December 05, 2020
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       Florida Senate - 2010                                    SB 2104
       By Senator Bennett
       21-01507-10                                           20102104__
    1                        A bill to be entitled                      
    2         An act relating to Citizens Property Insurance
    3         Corporation; amending s. 627.351, F.S.; revising
    4         legislative intent; requiring that the corporation
    5         achieve actuarially sound rates on or before a
    6         specified date; requiring that the corporation take
    7         certain actions to achieve actuarially sound rates;
    8         providing requirements for the determination of
    9         actuarially sound rates; requiring that the
   10         corporation file a plan of withdrawal on or before a
   11         specified date if it does not achieve actuarially
   12         sound rates by a specified deadline; establishing
   13         criteria for actuarially sound rates; prohibiting the
   14         Office of Insurance Regulation from having authority
   15         with respect to the corporation’s rates; authorizing a
   16         policyholder to challenge his or her premium in
   17         accordance with specified provisions of state law;
   18         prohibiting a challenge to the rates of the
   19         corporation; amending s. 624.430, F.S.; prohibiting
   20         the Office of Insurance Regulation from denying the
   21         corporation’s plan of withdrawal; providing an
   22         effective date.
   24  Be It Enacted by the Legislature of the State of Florida:
   26         Section 1. Paragraphs (a) and (n) of subsection (6) of
   27  section 627.351, Florida Statutes, are amended to read:
   28         627.351 Insurance risk apportionment plans.—
   30         (a)1. It is the public purpose of this subsection to ensure
   31  the existence of an orderly market for property insurance for
   32  Floridians and Florida businesses. The Legislature finds that
   33  private insurers are unwilling or unable to provide affordable
   34  property insurance coverage in this state to the extent sought
   35  and needed. The absence of affordable property insurance
   36  threatens the public health, safety, and welfare and likewise
   37  threatens the economic health of the state. The state therefore
   38  has a compelling public interest and a public purpose to assist
   39  in assuring that property in the state is insured and that it is
   40  insured at affordable rates so as to facilitate the remediation,
   41  reconstruction, and replacement of damaged or destroyed property
   42  in order to reduce or avoid the negative effects otherwise
   43  resulting to the public health, safety, and welfare, to the
   44  economy of the state, and to the revenues of the state and local
   45  governments which are needed to provide for the public welfare.
   46  It is necessary, therefore, to allow the Citizens Property
   47  Insurance Corporation to be restored to its prior status as an
   48  insurer of last resort and to allow the corporation to develop
   49  actuarially sound rates over a period of time so that it can pay
   50  claims promptly and fulfill its statutory obligations. To that
   51  end, Citizens Property Insurance Corporation shall achieve
   52  actuarially sound rates within the time period specified in this
   53  subsection or must file a plan to withdraw from the state
   54  pursuant to the requirements in s. 624.430 provide affordable
   55  property insurance to applicants who are in good faith entitled
   56  to procure insurance through the voluntary market but are unable
   57  to do so. The Legislature intends by this subsection that
   58  affordable property insurance be provided and that it continue
   59  to be provided, as long as necessary, through Citizens Property
   60  Insurance Corporation, a government entity that is an integral
   61  part of the state, and that is not a private insurance company.
   62  To that end, Citizens Property Insurance Corporation shall
   63  strive to increase the availability of affordable property
   64  insurance in this state, while achieving efficiencies and
   65  economies, and while providing service to policyholders,
   66  applicants, and agents which is no less than the quality
   67  generally provided in the voluntary market, for the achievement
   68  of the foregoing public purposes. Because it is essential for
   69  this government entity to have the maximum financial resources
   70  to pay claims following a catastrophic hurricane, it is the
   71  intent of the Legislature that Citizens Property Insurance
   72  Corporation be allowed to achieve actuarially sound rates so
   73  that it can continue to be an integral part of the state and
   74  that the income of the corporation be exempt from federal income
   75  taxation and that interest on the debt obligations issued by the
   76  corporation be exempt from federal income taxation.
   77         2. The Residential Property and Casualty Joint Underwriting
   78  Association originally created by this statute shall be known,
   79  as of July 1, 2002, as the Citizens Property Insurance
   80  Corporation. The corporation shall provide insurance for
   81  residential and commercial property, for applicants who are in
   82  good faith entitled, but are unable, to procure insurance
   83  through the voluntary market. The corporation shall operate
   84  pursuant to a plan of operation approved by order of the
   85  Financial Services Commission. The plan is subject to continuous
   86  review by the commission. The commission may, by order, withdraw
   87  approval of all or part of a plan if the commission determines
   88  that conditions have changed since approval was granted and that
   89  the purposes of the plan require changes in the plan. The
   90  corporation shall continue to operate pursuant to the plan of
   91  operation approved by the Office of Insurance Regulation until
   92  October 1, 2006. For the purposes of this subsection,
   93  residential coverage includes both personal lines residential
   94  coverage, which consists of the type of coverage provided by
   95  homeowner’s, mobile home owner’s, dwelling, tenant’s,
   96  condominium unit owner’s, and similar policies, and commercial
   97  lines residential coverage, which consists of the type of
   98  coverage provided by condominium association, apartment
   99  building, and similar policies.
  100         3. Effective January 1, 2009, a personal lines residential
  101  structure that has a dwelling replacement cost of $2 million or
  102  more, or a single condominium unit that has a combined dwelling
  103  and content replacement cost of $2 million or more is not
  104  eligible for coverage by the corporation. Such dwellings insured
  105  by the corporation on December 31, 2008, may continue to be
  106  covered by the corporation until the end of the policy term.
  107  However, such dwellings that are insured by the corporation and
  108  become ineligible for coverage due to the provisions of this
  109  subparagraph may reapply and obtain coverage if the property
  110  owner provides the corporation with a sworn affidavit from one
  111  or more insurance agents, on a form provided by the corporation,
  112  stating that the agents have made their best efforts to obtain
  113  coverage and that the property has been rejected for coverage by
  114  at least one authorized insurer and at least three surplus lines
  115  insurers. If such conditions are met, the dwelling may be
  116  insured by the corporation for up to 3 years, after which time
  117  the dwelling is ineligible for coverage. The office shall
  118  approve the method used by the corporation for valuing the
  119  dwelling replacement cost for the purposes of this subparagraph.
  120  If a policyholder is insured by the corporation prior to being
  121  determined to be ineligible pursuant to this subparagraph and
  122  such policyholder files a lawsuit challenging the determination,
  123  the policyholder may remain insured by the corporation until the
  124  conclusion of the litigation.
  125         4. It is the intent of the Legislature that policyholders,
  126  applicants, and agents of the corporation receive service and
  127  treatment of the highest possible level but never less than that
  128  generally provided in the voluntary market. It also is intended
  129  that the corporation be held to service standards no less than
  130  those applied to insurers in the voluntary market by the office
  131  with respect to responsiveness, timeliness, customer courtesy,
  132  and overall dealings with policyholders, applicants, or agents
  133  of the corporation.
  134         5. Effective January 1, 2009, a personal lines residential
  135  structure that is located in the “wind-borne debris region,” as
  136  defined in s. 1609.2, International Building Code (2006), and
  137  that has an insured value on the structure of $750,000 or more
  138  is not eligible for coverage by the corporation unless the
  139  structure has opening protections as required under the Florida
  140  Building Code for a newly constructed residential structure in
  141  that area. A residential structure shall be deemed to comply
  142  with the requirements of this subparagraph if it has shutters or
  143  opening protections on all openings and if such opening
  144  protections complied with the Florida Building Code at the time
  145  they were installed.
  146         (n)1. As of January 1, 2016, the rates of the corporation
  147  shall be actuarially sound as provided in this paragraph. If the
  148  corporation does not achieve actuarially sound rates on or
  149  before January 1, 2016, it must file a plan of withdrawal
  150  pursuant to s. 624.430 by July 1, 2016.
  151         2.In order to achieve actuarially sound rates by January
  152  1, 2016, the corporation shall phase in rate changes over a 5
  153  year period beginning January 1, 2011, such that the gap between
  154  the then-current rates and the rates required to achieve
  155  actuarial soundness decreases by approximately 20 percent each
  156  year over the 5-year period. During the 5-year period, rate
  157  decreases are permitted to the extent that they are actuarially
  158  sound and phased in during that period.
  159         3. In determining the actuarial soundness of its rates, the
  160  corporation:
  161         a.May consider the applicable generally accepted and
  162  reasonable actuarial techniques as enumerated in s.
  163  627.062(2)(b)1., 2., 4., 5., 7., 9., 10., 11., 12., and 14.,
  164  (e)1., 3., 4., 5., and 6., (j), and (5).
  165         b.Shall include in its rates the following factors for the
  166  cost of reinsurance to cover its projected 100-year probable
  167  maximum loss:
  168         (I)The actual cost of reinsurance purchased from the
  169  Florida Hurricane Catastrophe Fund or in the private reinsurance
  170  market; and
  171         (II)The presumed cost of reinsurance not purchased which
  172  reflects the market value of future corporation assessments
  173  against corporation and noncorporation policyholders.
  174         c.May use one or more models found to be accurate and
  175  reliable by the Florida Commission on Hurricane Loss Projection
  176  Methodology.
  177         4.The office shall have no authority with respect to the
  178  rates of the corporation.
  179         5.A policyholder may challenge his or her premium as
  180  provided in s. 627.371. The rates of the corporation may not be
  181  challenged. Rates for coverage provided by the corporation shall
  182  be actuarially sound and subject to the requirements of s.
  183  627.062, except as otherwise provided in this paragraph. The
  184  corporation shall file its recommended rates with the office at
  185  least annually. The corporation shall provide any additional
  186  information regarding the rates which the office requires. The
  187  office shall consider the recommendations of the board and issue
  188  a final order establishing the rates for the corporation within
  189  45 days after the recommended rates are filed. The corporation
  190  may not pursue an administrative challenge or judicial review of
  191  the final order of the office.
  192         6.2. In addition to the rates otherwise determined pursuant
  193  to this paragraph, the corporation shall impose and collect an
  194  amount equal to the premium tax provided for in s. 624.509 to
  195  augment the financial resources of the corporation.
  196         3.After the public hurricane loss-projection model under
  197  s. 627.06281 has been found to be accurate and reliable by the
  198  Florida Commission on Hurricane Loss Projection Methodology,
  199  that model shall serve as the minimum benchmark for determining
  200  the windstorm portion of the corporation’s rates. This
  201  subparagraph does not require or allow the corporation to adopt
  202  rates lower than the rates otherwise required or allowed by this
  203  paragraph.
  204         4.The rate filings for the corporation which were approved
  205  by the office and which took effect January 1, 2007, are
  206  rescinded, except for those rates that were lowered. As soon as
  207  possible, the corporation shall begin using the lower rates that
  208  were in effect on December 31, 2006, and shall provide refunds
  209  to policyholders who have paid higher rates as a result of that
  210  rate filing. The rates in effect on December 31, 2006, shall
  211  remain in effect for the 2007 and 2008 calendar years except for
  212  any rate change that results in a lower rate. The next rate
  213  change that may increase rates shall take effect pursuant to a
  214  new rate filing recommended by the corporation and established
  215  by the office, subject to the requirements of this paragraph.
  216         5.Beginning on July 15, 2009, and each year thereafter,
  217  the corporation must make a recommended actuarially sound rate
  218  filing for each personal and commercial line of business it
  219  writes, to be effective no earlier than January 1, 2010.
  220         6.Beginning on or after January 1, 2010, and
  221  notwithstanding the board’s recommended rates and the office’s
  222  final order regarding the corporation’s filed rates under
  223  subparagraph 1., the corporation shall implement a rate increase
  224  each year which does not exceed 10 percent for any single policy
  225  issued by the corporation, excluding coverage changes and
  226  surcharges.
  227         7.The corporation may also implement an increase to
  228  reflect the effect on the corporation of the cash buildup factor
  229  pursuant to s. 215.555(5)(b).
  230         8.The corporation’s implementation of rates as prescribed
  231  in subparagraph 6. shall cease for any line of business written
  232  by the corporation upon the corporation’s implementation of
  233  actuarially sound rates. Thereafter, the corporation shall
  234  annually make a recommended actuarially sound rate filing for
  235  each commercial and personal line of business the corporation
  236  writes.
  237         Section 2. Present subsection (9) of section 624.430,
  238  Florida Statutes, is renumbered as subsection (10), and a new
  239  subsection (9) is added to that section, to read:
  240         624.430 Withdrawal of insurer or discontinuance of writing
  241  certain kinds or lines of insurance.—
  242         (9) The office may not deny Citizens Property Insurance
  243  Corporation’s plan of withdrawal as described in s.
  244  627.351(6)(n).
  245         Section 3. This act shall take effect July 1, 2010.

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