph (p)4. However, there shall
 2510  be no limitation or deferment of an emergency assessment to be
 2511  collected from policyholders under sub-subparagraph (b)3.d.
 2512         14. Must provide that the corporation appoint as its
 2513  licensed agents only those agents who also hold an appointment
 2514  as defined in s. 626.015(3) with an insurer who at the time of
 2515  the agent’s initial appointment by the corporation is authorized
 2516  to write and is actually writing personal lines residential
 2517  property coverage, commercial residential property coverage, or
 2518  commercial nonresidential property coverage within the state.
 2519         15. Must provide, by July 1, 2007, a premium payment plan
 2520  option to its policyholders which allows at a minimum for
 2521  quarterly and semiannual payment of premiums. A monthly payment
 2522  plan may, but is not required to, be offered.
 2523         16. Must limit coverage on mobile homes or manufactured
 2524  homes built prior to 1994 to actual cash value of the dwelling
 2525  rather than replacement costs of the dwelling.
 2526         17. May provide such limits of coverage as the board
 2527  determines, consistent with the requirements of this subsection.
 2528         18. May require commercial property to meet specified
 2529  hurricane mitigation construction features as a condition of
 2530  eligibility for coverage.
 2531         (d)1. All prospective employees for senior management
 2532  positions, as defined by the plan of operation, are subject to
 2533  background checks as a prerequisite for employment. The office
 2534  shall conduct background checks on such prospective employees
 2535  pursuant to ss. 624.34, 624.404(3), and 628.261.
 2536         2. On or before July 1 of each year, employees of the
 2537  corporation are required to sign and submit a statement
 2538  attesting that they do not have a conflict of interest, as
 2539  defined in part III of chapter 112. As a condition of
 2540  employment, all prospective employees are required to sign and
 2541  submit to the corporation a conflict-of-interest statement.
 2542         3. Senior managers and members of the board of governors
 2543  are subject to the provisions of part III of chapter 112,
 2544  including, but not limited to, the code of ethics and public
 2545  disclosure and reporting of financial interests, pursuant to s.
 2546  112.3145. Notwithstanding s. 112.3143(2), a board member may not
 2547  vote on any measure that would inure to his or her special
 2548  private gain or loss; that he or she knows would inure to the
 2549  special private gain or loss of any principal by whom he or she
 2550  is retained or to the parent organization or subsidiary of a
 2551  corporate principal by which he or she is retained, other than
 2552  an agency as defined in s. 112.312; or that he or she knows
 2553  would inure to the special private gain or loss of a relative or
 2554  business associate of the public officer. Before the vote is
 2555  taken, such member shall publicly state to the assembly the
 2556  nature of the his or her interest in the matter from which he or
 2557  she is abstaining from voting and, within 15 days after the vote
 2558  occurs, disclose the nature of his or her interest as a public
 2559  record in a memorandum filed with the person responsible for
 2560  recording the minutes of the meeting, who shall incorporate the
 2561  memorandum in the minutes. Senior managers and board members are
 2562  also required to file such disclosures with the Commission on
 2563  Ethics and the Office of Insurance Regulation. The executive
 2564  director of the corporation or his or her designee shall notify
 2565  each existing and newly appointed and existing appointed member
 2566  of the board of governors and senior managers of their duty to
 2567  comply with the reporting requirements of part III of chapter
 2568  112. At least quarterly, the executive director or his or her
 2569  designee shall submit to the Commission on Ethics a list of
 2570  names of the senior managers and members of the board of
 2571  governors who are subject to the public disclosure requirements
 2572  under s. 112.3145.
 2573         4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
 2574  provision of law, an employee or board member may not knowingly
 2575  accept, directly or indirectly, any gift or expenditure from a
 2576  person or entity, or an employee or representative of such
 2577  person or entity, that has a contractual relationship with the
 2578  corporation or who is under consideration for a contract. An
 2579  employee or board member who fails to comply with subparagraph
 2580  3. or this subparagraph is subject to penalties provided under
 2581  ss. 112.317 and 112.3173.
 2582         5. Any senior manager of the corporation who is employed on
 2583  or after January 1, 2007, regardless of the date of hire, who
 2584  subsequently retires or terminates employment is prohibited from
 2585  representing another person or entity before the corporation for
 2586  2 years after retirement or termination of employment from the
 2587  corporation.
 2588         6. Any senior manager of the corporation who is employed on
 2589  or after January 1, 2007, regardless of the date of hire, who
 2590  subsequently retires or terminates employment is prohibited from
 2591  having any employment or contractual relationship for 2 years
 2592  with an insurer that has entered into a take-out bonus agreement
 2593  with the corporation.
 2594         (y) It is the intent of the Legislature that the amendments
 2595  to this subsection enacted in 2002 should, over time, reduce the
 2596  probable maximum windstorm losses in the residual markets and
 2597  should reduce the potential assessments to be levied on property
 2598  insurers and policyholders statewide. In furtherance of this
 2599  intent:
 2600         1. The board shall, on or before February 1 of each year,
 2601  provide a report to the President of the Senate and the Speaker
 2602  of the House of Representatives showing the reduction or
 2603  increase in the 100-year probable maximum loss attributable to
 2604  wind-only coverages and the quota share program under this
 2605  subsection combined, as compared to the benchmark 100-year
 2606  probable maximum loss of the Florida Windstorm Underwriting
 2607  Association. For purposes of this paragraph, the benchmark 100
 2608  year probable maximum loss of the Florida Windstorm Underwriting
 2609  Association shall be the calculation dated February 2001 and
 2610  based on November 30, 2000, exposures. In order to ensure
 2611  comparability of data, the board shall use the same methods for
 2612  calculating its probable maximum loss as were used to calculate
 2613  the benchmark probable maximum loss.
 2614         2. Beginning December 1, 2012 2010, if the report under
 2615  subparagraph 1. for any year indicates that the 100-year
 2616  probable maximum loss attributable to wind-only coverages and
 2617  the quota share program combined does not reflect a reduction of
 2618  at least 25 percent from the benchmark, the board shall reduce
 2619  the boundaries of the high-risk area eligible for wind-only
 2620  coverages under this subsection in a manner calculated to reduce
 2621  such probable maximum loss to an amount at least 25 percent
 2622  below the benchmark.
 2623         3. Beginning February 1, 2015, if the report under
 2624  subparagraph 1. for any year indicates that the 100-year
 2625  probable maximum loss attributable to wind-only coverages and
 2626  the quota share program combined does not reflect a reduction of
 2627  at least 50 percent from the benchmark, the boundaries of the
 2628  high-risk area eligible for wind-only coverages under this
 2629  subsection shall be reduced by the elimination of any area that
 2630  is not seaward of a line 1,000 feet inland from the Intracoastal
 2631  Waterway.
 2632         Section 17. The Division of Statutory Revision is directed
 2633  to prepare a reviser’s bill for introduction at the next regular
 2634  session of the Legislature to change the term “high-risk
 2635  account” to “coastal account” to conform the Florida Statutes to
 2636  the amendment to s. 627.351(6)(b)2.a.(III), Florida Statutes,
 2637  made by this act.
 2638         Section 18. Subsection (2) of section 627.4133, Florida
 2639  Statutes, is amended to read:
 2640         627.4133 Notice of cancellation, nonrenewal, or renewal
 2641  premium.—
 2642         (2) With respect to any personal lines or commercial
 2643  residential property insurance policy, including, but not
 2644  limited to, any homeowner’s, mobile home owner’s, farmowner’s,
 2645  condominium association, condominium unit owner’s, apartment
 2646  building, or other policy covering a residential structure or
 2647  its contents:
 2648         (a) The insurer shall give the named insured at least 45
 2649  days’ advance written notice of the renewal premium.
 2650         (b) The insurer shall give the named insured written notice
 2651  of nonrenewal, cancellation, or termination at least 100 days
 2652  before prior to the effective date of the nonrenewal,
 2653  cancellation, or termination. However, the insurer shall give at
 2654  least 100 days’ written notice, or written notice by June 1,
 2655  whichever is earlier, for any nonrenewal, cancellation, or
 2656  termination that would be effective between June 1 and November
 2657  30. The notice must include the reason or reasons for the
 2658  nonrenewal, cancellation, or termination, except that:
 2659         1. The insurer must shall give the named insured written
 2660  notice of nonrenewal, cancellation, or termination at least 180
 2661  days before prior to the effective date of the nonrenewal,
 2662  cancellation, or termination for a named insured whose
 2663  residential structure has been insured by that insurer or an
 2664  affiliated insurer for at least a 5-year period immediately
 2665  prior to the date of the written notice.
 2666         2. When cancellation is for nonpayment of premium, at least
 2667  10 days’ written notice of cancellation accompanied by the
 2668  reason therefor must shall be given. As used in this
 2669  subparagraph, the term “nonpayment of premium” means failure of
 2670  the named insured to discharge when due any of her or his
 2671  obligations in connection with the payment of premiums on a
 2672  policy or any installment of such premium, whether the premium
 2673  is payable directly to the insurer or its agent or indirectly
 2674  under any premium finance plan or extension of credit, or
 2675  failure to maintain membership in an organization if such
 2676  membership is a condition precedent to insurance coverage.
 2677  “Nonpayment of premium” also means the failure of a financial
 2678  institution to honor an insurance applicant’s check after
 2679  delivery to a licensed agent for payment of a premium, even if
 2680  the agent has previously delivered or transferred the premium to
 2681  the insurer. If a dishonored check represents the initial
 2682  premium payment, the contract and all contractual obligations
 2683  are shall be void ab initio unless the nonpayment is cured
 2684  within the earlier of 5 days after actual notice by certified
 2685  mail is received by the applicant or 15 days after notice is
 2686  sent to the applicant by certified mail or registered mail, and
 2687  if the contract is void, any premium received by the insurer
 2688  from a third party must shall be refunded to that party in full.
 2689         3. When such cancellation or termination occurs during the
 2690  first 90 days during which the insurance is in force and the
 2691  insurance is canceled or terminated for reasons other than
 2692  nonpayment of premium, at least 20 days’ written notice of
 2693  cancellation or termination accompanied by the reason therefor
 2694  must shall be given except if where there has been a material
 2695  misstatement or misrepresentation or failure to comply with the
 2696  underwriting requirements established by the insurer.
 2697         4. The requirement for providing written notice of
 2698  nonrenewal by June 1 of any nonrenewal that would be effective
 2699  between June 1 and November 30 does not apply to the following
 2700  situations, but the insurer remains subject to the requirement
 2701  to provide such notice at least 100 days before prior to the
 2702  effective date of nonrenewal:
 2703         a. A policy that is nonrenewed due to a revision in the
 2704  coverage for sinkhole losses and catastrophic ground cover
 2705  collapse pursuant to s. 627.706, as amended by s. 30, chapter
 2706  2007-1, Laws of Florida.
 2707         b. A policy that is nonrenewed by Citizens Property
 2708  Insurance Corporation, pursuant to s. 627.351(6), for a policy
 2709  that has been assumed by an authorized insurer offering
 2710  replacement or renewal coverage to the policyholder is exempt
 2711  from the notice requirements of paragraph (a) and this
 2712  paragraph. In such cases, Citizens Property Insurance
 2713  Corporation shall give the named insured written notice of
 2714  nonrenewal at least 45 days before the effective date of the
 2715  nonrenewal.
 2716  
 2717  After the policy has been in effect for 90 days, the policy may
 2718  shall not be canceled by the insurer except if when there has
 2719  been a material misstatement, a nonpayment of premium, a failure
 2720  to comply with underwriting requirements established by the
 2721  insurer within 90 days of the date of effectuation of coverage,
 2722  or a substantial change in the risk covered by the policy or if
 2723  when the cancellation is for all insureds under such policies
 2724  for a given class of insureds. This paragraph does not apply to
 2725  individually rated risks having a policy term of less than 90
 2726  days.
 2727         5.Notwithstanding any other provision of law, an insurer
 2728  may cancel or nonrenew a property insurance policy upon a
 2729  minimum of 45 days notice if the office finds that the early
 2730  cancellation of some or all of the insurer’s policies is
 2731  necessary to protect the best interests of the public or
 2732  policyholders and the office approves the insurer’s plan for
 2733  early cancellation or nonrenewal of some or all of its policies.
 2734  The office may base such a finding upon the financial condition
 2735  of the insurer, lack of adequate reinsurance coverage for
 2736  hurricane risk, or other relevant factors. The office may
 2737  condition its finding on the consent of the insurer to be placed
 2738  in administrative supervision pursuant to s. 624.81 or consent
 2739  to the appointment of a receiver under chapter 631.
 2740         (c) If the insurer fails to provide the notice required by
 2741  this subsection, other than the 10-day notice, the coverage
 2742  provided to the named insured shall remain in effect until the
 2743  effective date of replacement coverage or until the expiration
 2744  of a period of days after the notice is given equal to the
 2745  required notice period, whichever occurs first. The premium for
 2746  the coverage shall remain the same during any such extension
 2747  period except that, in the event of failure to provide notice of
 2748  nonrenewal, if the rate filing then in effect would have
 2749  resulted in a premium reduction, the premium during such
 2750  extension must shall be calculated based on the later rate
 2751  filing.
 2752         (d)1. Upon a declaration of an emergency pursuant to s.
 2753  252.36 and the filing of an order by the Commissioner of
 2754  Insurance Regulation, an insurer may not cancel or nonrenew a
 2755  personal residential or commercial residential property
 2756  insurance policy covering a dwelling or residential property
 2757  located in this state which has been damaged as a result of a
 2758  hurricane or wind loss that is the subject of the declaration of
 2759  emergency for a period of 90 days after the dwelling or
 2760  residential property has been repaired. A structure is deemed to
 2761  be repaired when substantially completed and restored to the
 2762  extent that it is insurable by another authorized insurer that
 2763  is writing policies in this state.
 2764         2. However, an insurer or agent may cancel or nonrenew such
 2765  a policy before prior to the repair of the dwelling or
 2766  residential property:
 2767         a. Upon 10 days’ notice for nonpayment of premium; or
 2768         b. Upon 45 days’ notice:
 2769         (I) For a material misstatement or fraud related to the
 2770  claim;
 2771         (II) If the insurer determines that the insured has
 2772  unreasonably caused a delay in the repair of the dwelling; or
 2773         (III) If the insurer has paid policy limits.
 2774         3. If the insurer elects to nonrenew a policy covering a
 2775  property that has been damaged, the insurer shall provide at
 2776  least 90 days’ notice to the insured that the insurer intends to
 2777  nonrenew the policy 90 days after the dwelling or residential
 2778  property has been repaired. Nothing in this paragraph shall
 2779  prevent the insurer from canceling or nonrenewing the policy 90
 2780  days after the repairs are complete for the same reasons the
 2781  insurer would otherwise have canceled or nonrenewed the policy
 2782  but for the limitations of subparagraph 1. The Financial
 2783  Services Commission may adopt rules, and the Commissioner of
 2784  Insurance Regulation may issue orders, necessary to implement
 2785  this paragraph.
 2786         4. This paragraph shall also applies apply to personal
 2787  residential and commercial residential policies covering
 2788  property that was damaged as the result of Tropical Storm
 2789  Bonnie, Hurricane Charley, Hurricane Frances, Hurricane Ivan, or
 2790  Hurricane Jeanne.
 2791         (e) If any cancellation or nonrenewal of a policy subject
 2792  to this subsection is to take effect during the duration of a
 2793  hurricane as defined in s. 627.4025(2)(c), the effective date of
 2794  such cancellation or nonrenewal is extended until the end of the
 2795  duration of such hurricane. The insurer may collect premium at
 2796  the prior rates or the rates then in effect for the period of
 2797  time for which coverage is extended. This paragraph does not
 2798  apply to any property with respect to which replacement coverage
 2799  has been obtained and which is in effect for a claim occurring
 2800  during the duration of the hurricane.
 2801         Section 19. Section 627.43141, Florida Statutes, is created
 2802  to read:
 2803         627.43141 Notice of change in policy terms.—
 2804         (1) As used in this section, the term:
 2805         (a) “Change in policy terms” means the modification,
 2806  addition, or deletion of any term, coverage, duty, or condition
 2807  from the previous policy. The correction of typographical or
 2808  scrivener’s errors or the application of mandated legislative
 2809  changes is not a change in policy terms.
 2810         (b) “Policy” means a written contract of personal lines
 2811  property insurance or a written agreement for insurance, or the
 2812  certificate of such insurance, by whatever name called, and
 2813  includes all clauses, riders, endorsements, and papers that are
 2814  a part of such policy. The term does not include a binder as
 2815  defined in s. 627.420 unless the duration of the binder period
 2816  exceeds 60 days.
 2817         (c) “Renewal” means the issuance and delivery by an insurer
 2818  of a policy superseding at the end of the policy period a policy
 2819  previously issued and delivered by the same insurer or the
 2820  issuance and delivery of a certificate or notice extending the
 2821  term of a policy beyond its policy period or term. Any policy
 2822  that has a policy period or term of less than 6 months or any
 2823  policy that does not have a fixed expiration date shall, for
 2824  purposes of this section, be considered as written for
 2825  successive policy periods or terms of 6 months.
 2826         (2) A renewal policy may contain a change in policy terms.
 2827  If a renewal policy contains a change in policy terms, the
 2828  insurer shall give the named insured a written notice of the
 2829  change in policy terms, which must be enclosed along with the
 2830  written notice of renewal premium required by ss. 627.4133 and
 2831  627.728. Such notice should be entitled “Notice of Change in
 2832  Policy Terms.”
 2833         (3) Although not required, proof of mailing or registered
 2834  mailing through the United States Postal Service of the Notice
 2835  of Change in Policy Terms to the named insured at the address
 2836  shown in the policy is sufficient proof of notice.
 2837         (4) Receipt of payment of the premium for the renewal
 2838  policy by the insurer is deemed to be acceptance of the new
 2839  policy terms by the named insured.
 2840         (5) If an insurer fails to provide the notice required in
 2841  subsection (2), the original policy terms shall remain in effect
 2842  until the next renewal and the proper service of the notice or
 2843  until the effective date of replacement coverage obtained by the
 2844  named insured, whichever occurs first.
 2845         (6) The intent of this section is to:
 2846         (a) Allow an insurer to make a change in policy terms
 2847  without nonrenewing policyholders that the insurer wishes to
 2848  continue insuring.
 2849         (b) Alleviate concern and confusion to the policyholder
 2850  caused by the required policy nonrenewal for the limited issue
 2851  when an insurer intends to renew the insurance policy but the
 2852  new policy contains a change in policy terms.
 2853         (c) Encourage policyholders to discuss their coverages with
 2854  their insurance agents.
 2855         Section 20. Section 627.7011, Florida Statutes, is amended
 2856  to read:
 2857         627.7011 Homeowners’ policies; offer of replacement cost
 2858  coverage and law and ordinance coverage.—
 2859         (1) Before Prior to issuing or renewing a homeowner’s
 2860  insurance policy on or after October 1, 2005, or prior to the
 2861  first renewal of a homeowner’s insurance policy on or after
 2862  October 1, 2005, the insurer must offer each of the following:
 2863         (a) A policy or endorsement providing that any loss which
 2864  is repaired or replaced will be adjusted on the basis of
 2865  replacement costs not exceeding policy limits as to the
 2866  dwelling, rather than actual cash value, but not including costs
 2867  necessary to meet applicable laws and ordinances regulating the
 2868  construction, use, or repair of any property or requiring the
 2869  tearing down of any property, including the costs of removing
 2870  debris.
 2871         (b) A policy or endorsement providing that, subject to
 2872  other policy provisions, any loss which is repaired or replaced
 2873  at any location will be adjusted on the basis of replacement
 2874  costs not exceeding policy limits as to the dwelling, rather
 2875  than actual cash value, and also including costs necessary to
 2876  meet applicable laws and ordinances regulating the construction,
 2877  use, or repair of any property or requiring the tearing down of
 2878  any property, including the costs of removing debris.; However,
 2879  such additional costs necessary to meet applicable laws and
 2880  ordinances may be limited to either 25 percent or 50 percent of
 2881  the dwelling limit, as selected by the policyholder, and such
 2882  coverage shall apply only to repairs of the damaged portion of
 2883  the structure unless the total damage to the structure exceeds
 2884  50 percent of the replacement cost of the structure.
 2885  
 2886  An insurer is not required to make the offers required by this
 2887  subsection with respect to the issuance or renewal of a
 2888  homeowner’s policy that contains the provisions specified in
 2889  paragraph (b) for law and ordinance coverage limited to 25
 2890  percent of the dwelling limit, except that the insurer must
 2891  offer the law and ordinance coverage limited to 50 percent of
 2892  the dwelling limit. This subsection does not prohibit the offer
 2893  of a guaranteed replacement cost policy.
 2894         (2) Unless the insurer obtains the policyholder’s written
 2895  refusal of the policies or endorsements specified in subsection
 2896  (1), any policy covering the dwelling is deemed to include the
 2897  law and ordinance coverage limited to 25 percent of the dwelling
 2898  limit. The rejection or selection of alternative coverage shall
 2899  be made on a form approved by the office. The form shall fully
 2900  advise the applicant of the nature of the coverage being
 2901  rejected. If this form is signed by a named insured, it will be
 2902  conclusively presumed that there was an informed, knowing
 2903  rejection of the coverage or election of the alternative
 2904  coverage on behalf of all insureds. Unless the policyholder
 2905  requests in writing the coverage specified in this section, it
 2906  need not be provided in or supplemental to any other policy that
 2907  renews, insures, extends, changes, supersedes, or replaces an
 2908  existing policy when the policyholder has rejected the coverage
 2909  specified in this section or has selected alternative coverage.
 2910  The insurer must provide such policyholder with notice of the
 2911  availability of such coverage in a form approved by the office
 2912  at least once every 3 years. The failure to provide such notice
 2913  constitutes a violation of this code, but does not affect the
 2914  coverage provided under the policy.
 2915         (3)(a) In the event of a loss for which a dwelling is
 2916  insured on the basis of replacement costs, the insurer initially
 2917  must pay at least the actual cash value of the insured loss,
 2918  less any applicable deductible. An insured shall subsequently
 2919  enter into a contract for the performance of building and
 2920  structural repairs. The insurer shall pay any remaining amounts
 2921  incurred to perform such repairs as the work is performed. With
 2922  the exception of incidental expenses to mitigate further damage,
 2923  the insurer or any contractor or subcontractor may not require
 2924  the policyholder to advance payment for such repairs or
 2925  expenses. The insurer may waive the requirement for a contract
 2926  as provided in this paragraph. An insured shall have a period of
 2927  one 1 year after the date the insurer pays actual cash value to
 2928  make a claim for replacement cost. If a total loss of a dwelling
 2929  occurs, the insurer shall pay the replacement cost coverage
 2930  without reservation or holdback of any depreciation in value,
 2931  pursuant to s. 627.702.
 2932         (b) In the event of a loss for which a dwelling or personal
 2933  property is insured on the basis of replacement costs, the
 2934  insurer shall pay the replacement cost without reservation or
 2935  holdback of any depreciation in value, whether or not the
 2936  insured replaces or repairs the dwelling or property.
 2937         (4) A Any homeowner’s insurance policy issued or renewed on
 2938  or after October 1, 2005, must include in bold type no smaller
 2939  than 18 points the following statement:
 2940  
 2941         “LAW AND ORDINANCE COVERAGE IS AN IMPORTANT COVERAGE
 2942         THAT YOU MAY WISH TO PURCHASE. YOU MAY ALSO NEED TO
 2943         CONSIDER THE PURCHASE OF FLOOD INSURANCE FROM THE
 2944         NATIONAL FLOOD INSURANCE PROGRAM. WITHOUT THIS
 2945         COVERAGE, YOU MAY HAVE UNCOVERED LOSSES. PLEASE
 2946         DISCUSS THESE COVERAGES WITH YOUR INSURANCE AGENT.”
 2947  The intent of this subsection is to encourage policyholders to
 2948  purchase sufficient coverage to protect them in case events
 2949  excluded from the standard homeowners policy, such as law and
 2950  ordinance enforcement and flood, combine with covered events to
 2951  produce damage or loss to the insured property. The intent is
 2952  also to encourage policyholders to discuss these issues with
 2953  their insurance agent.
 2954         (5) Nothing in This section does not shall be construed to
 2955  apply to policies not considered to be “homeowners’ policies,”
 2956  as that term is commonly understood in the insurance industry.
 2957  This section specifically does not apply to mobile home
 2958  policies. Nothing in This section does not limit shall be
 2959  construed as limiting the ability of any insurer to reject or
 2960  nonrenew any insured or applicant on the grounds that the
 2961  structure does not meet underwriting criteria applicable to
 2962  replacement cost or law and ordinance policies or for other
 2963  lawful reasons.
 2964         (6) This section does not prohibit an insurer from limiting
 2965  its liability under a policy or endorsement providing that loss
 2966  will be adjusted on the basis of replacement costs to the lesser
 2967  of:
 2968         (a) The limit of liability shown on the policy declarations
 2969  page;
 2970         (b) The reasonable and necessary cost to repair the
 2971  damaged, destroyed, or stolen covered property; or
 2972         (c) The reasonable and necessary cost to replace the
 2973  damaged, destroyed, or stolen covered property.
 2974         (7) This section does not prohibit an insurer from
 2975  exercising its right to repair damaged property in compliance
 2976  with its policy and s. 627.702(7).
 2977         Section 21. Paragraph (a) of subsection (5) of section
 2978  627.70131, Florida Statutes, is amended to read:
 2979         627.70131 Insurer’s duty to acknowledge communications
 2980  regarding claims; investigation.—
 2981         (5)(a) Within 90 days after an insurer receives notice of
 2982  an initial or supplemental a property insurance claim from a
 2983  policyholder, the insurer shall pay or deny such claim or a
 2984  portion of the claim unless the failure to pay such claim or a
 2985  portion of the claim is caused by factors beyond the control of
 2986  the insurer which reasonably prevent such payment. Any payment
 2987  of an initial or supplemental a claim or portion of such a claim
 2988  made paid 90 days after the insurer receives notice of the
 2989  claim, or made paid more than 15 days after there are no longer
 2990  factors beyond the control of the insurer which reasonably
 2991  prevented such payment, whichever is later, shall bear interest
 2992  at the rate set forth in s. 55.03. Interest begins to accrue
 2993  from the date the insurer receives notice of the claim. The
 2994  provisions of this subsection may not be waived, voided, or
 2995  nullified by the terms of the insurance policy. If there is a
 2996  right to prejudgment interest, the insured shall select whether
 2997  to receive prejudgment interest or interest under this
 2998  subsection. Interest is payable when the claim or portion of the
 2999  claim is paid. Failure to comply with this subsection
 3000  constitutes a violation of this code. However, failure to comply
 3001  with this subsection shall not form the sole basis for a private
 3002  cause of action.
 3003         Section 22. Section 627.711, Florida Statutes, is amended
 3004  to read:
 3005         627.711 Notice of premium discounts for hurricane loss
 3006  mitigation; uniform mitigation verification inspection form.—
 3007         (1) Using a form prescribed by the Office of Insurance
 3008  Regulation, the insurer shall clearly notify the applicant or
 3009  policyholder of any personal lines residential property
 3010  insurance policy, at the time of the issuance of the policy and
 3011  at each renewal, of the availability and the range of each
 3012  premium discount, credit, other rate differential, or reduction
 3013  in deductibles, and combinations of discounts, credits, rate
 3014  differentials, or reductions in deductibles, for properties on
 3015  which fixtures or construction techniques demonstrated to reduce
 3016  the amount of loss in a windstorm can be or have been installed
 3017  or implemented. The prescribed form shall describe generally
 3018  what actions the policyholders may be able to take to reduce
 3019  their windstorm premium. The prescribed form and a list of such
 3020  ranges approved by the office for each insurer licensed in the
 3021  state and providing such discounts, credits, other rate
 3022  differentials, or reductions in deductibles for properties
 3023  described in this subsection shall be available for electronic
 3024  viewing and download from the Department of Financial Services’
 3025  or the Office of Insurance Regulation’s Internet website. The
 3026  Financial Services Commission may adopt rules to implement this
 3027  subsection.
 3028         (2)(a)By July 1, 2007, The Financial Services Commission
 3029  shall develop by rule a uniform mitigation verification
 3030  inspection form that shall be used by all insurers when
 3031  submitted by policyholders for the purpose of factoring
 3032  discounts for wind insurance. In developing the form, the
 3033  commission shall seek input from insurance, construction, and
 3034  building code representatives. Further, the commission shall
 3035  provide guidance as to the length of time the inspection results
 3036  are valid. An insurer shall accept as valid a uniform mitigation
 3037  verification form certified by the Department of Financial
 3038  Services or signed by the following authorized mitigation
 3039  inspectors:
 3040         1.(a) A home inspector licensed under s. 468.8314 who has
 3041  completed at least 3 hours of hurricane mitigation training
 3042  which includes hurricane mitigation techniques and compliance
 3043  with the uniform mitigation verification form and completion of
 3044  a proficiency exam. Thereafter, home inspectors licensed under
 3045  s. 468.8314, must complete at least 2 hours of continuing
 3046  education, as part of the existing licensure renewal
 3047  requirements each year, related to mitigation inspection and the
 3048  uniform mitigation form hurricane mitigation inspector certified
 3049  by the My Safe Florida Home program;
 3050         2.(b) A building code inspector certified under s. 468.607;
 3051         3.(c) A general, building, or residential contractor
 3052  licensed under s. 489.111;
 3053         4.(d) A professional engineer licensed under s. 471.015 who
 3054  has passed the appropriate equivalency test of the building code
 3055  training program as required by s. 553.841;
 3056         5.(e) A professional architect licensed under s. 481.213;
 3057  or
 3058         6.(f) Any other individual or entity recognized by the
 3059  insurer as possessing the necessary qualifications to properly
 3060  complete a uniform mitigation verification form.
 3061         (b) An insurer may, but is not required to, accept a form
 3062  from any other person possessing qualifications and experience
 3063  acceptable to the insurer.
 3064         (3) A person who is authorized to sign a mitigation
 3065  verification form must inspect the structures referenced by the
 3066  form personally, not through employees or other persons, and
 3067  must certify or attest to personal inspection of the structures
 3068  referenced by the form. However, licensees under s. 489.111, may
 3069  authorize a direct employee, who is not an independent
 3070  contractor, and who possesses the requisite skill, knowledge and
 3071  experience to conduct a mitigation verification inspection.
 3072  Insurers shall have the right to request and obtain information
 3073  from the authorized mitigation inspector under s. 489.111,
 3074  regarding any authorized employee’s qualifications prior to
 3075  accepting a mitigation verification form performed by an
 3076  employee that is not licensed under s. 489.111.
 3077         (4) An authorized mitigation inspector that signs a uniform
 3078  mitigation form, and a direct employee authorized to conduct
 3079  mitigation verification inspections under paragraph (3), may not
 3080  commit misconduct in performing hurricane mitigation inspections
 3081  or in completing a uniform mitigation form that causes financial
 3082  harm to a customer or their insurer; or that jeopardizes a
 3083  customer’s health and safety. Misconduct occurs when an
 3084  authorized mitigation inspector signs a uniform mitigation
 3085  verification form that:
 3086         (a) Falsely indicates that he or she personally inspected
 3087  the structures referenced by the form;
 3088         (b) Falsely indicates the existence of a feature which
 3089  entitles an insured to a mitigation discount which the inspector
 3090  knows does not exist or did not personally inspect;
 3091         (c) Contains erroneous information due to the gross
 3092  negligence of the inspector; or
 3093         (d) Contains a pattern of demonstrably false information
 3094  regarding the existence of mitigation features that could give
 3095  an insured a false evaluation of the ability of the structure to
 3096  withstand major damage from a hurricane endangering the safety
 3097  of the insured’s life and property.
 3098         (5) The licensing board of an authorized mitigation
 3099  inspector that violates subsection (4) may commence disciplinary
 3100  proceedings and impose administrative fines and other sanctions
 3101  authorized under the authorized mitigation inspector’s licensing
 3102  act. Authorized mitigation inspectors licensed under s. 489.111,
 3103  shall be directly liable for the acts of employees that violate
 3104  subsection (4) as if the authorized mitigation inspector
 3105  personally performed the inspection.
 3106         (6) An insurer, person, or other entity that obtains
 3107  evidence of fraud or evidence that an authorized mitigation
 3108  inspector or an employee authorized to conduct mitigation
 3109  verification inspections under paragraph (3), has made false
 3110  statements in the completion of a mitigation inspection form
 3111  shall file a report with the Division of Insurance Fraud, along
 3112  with all of the evidence in its possession that supports the
 3113  allegation of fraud or falsity. An insurer, person, or other
 3114  entity making the report shall be immune from liability in
 3115  accordance with s. 626.989(4), for any statements made in the
 3116  report, during the investigation, or in connection with the
 3117  report. The Division of Insurance Fraud shall issue an
 3118  investigative report if it finds that probable cause exists to
 3119  believe that the authorized mitigation inspector, or an employee
 3120  authorized to conduct mitigation verification inspections under
 3121  paragraph (3), made intentionally false or fraudulent statements
 3122  in the inspection form. Upon conclusion of the investigation and
 3123  a finding of probable cause that a violation has occurred, the
 3124  Division of Insurance Fraud shall send a copy of the
 3125  investigative report to the office and a copy to the agency
 3126  responsible for the professional licensure of the authorized
 3127  mitigation inspector, whether or not a prosecutor takes action
 3128  based upon the report.
 3129         (7)(3) An individual or entity who knowingly provides or
 3130  utters a false or fraudulent mitigation verification form with
 3131  the intent to obtain or receive a discount on an insurance
 3132  premium to which the individual or entity is not entitled
 3133  commits a misdemeanor of the first degree, punishable as
 3134  provided in s. 775.082 or s. 775.083.
 3135         (8) At its expense, the insurer may require that any
 3136  uniform mitigation verification form provided by an authorized
 3137  mitigation inspector or inspection company be independently
 3138  verified by an inspector, inspection company or an independent
 3139  third-party quality assurance provider which does possess a
 3140  quality assurance program prior to accepting the uniform
 3141  mitigation verification form as valid.
 3142         Section 23. Section 628.252, Florida Statutes, is created
 3143  to read:
 3144         628.252 Servicing affiliates of domestic property
 3145  insurers.—Every domestic property insurer shall notify the
 3146  office of its intention to enter into with affiliates all
 3147  management agreements, service contracts, and cost-sharing
 3148  arrangements. A domestic property insurer may not enter into
 3149  such an agreement, contract, or arrangement unless the insurer
 3150  has it has provided the office with at least 30 days’ written
 3151  notice of its intention to enter into such agreement, contract,
 3152  or arrangement, or such shorter period as the office, in its
 3153  discretion, may permit and the office has not disapproved such
 3154  agreement, contract, or arrangement within such period. This
 3155  section does not limit any existing authority of the office.
 3156         Section 24. The sums of $263,200 in nonrecurring funds and
 3157  $47,500 in recurring funds from the Insurance Regulatory Trust
 3158  Fund are appropriated and one full-time equivalent position and
 3159  associated salary rate is authorized to the Office of Insurance
 3160  Regulation to implement the provisions of the act relating to
 3161  the design, development, and operation of a comprehensive
 3162  website for consumers which provides comparisons of homeowners’
 3163  insurance rates and products.
 3164         Section 25. Except as otherwise expressly provided in this
 3165  act and except for this section, which shall take effect June 1,
 3166  2010, this act shall take effect July 1, 2010.

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