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Florida Senate - 2008 COMMITTEE AMENDMENT

Bill No. SB 2860

411274

CHAMBER ACTION

Senate

Comm: RCS

3/25/2008

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House



1

The Committee on Banking and Insurance (Atwater and Posey)

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recommended the following amendment:

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4

     Senate Amendment (with title amendment)

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     Delete everything after the enacting clause

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and insert:

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     Section 1.  Section 215.5595, Florida Statutes, is amended

8

to read:

9

     215.5595  Insurance Capital Build-Up Incentive Program.--

10

     (1) Upon entering the 2008 2006 hurricane season, the

11

Legislature finds that:

12

     (a)  The losses in Florida from eight hurricanes in 2004 and

13

2005 have seriously strained the resources of both the voluntary

14

insurance market and the public sector mechanisms of Citizens

15

Property Insurance Corporation and the Florida Hurricane

16

Catastrophe Fund.

17

     (b) Private reinsurance is much less available and at a

18

significantly greater cost to residential property insurers as

19

compared to 1 year ago, particularly for amounts below the

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insurer's retention or retained losses that must be paid before

21

reimbursement is provided by the Florida Hurricane Catastrophe

22

Fund.

23

     (c) The Office of Insurance Regulation has reported that

24

the insolvency of certain insurers may be imminent.

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     (d) Hurricane forecast experts predict that the 2006

26

hurricane season will be an active hurricane season and that the

27

Atlantic and Gulf Coast regions face an active hurricane cycle of

28

10 to 20 years or longer.

29

     (b)(e) Citizens Property Insurance Corporation has over 1.2

30

million policies in force and has the largest market share of any

31

insurer writing residential property insurer in the state, and

32

faces the threat of a catastrophic loss that The number of

33

cancellations or nonrenewals of residential property insurance

34

policies is expected to increase and the number of new

35

residential policies written in the voluntary market are likely

36

to decrease, causing increased policy growth and exposure to the

37

state insurer of last resort, Citizens Property Insurance

38

Corporation, and threatening to increase the deficit of the

39

corporation, currently estimated to be over $1.7 billion. This

40

deficit must be funded by assessments against insurers and

41

policyholders, unless otherwise funded by the state.

42

     (c)(f) Policyholders are subject to high increased premiums

43

and assessments that are increasingly making such coverage

44

unaffordable and that may force policyholders to sell their homes

45

and even leave the state.

46

     (d)(g) The increased risk to the public sector and private

47

sector continues to pose poses a serious threat to the economy of

48

this state, particularly the building and financing of

49

residential structures, and existing mortgages may be placed in

50

default.

51

     (h) The losses from 2004 and 2005, combined with the

52

expectation that the increase in hurricane activity will continue

53

for the foreseeable future, have caused both insurers and

54

reinsurers to limit the capital they are willing to commit to

55

covering the hurricane risk in Florida; attracting new capital to

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the Florida market is a critical priority; and providing a low-

57

cost source of capital would enable insurers to write additional

58

residential property insurance coverage and act to mitigate

59

premium increases.

60

     (e)(i) Appropriating state funds to be exchanged for used

61

as surplus notes issued by for residential property insurers,

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under conditions requiring the insurer to contribute additional

63

private sector capital and to write a minimum level of premiums

64

for residential hurricane coverage, is a valid and important

65

public purpose.

66

     (f) Extending the Insurance Capital Build-up Incentive

67

Program will provide an incentive for investors to commit

68

additional capital to Florida's residential insurance market.

69

     (2) The purpose of this section is to provide funds in

70

exchange for surplus notes to be issued by to new or existing

71

authorized residential property insurers under the Insurance

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Capital Build-Up Incentive Program administered by the State

73

Board of Administration, under the following conditions:

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     (a) The amount of state funds provided in exchange for a

75

the surplus note to for any insurer or insurer group, other than

76

an insurer writing only manufactured housing policies, may not

77

exceed $25 million or 20 percent of the total amount of funds

78

appropriated for available under the program, whichever is

79

greater. The amount of the surplus note for any insurer or

80

insurer group writing residential property insurance covering

81

only manufactured housing may not exceed $7 million.

82

     (b)  The insurer must contribute an amount of new capital to

83

its surplus which is at least equal to the amount of the surplus

84

note and must apply to the board by July 1, 2006. If an insurer

85

applies after July 1, 2006, but before June 1, 2007, the amount

86

of the surplus note is limited to one-half of the new capital

87

that the insurer contributes to its surplus, except that an

88

insurer writing only manufactured housing policies is eligible to

89

receive a surplus note of up to $7 million. For purposes of this

90

section, new capital must be in the form of cash or cash

91

equivalents as specified in s. 625.012(1).

92

     (c)  The insurer's surplus, new capital, and the surplus

93

note must total at least $50 million, except for insurers writing

94

residential property insurance covering only manufactured

95

housing. The insurer's surplus, new capital, and the surplus note

96

must total at least $14 million for insurers writing only

97

residential property insurance covering manufactured housing

98

policies as provided in paragraph (a).

99

     (d) The insurer must commit to increase its writings of

100

residential property insurance, including the peril of wind, and

101

to meet meeting a minimum writing ratio of net written premium to

102

surplus of at least 1:1 for the first year after receiving the

103

state funds, 1.5:1 for the second year, and 2:1 for the remaining

104

term of the surplus note. Alternatively, the insurer must meet a

105

minimum writing ratio of gross written premium to surplus of at

106

least 3:1 for the first year after receiving the state funds,

107

4.5:1 for the second year, and 6:1 for the remaining term of the

108

surplus note. The writing ratios, which shall be determined by

109

the Office of Insurance Regulation and certified quarterly to the

110

board. For this purpose, the term "premium" "net written premium"

111

means net written premium for residential property insurance in

112

Florida, including the peril of wind, and "surplus" refers to the

113

entire surplus of the insurer. The insurer must also commit to

114

writing at least one-third of its net or gross written premium

115

for new policies, not including renewal premiums, for policies

116

taken out of Citizens Property Insurance Corporation, during each

117

of the first 3 years after receiving the state funds in exchange

118

for the surplus note, which shall be determined by the Office of

119

Insurance Regulation and certified annually to the board. The

120

office may determine that an insurer meets the requirement for

121

taking policies out of Citizens, by written notice to the board,

122

upon a finding that the insurer made offers of coverage to

123

policyholders of Citizens which would have resulted in meeting

124

this requirement had the policyholders accepted the offer. If the

125

required ratio or the required writings for policies taken out of

126

Citizens is not maintained during the term of the surplus note,

127

the board may increase the interest rate, accelerate the

128

repayment of interest and principal, or shorten the term of the

129

surplus note, subject to approval by the Commissioner of

130

Insurance of payments by the insurer of principal and interest as

131

provided in paragraph (f).

132

     (e)  If the requirements of this section are met, the board

133

may approve an application by an insurer for funds in exchange

134

for issuance of a surplus note, unless the board determines that

135

the financial condition of the insurer and its business plan for

136

writing residential property insurance in Florida places an

137

unreasonably high level of financial risk to the state of

138

nonpayment in full of the interest and principal. The board shall

139

consult with the Office of Insurance Regulation and may contract

140

with independent financial and insurance consultants in making

141

this determination.

142

     (f)  The surplus note must be repayable to the state with a

143

term of 20 years. The surplus note shall accrue interest on the

144

unpaid principal balance at a rate equivalent to the 10-year U.S.

145

Treasury Bond rate, require the payment only of interest during

146

the first 3 years, and include such other terms as approved by

147

the board. The board may charge late fees up to 5 percent for

148

late payments or other late remittances. Payment of principal, or

149

interest, or late fees by the insurer on the surplus note must be

150

approved by the Commissioner of Insurance, who shall approve such

151

payment unless the commissioner determines that such payment will

152

substantially impair the financial condition of the insurer. If

153

such a determination is made, the commissioner shall approve such

154

payment that will not substantially impair the financial

155

condition of the insurer.

156

     (g)  The total amount of funds available for the program is

157

limited to the amount appropriated by the Legislature for this

158

purpose. If the amount of surplus notes requested by insurers

159

exceeds the amount of funds available, the board may prioritize

160

insurers that are eligible and approved, with priority for

161

funding given to insurers writing only manufactured housing

162

policies, regardless of the date of application, based on the

163

financial strength of the insurer, the viability of its proposed

164

business plan for writing additional residential property

165

insurance in the state, and the effect on competition in the

166

residential property insurance market. Between insurers writing

167

residential property insurance covering manufactured housing,

168

priority shall be given to the insurer writing the highest

169

percentage of its policies covering manufactured housing.

170

     (h) The board may allocate portions of the funds available

171

for the program and establish dates for insurers to apply for

172

surplus notes from such allocation which are earlier than the

173

dates established in paragraph (b).

174

     (h)(i) Notwithstanding paragraph (d), a newly formed

175

manufactured housing insurer that is eligible for a surplus note

176

under this section shall meet the premium to surplus ratio

177

provisions of s. 624.4095.

178

     (i)(j) As used in this section, "an insurer writing only

179

manufactured housing policies" includes:

180

     1.  A Florida domiciled insurer that begins writing personal

181

lines residential manufactured housing policies in Florida after

182

March 1, 2007, and that removes a minimum of 50,000 policies from

183

Citizens Property Insurance Corporation without accepting a

184

bonus, provided at least 25 percent of its policies cover

185

manufactured housing. Such an insurer may count any funds above

186

the minimum capital and surplus requirement that were contributed

187

into the insurer after March 1, 2007, as new capital under this

188

section.

189

     2.  A Florida domiciled insurer that writes at least 40

190

percent of its policies covering manufactured housing in Florida.

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     (3)  As used in this section, the term:

192

     (a)  "Board" means the State Board of Administration.

193

     (b)  "Program" means the Insurance Capital Build-Up

194

Incentive Program established by this section.

195

     (4) The state funds provided to the insurer in exchange for

196

the A surplus note provided to an insurer pursuant to this

197

section are is considered borrowed surplus an asset of the

198

insurer pursuant to s. 628.401 s. 625.012.

199

     (5) If an insurer that receives funds in exchange for

200

issuance of a surplus note pursuant to this section is rendered

201

insolvent, the state is a class 3 creditor pursuant to s. 631.271

202

for the unpaid principal and interest on the surplus note.

203

     (6)  The board shall adopt rules prescribing the procedures,

204

administration, and criteria for approving the applications of

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insurers to receive funds in exchange for issuance of surplus

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notes pursuant to this section, which may be adopted pursuant to

207

the procedures for emergency rules of chapter 120. Otherwise,

208

actions and determinations by the board pursuant to this section

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are exempt from chapter 120.

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     (7)  The board shall invest and reinvest the funds

211

appropriated for the program in accordance with s. 215.47 and

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consistent with board policy.

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     (8) The amendments to this section enacted in 2008 do not

214

affect the terms or conditions of the surplus notes that were

215

approved prior to January 1, 2008. However, the board may

216

renegotiate the terms of any surplus note issued by an insurer

217

prior to January 2008 under this program, upon the agreement of

218

the insurer and the board, consistent with the requirements of

219

this section as amended in 2008.

220

     Section 2.  Section 542.20, Florida Statutes, is amended to

221

read:

222

     542.20  Exemptions.--

223

     (1) Any activity or conduct exempt under Florida statutory

224

or common law or exempt from the provisions of the antitrust laws

225

of the United States is exempt from the provisions of this

226

chapter, except as provided in subsection (2).

227

     (2) The business of insurance is subject to the provisions

228

of this chapter. This chapter does not prohibit a rating

229

organization or advisory organization from collecting claims,

230

loss, or expense data from insurers and filing rates or advisory

231

rates with the Office of Insurance Regulation.

232

     Section 3.  Subsection (6) is added to section 624.3161,

233

Florida Statutes, to read:

234

     624.3161  Market conduct examinations.--

235

     (6) Based on the findings of a market conduct examination,

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the office may require an insurer to file its claims-handling

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practices and procedures with the office for review and

238

inspection. Such claims-handling practices and procedures are

239

public records and are not trade secrets or otherwise exempt from

240

the provisions of s. 119.07(1). As used in this section, "claims-

241

handling practices and procedures" are any policies, guidelines,

242

rules, protocols, standard operating procedures, instructions, or

243

directives that govern or guide how and the manner in which an

244

insured's claims for benefits under any policy will be processed.

245

     Section 4.  Subsection (4) is added to section 624.418,

246

Florida Statutes, to read:

247

     624.418  Suspension, revocation of certificate of authority

248

for violations and special grounds.--

249

     (4) The failure of an insurer to provide documents or

250

information subpoenaed by the office constitutes an immediate and

251

serious danger to the public health, safety, and welfare; and the

252

office may, at its discretion, without prior notice or the

253

opportunity for a hearing immediately suspend the insurer's

254

certificate of authority.

255

     Section 5.  Subsections (2) and (3) of section 624.4211,

256

Florida Statutes, are amended, and subsections (5) and (6) are

257

added to that section, to read:

258

     624.4211  Administrative fine in lieu of suspension or

259

revocation.--

260

     (2) With respect to any nonwillful violation, such fine may

261

shall not exceed $25,000 $2,500 per violation. In no event shall

262

such fine exceed an aggregate amount of $10,000 for all

263

nonwillful violations arising out of the same action. If When an

264

insurer discovers a nonwillful violation, the insurer shall

265

correct the violation and, if restitution is due, make

266

restitution to all affected persons. Such restitution shall

267

include interest at 12 percent per year from either the date of

268

the violation or the date of inception of the affected person's

269

policy, at the insurer's option. The restitution may be a credit

270

against future premiums due provided that the interest

271

accumulates shall accumulate until the premiums are due. If the

272

amount of restitution due to any person is $50 or more and the

273

insurer wishes to credit it against future premiums, it shall

274

notify such person that she or he may receive a check instead of

275

a credit. If the credit is on a policy that which is not renewed,

276

the insurer shall pay the restitution to the person to whom it is

277

due.

278

     (3)  With respect to any knowing and willful violation of a

279

lawful order or rule of the office or commission or a provision

280

of this code, the office may impose a fine upon the insurer in an

281

amount not to exceed $100,000 $20,000 for each such violation. In

282

no event shall such fine exceed an aggregate amount of $100,000

283

for all knowing and willful violations arising out of the same

284

action. In addition to such fines, the such insurer shall make

285

restitution when due in accordance with the provisions of

286

subsection (2).

287

     (5) The office may impose an administrative fine for each

288

day the insurer is not in compliance with the Florida Insurance

289

Code up to a maximum of $25,000 per violation per day.

290

     (6) In determining the amount of the fine, the office shall

291

consider:

292

     (a) The degree of consumer harm caused or potentially

293

caused by the violation;

294

     (b) Whether the violation constitutes an immediate danger

295

to the public;

296

     (c) Whether the violation is a repeat violation or similar

297

to past violations by the insurer;

298

     (d) The effect on the solvency of the insurer;

299

     (e) The premium volume of the insurer; and

300

     (f) The effect that fining the insurer will have on the

301

insurer's compliance with the Florida Insurance Code.

302

     Section 6. Section 624.4213, Florida Statutes, is created to

303

read:

304

     624.4213 Trade secret documents.--

305

     (1) If any person who is required to submit documents or

306

other information to the office or department pursuant to the

307

Insurance Code or by rule or order of the office, department, or

308

commission claims that such submission contains a trade secret,

309

such person may file with the office or department a notice of

310

trade secret as provided in this section. Failure to do so

311

constitutes a waiver of any claim by such person that the

312

document or information is a trade secret.

313

     (a) Each page of such document or specific portion of a

314

document claimed to be a trade secret must be clearly marked as

315

"trade secret."

316

     (b) All material marked as a trade secret must be separated

317

from all non-trade secret material, such as being submitted in a

318

separate envelope clearly marked as "trade secret."

319

     (c) In submitting a notice of trade secret to the office or

320

department, the submitting party must include an affidavit

321

certifying under oath to the truth of the following statements

322

concerning all documents or information that are claimed to be

323

trade secrets:

324

     1. [I consider/My company considers] this information a

325

trade secret that has value and provides an advantage or an

326

opportunity to obtain an advantage over those who do not know or

327

use it.

328

     2. [I have/My company has] taken measures to prevent the

329

disclosure of the information to anyone other that those who have

330

been selected to have access for limited purposes, and [I

331

intend/my company intends] to continue to take such measures.

332

     3. The information is not, and has not been, reasonably

333

obtainable without [my/our] consent by other persons by use of

334

legitimate means.

335

     4. The information is not publicly available elsewhere.

336

     (2) If a court or administrative tribunal finds that any

337

document or information certified as a trade secret, submitted to

338

the office or department under this section, and subsequently

339

requested by a third party is not a trade secret, the company or

340

the person certifying such document or information as a trade

341

secret is liable for an award of reasonable attorney's fees and

342

costs to the third party seeking access to such documents. In

343

addition, it is a violation of the Florida Insurance Code if the

344

office or department finds that the person submitting the

345

document or information knew, or should have known, that the

346

document or information is not a trade secret.

347

     (3) The office or department may disclose a trade secret,

348

together with the claim that it is a trade secret, to an officer

349

or employee of another governmental agency whose use of the trade

350

secret is within the scope of his or her employment.

351

     Section 7. Section 624.4305, Florida Statutes, is created to

352

read:

353

     624.4305 Nonrenewal of residential property insurance

354

policies.--

355

     (1) Any insurer planning to nonrenew more than 10,000

356

residential property insurance policies in this state shall give

357

90 days' notice in writing to the office prior to the issuance of

358

any notices of nonrenewal. The notice must set forth the

359

insurer's reasons for such action, the effective dates of

360

nonrenewal, and any arrangements that have been made for other

361

insurers to offer coverage to affected policyholders.

362

     (2) The insurer may not issue a notice of nonrenewal to

363

such policyholders unless the office approves or fails to

364

disapprove the nonrenewal plan within 90 days after receiving the

365

notice from the insurer. The office may not approve the plan

366

unless it finds that the insurer has staggered the nonrenewals

367

over a reasonable period relative to the number of nonrenewals,

368

or has made arrangements for offers of replacement coverage, such

369

that the actions are not hazardous to policyholders or the

370

public.

371

     Section 8.  Subsection (2) of section 626.9521, Florida

372

Statutes, is amended to read:

373

     626.9521  Unfair methods of competition and unfair or

374

deceptive acts or practices prohibited; penalties.--

375

     (2)  Any person who violates any provision of this part

376

shall be subject to a fine in an amount not greater than $25,000

377

$2,500 for each nonwillful violation and not greater than

378

$100,000 $20,000 for each willful violation. Fines under this

379

subsection may not exceed an aggregate amount of $10,000 for all

380

nonwillful violations arising out of the same action or an

381

aggregate amount of $100,000 for all willful violations arising

382

out of the same action. The fines authorized by this subsection

383

may be imposed in addition to any other applicable penalty.

384

     Section 9.  Paragraph (i) of subsection (1) of section

385

626.9541, Florida Statutes, is amended to read:

386

     626.9541  Unfair methods of competition and unfair or

387

deceptive acts or practices defined.--

388

     (1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE

389

ACTS.--The following are defined as unfair methods of competition

390

and unfair or deceptive acts or practices:

391

     (i)  Unfair claim settlement practices.--

392

     1.  Attempting to settle claims on the basis of an

393

application, when serving as a binder or intended to become a

394

part of the policy, or any other material document that is which

395

was altered without notice to, or knowledge or consent of, the

396

insured;

397

     2.  A material misrepresentation made to an insured or any

398

other person having an interest in the proceeds payable under a

399

such contract or policy, for the purpose and with the intent of

400

effecting settlement of such claims, loss, or damage under such

401

contract or policy on less favorable terms than those provided

402

in, and contemplated by, the such contract or policy; or

403

     3.  Committing or performing with such frequency as to

404

indicate a general business practice any of the following:

405

     a.  Failing to adopt and implement standards for the proper

406

investigation of claims.;

407

     b.  Misrepresenting pertinent facts or insurance policy

408

provisions relating to coverages at issue.;

409

     c.  Failing to acknowledge and act promptly upon

410

communications with respect to claims.;

411

     d.  Denying claims without conducting reasonable

412

investigations based upon available information.;

413

     e.  Failing to affirm or deny full or partial coverage of

414

claims, and, as to partial coverage, the dollar amount or extent

415

of coverage, or failing to provide a written statement that the

416

claim is being investigated, upon the written request of the

417

insured within 30 days after proof-of-loss statements have been

418

completed.;

419

     f.  Failing to promptly provide a reasonable explanation in

420

writing to the insured of the basis in the insurance policy, in

421

relation to the facts or applicable law, for denial of a claim or

422

for the offer of a compromise settlement.;

423

     g.  Failing to promptly notify the insured of any additional

424

information necessary for the processing of a claim.; or

425

     h.  Failing to clearly explain the nature of the requested

426

information and the reasons why such information is necessary.

427

     i. Failing to promptly provide to the insured estimates of

428

damage and a good faith explanation in writing of the insurer's

429

evaluation of benefits and the basis for the evaluation.

430

     4. Giving consideration to the age, race, income level,

431

education, credit score, or any other personal characteristic of

432

a policyholder when evaluating, adjusting, settling, or

433

attempting to settle a property insurance claim; or

434

     5. Failing to pay undisputed amounts of partial or full

435

benefits owed under first-party property insurance policies

436

within 30 days after determining the amounts of partial or full

437

benefits and agreeing to coverage. This subparagraph controls to

438

the extent of any conflict with any other provision of law.

439

     Section 10.  Paragraphs (a), (b), and (g) of subsection (2)

440

and subsection (9) of section 627.062, Florida Statutes, are

441

amended to read:

442

     627.062  Rate standards.--

443

     (2)  As to all such classes of insurance:

444

     (a)  Insurers or rating organizations shall establish and

445

use rates, rating schedules, or rating manuals to allow the

446

insurer a reasonable rate of return on such classes of insurance

447

written in this state. A copy of rates, rating schedules, rating

448

manuals, premium credits or discount schedules, and surcharge

449

schedules, and changes thereto, shall be filed with the office

450

under one of the following procedures except as provided in

451

subparagraph 3.:

452

     1.  If the filing is made at least 90 days before the

453

proposed effective date and the filing is not implemented during

454

the office's review of the filing and any proceeding and judicial

455

review, then such filing shall be considered a "file and use"

456

filing. In such case, the office shall finalize its review by

457

issuance of a notice of intent to approve or a notice of intent

458

to disapprove within 90 days after receipt of the filing. The

459

notice of intent to approve and the notice of intent to

460

disapprove constitute agency action for purposes of the

461

Administrative Procedure Act. Requests for supporting

462

information, requests for mathematical or mechanical corrections,

463

or notification to the insurer by the office of its preliminary

464

findings shall not toll the 90-day period during any such

465

proceedings and subsequent judicial review. The rate shall be

466

deemed approved if the office does not issue a notice of intent

467

to approve or a notice of intent to disapprove within 90 days

468

after receipt of the filing.

469

     2.  If the filing is not made in accordance with the

470

provisions of subparagraph 1., such filing shall be made as soon

471

as practicable, but no later than 30 days after the effective

472

date, and shall be considered a "use and file" filing. An insurer

473

making a "use and file" filing is potentially subject to an order

474

by the office to return to policyholders portions of rates found

475

to be excessive, as provided in paragraph (h).

476

     3. For all property insurance filings made or submitted

477

after January 25, 2007, but before December 31, 2008, an insurer

478

seeking a rate that is greater than the rate most recently

479

approved by the office shall make a "file and use" filing. This

480

subparagraph applies to property insurance only. For purposes of

481

this subparagraph, motor vehicle collision and comprehensive

482

coverages are not considered to be property coverages.

483

     (b)  Upon receiving a rate filing, the office shall review

484

the rate filing to determine if a rate is excessive, inadequate,

485

or unfairly discriminatory. In making that determination, the

486

office shall, in accordance with generally accepted and

487

reasonable actuarial techniques, consider the following factors:

488

     1.  Past and prospective loss experience within and without

489

this state.

490

     2.  Past and prospective expenses.

491

     3.  The degree of competition among insurers for the risk

492

insured.

493

     4.  Investment income reasonably expected by the insurer,

494

consistent with the insurer's investment practices, from

495

investable premiums anticipated in the filing, plus any other

496

expected income from currently invested assets representing the

497

amount expected on unearned premium reserves and loss reserves.

498

The commission may adopt rules using utilizing reasonable

499

techniques of actuarial science and economics to specify the

500

manner in which insurers shall calculate investment income

501

attributable to such classes of insurance written in this state

502

and the manner in which such investment income shall be used to

503

calculate in the calculation of insurance rates. Such manner

504

shall contemplate allowances for an underwriting profit factor

505

and full consideration of investment income which produce a

506

reasonable rate of return; however, investment income from

507

invested surplus may shall not be considered.

508

     5.  The reasonableness of the judgment reflected in the

509

filing.

510

     6.  Dividends, savings, or unabsorbed premium deposits

511

allowed or returned to Florida policyholders, members, or

512

subscribers.

513

     7.  The adequacy of loss reserves.

514

     8. The cost of reinsurance, subject to the following

515

conditions:.

516

     a. The cost of reinsurance shall be presumed to be

517

excessive if the annual expected recoveries are less than 40

518

percent of the annual reinsurance premium for reinsurance

519

purchased from affiliated reinsurers, or less than 20 percent of

520

the annual reinsurance premium for reinsurance purchased from

521

unaffiliated reinsurers after excluding the Florida Hurricane

522

Catastrophe Fund. The insurer may rebut this presumption by

523

providing documentation to the office demonstrating that the

524

annual expected recovery must deviate from such requirements in

525

order to ensure the financial soundness of the insurer.

526

     b. For reinsurance purchased from affiliated reinsurers,

527

the costs may not include any broker fees.

528

     c. The cost of catastrophe reinsurance shall be presumed to

529

be excessive to the extent that the amount of reinsurance

530

coverage was based on estimates of probable maximum loss which

531

are in excess of estimates using a hurricane loss model or method

532

found to be acceptable or reliable by the Florida Commission on

533

Hurricane Loss Projection Methodology, as provided in s.

534

627.0628.

535

     9.  Trend factors, including trends in actual losses per

536

insured unit for the insurer making the filing.

537

     10.  Conflagration and catastrophe hazards, if applicable.

538

     11. Projected hurricane losses, if applicable, which must

539

be estimated using a model or method found to be acceptable or

540

reliable by the Florida Commission on Hurricane Loss Projection

541

Methodology, and as further provided in s. 627.0628.

542

     12.11. A reasonable margin for underwriting profit and

543

contingencies. For that portion of the rate covering the risk of

544

hurricanes and other catastrophic losses for which the insurer

545

has not purchased reinsurance and has exposed its capital and

546

surplus to such risk, the office must approve a rating factor

547

that provides the insurer a reasonable rate of return that is

548

commensurate with such risk.

549

     13.12. The cost of medical services, if applicable.

550

     14.13. Other relevant factors which impact upon the

551

frequency or severity of claims or upon expenses.

552

     (g)  The office may at any time review a rate, rating

553

schedule, rating manual, or rate change; the pertinent records of

554

the insurer; and market conditions. If the office finds on a

555

preliminary basis that a rate may be excessive, inadequate, or

556

unfairly discriminatory, the office shall initiate proceedings to

557

disapprove the rate and shall so notify the insurer. However, the

558

office may not disapprove as excessive any rate for which it has

559

given final approval or which has been deemed approved for a

560

period of 1 year after the effective date of the filing unless

561

the office finds that a material misrepresentation or material

562

error was made by the insurer or was contained in the filing, or

563

unless the insurer has nonrenewed a number or percentage of

564

policies which the office determines may result in the insurer

565

having an excessive rate. Upon being so notified, the insurer or

566

rating organization shall, within 60 days, file with the office

567

all information which, in the belief of the insurer or

568

organization, proves the reasonableness, adequacy, and fairness

569

of the rate or rate change. The office shall issue a notice of

570

intent to approve or a notice of intent to disapprove pursuant to

571

the procedures of paragraph (a) within 90 days after receipt of

572

the insurer's initial response. In such instances and in any

573

administrative proceeding relating to the legality of the rate,

574

the insurer or rating organization shall carry the burden of

575

proof by a preponderance of the evidence to show that the rate is

576

not excessive, inadequate, or unfairly discriminatory. After the

577

office notifies an insurer that a rate may be excessive,

578

inadequate, or unfairly discriminatory, unless the office

579

withdraws the notification, the insurer shall not alter the rate

580

except to conform with the office's notice until the earlier of

581

120 days after the date the notification was provided or 180 days

582

after the date of the implementation of the rate. The office may,

583

subject to chapter 120, disapprove without the 60-day

584

notification any rate increase filed by an insurer within the

585

prohibited time period or during the time that the legality of

586

the increased rate is being contested.

587

588

The provisions of this subsection shall not apply to workers'

589

compensation and employer's liability insurance and to motor

590

vehicle insurance.

591

     (9)(a) Effective March 1, 2007, The chief executive officer

592

or chief financial officer of a property insurer and the chief

593

actuary of a property insurer must certify under oath and subject

594

to the penalty of perjury, on a form approved by the commission,

595

the following information, which must accompany a rate filing:

596

     1.  The signing officer and actuary have reviewed the rate

597

filing;

598

     2.  Based on the signing officer's and actuary's knowledge,

599

the rate filing does not contain any untrue statement of a

600

material fact or omit to state a material fact necessary in order

601

to make the statements made, in light of the circumstances under

602

which such statements were made, not misleading;

603

     3.  Based on the signing officer's and actuary's knowledge,

604

the information and other factors described in paragraph (2)(b),

605

including, but not limited to, investment income, fairly present

606

in all material respects the basis of the rate filing for the

607

periods presented in the filing; and

608

     4.  Based on the signing officer's and actuary's knowledge,

609

the rate filing reflects all premium savings that are reasonably

610

expected to result from legislative enactments and are in

611

accordance with generally accepted and reasonable actuarial

612

techniques;.

613

     5. Based on the signing officer's and actuary's knowledge,

614

the actuary responsible for preparing the rate filing reviewed

615

the rate indications used by the office in approving the

616

insurer's last rate filing, if made available to the insurer for

617

review, and identified factors used in the current rate filing

618

which are inconsistent with the factors used by the office in

619

developing such rate indications; and

620

     6. Based on the signing officer's and actuary's knowledge,

621

the number and type of policies that the insurer intends to

622

nonrenew during the year following the proposed effective date of

623

the rate filing, and that the rate filing reflects the reduced

624

risk of loss associated with such nonrenewals.

625

     (b)  A signing officer or actuary knowingly making a false

626

certification under this subsection commits a violation of s.

627

626.9541(1)(e) and is subject to the penalties under s. 626.9521.

628

     (c)  Failure to provide such certification by the officer

629

and actuary shall result in the rate filing being disapproved

630

without prejudice to be refiled.

631

     (d) A properly certified rate filing must contain all

632

information that the insurer intends to support the rate filing,

633

unless the office requests additional information to support the

634

filing. If the office issues a notice of intent to disapprove the

635

filing, additional information related to the rate filing is not

636

admissible to justify the rate in any subsequent administrative

637

or legal proceeding, other than expert opinion.

638

     (e)(d) The commission may adopt rules and forms pursuant to

639

ss. 120.536(1) and 120.54 to administer this subsection.

640

     Section 11. Subsection (6) of section 627.062, Florida

641

Statutes, is repealed.

642

     Section 12.  Subsection (1) of section 627.0613, Florida

643

Statutes, is amended to read:

644

     627.0613  Consumer advocate.--The Chief Financial Officer

645

must appoint a consumer advocate who must represent the general

646

public of the state before the department and the office. The

647

consumer advocate must report directly to the Chief Financial

648

Officer, but is not otherwise under the authority of the

649

department or of any employee of the department. The consumer

650

advocate has such powers as are necessary to carry out the duties

651

of the office of consumer advocate, including, but not limited

652

to, the powers to:

653

     (1)  Recommend to the department or office, by petition, the

654

commencement of any proceeding or action; appear in any

655

proceeding or action before the department or office; or appear

656

in any proceeding before the Division of Administrative Hearings

657

or arbitration panel specified in s. 627.062(6) relating to

658

subject matter under the jurisdiction of the department or

659

office.

660

     Section 13.  Paragraph (c) of subsection (1) and paragraph

661

(c) of subsection (3) of section 627.0628, Florida Statutes, are

662

amended to read:

663

     627.0628  Florida Commission on Hurricane Loss Projection

664

Methodology; public records exemption; public meetings

665

exemption.--

666

     (1)  LEGISLATIVE FINDINGS AND INTENT.--

667

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

668

Florida Commission on Hurricane Loss Projection Methodology as a

669

panel of experts to provide the most actuarially sophisticated

670

guidelines and standards for projection of hurricane losses

671

possible, given the current state of actuarial science. It is the

672

further intent of the Legislature that such standards and

673

guidelines must be used by the State Board of Administration in

674

developing reimbursement premium rates for the Florida Hurricane

675

Catastrophe Fund, and, subject to paragraph (3)(c), must may be

676

used by insurers in rate filings under s. 627.062 unless the way

677

in which such standards and guidelines were applied by the

678

insurer was erroneous, as shown by a preponderance of the

679

evidence.

680

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

681

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

682

insurer must may employ and may not modify or adjust actuarial

683

methods, principles, standards, models, or output ranges found by

684

the commission to be accurate or reliable in determining to

685

determine hurricane loss factors used for use in a rate filing

686

and in determining probable maximum loss levels for reinsurance

687

costs included in a rate filing under s. 627.062. However, such

688

findings and factors are admissible and relevant in consideration

689

of a rate filing by the office or in any arbitration or

690

administrative or judicial review only if the office and the

691

consumer advocate appointed pursuant to s. 627.0613 have access

692

to all of the assumptions and factors that were used in

693

developing the actuarial methods, principles, standards, models,

694

or output ranges, and are not precluded from disclosing such

695

information in a rate proceeding. In any rate hearing under s.

696

120.57 or in any arbitration proceeding under s. 627.062(6), the

697

hearing officer or, judge, or arbitration panel may determine

698

whether the office and the consumer advocate were provided with

699

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

700

developing the actuarial methods, principles, standards, models,

701

or output ranges and may to determine their admissibility.

702

     Section 14.  Subsection (1) of section 627.0629, Florida

703

Statutes, is amended to read:

704

     627.0629  Residential property insurance; rate filings.--

705

     (1)(a) It is the intent of the Legislature that insurers

706

must provide savings to consumers who install or implement

707

windstorm damage mitigation techniques, alterations, or solutions

708

to their properties to prevent windstorm losses. A rate filing

709

for residential property insurance must include actuarially

710

reasonable discounts, credits, or other rate differentials, or

711

appropriate reductions in deductibles, for properties on which

712

fixtures or construction techniques demonstrated to reduce the

713

amount of loss in a windstorm have been installed or implemented.

714

The fixtures or construction techniques shall include, but not be

715

limited to, fixtures or construction techniques which enhance

716

roof strength, roof covering performance, roof-to-wall strength,

717

wall-to-floor-to-foundation strength, opening protection, and

718

window, door, and skylight strength. Credits, discounts, or other

719

rate differentials, or appropriate reductions in deductibles, for

720

fixtures and construction techniques which meet the minimum

721

requirements of the Florida Building Code must be included in the

722

rate filing. All insurance companies must make a rate filing

723

which includes the credits, discounts, or other rate

724

differentials or reductions in deductibles by February 28, 2003.

725

By July 1, 2007, the office shall reevaluate the discounts,

726

credits, other rate differentials, and appropriate reductions in

727

deductibles for fixtures and construction techniques that meet

728

the minimum requirements of the Florida Building Code, based upon

729

actual experience or any other loss relativity studies available

730

to the office. The office shall determine the discounts, credits,

731

other rate differentials, and appropriate reductions in

732

deductibles that reflect the full actuarial value of such

733

revaluation, which may be used by insurers in rate filings.

734

     (b) By February 1, 2009, the Office of Insurance

735

Regulation, in consultation with the Department of Financial

736

Services and the Department of Community Affairs, shall develop

737

and make publicly available a proposed method for insurers to

738

establish discounts, credits, or other rate differentials for

739

hurricane mitigation measures which directly correlate to the

740

numerical rating assigned to a structure pursuant to the uniform

741

home grading scale adopted by the Financial Services Commission

742

pursuant to s. 215.55865, including any proposed changes to the

743

uniform home grading scale. By October 1, 2009, the commission

744

shall adopt rules requiring insurers to make rate filings for

745

residential property insurance which revise insurers' discounts,

746

credits, or other rate differentials for hurricane mitigation

747

measures so that such rate differentials correlate directly to

748

the uniform home grading scale. The rules may include such

749

changes to the uniform home grading scale as the commission

750

determines are necessary, and may specify the minimum required

751

discounts, credits, or other rate differentials. Such rate

752

differentials must be consistent with generally accepted

753

actuarial principles and wind-loss mitigation studies.

754

     Section 15.  Paragraph (b) of subsection (2) and subsection

755

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

756

     627.351  Insurance risk apportionment plans.--

757

     (2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--

758

     (b)  The department shall require all insurers holding a

759

certificate of authority to transact property insurance on a

760

direct basis in this state, other than joint underwriting

761

associations and other entities formed pursuant to this section,

762

to provide windstorm coverage to applicants from areas determined

763

to be eligible pursuant to paragraph (c) who in good faith are

764

entitled to, but are unable to procure, such coverage through

765

ordinary means; or it shall adopt a reasonable plan or plans for

766

the equitable apportionment or sharing among such insurers of

767

windstorm coverage, which may include formation of an association

768

for this purpose. As used in this subsection, the term "property

769

insurance" means insurance on real or personal property, as

770

defined in s. 624.604, including insurance for fire, industrial

771

fire, allied lines, farmowners multiperil, homeowners'

772

multiperil, commercial multiperil, and mobile homes, and

773

including liability coverages on all such insurance, but

774

excluding inland marine as defined in s. 624.607(3) and excluding

775

vehicle insurance as defined in s. 624.605(1)(a) other than

776

insurance on mobile homes used as permanent dwellings. The

777

department shall adopt rules that provide a formula for the

778

recovery and repayment of any deferred assessments.

779

     1.  For the purpose of this section, properties eligible for

780

such windstorm coverage are defined as dwellings, buildings, and

781

other structures, including mobile homes which are used as

782

dwellings and which are tied down in compliance with mobile home

783

tie-down requirements prescribed by the Department of Highway

784

Safety and Motor Vehicles pursuant to s. 320.8325, and the

785

contents of all such properties. An applicant or policyholder is

786

eligible for coverage only if an offer of coverage cannot be

787

obtained by or for the applicant or policyholder from an admitted

788

insurer at approved rates.

789

     2.a.(I)  All insurers required to be members of such

790

association shall participate in its writings, expenses, and

791

losses. Surplus of the association shall be retained for the

792

payment of claims and shall not be distributed to the member

793

insurers. Such participation by member insurers shall be in the

794

proportion that the net direct premiums of each member insurer

795

written for property insurance in this state during the preceding

796

calendar year bear to the aggregate net direct premiums for

797

property insurance of all member insurers, as reduced by any

798

credits for voluntary writings, in this state during the

799

preceding calendar year. For the purposes of this subsection, the

800

term "net direct premiums" means direct written premiums for

801

property insurance, reduced by premium for liability coverage and

802

for the following if included in allied lines: rain and hail on

803

growing crops; livestock; association direct premiums booked;

804

National Flood Insurance Program direct premiums; and similar

805

deductions specifically authorized by the plan of operation and

806

approved by the department. A member's participation shall begin

807

on the first day of the calendar year following the year in which

808

it is issued a certificate of authority to transact property

809

insurance in the state and shall terminate 1 year after the end

810

of the calendar year during which it no longer holds a

811

certificate of authority to transact property insurance in the

812

state. The commissioner, after review of annual statements, other

813

reports, and any other statistics that the commissioner deems

814

necessary, shall certify to the association the aggregate direct

815

premiums written for property insurance in this state by all

816

member insurers.

817

     (II)  Effective July 1, 2002, the association shall operate

818

subject to the supervision and approval of a board of governors

819

who are the same individuals that have been appointed by the

820

Treasurer to serve on the board of governors of the Citizens

821

Property Insurance Corporation.

822

     (III)  The plan of operation shall provide a formula whereby

823

a company voluntarily providing windstorm coverage in affected

824

areas will be relieved wholly or partially from apportionment of

825

a regular assessment pursuant to sub-sub-subparagraph d.(I) or

826

sub-sub-subparagraph d.(II).

827

     (IV)  A company which is a member of a group of companies

828

under common management may elect to have its credits applied on

829

a group basis, and any company or group may elect to have its

830

credits applied to any other company or group.

831

     (V)  There shall be no credits or relief from apportionment

832

to a company for emergency assessments collected from its

833

policyholders under sub-sub-subparagraph d.(III).

834

     (VI)  The plan of operation may also provide for the award

835

of credits, for a period not to exceed 3 years, from a regular

836

assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-

837

subparagraph d.(II) as an incentive for taking policies out of

838

the Residential Property and Casualty Joint Underwriting

839

Association. In order to qualify for the exemption under this

840

sub-sub-subparagraph, the take-out plan must provide that at

841

least 40 percent of the policies removed from the Residential

842

Property and Casualty Joint Underwriting Association cover risks

843

located in Dade, Broward, and Palm Beach Counties or at least 30

844

percent of the policies so removed cover risks located in Dade,

845

Broward, and Palm Beach Counties and an additional 50 percent of

846

the policies so removed cover risks located in other coastal

847

counties, and must also provide that no more than 15 percent of

848

the policies so removed may exclude windstorm coverage. With the

849

approval of the department, the association may waive these

850

geographic criteria for a take-out plan that removes at least the

851

lesser of 100,000 Residential Property and Casualty Joint

852

Underwriting Association policies or 15 percent of the total

853

number of Residential Property and Casualty Joint Underwriting

854

Association policies, provided the governing board of the

855

Residential Property and Casualty Joint Underwriting Association

856

certifies that the take-out plan will materially reduce the

857

Residential Property and Casualty Joint Underwriting

858

Association's 100-year probable maximum loss from hurricanes.

859

With the approval of the department, the board may extend such

860

credits for an additional year if the insurer guarantees an

861

additional year of renewability for all policies removed from the

862

Residential Property and Casualty Joint Underwriting Association,

863

or for 2 additional years if the insurer guarantees 2 additional

864

years of renewability for all policies removed from the

865

Residential Property and Casualty Joint Underwriting Association.

866

     b.  Assessments to pay deficits in the association under

867

this subparagraph shall be included as an appropriate factor in

868

the making of rates as provided in s. 627.3512.

869

     c.  The Legislature finds that the potential for unlimited

870

deficit assessments under this subparagraph may induce insurers

871

to attempt to reduce their writings in the voluntary market, and

872

that such actions would worsen the availability problems that the

873

association was created to remedy. It is the intent of the

874

Legislature that insurers remain fully responsible for paying

875

regular assessments and collecting emergency assessments for any

876

deficits of the association; however, it is also the intent of

877

the Legislature to provide a means by which assessment

878

liabilities may be amortized over a period of years.

879

     d.(I)  When the deficit incurred in a particular calendar

880

year is 10 percent or less of the aggregate statewide direct

881

written premium for property insurance for the prior calendar

882

year for all member insurers, the association shall levy an

883

assessment on member insurers in an amount equal to the deficit.

884

     (II)  When the deficit incurred in a particular calendar

885

year exceeds 10 percent of the aggregate statewide direct written

886

premium for property insurance for the prior calendar year for

887

all member insurers, the association shall levy an assessment on

888

member insurers in an amount equal to the greater of 10 percent

889

of the deficit or 10 percent of the aggregate statewide direct

890

written premium for property insurance for the prior calendar

891

year for member insurers. Any remaining deficit shall be

892

recovered through emergency assessments under sub-sub-

893

subparagraph (III).

894

     (III)  Upon a determination by the board of directors that a

895

deficit exceeds the amount that will be recovered through regular

896

assessments on member insurers, pursuant to sub-sub-subparagraph

897

(I) or sub-sub-subparagraph (II), the board shall levy, after

898

verification by the department, emergency assessments to be

899

collected by member insurers and by underwriting associations

900

created pursuant to this section which write property insurance,

901

upon issuance or renewal of property insurance policies other

902

than National Flood Insurance policies in the year or years

903

following levy of the regular assessments. The amount of the

904

emergency assessment collected in a particular year shall be a

905

uniform percentage of that year's direct written premium for

906

property insurance for all member insurers and underwriting

907

associations, excluding National Flood Insurance policy premiums,

908

as annually determined by the board and verified by the

909

department. The department shall verify the arithmetic

910

calculations involved in the board's determination within 30 days

911

after receipt of the information on which the determination was

912

based. Notwithstanding any other provision of law, each member

913

insurer and each underwriting association created pursuant to

914

this section shall collect emergency assessments from its

915

policyholders without such obligation being affected by any

916

credit, limitation, exemption, or deferment. The emergency

917

assessments so collected shall be transferred directly to the

918

association on a periodic basis as determined by the association.

919

The aggregate amount of emergency assessments levied under this

920

sub-sub-subparagraph in any calendar year may not exceed the

921

greater of 10 percent of the amount needed to cover the original

922

deficit, plus interest, fees, commissions, required reserves, and

923

other costs associated with financing of the original deficit, or

924

10 percent of the aggregate statewide direct written premium for

925

property insurance written by member insurers and underwriting

926

associations for the prior year, plus interest, fees,

927

commissions, required reserves, and other costs associated with

928

financing the original deficit. The board may pledge the proceeds

929

of the emergency assessments under this sub-sub-subparagraph as

930

the source of revenue for bonds, to retire any other debt

931

incurred as a result of the deficit or events giving rise to the

932

deficit, or in any other way that the board determines will

933

efficiently recover the deficit. The emergency assessments under

934

this sub-sub-subparagraph shall continue as long as any bonds

935

issued or other indebtedness incurred with respect to a deficit

936

for which the assessment was imposed remain outstanding, unless

937

adequate provision has been made for the payment of such bonds or

938

other indebtedness pursuant to the document governing such bonds

939

or other indebtedness. Emergency assessments collected under this

940

sub-sub-subparagraph are not part of an insurer's rates, are not

941

premium, and are not subject to premium tax, fees, or

942

commissions; however, failure to pay the emergency assessment

943

shall be treated as failure to pay premium.

944

     (IV)  Each member insurer's share of the total regular

945

assessments under sub-sub-subparagraph (I) or sub-sub-

946

subparagraph (II) shall be in the proportion that the insurer's

947

net direct premium for property insurance in this state, for the

948

year preceding the assessment bears to the aggregate statewide

949

net direct premium for property insurance of all member insurers,

950

as reduced by any credits for voluntary writings for that year.

951

     (V)  If regular deficit assessments are made under sub-sub-

952

subparagraph (I) or sub-sub-subparagraph (II), or by the

953

Residential Property and Casualty Joint Underwriting Association

954

under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,

955

the association shall levy upon the association's policyholders,

956

as part of its next rate filing, or by a separate rate filing

957

solely for this purpose, a market equalization surcharge in a

958

percentage equal to the total amount of such regular assessments

959

divided by the aggregate statewide direct written premium for

960

property insurance for member insurers for the prior calendar

961

year. Market equalization surcharges under this sub-sub-

962

subparagraph are not considered premium and are not subject to

963

commissions, fees, or premium taxes; however, failure to pay a

964

market equalization surcharge shall be treated as failure to pay

965

premium.

966

     e.  The governing body of any unit of local government, any

967

residents of which are insured under the plan, may issue bonds as

968

defined in s. 125.013 or s. 166.101 to fund an assistance

969

program, in conjunction with the association, for the purpose of

970

defraying deficits of the association. In order to avoid needless

971

and indiscriminate proliferation, duplication, and fragmentation

972

of such assistance programs, any unit of local government, any

973

residents of which are insured by the association, may provide

974

for the payment of losses, regardless of whether or not the

975

losses occurred within or outside of the territorial jurisdiction

976

of the local government. Revenue bonds may not be issued until

977

validated pursuant to chapter 75, unless a state of emergency is

978

declared by executive order or proclamation of the Governor

979

pursuant to s. 252.36 making such findings as are necessary to

980

determine that it is in the best interests of, and necessary for,

981

the protection of the public health, safety, and general welfare

982

of residents of this state and the protection and preservation of

983

the economic stability of insurers operating in this state, and

984

declaring it an essential public purpose to permit certain

985

municipalities or counties to issue bonds as will provide relief

986

to claimants and policyholders of the association and insurers

987

responsible for apportionment of plan losses. Any such unit of

988

local government may enter into such contracts with the

989

association and with any other entity created pursuant to this

990

subsection as are necessary to carry out this paragraph. Any

991

bonds issued under this sub-subparagraph shall be payable from

992

and secured by moneys received by the association from

993

assessments under this subparagraph, and assigned and pledged to

994

or on behalf of the unit of local government for the benefit of

995

the holders of such bonds. The funds, credit, property, and

996

taxing power of the state or of the unit of local government

997

shall not be pledged for the payment of such bonds. If any of the

998

bonds remain unsold 60 days after issuance, the department shall

999

require all insurers subject to assessment to purchase the bonds,

1000

which shall be treated as admitted assets; each insurer shall be

1001

required to purchase that percentage of the unsold portion of the

1002

bond issue that equals the insurer's relative share of assessment

1003

liability under this subsection. An insurer shall not be required

1004

to purchase the bonds to the extent that the department

1005

determines that the purchase would endanger or impair the

1006

solvency of the insurer. The authority granted by this sub-

1007

subparagraph is additional to any bonding authority granted by

1008

subparagraph 6.

1009

     3.  The plan shall also provide that any member with a

1010

surplus as to policyholders of $20 million or less writing 25

1011

percent or more of its total countrywide property insurance

1012

premiums in this state may petition the department, within the

1013

first 90 days of each calendar year, to qualify as a limited

1014

apportionment company. The apportionment of such a member company

1015

in any calendar year for which it is qualified shall not exceed

1016

its gross participation, which shall not be affected by the

1017

formula for voluntary writings. In no event shall a limited

1018

apportionment company be required to participate in any

1019

apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)

1020

or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds

1021

$50 million after payment of available plan funds in any calendar

1022

year. However, a limited apportionment company shall collect from

1023

its policyholders any emergency assessment imposed under sub-sub-

1024

subparagraph 2.d.(III). The plan shall provide that, if the

1025

department determines that any regular assessment will result in

1026

an impairment of the surplus of a limited apportionment company,

1027

the department may direct that all or part of such assessment be

1028

deferred. However, there shall be no limitation or deferment of

1029

an emergency assessment to be collected from policyholders under

1030

sub-sub-subparagraph 2.d.(III).

1031

     4.  The plan shall provide for the deferment, in whole or in

1032

part, of a regular assessment of a member insurer under sub-sub-

1033

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not

1034

for an emergency assessment collected from policyholders under

1035

sub-sub-subparagraph 2.d.(III), if, in the opinion of the

1036

commissioner, payment of such regular assessment would endanger

1037

or impair the solvency of the member insurer. In the event a

1038

regular assessment against a member insurer is deferred in whole

1039

or in part, the amount by which such assessment is deferred may

1040

be assessed against the other member insurers in a manner

1041

consistent with the basis for assessments set forth in sub-sub-

1042

subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).

1043

     5.a.  The plan of operation may include deductibles and

1044

rules for classification of risks and rate modifications

1045

consistent with the objective of providing and maintaining funds

1046

sufficient to pay catastrophe losses.

1047

     b. The association may require arbitration of a rate filing

1048

under s. 627.062(6). It is the intent of the Legislature that the

1049

rates for coverage provided by the association be actuarially

1050

sound and not competitive with approved rates charged in the

1051

admitted voluntary market such that the association functions as

1052

a residual market mechanism to provide insurance only when the

1053

insurance cannot be procured in the voluntary market. The plan of

1054

operation shall provide a mechanism to assure that, beginning no

1055

later than January 1, 1999, the rates charged by the association

1056

for each line of business are reflective of approved rates in the

1057

voluntary market for hurricane coverage for each line of business

1058

in the various areas eligible for association coverage.

1059

     c.  The association shall provide for windstorm coverage on

1060

residential properties in limits up to $10 million for commercial

1061

lines residential risks and up to $1 million for personal lines

1062

residential risks. If coverage with the association is sought for

1063

a residential risk valued in excess of these limits, coverage

1064

shall be available to the risk up to the replacement cost or

1065

actual cash value of the property, at the option of the insured,

1066

if coverage for the risk cannot be located in the authorized

1067

market. The association must accept a commercial lines

1068

residential risk with limits above $10 million or a personal

1069

lines residential risk with limits above $1 million if coverage

1070

is not available in the authorized market. The association may

1071

write coverage above the limits specified in this subparagraph

1072

with or without facultative or other reinsurance coverage, as the

1073

association determines appropriate.

1074

     d.  The plan of operation must provide objective criteria

1075

and procedures, approved by the department, to be uniformly

1076

applied for all applicants in determining whether an individual

1077

risk is so hazardous as to be uninsurable. In making this

1078

determination and in establishing the criteria and procedures,

1079

the following shall be considered:

1080

     (I)  Whether the likelihood of a loss for the individual

1081

risk is substantially higher than for other risks of the same

1082

class; and

1083

     (II)  Whether the uncertainty associated with the individual

1084

risk is such that an appropriate premium cannot be determined.

1085

1086

The acceptance or rejection of a risk by the association pursuant

1087

to such criteria and procedures must be construed as the private

1088

placement of insurance, and the provisions of chapter 120 do not

1089

apply.

1090

     e.  If the risk accepts an offer of coverage through the

1091

market assistance program or through a mechanism established by

1092

the association, either before the policy is issued by the

1093

association or during the first 30 days of coverage by the

1094

association, and the producing agent who submitted the

1095

application to the association is not currently appointed by the

1096

insurer, the insurer shall:

1097

     (I)  Pay to the producing agent of record of the policy, for

1098

the first year, an amount that is the greater of the insurer's

1099

usual and customary commission for the type of policy written or

1100

a fee equal to the usual and customary commission of the

1101

association; or

1102

     (II)  Offer to allow the producing agent of record of the

1103

policy to continue servicing the policy for a period of not less

1104

than 1 year and offer to pay the agent the greater of the

1105

insurer's or the association's usual and customary commission for

1106

the type of policy written.

1107

1108

If the producing agent is unwilling or unable to accept

1109

appointment, the new insurer shall pay the agent in accordance

1110

with sub-sub-subparagraph (I). Subject to the provisions of s.

1111

627.3517, the policies issued by the association must provide

1112

that if the association obtains an offer from an authorized

1113

insurer to cover the risk at its approved rates under either a

1114

standard policy including wind coverage or, if consistent with

1115

the insurer's underwriting rules as filed with the department, a

1116

basic policy including wind coverage, the risk is no longer

1117

eligible for coverage through the association. Upon termination

1118

of eligibility, the association shall provide written notice to

1119

the policyholder and agent of record stating that the association

1120

policy must be canceled as of 60 days after the date of the

1121

notice because of the offer of coverage from an authorized

1122

insurer. Other provisions of the insurance code relating to

1123

cancellation and notice of cancellation do not apply to actions

1124

under this sub-subparagraph.

1125

     f.  When the association enters into a contractual agreement

1126

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

1127

association policy is entitled to retain any unearned commission

1128

on the policy, and the insurer shall:

1129

     (I)  Pay to the producing agent of record of the association

1130

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

1131

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

1132

written or a fee equal to the usual and customary commission of

1133

the association; or

1134

     (II)  Offer to allow the producing agent of record of the

1135

association policy to continue servicing the policy for a period

1136

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

1137

the insurer's or the association's usual and customary commission

1138

for the type of policy written.

1139

1140

If the producing agent is unwilling or unable to accept

1141

appointment, the new insurer shall pay the agent in accordance

1142

with sub-sub-subparagraph (I).

1143

     6.a.  The plan of operation may authorize the formation of a

1144

private nonprofit corporation, a private nonprofit unincorporated

1145

association, a partnership, a trust, a limited liability company,

1146

or a nonprofit mutual company which may be empowered, among other

1147

things, to borrow money by issuing bonds or by incurring other

1148

indebtedness and to accumulate reserves or funds to be used for

1149

the payment of insured catastrophe losses. The plan may authorize

1150

all actions necessary to facilitate the issuance of bonds,

1151

including the pledging of assessments or other revenues.

1152

     b.  Any entity created under this subsection, or any entity

1153

formed for the purposes of this subsection, may sue and be sued,

1154

may borrow money; issue bonds, notes, or debt instruments; pledge

1155

or sell assessments, market equalization surcharges and other

1156

surcharges, rights, premiums, contractual rights, projected

1157

recoveries from the Florida Hurricane Catastrophe Fund, other

1158

reinsurance recoverables, and other assets as security for such

1159

bonds, notes, or debt instruments; enter into any contracts or

1160

agreements necessary or proper to accomplish such borrowings; and

1161

take other actions necessary to carry out the purposes of this

1162

subsection. The association may issue bonds or incur other

1163

indebtedness, or have bonds issued on its behalf by a unit of

1164

local government pursuant to subparagraph (6)(p)2., in the

1165

absence of a hurricane or other weather-related event, upon a

1166

determination by the association subject to approval by the

1167

department that such action would enable it to efficiently meet

1168

the financial obligations of the association and that such

1169

financings are reasonably necessary to effectuate the

1170

requirements of this subsection. Any such entity may accumulate

1171

reserves and retain surpluses as of the end of any association

1172

year to provide for the payment of losses incurred by the

1173

association during that year or any future year. The association

1174

shall incorporate and continue the plan of operation and articles

1175

of agreement in effect on the effective date of chapter 76-96,

1176

Laws of Florida, to the extent that it is not inconsistent with

1177

chapter 76-96, and as subsequently modified consistent with

1178

chapter 76-96. The board of directors and officers currently

1179

serving shall continue to serve until their successors are duly

1180

qualified as provided under the plan. The assets and obligations

1181

of the plan in effect immediately prior to the effective date of

1182

chapter 76-96 shall be construed to be the assets and obligations

1183

of the successor plan created herein.

1184

     c.  In recognition of s. 10, Art. I of the State

1185

Constitution, prohibiting the impairment of obligations of

1186

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

1187

taken whose purpose is to impair any bond indenture or financing

1188

agreement or any revenue source committed by contract to such

1189

bond or other indebtedness issued or incurred by the association

1190

or any other entity created under this subsection.

1191

     7.  On such coverage, an agent's remuneration shall be that

1192

amount of money payable to the agent by the terms of his or her

1193

contract with the company with which the business is placed.

1194

However, no commission will be paid on that portion of the

1195

premium which is in excess of the standard premium of that

1196

company.

1197

     8.  Subject to approval by the department, the association

1198

may establish different eligibility requirements and operational

1199

procedures for any line or type of coverage for any specified

1200

eligible area or portion of an eligible area if the board

1201

determines that such changes to the eligibility requirements and

1202

operational procedures are justified due to the voluntary market

1203

being sufficiently stable and competitive in such area or for

1204

such line or type of coverage and that consumers who, in good

1205

faith, are unable to obtain insurance through the voluntary

1206

market through ordinary methods would continue to have access to

1207

coverage from the association. When coverage is sought in

1208

connection with a real property transfer, such requirements and

1209

procedures shall not provide for an effective date of coverage

1210

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

1211

by the transferor, the transferee, and, if applicable, the

1212

lender.

1213

     9.  Notwithstanding any other provision of law:

1214

     a.  The pledge or sale of, the lien upon, and the security

1215

interest in any rights, revenues, or other assets of the

1216

association created or purported to be created pursuant to any

1217

financing documents to secure any bonds or other indebtedness of

1218

the association shall be and remain valid and enforceable,

1219

notwithstanding the commencement of and during the continuation

1220

of, and after, any rehabilitation, insolvency, liquidation,

1221

bankruptcy, receivership, conservatorship, reorganization, or

1222

similar proceeding against the association under the laws of this

1223

state or any other applicable laws.

1224

     b.  No such proceeding shall relieve the association of its

1225

obligation, or otherwise affect its ability to perform its

1226

obligation, to continue to collect, or levy and collect,

1227

assessments, market equalization or other surcharges, projected

1228

recoveries from the Florida Hurricane Catastrophe Fund,

1229

reinsurance recoverables, or any other rights, revenues, or other

1230

assets of the association pledged.

1231

     c.  Each such pledge or sale of, lien upon, and security

1232

interest in, including the priority of such pledge, lien, or

1233

security interest, any such assessments, emergency assessments,

1234

market equalization or renewal surcharges, projected recoveries

1235

from the Florida Hurricane Catastrophe Fund, reinsurance

1236

recoverables, or other rights, revenues, or other assets which

1237

are collected, or levied and collected, after the commencement of

1238

and during the pendency of or after any such proceeding shall

1239

continue unaffected by such proceeding.

1240

     d.  As used in this subsection, the term "financing

1241

documents" means any agreement, instrument, or other document now

1242

existing or hereafter created evidencing any bonds or other

1243

indebtedness of the association or pursuant to which any such

1244

bonds or other indebtedness has been or may be issued and

1245

pursuant to which any rights, revenues, or other assets of the

1246

association are pledged or sold to secure the repayment of such

1247

bonds or indebtedness, together with the payment of interest on

1248

such bonds or such indebtedness, or the payment of any other

1249

obligation of the association related to such bonds or

1250

indebtedness.

1251

     e.  Any such pledge or sale of assessments, revenues,

1252

contract rights or other rights or assets of the association

1253

shall constitute a lien and security interest, or sale, as the

1254

case may be, that is immediately effective and attaches to such

1255

assessments, revenues, contract, or other rights or assets,

1256

whether or not imposed or collected at the time the pledge or

1257

sale is made. Any such pledge or sale is effective, valid,

1258

binding, and enforceable against the association or other entity

1259

making such pledge or sale, and valid and binding against and

1260

superior to any competing claims or obligations owed to any other

1261

person or entity, including policyholders in this state,

1262

asserting rights in any such assessments, revenues, contract, or

1263

other rights or assets to the extent set forth in and in

1264

accordance with the terms of the pledge or sale contained in the

1265

applicable financing documents, whether or not any such person or

1266

entity has notice of such pledge or sale and without the need for

1267

any physical delivery, recordation, filing, or other action.

1268

     f.  There shall be no liability on the part of, and no cause

1269

of action of any nature shall arise against, any member insurer

1270

or its agents or employees, agents or employees of the

1271

association, members of the board of directors of the

1272

association, or the department or its representatives, for any

1273

action taken by them in the performance of their duties or

1274

responsibilities under this subsection. Such immunity does not

1275

apply to actions for breach of any contract or agreement

1276

pertaining to insurance, or any willful tort.

1277

     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--

1278

     (a)1.  It is the public purpose of this subsection to ensure

1279

the existence of an orderly market for property insurance for

1280

Floridians and Florida businesses. The Legislature finds that

1281

private insurers are unwilling or unable to provide affordable

1282

property insurance coverage in this state to the extent sought

1283

and needed. The absence of affordable property insurance

1284

threatens the public health, safety, and welfare and likewise

1285

threatens the economic health of the state. The state therefore

1286

has a compelling public interest and a public purpose to assist

1287

in assuring that property in the state is insured and that it is

1288

insured at affordable rates so as to facilitate the remediation,

1289

reconstruction, and replacement of damaged or destroyed property

1290

in order to reduce or avoid the negative effects otherwise

1291

resulting to the public health, safety, and welfare, to the

1292

economy of the state, and to the revenues of the state and local

1293

governments which are needed to provide for the public welfare.

1294

It is necessary, therefore, to provide affordable property

1295

insurance to applicants who are in good faith entitled to procure

1296

insurance through the voluntary market but are unable to do so.

1297

The Legislature intends by this subsection that affordable

1298

property insurance be provided and that it continue to be

1299

provided, as long as necessary, through Citizens Property

1300

Insurance Corporation, a government entity that is an integral

1301

part of the state, and that is not a private insurance company.

1302

To that end, Citizens Property Insurance Corporation shall strive

1303

to increase the availability of affordable property insurance in

1304

this state, while achieving efficiencies and economies, and while

1305

providing service to policyholders, applicants, and agents which

1306

is no less than the quality generally provided in the voluntary

1307

market, for the achievement of the foregoing public purposes.

1308

Because it is essential for this government entity to have the

1309

maximum financial resources to pay claims following a

1310

catastrophic hurricane, it is the intent of the Legislature that

1311

Citizens Property Insurance Corporation continue to be an

1312

integral part of the state and that the income of the corporation

1313

be exempt from federal income taxation and that interest on the

1314

debt obligations issued by the corporation be exempt from federal

1315

income taxation.

1316

     2.  The Residential Property and Casualty Joint Underwriting

1317

Association originally created by this statute shall be known, as

1318

of July 1, 2002, as the Citizens Property Insurance Corporation.

1319

The corporation shall provide insurance for residential and

1320

commercial property, for applicants who are in good faith

1321

entitled, but are unable, to procure insurance through the

1322

voluntary market. The corporation shall operate pursuant to a

1323

plan of operation approved by order of the Financial Services

1324

Commission. The plan is subject to continuous review by the

1325

commission. The commission may, by order, withdraw approval of

1326

all or part of a plan if the commission determines that

1327

conditions have changed since approval was granted and that the

1328

purposes of the plan require changes in the plan. The corporation

1329

shall continue to operate pursuant to the plan of operation

1330

approved by the Office of Insurance Regulation until October 1,

1331

2006. For the purposes of this subsection, residential coverage

1332

includes both personal lines residential coverage, which consists

1333

of the type of coverage provided by homeowner's, mobile home

1334

owner's, dwelling, tenant's, condominium unit owner's, and

1335

similar policies, and commercial lines residential coverage,

1336

which consists of the type of coverage provided by condominium

1337

association, apartment building, and similar policies.

1338

     3. For the purposes of this subsection, the term "homestead

1339

property" means:

1340

     a. Property that has been granted a homestead exemption

1341

under chapter 196;

1342

     b. Property for which the owner has a current, written

1343

lease with a renter for a term of at least 7 months and for which

1344

the dwelling is insured by the corporation for $200,000 or less;

1345

     c. An owner-occupied mobile home or manufactured home, as

1346

defined in s. 320.01, which is permanently affixed to real

1347

property, is owned by a Florida resident, and has been granted a

1348

homestead exemption under chapter 196 or, if the owner does not

1349

own the real property, the owner certifies that the mobile home

1350

or manufactured home is his or her principal place of residence;

1351

     d. Tenant's coverage;

1352

     e. Commercial lines residential property; or

1353

     f. Any county, district, or municipal hospital; a hospital

1354

licensed by any not-for-profit corporation qualified under s.

1355

501(c)(3) of the United States Internal Revenue Code; or a

1356

continuing care retirement community that is certified under

1357

chapter 651 and that receives an exemption from ad valorem taxes

1358

under chapter 196.

1359

     4. For the purposes of this subsection, the term

1360

"nonhomestead property" means property that is not homestead

1361

property.

1362

     5. Effective January 1, 2009, a personal lines residential

1363

structure that has a dwelling replacement cost of $1 million or

1364

more, or a single condominium unit that has a combined dwelling

1365

and content replacement cost of $1 million or more is not

1366

eligible for coverage by the corporation. Such dwellings insured

1367

by the corporation on December 31, 2008, may continue to be

1368

covered by the corporation until the end of the policy term.

1369

However, such dwellings that are insured by the corporation and

1370

become ineligible for coverage due to the provisions of this

1371

subparagraph may reapply and obtain coverage in the high-risk

1372

account and be considered "nonhomestead property" if the property

1373

owner provides the corporation with a sworn affidavit from one or

1374

more insurance agents, on a form provided by the corporation,

1375

stating that the agents have made their best efforts to obtain

1376

coverage and that the property has been rejected for coverage by

1377

at least one authorized insurer and at least three surplus lines

1378

insurers. If such conditions are met, the dwelling may be insured

1379

by the corporation for up to 3 years, after which time the

1380

dwelling is ineligible for coverage. The office shall approve the

1381

method used by the corporation for valuing the dwelling

1382

replacement cost for the purposes of this subparagraph. If a

1383

policyholder is insured by the corporation prior to being

1384

determined to be ineligible pursuant to this subparagraph and

1385

such policyholder files a lawsuit challenging the determination,

1386

the policyholder may remain insured by the corporation until the

1387

conclusion of the litigation.

1388

     3.6. For properties constructed on or after January 1,

1389

2009, the corporation may not insure any property located within

1390

2,500 feet landward of the coastal construction control line

1391

created pursuant to s. 161.053 unless the property meets the

1392

requirements of the code-plus building standards developed by the

1393

Florida Building Commission.

1394

     4.7. It is the intent of the Legislature that

1395

policyholders, applicants, and agents of the corporation receive

1396

service and treatment of the highest possible level but never

1397

less than that generally provided in the voluntary market. It

1398

also is intended that the corporation be held to service

1399

standards no less than those applied to insurers in the voluntary

1400

market by the office with respect to responsiveness, timeliness,

1401

customer courtesy, and overall dealings with policyholders,

1402

applicants, or agents of the corporation.

1403

     5.8. Effective January 1, 2009, a personal lines

1404

residential structure that is located in the "wind-borne debris

1405

region," as defined in s. 1609.2, International Building Code

1406

(2006), and that has an insured value on the structure of

1407

$750,000 or more is not eligible for coverage by the corporation

1408

unless the structure has opening protections as required under

1409

the Florida Building Code for a newly constructed residential

1410

structure in that area. A residential structure shall be deemed

1411

to comply with the requirements of this subparagraph if it has

1412

shutters or opening protections on all openings and if such

1413

opening protections complied with the Florida Building Code at

1414

the time they were installed. Effective January 1, 2011, the

1415

requirements of this subparagraph apply to a personal lines

1416

residential structure that is located in the wind-borne debris

1417

region and that has an insured value on the structure of $300,000

1418

or more.

1419

     (b)1.  All insurers authorized to write one or more subject

1420

lines of business in this state are subject to assessment by the

1421

corporation and, for the purposes of this subsection, are

1422

referred to collectively as "assessable insurers." Insurers

1423

writing one or more subject lines of business in this state

1424

pursuant to part VIII of chapter 626 are not assessable insurers,

1425

but insureds who procure one or more subject lines of business in

1426

this state pursuant to part VIII of chapter 626 are subject to

1427

assessment by the corporation and are referred to collectively as

1428

"assessable insureds." An authorized insurer's assessment

1429

liability shall begin on the first day of the calendar year

1430

following the year in which the insurer was issued a certificate

1431

of authority to transact insurance for subject lines of business

1432

in this state and shall terminate 1 year after the end of the

1433

first calendar year during which the insurer no longer holds a

1434

certificate of authority to transact insurance for subject lines

1435

of business in this state.

1436

     2.a.  All revenues, assets, liabilities, losses, and

1437

expenses of the corporation shall be divided into three separate

1438

accounts as follows:

1439

     (I)  A personal lines account for personal residential

1440

policies issued by the corporation or issued by the Residential

1441

Property and Casualty Joint Underwriting Association and renewed

1442

by the corporation that provide comprehensive, multiperil

1443

coverage on risks that are not located in areas eligible for

1444

coverage in the Florida Windstorm Underwriting Association as

1445

those areas were defined on January 1, 2002, and for such

1446

policies that do not provide coverage for the peril of wind on

1447

risks that are located in such areas;

1448

     (II)  A commercial lines account for commercial residential

1449

and commercial nonresidential policies issued by the corporation

1450

or issued by the Residential Property and Casualty Joint

1451

Underwriting Association and renewed by the corporation that

1452

provide coverage for basic property perils on risks that are not

1453

located in areas eligible for coverage in the Florida Windstorm

1454

Underwriting Association as those areas were defined on January

1455

1, 2002, and for such policies that do not provide coverage for

1456

the peril of wind on risks that are located in such areas; and

1457

     (III)  A high-risk account for personal residential policies

1458

and commercial residential and commercial nonresidential property

1459

policies issued by the corporation or transferred to the

1460

corporation that provide coverage for the peril of wind on risks

1461

that are located in areas eligible for coverage in the Florida

1462

Windstorm Underwriting Association as those areas were defined on

1463

January 1, 2002. Subject to the approval of a business plan by

1464

the Financial Services Commission and Legislative Budget

1465

Commission as provided in this sub-sub-subparagraph, but no

1466

earlier than March 31, 2007, The corporation shall may offer

1467

policies that provide multiperil coverage and the corporation

1468

shall continue to offer policies that provide coverage only for

1469

the peril of wind for risks located in areas eligible for

1470

coverage in the high-risk account. Beginning July 1, 2008, the

1471

corporation may not issue new policies that provide coverage only

1472

for the peril of wind, but may continue to renew such policies

1473

that were in force on that date. In issuing multiperil coverage,

1474

the corporation may use its approved policy forms and rates for

1475

the personal lines account. An applicant or insured who is

1476

eligible to purchase a multiperil policy from the corporation may

1477

purchase a multiperil policy from an authorized insurer without

1478

prejudice to the applicant's or insured's eligibility to

1479

prospectively purchase a policy that provides coverage only for

1480

the peril of wind from the corporation prior to July 1, 2008. An

1481

applicant or insured who is eligible for a corporation policy

1482

that provides coverage only for the peril of wind may elect to

1483

purchase or retain such policy and also purchase or retain

1484

coverage excluding wind from an authorized insurer without

1485

prejudice to the applicant's or insured's eligibility to

1486

prospectively purchase a policy that provides multiperil coverage

1487

from the corporation. It is the goal of the Legislature that

1488

there would be an overall average savings of 10 percent or more

1489

for a policyholder who currently has a wind-only policy with the

1490

corporation, and an ex-wind policy with a voluntary insurer or

1491

the corporation, and who then obtains a multiperil policy from

1492

the corporation. It is the intent of the Legislature that the

1493

offer of multiperil coverage in the high-risk account be made and

1494

implemented in a manner that does not adversely affect the tax-

1495

exempt status of the corporation or creditworthiness of or

1496

security for currently outstanding financing obligations or

1497

credit facilities of the high-risk account, the personal lines

1498

account, or the commercial lines account. By March 1, 2007, the

1499

corporation shall prepare and submit for approval by the

1500

Financial Services Commission and Legislative Budget Commission a

1501

report detailing the corporation's business plan for issuing

1502

multiperil coverage in the high-risk account. The business plan

1503

shall be approved or disapproved within 30 days after receipt, as

1504

submitted or modified and resubmitted by the corporation. The

1505

business plan must include: the impact of such multiperil

1506

coverage on the corporation's financial resources, the impact of

1507

such multiperil coverage on the corporation's tax-exempt status,

1508

the manner in which the corporation plans to implement the

1509

processing of applications and policy forms for new and existing

1510

policyholders, the impact of such multiperil coverage on the

1511

corporation's ability to deliver customer service at the high

1512

level required by this subsection, the ability of the corporation

1513

to process claims, the ability of the corporation to quote and

1514

issue policies, the impact of such multiperil coverage on the

1515

corporation's agents, the impact of such multiperil coverage on

1516

the corporation's existing policyholders, and the impact of such

1517

multiperil coverage on rates and premium. The high-risk account

1518

must also include quota share primary insurance under

1519

subparagraph (c)2. The area eligible for coverage under the high-

1520

risk account also includes the area within Port Canaveral, which

1521

is bordered on the south by the City of Cape Canaveral, bordered

1522

on the west by the Banana River, and bordered on the north by

1523

Federal Government property.

1524

     b.  The three separate accounts must be maintained as long

1525

as financing obligations entered into by the Florida Windstorm

1526

Underwriting Association or Residential Property and Casualty

1527

Joint Underwriting Association are outstanding, in accordance

1528

with the terms of the corresponding financing documents. When the

1529

financing obligations are no longer outstanding, in accordance

1530

with the terms of the corresponding financing documents, the

1531

corporation may use a single account for all revenues, assets,

1532

liabilities, losses, and expenses of the corporation. Consistent

1533

with the requirement of this subparagraph and prudent investment

1534

policies that minimize the cost of carrying debt, the board shall

1535

exercise its best efforts to retire existing debt or to obtain

1536

approval of necessary parties to amend the terms of existing

1537

debt, so as to structure the most efficient plan to consolidate

1538

the three separate accounts into a single account. By February 1,

1539

2007, the board shall submit a report to the Financial Services

1540

Commission, the President of the Senate, and the Speaker of the

1541

House of Representatives which includes an analysis of

1542

consolidating the accounts, the actions the board has taken to

1543

minimize the cost of carrying debt, and its recommendations for

1544

executing the most efficient plan.

1545

     c.  Creditors of the Residential Property and Casualty Joint

1546

Underwriting Association and of the accounts specified in sub-

1547

sub-subparagraphs a.(I) and (II) may have a claim against, and

1548

recourse to, the accounts referred to in sub-sub-subparagraphs

1549

a.(I) and (II) and shall have no claim against, or recourse to,

1550

the account referred to in sub-sub-subparagraph a.(III).

1551

Creditors of the Florida Windstorm Underwriting Association shall

1552

have a claim against, and recourse to, the account referred to in

1553

sub-sub-subparagraph a.(III) and shall have no claim against, or

1554

recourse to, the accounts referred to in sub-sub-subparagraphs

1555

a.(I) and (II).

1556

     d.  Revenues, assets, liabilities, losses, and expenses not

1557

attributable to particular accounts shall be prorated among the

1558

accounts.

1559

     e.  The Legislature finds that the revenues of the

1560

corporation are revenues that are necessary to meet the

1561

requirements set forth in documents authorizing the issuance of

1562

bonds under this subsection.

1563

     f.  No part of the income of the corporation may inure to

1564

the benefit of any private person.

1565

     3.  With respect to a deficit in an account:

1566

     a.  When the deficit incurred in a particular calendar year

1567

is not greater than 8 10 percent of the aggregate statewide

1568

direct written premium for the subject lines of business for the

1569

prior calendar year, the entire deficit shall be recovered

1570

through regular assessments of assessable insurers under

1571

paragraph (p) and assessable insureds.

1572

     b.  When the deficit incurred in a particular calendar year

1573

exceeds 8 10 percent of the aggregate statewide direct written

1574

premium for the subject lines of business for the prior calendar

1575

year, the corporation shall levy regular assessments on

1576

assessable insurers under paragraph (p) and on assessable

1577

insureds in an amount equal to the greater of 8 10 percent of the

1578

deficit or 8 10 percent of the aggregate statewide direct written

1579

premium for the subject lines of business for the prior calendar

1580

year. Any remaining deficit shall be recovered through emergency

1581

assessments under sub-subparagraph d.

1582

     c.  Each assessable insurer's share of the amount being

1583

assessed under sub-subparagraph a. or sub-subparagraph b. shall

1584

be in the proportion that the assessable insurer's direct written

1585

premium for the subject lines of business for the year preceding

1586

the assessment bears to the aggregate statewide direct written

1587

premium for the subject lines of business for that year. The

1588

assessment percentage applicable to each assessable insured is

1589

the ratio of the amount being assessed under sub-subparagraph a.

1590

or sub-subparagraph b. to the aggregate statewide direct written

1591

premium for the subject lines of business for the prior year.

1592

Assessments levied by the corporation on assessable insurers

1593

under sub-subparagraphs a. and b. shall be paid as required by

1594

the corporation's plan of operation and paragraph (p).

1595

notwithstanding any other provision of this subsection, the

1596

aggregate amount of a regular assessment for a deficit incurred

1597

in a particular calendar year shall be reduced by the estimated

1598

amount to be received by the corporation from the Citizens

1599

policyholder surcharge under subparagraph (c)10. and the amount

1600

collected or estimated to be collected from the assessment on

1601

Citizens policyholders pursuant to sub-subparagraph i.

1602

Assessments levied by the corporation on assessable insureds

1603

under sub-subparagraphs a. and b. shall be collected by the

1604

surplus lines agent at the time the surplus lines agent collects

1605

the surplus lines tax required by s. 626.932 and shall be paid to

1606

the Florida Surplus Lines Service Office at the time the surplus

1607

lines agent pays the surplus lines tax to the Florida Surplus

1608

Lines Service Office. Upon receipt of regular assessments from

1609

surplus lines agents, the Florida Surplus Lines Service Office

1610

shall transfer the assessments directly to the corporation as

1611

determined by the corporation.

1612

     d.  Upon a determination by the board of governors that a

1613

deficit in an account exceeds the amount that will be recovered

1614

through regular assessments under sub-subparagraph a. or sub-

1615

subparagraph b., plus the amount that is expected to be recovered

1616

through surcharges under sub-subparagraph i., as to the remaining

1617

projected deficit the board shall levy, after verification by the

1618

office, emergency assessments, for as many years as necessary to

1619

cover the deficits, to be collected by assessable insurers and

1620

the corporation and collected from assessable insureds upon

1621

issuance or renewal of policies for subject lines of business,

1622

excluding National Flood Insurance policies. The amount of the

1623

emergency assessment collected in a particular year shall be a

1624

uniform percentage of that year's direct written premium for

1625

subject lines of business and all accounts of the corporation,

1626

excluding National Flood Insurance Program policy premiums, as

1627

annually determined by the board and verified by the office. The

1628

office shall verify the arithmetic calculations involved in the

1629

board's determination within 30 days after receipt of the

1630

information on which the determination was based. Notwithstanding

1631

any other provision of law, the corporation and each assessable

1632

insurer that writes subject lines of business shall collect

1633

emergency assessments from its policyholders without such

1634

obligation being affected by any credit, limitation, exemption,

1635

or deferment. Emergency assessments levied by the corporation on

1636

assessable insureds shall be collected by the surplus lines agent

1637

at the time the surplus lines agent collects the surplus lines

1638

tax required by s. 626.932 and shall be paid to the Florida

1639

Surplus Lines Service Office at the time the surplus lines agent

1640

pays the surplus lines tax to the Florida Surplus Lines Service

1641

Office. The emergency assessments so collected shall be

1642

transferred directly to the corporation on a periodic basis as

1643

determined by the corporation and shall be held by the

1644

corporation solely in the applicable account. The aggregate

1645

amount of emergency assessments levied for an account under this

1646

sub-subparagraph in any calendar year may, at the discretion of

1647

the board of governors, be less than but may not exceed the

1648

greater of 10 percent of the amount needed to cover the original

1649

deficit, plus interest, fees, commissions, required reserves, and

1650

other costs associated with financing of the original deficit, or

1651

10 percent of the aggregate statewide direct written premium for

1652

subject lines of business and for all accounts of the corporation

1653

for the prior year, plus interest, fees, commissions, required

1654

reserves, and other costs associated with financing the original

1655

deficit.

1656

     e.  The corporation may pledge the proceeds of assessments,

1657

projected recoveries from the Florida Hurricane Catastrophe Fund,

1658

other insurance and reinsurance recoverables, policyholder

1659

surcharges and other surcharges, and other funds available to the

1660

corporation as the source of revenue for and to secure bonds

1661

issued under paragraph (p), bonds or other indebtedness issued

1662

under subparagraph (c)3., or lines of credit or other financing

1663

mechanisms issued or created under this subsection, or to retire

1664

any other debt incurred as a result of deficits or events giving

1665

rise to deficits, or in any other way that the board determines

1666

will efficiently recover such deficits. The purpose of the lines

1667

of credit or other financing mechanisms is to provide additional

1668

resources to assist the corporation in covering claims and

1669

expenses attributable to a catastrophe. As used in this

1670

subsection, the term "assessments" includes regular assessments

1671

under sub-subparagraph a., sub-subparagraph b., or subparagraph

1672

(p)1. and emergency assessments under sub-subparagraph d.

1673

Emergency assessments collected under sub-subparagraph d. are not

1674

part of an insurer's rates, are not premium, and are not subject

1675

to premium tax, fees, or commissions; however, failure to pay the

1676

emergency assessment shall be treated as failure to pay premium.

1677

The emergency assessments under sub-subparagraph d. shall

1678

continue as long as any bonds issued or other indebtedness

1679

incurred with respect to a deficit for which the assessment was

1680

imposed remain outstanding, unless adequate provision has been

1681

made for the payment of such bonds or other indebtedness pursuant

1682

to the documents governing such bonds or other indebtedness.

1683

     f.  As used in this subsection for purposes of any deficit

1684

incurred on or after January 25, 2007, the term "subject lines of

1685

business" means insurance written by assessable insurers or

1686

procured by assessable insureds for all property and casualty

1687

lines of business in this state, but not including workers'

1688

compensation or medical malpractice. As used in the sub-

1689

subparagraph, the term "property and casualty lines of business"

1690

includes all lines of business identified on Form 2, Exhibit of

1691

Premiums and Losses, in the annual statement required of

1692

authorized insurers by s. 624.424 and any rule adopted under this

1693

section, except for those lines identified as accident and health

1694

insurance and except for policies written under the National

1695

Flood Insurance Program or the Federal Crop Insurance Program.

1696

For purposes of this sub-subparagraph, the term "workers'

1697

compensation" includes both workers' compensation insurance and

1698

excess workers' compensation insurance.

1699

     g.  The Florida Surplus Lines Service Office shall determine

1700

annually the aggregate statewide written premium in subject lines

1701

of business procured by assessable insureds and shall report that

1702

information to the corporation in a form and at a time the

1703

corporation specifies to ensure that the corporation can meet the

1704

requirements of this subsection and the corporation's financing

1705

obligations.

1706

     h.  The Florida Surplus Lines Service Office shall verify

1707

the proper application by surplus lines agents of assessment

1708

percentages for regular assessments and emergency assessments

1709

levied under this subparagraph on assessable insureds and shall

1710

assist the corporation in ensuring the accurate, timely

1711

collection and payment of assessments by surplus lines agents as

1712

required by the corporation.

1713

     i.  If a deficit is incurred in any account in 2008 or

1714

thereafter, the board of governors shall levy a Citizens

1715

policyholder surcharge an immediate assessment against the

1716

premium of each nonhomestead property policyholder in all

1717

accounts of the corporation, as a uniform percentage of the

1718

premium of the policy of up to 10 percent of such premium, which

1719

funds shall be used to offset the deficit. If this assessment is

1720

insufficient to eliminate the deficit, the board of governors

1721

shall levy an additional assessment against all policyholders of

1722

the corporation for a 12-month period, which shall be collected

1723

at the time of issuance or renewal of a policy, as a uniform

1724

percentage of the premium for the policy of up to 10 percent of

1725

such premium, which funds shall be used to further offset the

1726

deficit and reduce the amount of the regular assessment as

1727

provided in sub-subparagraphs a. and b. Citizens policyholder

1728

surcharges under this sub-subparagraph are not considered premium

1729

and are not subject to commissions, fees, or premium taxes.

1730

However, failure to pay such surcharges shall be treated as

1731

failure to pay premium.

1732

     j. If the amount of any assessments or surcharges collected

1733

from corporation policyholders, assessable insurers or their

1734

policyholders, or assessable insureds exceeds the amount of the

1735

deficits, such excess amounts shall be remitted to and retained

1736

by the corporation in a reserve to be used by the corporation, as

1737

determined by the board of governors and approved by the office,

1738

to pay claims or reduce any past, present, or future plan-year

1739

deficits or to reduce outstanding debt. The board of governors

1740

shall maintain separate accounting records that consolidate data

1741

for nonhomestead properties, including, but not limited to,

1742

number of policies, insured values, premiums written, and losses.

1743

The board of governors shall annually report to the office and

1744

the Legislature a summary of such data.

1745

     (c)  The plan of operation of the corporation:

1746

     1.  Must provide for adoption of residential property and

1747

casualty insurance policy forms and commercial residential and

1748

nonresidential property insurance forms, which forms must be

1749

approved by the office prior to use. The corporation shall adopt

1750

the following policy forms:

1751

     a.  Standard personal lines policy forms that are

1752

comprehensive multiperil policies providing full coverage of a

1753

residential property equivalent to the coverage provided in the

1754

private insurance market under an HO-3, HO-4, or HO-6 policy.

1755

     b.  Basic personal lines policy forms that are policies

1756

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

1757

coverage meeting the requirements of the secondary mortgage

1758

market, but which coverage is more limited than the coverage

1759

under a standard policy.

1760

     c.  Commercial lines residential and nonresidential policy

1761

forms that are generally similar to the basic perils of full

1762

coverage obtainable for commercial residential structures and

1763

commercial nonresidential structures in the admitted voluntary

1764

market.

1765

     d.  Personal lines and commercial lines residential property

1766

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

1767

applicable only to residential properties located in areas

1768

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

1769

sub-subparagraph (b)2.a.

1770

     e.  Commercial lines nonresidential property insurance forms

1771

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

1772

to nonresidential properties located in areas eligible for

1773

coverage under the high-risk account referred to in sub-

1774

subparagraph (b)2.a.

1775

     f.  The corporation may adopt variations of the policy forms

1776

listed in sub-subparagraphs a.-e. that contain more restrictive

1777

coverage.

1778

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

1779

which the corporation and authorized insurers enter into quota

1780

share primary insurance agreements for hurricane coverage, as

1781

defined in s. 627.4025(2)(a), for eligible risks, and adopt

1782

property insurance forms for eligible risks which cover the peril

1783

of wind only. As used in this subsection, the term:

1784

     (I)  "Quota share primary insurance" means an arrangement in

1785

which the primary hurricane coverage of an eligible risk is

1786

provided in specified percentages by the corporation and an

1787

authorized insurer. The corporation and authorized insurer are

1788

each solely responsible for a specified percentage of hurricane

1789

coverage of an eligible risk as set forth in a quota share

1790

primary insurance agreement between the corporation and an

1791

authorized insurer and the insurance contract. The responsibility

1792

of the corporation or authorized insurer to pay its specified

1793

percentage of hurricane losses of an eligible risk, as set forth

1794

in the quota share primary insurance agreement, may not be

1795

altered by the inability of the other party to the agreement to

1796

pay its specified percentage of hurricane losses. Eligible risks

1797

that are provided hurricane coverage through a quota share

1798

primary insurance arrangement must be provided policy forms that

1799

set forth the obligations of the corporation and authorized

1800

insurer under the arrangement, clearly specify the percentages of

1801

quota share primary insurance provided by the corporation and

1802

authorized insurer, and conspicuously and clearly state that

1803

neither the authorized insurer nor the corporation may be held

1804

responsible beyond its specified percentage of coverage of

1805

hurricane losses.

1806

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

1807

commercial lines residential risks that meet the underwriting

1808

criteria of the corporation and are located in areas that were

1809

eligible for coverage by the Florida Windstorm Underwriting

1810

Association on January 1, 2002.

1811

     b.  The corporation may enter into quota share primary

1812

insurance agreements with authorized insurers at corporation

1813

coverage levels of 90 percent and 50 percent.

1814

     c.  If the corporation determines that additional coverage

1815

levels are necessary to maximize participation in quota share

1816

primary insurance agreements by authorized insurers, the

1817

corporation may establish additional coverage levels. However,

1818

the corporation's quota share primary insurance coverage level

1819

may not exceed 90 percent.

1820

     d.  Any quota share primary insurance agreement entered into

1821

between an authorized insurer and the corporation must provide

1822

for a uniform specified percentage of coverage of hurricane

1823

losses, by county or territory as set forth by the corporation

1824

board, for all eligible risks of the authorized insurer covered

1825

under the quota share primary insurance agreement.

1826

     e.  Any quota share primary insurance agreement entered into

1827

between an authorized insurer and the corporation is subject to

1828

review and approval by the office. However, such agreement shall

1829

be authorized only as to insurance contracts entered into between

1830

an authorized insurer and an insured who is already insured by

1831

the corporation for wind coverage.

1832

     f.  For all eligible risks covered under quota share primary

1833

insurance agreements, the exposure and coverage levels for both

1834

the corporation and authorized insurers shall be reported by the

1835

corporation to the Florida Hurricane Catastrophe Fund. For all

1836

policies of eligible risks covered under quota share primary

1837

insurance agreements, the corporation and the authorized insurer

1838

shall maintain complete and accurate records for the purpose of

1839

exposure and loss reimbursement audits as required by Florida

1840

Hurricane Catastrophe Fund rules. The corporation and the

1841

authorized insurer shall each maintain duplicate copies of policy

1842

declaration pages and supporting claims documents.

1843

     g.  The corporation board shall establish in its plan of

1844

operation standards for quota share agreements which ensure that

1845

there is no discriminatory application among insurers as to the

1846

terms of quota share agreements, pricing of quota share

1847

agreements, incentive provisions if any, and consideration paid

1848

for servicing policies or adjusting claims.

1849

     h.  The quota share primary insurance agreement between the

1850

corporation and an authorized insurer must set forth the specific

1851

terms under which coverage is provided, including, but not

1852

limited to, the sale and servicing of policies issued under the

1853

agreement by the insurance agent of the authorized insurer

1854

producing the business, the reporting of information concerning

1855

eligible risks, the payment of premium to the corporation, and

1856

arrangements for the adjustment and payment of hurricane claims

1857

incurred on eligible risks by the claims adjuster and personnel

1858

of the authorized insurer. Entering into a quota sharing

1859

insurance agreement between the corporation and an authorized

1860

insurer shall be voluntary and at the discretion of the

1861

authorized insurer.

1862

     3.  May provide that the corporation may employ or otherwise

1863

contract with individuals or other entities to provide

1864

administrative or professional services that may be appropriate

1865

to effectuate the plan. The corporation shall have the power to

1866

borrow funds, by issuing bonds or by incurring other

1867

indebtedness, and shall have other powers reasonably necessary to

1868

effectuate the requirements of this subsection, including,

1869

without limitation, the power to issue bonds and incur other

1870

indebtedness in order to refinance outstanding bonds or other

1871

indebtedness. The corporation may, but is not required to, seek

1872

judicial validation of its bonds or other indebtedness under

1873

chapter 75. The corporation may issue bonds or incur other

1874

indebtedness, or have bonds issued on its behalf by a unit of

1875

local government pursuant to subparagraph (p)2., in the absence

1876

of a hurricane or other weather-related event, upon a

1877

determination by the corporation, subject to approval by the

1878

office, that such action would enable it to efficiently meet the

1879

financial obligations of the corporation and that such financings

1880

are reasonably necessary to effectuate the requirements of this

1881

subsection. The corporation is authorized to take all actions

1882

needed to facilitate tax-free status for any such bonds or

1883

indebtedness, including formation of trusts or other affiliated

1884

entities. The corporation shall have the authority to pledge

1885

assessments, projected recoveries from the Florida Hurricane

1886

Catastrophe Fund, other reinsurance recoverables, market

1887

equalization and other surcharges, and other funds available to

1888

the corporation as security for bonds or other indebtedness. In

1889

recognition of s. 10, Art. I of the State Constitution,

1890

prohibiting the impairment of obligations of contracts, it is the

1891

intent of the Legislature that no action be taken whose purpose

1892

is to impair any bond indenture or financing agreement or any

1893

revenue source committed by contract to such bond or other

1894

indebtedness.

1895

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

1896

the supervision and approval of a board of governors consisting

1897

of eight individuals who are residents of this state, from

1898

different geographical areas of this state. The Governor, the

1899

Chief Financial Officer, the President of the Senate, and the

1900

Speaker of the House of Representatives shall each appoint two

1901

members of the board. At least one of the two members appointed

1902

by each appointing officer must have demonstrated expertise in

1903

insurance. The Chief Financial Officer shall designate one of the

1904

appointees as chair. All board members serve at the pleasure of

1905

the appointing officer. All members of the board of governors are

1906

subject to removal at will by the officers who appointed them.

1907

All board members, including the chair, must be appointed to

1908

serve for 3-year terms beginning annually on a date designated by

1909

the plan. Any board vacancy shall be filled for the unexpired

1910

term by the appointing officer. The Chief Financial Officer shall

1911

appoint a technical advisory group to provide information and

1912

advice to the board of governors in connection with the board's

1913

duties under this subsection. The executive director and senior

1914

managers of the corporation shall be engaged by the board and

1915

serve at the pleasure of the board. Any executive director

1916

appointed on or after July 1, 2006, is subject to confirmation by

1917

the Senate. The executive director is responsible for employing

1918

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

1919

concurrence by the board.

1920

     b.  The board shall create a Market Accountability Advisory

1921

Committee to assist the corporation in developing awareness of

1922

its rates and its customer and agent service levels in

1923

relationship to the voluntary market insurers writing similar

1924

coverage. The members of the advisory committee shall consist of

1925

the following 11 persons, one of whom must be elected chair by

1926

the members of the committee: four representatives, one appointed

1927

by the Florida Association of Insurance Agents, one by the

1928

Florida Association of Insurance and Financial Advisors, one by

1929

the Professional Insurance Agents of Florida, and one by the

1930

Latin American Association of Insurance Agencies; three

1931

representatives appointed by the insurers with the three highest

1932

voluntary market share of residential property insurance business

1933

in the state; one representative from the Office of Insurance

1934

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

1935

the corporation at the time of appointment to the committee; one

1936

representative appointed by the Florida Association of Realtors;

1937

and one representative appointed by the Florida Bankers

1938

Association. All members must serve for 3-year terms and may

1939

serve for consecutive terms. The committee shall report to the

1940

corporation at each board meeting on insurance market issues

1941

which may include rates and rate competition with the voluntary

1942

market; service, including policy issuance, claims processing,

1943

and general responsiveness to policyholders, applicants, and

1944

agents; and matters relating to depopulation.

1945

     5.  Must provide a procedure for determining the eligibility

1946

of a risk for coverage, as follows:

1947

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

1948

to personal lines residential risks, if the risk is offered

1949

coverage from an authorized insurer at the insurer's approved

1950

rate under either a standard policy including wind coverage or,

1951

if consistent with the insurer's underwriting rules as filed with

1952

the office, a basic policy including wind coverage, for a new

1953

application to the corporation for coverage, the risk is not

1954

eligible for any policy issued by the corporation unless the

1955

premium for coverage from the authorized insurer is more than 15

1956

percent greater than the premium for comparable coverage from the

1957

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

1958

the risk is eligible for either a standard policy including wind

1959

coverage or a basic policy including wind coverage issued by the

1960

corporation; however, if the risk could not be insured under a

1961

standard policy including wind coverage regardless of market

1962

conditions, the risk shall be eligible for a basic policy

1963

including wind coverage unless rejected under subparagraph 9.

1964

However, with regard to a policyholder of the corporation or a

1965

policyholder removed from the corporation through an assumption

1966

agreement until the end of the assumption period, the

1967

policyholder remains eligible for coverage from the corporation

1968

regardless of any offer of coverage from an authorized insurer or

1969

surplus lines insurer. The corporation shall determine the type

1970

of policy to be provided on the basis of objective standards

1971

specified in the underwriting manual and based on generally

1972

accepted underwriting practices.

1973

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

1974

market assistance plan or an offer of coverage through a

1975

mechanism established by the corporation before a policy is

1976

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

1977

of coverage by the corporation, and the producing agent who

1978

submitted the application to the plan or to the corporation is

1979

not currently appointed by the insurer, the insurer shall:

1980

     (A)  Pay to the producing agent of record of the policy, for

1981

the first year, an amount that is the greater of the insurer's

1982

usual and customary commission for the type of policy written or

1983

a fee equal to the usual and customary commission of the

1984

corporation; or

1985

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

1986

policy to continue servicing the policy for a period of not less

1987

than 1 year and offer to pay the agent the greater of the

1988

insurer's or the corporation's usual and customary commission for

1989

the type of policy written.

1990

1991

If the producing agent is unwilling or unable to accept

1992

appointment, the new insurer shall pay the agent in accordance

1993

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

1994

     (II)  When the corporation enters into a contractual

1995

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

1996

the corporation policy is entitled to retain any unearned

1997

commission on the policy, and the insurer shall:

1998

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

1999

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

2000

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

2001

written or a fee equal to the usual and customary commission of

2002

the corporation; or

2003

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

2004

corporation policy to continue servicing the policy for a period

2005

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

2006

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

2007

for the type of policy written.

2008

2009

If the producing agent is unwilling or unable to accept

2010

appointment, the new insurer shall pay the agent in accordance

2011

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

2012

     b.  With respect to commercial lines residential risks, for

2013

a new application to the corporation for coverage, if the risk is

2014

offered coverage under a policy including wind coverage from an

2015

authorized insurer at its approved rate, the risk is not eligible

2016

for any policy issued by the corporation unless the premium for

2017

coverage from the authorized insurer is more than 15 percent

2018

greater than the premium for comparable coverage from the

2019

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

2020

the risk is eligible for a policy including wind coverage issued

2021

by the corporation. However, with regard to a policyholder of the

2022

corporation or a policyholder removed from the corporation

2023

through an assumption agreement until the end of the assumption

2024

period, the policyholder remains eligible for coverage from the

2025

corporation regardless of any offer of coverage from an

2026

authorized insurer or surplus lines insurer.

2027

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

2028

market assistance plan or an offer of coverage through a

2029

mechanism established by the corporation before a policy is

2030

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

2031

of coverage by the corporation, and the producing agent who

2032

submitted the application to the plan or the corporation is not

2033

currently appointed by the insurer, the insurer shall:

2034

     (A)  Pay to the producing agent of record of the policy, for

2035

the first year, an amount that is the greater of the insurer's

2036

usual and customary commission for the type of policy written or

2037

a fee equal to the usual and customary commission of the

2038

corporation; or

2039

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

2040

policy to continue servicing the policy for a period of not less

2041

than 1 year and offer to pay the agent the greater of the

2042

insurer's or the corporation's usual and customary commission for

2043

the type of policy written.

2044

2045

If the producing agent is unwilling or unable to accept

2046

appointment, the new insurer shall pay the agent in accordance

2047

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

2048

     (II)  When the corporation enters into a contractual

2049

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

2050

the corporation policy is entitled to retain any unearned

2051

commission on the policy, and the insurer shall:

2052

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

2053

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

2054

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

2055

written or a fee equal to the usual and customary commission of

2056

the corporation; or

2057

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

2058

corporation policy to continue servicing the policy for a period

2059

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

2060

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

2061

for the type of policy written.

2062

2063

If the producing agent is unwilling or unable to accept

2064

appointment, the new insurer shall pay the agent in accordance

2065

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

2066

     c.  For purposes of determining comparable coverage under

2067

sub-subparagraphs a. and b., the comparison shall be based on

2068

those forms and coverages that are reasonably comparable. The

2069

corporation may rely on a determination of comparable coverage

2070

and premium made by the producing agent who submits the

2071

application to the corporation, made in the agent's capacity as

2072

the corporation's agent. A comparison may be made solely of the

2073

premium with respect to the main building or structure only on

2074

the following basis: the same coverage A or other building

2075

limits; the same percentage hurricane deductible that applies on

2076

an annual basis or that applies to each hurricane for commercial

2077

residential property; the same percentage of ordinance and law

2078

coverage, if the same limit is offered by both the corporation

2079

and the authorized insurer; the same mitigation credits, to the

2080

extent the same types of credits are offered both by the

2081

corporation and the authorized insurer; the same method for loss

2082

payment, such as replacement cost or actual cash value, if the

2083

same method is offered both by the corporation and the authorized

2084

insurer in accordance with underwriting rules; and any other form

2085

or coverage that is reasonably comparable as determined by the

2086

board. If an application is submitted to the corporation for

2087

wind-only coverage in the high-risk account, the premium for the

2088

corporation's wind-only policy plus the premium for the ex-wind

2089

policy that is offered by an authorized insurer to the applicant

2090

shall be compared to the premium for multiperil coverage offered

2091

by an authorized insurer, subject to the standards for comparison

2092

specified in this subparagraph. If the corporation or the

2093

applicant requests from the authorized insurer a breakdown of the

2094

premium of the offer by types of coverage so that a comparison

2095

may be made by the corporation or its agent and the authorized

2096

insurer refuses or is unable to provide such information, the

2097

corporation may treat the offer as not being an offer of coverage

2098

from an authorized insurer at the insurer's approved rate.

2099

     6.  Must include rules for classifications of risks and

2100

rates therefor.

2101

     7.  Must provide that if premium and investment income for

2102

an account attributable to a particular calendar year are in

2103

excess of projected losses and expenses for the account

2104

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

2105

in the account. Such surplus shall be available to defray

2106

deficits in that account as to future years and shall be used for

2107

that purpose prior to assessing assessable insurers and

2108

assessable insureds as to any calendar year.

2109

     8.  Must provide objective criteria and procedures to be

2110

uniformly applied for all applicants in determining whether an

2111

individual risk is so hazardous as to be uninsurable. In making

2112

this determination and in establishing the criteria and

2113

procedures, the following shall be considered:

2114

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

2115

is substantially higher than for other risks of the same class;

2116

and

2117

     b.  Whether the uncertainty associated with the individual

2118

risk is such that an appropriate premium cannot be determined.

2119

2120

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

2121

construed as the private placement of insurance, and the

2122

provisions of chapter 120 shall not apply.

2123

     9.  Must provide that the corporation shall make its best

2124

efforts to procure catastrophe reinsurance at reasonable rates,

2125

to cover its projected 100-year probable maximum loss as

2126

determined by the board of governors.

2127

     10. Must provide that in the event of regular deficit

2128

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

2129

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

2130

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

2131

shall levy upon corporation policyholders in its next rate

2132

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

2133

Citizens policyholder surcharge arising from a regular assessment

2134

in such account in a percentage equal to the total amount of such

2135

regular assessments divided by the aggregate statewide direct

2136

written premium for subject lines of business for the prior

2137

calendar year. For purposes of calculating the Citizens

2138

policyholder surcharge to be levied under this subparagraph, the

2139

total amount of the regular assessment to which this surcharge is

2140

related shall be determined as set forth in subparagraph (b)3.,

2141

without deducting the estimated Citizens policyholder surcharge.

2142

Citizens policyholder surcharges under this subparagraph are not

2143

considered premium and are not subject to commissions, fees, or

2144

premium taxes; however, failure to pay a market equalization

2145

surcharge shall be treated as failure to pay premium.

2146

     10.11. The policies issued by the corporation must provide

2147

that, if the corporation or the market assistance plan obtains an

2148

offer from an authorized insurer to cover the risk at its

2149

approved rates, the risk is no longer eligible for renewal

2150

through the corporation, except as otherwise provided in this

2151

subsection.

2152

     11.12. Corporation policies and applications must include a

2153

notice that the corporation policy could, under this section, be

2154

replaced with a policy issued by an authorized insurer that does

2155

not provide coverage identical to the coverage provided by the

2156

corporation. The notice shall also specify that acceptance of

2157

corporation coverage creates a conclusive presumption that the

2158

applicant or policyholder is aware of this potential.

2159

     12.13. May establish, subject to approval by the office,

2160

different eligibility requirements and operational procedures for

2161

any line or type of coverage for any specified county or area if

2162

the board determines that such changes to the eligibility

2163

requirements and operational procedures are justified due to the

2164

voluntary market being sufficiently stable and competitive in

2165

such area or for such line or type of coverage and that consumers

2166

who, in good faith, are unable to obtain insurance through the

2167

voluntary market through ordinary methods would continue to have

2168

access to coverage from the corporation. When coverage is sought

2169

in connection with a real property transfer, such requirements

2170

and procedures shall not provide for an effective date of

2171

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

2172

established by the transferor, the transferee, and, if

2173

applicable, the lender.

2174

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

2175

account, any assessable insurer with a surplus as to

2176

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

2177

of its total countrywide property insurance premiums in this

2178

state may petition the office, within the first 90 days of each

2179

calendar year, to qualify as a limited apportionment company. A

2180

regular assessment levied by the corporation on a limited

2181

apportionment company for a deficit incurred by the corporation

2182

for the high-risk account in 2006 or thereafter may be paid to

2183

the corporation on a monthly basis as the assessments are

2184

collected by the limited apportionment company from its insureds

2185

pursuant to s. 627.3512, but the regular assessment must be paid

2186

in full within 12 months after being levied by the corporation. A

2187

limited apportionment company shall collect from its

2188

policyholders any emergency assessment imposed under sub-

2189

subparagraph (b)3.d. The plan shall provide that, if the office

2190

determines that any regular assessment will result in an

2191

impairment of the surplus of a limited apportionment company, the

2192

office may direct that all or part of such assessment be deferred

2193

as provided in subparagraph (p)4. However, there shall be no

2194

limitation or deferment of an emergency assessment to be

2195

collected from policyholders under sub-subparagraph (b)3.d.

2196

     14.15. Must provide that the corporation appoint as its

2197

licensed agents only those agents who also hold an appointment as

2198

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

2199

agent's initial appointment by the corporation is authorized to

2200

write and is actually writing personal lines residential property

2201

coverage, commercial residential property coverage, or commercial

2202

nonresidential property coverage within the state.

2203

     15.16. Must provide, by July 1, 2007, a premium payment

2204

plan option to its policyholders which allows at a minimum for

2205

quarterly and semiannual payment of premiums. A monthly payment

2206

plan may, but is not required to, be offered.

2207

     16.17. Must limit coverage on mobile homes or manufactured

2208

homes built prior to 1994 to actual cash value of the dwelling

2209

rather than replacement costs of the dwelling.

2210

     17.18. May provide such limits of coverage as the board

2211

determines, consistent with the requirements of this subsection.

2212

     18.19. May require commercial property to meet specified

2213

hurricane mitigation construction features as a condition of

2214

eligibility for coverage.

2215

     (d)1.  All prospective employees for senior management

2216

positions, as defined by the plan of operation, are subject to

2217

background checks as a prerequisite for employment. The office

2218

shall conduct background checks on such prospective employees

2219

pursuant to ss. 624.34, 624.404(3), and 628.261.

2220

     2.  On or before July 1 of each year, employees of the

2221

corporation are required to sign and submit a statement attesting

2222

that they do not have a conflict of interest, as defined in part

2223

III of chapter 112. As a condition of employment, all prospective

2224

employees are required to sign and submit to the corporation a

2225

conflict-of-interest statement.

2226

     3.  Senior managers and members of the board of governors

2227

are subject to the provisions of part III of chapter 112,

2228

including, but not limited to, the code of ethics and public

2229

disclosure and reporting of financial interests, pursuant to s.

2230

112.3145. Senior managers and board members are also required to

2231

file such disclosures with the Commission on Ethics and the

2232

Office of Insurance Regulation. The executive director of the

2233

corporation or his or her designee shall notify each newly

2234

appointed and existing appointed member of the board of governors

2235

and senior managers of their duty to comply with the reporting

2236

requirements of part III of chapter 112. At least quarterly, the

2237

executive director or his or her designee shall submit to the

2238

Commission on Ethics a list of names of the senior managers and

2239

members of the board of governors who are subject to the public

2240

disclosure requirements under s. 112.3145.

2241

     4.  Notwithstanding s. 112.3148 or s. 112.3149, or any other

2242

provision of law, an employee or board member may not knowingly

2243

accept, directly or indirectly, any gift or expenditure from a

2244

person or entity, or an employee or representative of such person

2245

or entity, that has a contractual relationship with the

2246

corporation or who is under consideration for a contract. An

2247

employee or board member who fails to comply with subparagraph 3.

2248

or this subparagraph is subject to penalties provided under ss.

2249

112.317 and 112.3173.

2250

     5.  Any senior manager of the corporation who is employed on

2251

or after January 1, 2007, regardless of the date of hire, who

2252

subsequently retires or terminates employment is prohibited from

2253

representing another person or entity before the corporation for

2254

2 years after retirement or termination of employment from the

2255

corporation.

2256

     6.  Any senior manager of the corporation who is employed on

2257

or after January 1, 2007, regardless of the date of hire, who

2258

subsequently retires or terminates employment is prohibited from

2259

having any employment or contractual relationship for 2 years

2260

with an insurer that has entered into a take-out bonus agreement

2261

with the corporation.

2262

     (e)  Purchases that equal or exceed $2,500, but are less

2263

than $25,000, shall be made by receipt of written quotes, written

2264

record of telephone quotes, or informal bids, whenever practical.

2265

The procurement of goods or services valued at or over $25,000

2266

shall be subject to competitive solicitation, except in

2267

situations where the goods or services are provided by a sole

2268

source or are deemed an emergency purchase; the services are

2269

exempted from competitive solicitation requirements under s.

2270

287.057(5)(f); or the procurement of services is subject to s.

2271

627.3513. Justification for the sole-sourcing or emergency

2272

procurement must be documented. Contracts for goods or services

2273

valued at or over $100,000 are subject to approval by the board.

2274

     (f)  The board shall determine whether it is more cost-

2275

effective and in the best interests of the corporation to use

2276

legal services provided by in-house attorneys employed by the

2277

corporation rather than contracting with outside counsel. In

2278

making such determination, the board shall document its findings

2279

and shall consider: the expertise needed; whether time

2280

commitments exceed in-house staff resources; whether local

2281

representation is needed; the travel, lodging and other costs

2282

associated with in-house representation; and such other factors

2283

that the board determines are relevant.

2284

     (g)  The corporation may not retain a lobbyist to represent

2285

it before the legislative branch or executive branch. However,

2286

full-time employees of the corporation may register as lobbyists

2287

and represent the corporation before the legislative branch or

2288

executive branch.

2289

     (h)1.  The Office of the Internal Auditor is established

2290

within the corporation to provide a central point for

2291

coordination of and responsibility for activities that promote

2292

accountability, integrity, and efficiency to the policyholders

2293

and to the taxpayers of this state. The internal auditor shall be

2294

appointed by the board of governors, shall report to and be under

2295

the general supervision of the board of governors, and is not

2296

subject to supervision by any employee of the corporation.

2297

Administrative staff and support shall be provided by the

2298

corporation. The internal auditor shall be appointed without

2299

regard to political affiliation. It is the duty and

2300

responsibility of the internal auditor to:

2301

     a.  Provide direction for, supervise, conduct, and

2302

coordinate audits, investigations, and management reviews

2303

relating to the programs and operations of the corporation.

2304

     b.  Conduct, supervise, or coordinate other activities

2305

carried out or financed by the corporation for the purpose of

2306

promoting efficiency in the administration of, or preventing and

2307

detecting fraud, abuse, and mismanagement in, its programs and

2308

operations.

2309

     c.  Submit final audit reports, reviews, or investigative

2310

reports to the board of governors, the executive director, the

2311

members of the Financial Services Commission, and the President

2312

of the Senate and the Speaker of the House of Representatives.

2313

     d.  Keep the board of governors informed concerning fraud,

2314

abuses, and internal control deficiencies relating to programs

2315

and operations administered or financed by the corporation,

2316

recommend corrective action, and report on the progress made in

2317

implementing corrective action.

2318

     e.  Report expeditiously to the Department of Law

2319

Enforcement or other law enforcement agencies, as appropriate,

2320

whenever the internal auditor has reasonable grounds to believe

2321

there has been a violation of criminal law.

2322

     2.  On or before February 15, the internal auditor shall

2323

prepare an annual report evaluating the effectiveness of the

2324

internal controls of the corporation and providing

2325

recommendations for corrective action, if necessary, and

2326

summarizing the audits, reviews, and investigations conducted by

2327

the office during the preceding fiscal year. The final report

2328

shall be furnished to the board of governors and the executive

2329

director, the President of the Senate, the Speaker of the House

2330

of Representatives, and the Financial Services Commission.

2331

     (i)  All records of the corporation, except as otherwise

2332

provided by law, are subject to the record retention requirements

2333

of s. 119.021.

2334

     (j)1.  The corporation shall establish and maintain a unit

2335

or division to investigate possible fraudulent claims by insureds

2336

or by persons making claims for services or repairs against

2337

policies held by insureds; or it may contract with others to

2338

investigate possible fraudulent claims for services or repairs

2339

against policies held by the corporation pursuant to s. 626.9891.

2340

The corporation must comply with reporting requirements of s.

2341

626.9891. An employee of the corporation shall notify the

2342

corporation's Office of the Internal Auditor and the Division of

2343

Insurance Fraud within 48 hours after having information that

2344

would lead a reasonable person to suspect that fraud may have

2345

been committed by any employee of the corporation.

2346

     2.  The corporation shall establish a unit or division

2347

responsible for receiving and responding to consumer complaints,

2348

which unit or division is the sole responsibility of a senior

2349

manager of the corporation.

2350

     (k)  The office shall conduct a comprehensive market conduct

2351

examination of the corporation every 2 years to determine

2352

compliance with its plan of operation and internal operations

2353

procedures. The first market conduct examination report shall be

2354

submitted to the President of the Senate and the Speaker of the

2355

House of Representatives no later than February 1, 2009.

2356

Subsequent reports shall be submitted on or before February 1

2357

every 2 years thereafter.

2358

     (l)  The Auditor General shall conduct an operational audit

2359

of the corporation every 3 years to evaluate management's

2360

performance in administering laws, policies, and procedures

2361

governing the operations of the corporation in an efficient and

2362

effective manner. The scope of the review shall include, but is

2363

not limited to, evaluating claims handling, customer service,

2364

take-out programs and bonuses, financing arrangements,

2365

procurement of goods and services, internal controls, and the

2366

internal audit function. The initial audit must be completed by

2367

February 1, 2009.

2368

     (m)1.  Rates for coverage provided by the corporation shall

2369

be actuarially sound and subject to the requirements of s.

2370

627.062, except as otherwise provided in this paragraph. The

2371

corporation shall file its recommended rates with the office at

2372

least annually. The corporation shall provide any additional

2373

information regarding the rates which the office requires. The

2374

office shall consider the recommendations of the board and issue

2375

a final order establishing the rates for the corporation within

2376

45 days after the recommended rates are filed. The corporation

2377

may not pursue an administrative challenge or judicial review of

2378

the final order of the office.

2379

     2.  In addition to the rates otherwise determined pursuant

2380

to this paragraph, the corporation shall impose and collect an

2381

amount equal to the premium tax provided for in s. 624.509 to

2382

augment the financial resources of the corporation.

2383

     3.  After the public hurricane loss-projection model under

2384

s. 627.06281 has been found to be accurate and reliable by the

2385

Florida Commission on Hurricane Loss Projection Methodology, that

2386

model shall serve as the minimum benchmark for determining the

2387

windstorm portion of the corporation's rates. This subparagraph

2388

does not require or allow the corporation to adopt rates lower

2389

than the rates otherwise required or allowed by this paragraph.

2390

     4.  The rate filings for the corporation which were approved

2391

by the office and which took effect January 1, 2007, are

2392

rescinded, except for those rates that were lowered. As soon as

2393

possible, the corporation shall begin using the lower rates that

2394

were in effect on December 31, 2006, and shall provide refunds to

2395

policyholders who have paid higher rates as a result of that rate

2396

filing. The rates in effect on December 31, 2006, shall remain in

2397

effect for the 2007, and 2008, and 2009 calendar years except for

2398

any rate change that results in a lower rate. The next rate

2399

change that may increase rates shall take effect no earlier than

2400

January 1, 2010 January 1, 2009, pursuant to a new rate filing

2401

recommended by the corporation and established by the office,

2402

subject to the requirements of this paragraph.

2403

     5. The Legislature finds that it is in the public interest

2404

to ensure that increased rates for coverage by the corporation be

2405

implemented incrementally in order to provide rate stability and

2406

predictability to its policyholders.

2407

     a. Beginning on or after January 1, 2010, the corporation

2408

must make an annual filing for each personal and commercial line

2409

of business it writes.

2410

     b. For the years 2010 through 2012, rates established by

2411

the office for the corporation for its personal residential

2412

multiperil policies, its commercial residential multiperil

2413

policies, and its commercial nonresidential multiperil policies

2414

may not result in any year in an overall average statewide

2415

premium increase of more than 10 percent or an increase for any

2416

single policyholder or more than 10 percent, excluding coverage

2417

changes and surcharges.

2418

     c. For the years 2010 through 2012, rates established by

2419

the office for the corporation for its personal residential wind-

2420

only policies, its commercial residential wind-only policies, and

2421

its commercial nonresidential wind-only policies may not result

2422

in any year in an overall average statewide premium increase of

2423

more than 15 percent or an increase for any single policyholder

2424

of more than 15 percent, excluding coverage changes and

2425

surcharges.

2426

     (n)  If coverage in an account is deactivated pursuant to

2427

paragraph (o), coverage through the corporation shall be

2428

reactivated by order of the office only under one of the

2429

following circumstances:

2430

     1.  If the market assistance plan receives a minimum of 100

2431

applications for coverage within a 3-month period, or 200

2432

applications for coverage within a 1-year period or less for

2433

residential coverage, unless the market assistance plan provides

2434

a quotation from admitted carriers at their filed rates for at

2435

least 90 percent of such applicants. Any market assistance plan

2436

application that is rejected because an individual risk is so

2437

hazardous as to be uninsurable using the criteria specified in

2438

subparagraph (c)9. shall not be included in the minimum

2439

percentage calculation provided herein. In the event that there

2440

is a legal or administrative challenge to a determination by the

2441

office that the conditions of this subparagraph have been met for

2442

eligibility for coverage in the corporation, any eligible risk

2443

may obtain coverage during the pendency of such challenge.

2444

     2.  In response to a state of emergency declared by the

2445

Governor under s. 252.36, the office may activate coverage by

2446

order for the period of the emergency upon a finding by the

2447

office that the emergency significantly affects the availability

2448

of residential property insurance.

2449

     (o)1.  The corporation shall file with the office quarterly

2450

statements of financial condition, an annual statement of

2451

financial condition, and audited financial statements in the

2452

manner prescribed by law. In addition, the corporation shall

2453

report to the office monthly on the types, premium, exposure, and

2454

distribution by county of its policies in force, and shall submit

2455

other reports as the office requires to carry out its oversight

2456

of the corporation.

2457

     2.  The activities of the corporation shall be reviewed at

2458

least annually by the office to determine whether coverage shall

2459

be deactivated in an account on the basis that the conditions

2460

giving rise to its activation no longer exist.

2461

     (p)1.  The corporation shall certify to the office its needs

2462

for annual assessments as to a particular calendar year, and for

2463

any interim assessments that it deems to be necessary to sustain

2464

operations as to a particular year pending the receipt of annual

2465

assessments. Upon verification, the office shall approve such

2466

certification, and the corporation shall levy such annual or

2467

interim assessments. Such assessments shall be prorated as

2468

provided in paragraph (b). The corporation shall take all

2469

reasonable and prudent steps necessary to collect the amount of

2470

assessment due from each assessable insurer, including, if

2471

prudent, filing suit to collect such assessment. If the

2472

corporation is unable to collect an assessment from any

2473

assessable insurer, the uncollected assessments shall be levied

2474

as an additional assessment against the assessable insurers and

2475

any assessable insurer required to pay an additional assessment

2476

as a result of such failure to pay shall have a cause of action

2477

against such nonpaying assessable insurer. Assessments shall be

2478

included as an appropriate factor in the making of rates. The

2479

failure of a surplus lines agent to collect and remit any regular

2480

or emergency assessment levied by the corporation is considered

2481

to be a violation of s. 626.936 and subjects the surplus lines

2482

agent to the penalties provided in that section.

2483

     2.  The governing body of any unit of local government, any

2484

residents of which are insured by the corporation, may issue

2485

bonds as defined in s. 125.013 or s. 166.101 from time to time to

2486

fund an assistance program, in conjunction with the corporation,

2487

for the purpose of defraying deficits of the corporation. In

2488

order to avoid needless and indiscriminate proliferation,

2489

duplication, and fragmentation of such assistance programs, any

2490

unit of local government, any residents of which are insured by

2491

the corporation, may provide for the payment of losses,

2492

regardless of whether or not the losses occurred within or

2493

outside of the territorial jurisdiction of the local government.

2494

Revenue bonds under this subparagraph may not be issued until

2495

validated pursuant to chapter 75, unless a state of emergency is

2496

declared by executive order or proclamation of the Governor

2497

pursuant to s. 252.36 making such findings as are necessary to

2498

determine that it is in the best interests of, and necessary for,

2499

the protection of the public health, safety, and general welfare

2500

of residents of this state and declaring it an essential public

2501

purpose to permit certain municipalities or counties to issue

2502

such bonds as will permit relief to claimants and policyholders

2503

of the corporation. Any such unit of local government may enter

2504

into such contracts with the corporation and with any other

2505

entity created pursuant to this subsection as are necessary to

2506

carry out this paragraph. Any bonds issued under this

2507

subparagraph shall be payable from and secured by moneys received

2508

by the corporation from emergency assessments under sub-

2509

subparagraph (b)3.d., and assigned and pledged to or on behalf of

2510

the unit of local government for the benefit of the holders of

2511

such bonds. The funds, credit, property, and taxing power of the

2512

state or of the unit of local government shall not be pledged for

2513

the payment of such bonds. If any of the bonds remain unsold 60

2514

days after issuance, the office shall require all insurers

2515

subject to assessment to purchase the bonds, which shall be

2516

treated as admitted assets; each insurer shall be required to

2517

purchase that percentage of the unsold portion of the bond issue

2518

that equals the insurer's relative share of assessment liability

2519

under this subsection. An insurer shall not be required to

2520

purchase the bonds to the extent that the office determines that

2521

the purchase would endanger or impair the solvency of the

2522

insurer.

2523

     3.a.  The corporation shall adopt one or more programs

2524

subject to approval by the office for the reduction of both new

2525

and renewal writings in the corporation. Beginning January 1,

2526

2008, any program the corporation adopts for the payment of

2527

bonuses to an insurer for each risk the insurer removes from the

2528

corporation shall comply with s. 627.3511(2) and may not exceed

2529

the amount referenced in s. 627.3511(2) for each risk removed.

2530

The corporation may consider any prudent and not unfairly

2531

discriminatory approach to reducing corporation writings, and may

2532

adopt a credit against assessment liability or other liability

2533

that provides an incentive for insurers to take risks out of the

2534

corporation and to keep risks out of the corporation by

2535

maintaining or increasing voluntary writings in counties or areas

2536

in which corporation risks are highly concentrated and a program

2537

to provide a formula under which an insurer voluntarily taking

2538

risks out of the corporation by maintaining or increasing

2539

voluntary writings will be relieved wholly or partially from

2540

assessments under sub-subparagraphs (b)3.a. and b. However, any

2541

"take-out bonus" or payment to an insurer must be conditioned on

2542

the property being insured for at least 5 years by the insurer,

2543

unless canceled or nonrenewed by the policyholder. If the policy

2544

is canceled or nonrenewed by the policyholder before the end of

2545

the 5-year period, the amount of the take-out bonus must be

2546

prorated for the time period the policy was insured. When the

2547

corporation enters into a contractual agreement for a take-out

2548

plan, the producing agent of record of the corporation policy is

2549

entitled to retain any unearned commission on such policy, and

2550

the insurer shall either:

2551

     (I)  Pay to the producing agent of record of the policy, for

2552

the first year, an amount which is the greater of the insurer's

2553

usual and customary commission for the type of policy written or

2554

a policy fee equal to the usual and customary commission of the

2555

corporation; or

2556

     (II)  Offer to allow the producing agent of record of the

2557

policy to continue servicing the policy for a period of not less

2558

than 1 year and offer to pay the agent the insurer's usual and

2559

customary commission for the type of policy written. If the

2560

producing agent is unwilling or unable to accept appointment by

2561

the new insurer, the new insurer shall pay the agent in

2562

accordance with sub-sub-subparagraph (I).

2563

     b.  Any credit or exemption from regular assessments adopted

2564

under this subparagraph shall last no longer than the 3 years

2565

following the cancellation or expiration of the policy by the

2566

corporation. With the approval of the office, the board may

2567

extend such credits for an additional year if the insurer

2568

guarantees an additional year of renewability for all policies

2569

removed from the corporation, or for 2 additional years if the

2570

insurer guarantees 2 additional years of renewability for all

2571

policies so removed.

2572

     c.  There shall be no credit, limitation, exemption, or

2573

deferment from emergency assessments to be collected from

2574

policyholders pursuant to sub-subparagraph (b)3.d.

2575

     d. Subject to the execution of the confidentiality

2576

agreement required by paragraph (w), the corporation shall make

2577

its database of policies available to prospective take-out

2578

insurers considering underwriting a risk insured by the

2579

corporation, without categorically eliminating policies from

2580

eligibility for removal. The corporation may not instruct or

2581

encourage prospective take-out insurers to avoid the selection of

2582

policies for which the agent has disapproved policy removals. The

2583

corporation must require agents to accept or decline appointment

2584

for any policy selected and, in the case of a declination, must

2585

notify the policyholder that an insurer, identified by name,

2586

selected his or her policy for a take-out offer, but that the

2587

policyholder's agent refused to be appointed by the insurer. The

2588

notice must also provide the policyholder with the take-out

2589

insurer's contact information so that the policyholder may

2590

contact the company directly and make his or her own

2591

determination of whether to seek coverage from the take-out

2592

insurer.

2593

     4.  The plan shall provide for the deferment, in whole or in

2594

part, of the assessment of an assessable insurer, other than an

2595

emergency assessment collected from policyholders pursuant to

2596

sub-subparagraph (b)3.d., if the office finds that payment of the

2597

assessment would endanger or impair the solvency of the insurer.

2598

In the event an assessment against an assessable insurer is

2599

deferred in whole or in part, the amount by which such assessment

2600

is deferred may be assessed against the other assessable insurers

2601

in a manner consistent with the basis for assessments set forth

2602

in paragraph (b).

2603

     5.  Effective July 1, 2007, in order to evaluate the costs

2604

and benefits of approved take-out plans, if the corporation pays

2605

a bonus or other payment to an insurer for an approved take-out

2606

plan, it shall maintain a record of the address or such other

2607

identifying information on the property or risk removed in order

2608

to track if and when the property or risk is later insured by the

2609

corporation.

2610

     6.  Any policy taken out, assumed, or removed from the

2611

corporation is, as of the effective date of the take-out,

2612

assumption, or removal, direct insurance issued by the insurer

2613

and not by the corporation, even if the corporation continues to

2614

service the policies. This subparagraph applies to policies of

2615

the corporation and not policies taken out, assumed, or removed

2616

from any other entity.

2617

     (q)  Nothing in this subsection shall be construed to

2618

preclude the issuance of residential property insurance coverage

2619

pursuant to part VIII of chapter 626.

2620

     (r)1.  There shall be no liability on the part of, and no

2621

cause of action of any nature shall arise against, any assessable

2622

insurer or its agents or employees, the corporation or its agents

2623

or employees, members of the board of governors or their

2624

respective designees at a board meeting, corporation committee

2625

members, or the office or its representatives, for any action

2626

taken by them in the performance of their duties or

2627

responsibilities under this subsection. Such immunity does not

2628

apply to:

2629

     a.  Any of the foregoing persons or entities for any willful

2630

tort;

2631

     b.  The corporation or its producing agents for breach of

2632

any contract or agreement pertaining to insurance coverage;

2633

     c.  The corporation with respect to issuance or payment of

2634

debt;

2635

     d.  Any assessable insurer with respect to any action to

2636

enforce an assessable insurer's obligations to the corporation

2637

under this subsection; or

2638

     e.  The corporation in any pending or future action for

2639

breach of contract or for benefits under a policy issued by the

2640

corporation; in any such action, the corporation shall be liable

2641

to the policyholders and beneficiaries for attorney's fees under

2642

s. 627.428.

2643

     2.  The corporation shall manage its claim employees,

2644

independent adjusters, and others who handle claims to ensure

2645

they carry out the corporation's duty to its policyholders to

2646

handle claims carefully, timely, diligently, and in good faith,

2647

balanced against the corporation's duty to the state to manage

2648

its assets responsibly to minimize its assessment potential.

2649

     (s)  For the purposes of s. 199.183(1), the corporation

2650

shall be considered a political subdivision of the state and

2651

shall be exempt from the corporate income tax. The premiums,

2652

assessments, investment income, and other revenue of the

2653

corporation are funds received for providing property insurance

2654

coverage as required by this subsection, paying claims for

2655

Florida citizens insured by the corporation, securing and

2656

repaying debt obligations issued by the corporation, and

2657

conducting all other activities of the corporation, and shall not

2658

be considered taxes, fees, licenses, or charges for services

2659

imposed by the Legislature on individuals, businesses, or

2660

agencies outside state government. Bonds and other debt

2661

obligations issued by or on behalf of the corporation are not to

2662

be considered "state bonds" within the meaning of s. 215.58(8).

2663

The corporation is not subject to the procurement provisions of

2664

chapter 287, and policies and decisions of the corporation

2665

relating to incurring debt, levying of assessments and the sale,

2666

issuance, continuation, terms and claims under corporation

2667

policies, and all services relating thereto, are not subject to

2668

the provisions of chapter 120. The corporation is not required to

2669

obtain or to hold a certificate of authority issued by the

2670

office, nor is it required to participate as a member insurer of

2671

the Florida Insurance Guaranty Association. However, the

2672

corporation is required to pay, in the same manner as an

2673

authorized insurer, assessments levied by the Florida Insurance

2674

Guaranty Association. It is the intent of the Legislature that

2675

the tax exemptions provided in this paragraph will augment the

2676

financial resources of the corporation to better enable the

2677

corporation to fulfill its public purposes. Any debt obligations

2678

issued by the corporation, their transfer, and the income

2679

therefrom, including any profit made on the sale thereof, shall

2680

at all times be free from taxation of every kind by the state and

2681

any political subdivision or local unit or other instrumentality

2682

thereof; however, this exemption does not apply to any tax

2683

imposed by chapter 220 on interest, income, or profits on debt

2684

obligations owned by corporations other than the corporation.

2685

     (t)  Upon a determination by the office that the conditions

2686

giving rise to the establishment and activation of the

2687

corporation no longer exist, the corporation is dissolved. Upon

2688

dissolution, the assets of the corporation shall be applied first

2689

to pay all debts, liabilities, and obligations of the

2690

corporation, including the establishment of reasonable reserves

2691

for any contingent liabilities or obligations, and all remaining

2692

assets of the corporation shall become property of the state and

2693

shall be deposited in the Florida Hurricane Catastrophe Fund.

2694

However, no dissolution shall take effect as long as the

2695

corporation has bonds or other financial obligations outstanding

2696

unless adequate provision has been made for the payment of the

2697

bonds or other financial obligations pursuant to the documents

2698

authorizing the issuance of the bonds or other financial

2699

obligations.

2700

     (u)1.  Effective July 1, 2002, policies of the Residential

2701

Property and Casualty Joint Underwriting Association shall become

2702

policies of the corporation. All obligations, rights, assets and

2703

liabilities of the Residential Property and Casualty Joint

2704

Underwriting Association, including bonds, note and debt

2705

obligations, and the financing documents pertaining to them

2706

become those of the corporation as of July 1, 2002. The

2707

corporation is not required to issue endorsements or certificates

2708

of assumption to insureds during the remaining term of in-force

2709

transferred policies.

2710

     2.  Effective July 1, 2002, policies of the Florida

2711

Windstorm Underwriting Association are transferred to the

2712

corporation and shall become policies of the corporation. All

2713

obligations, rights, assets, and liabilities of the Florida

2714

Windstorm Underwriting Association, including bonds, note and

2715

debt obligations, and the financing documents pertaining to them

2716

are transferred to and assumed by the corporation on July 1,

2717

2002. The corporation is not required to issue endorsements or

2718

certificates of assumption to insureds during the remaining term

2719

of in-force transferred policies.

2720

     3.  The Florida Windstorm Underwriting Association and the

2721

Residential Property and Casualty Joint Underwriting Association

2722

shall take all actions as may be proper to further evidence the

2723

transfers and shall provide the documents and instruments of

2724

further assurance as may reasonably be requested by the

2725

corporation for that purpose. The corporation shall execute

2726

assumptions and instruments as the trustees or other parties to

2727

the financing documents of the Florida Windstorm Underwriting

2728

Association or the Residential Property and Casualty Joint

2729

Underwriting Association may reasonably request to further

2730

evidence the transfers and assumptions, which transfers and

2731

assumptions, however, are effective on the date provided under

2732

this paragraph whether or not, and regardless of the date on

2733

which, the assumptions or instruments are executed by the

2734

corporation. Subject to the relevant financing documents

2735

pertaining to their outstanding bonds, notes, indebtedness, or

2736

other financing obligations, the moneys, investments,

2737

receivables, choses in action, and other intangibles of the

2738

Florida Windstorm Underwriting Association shall be credited to

2739

the high-risk account of the corporation, and those of the

2740

personal lines residential coverage account and the commercial

2741

lines residential coverage account of the Residential Property

2742

and Casualty Joint Underwriting Association shall be credited to

2743

the personal lines account and the commercial lines account,

2744

respectively, of the corporation.

2745

     4.  Effective July 1, 2002, a new applicant for property

2746

insurance coverage who would otherwise have been eligible for

2747

coverage in the Florida Windstorm Underwriting Association is

2748

eligible for coverage from the corporation as provided in this

2749

subsection.

2750

     5.  The transfer of all policies, obligations, rights,

2751

assets, and liabilities from the Florida Windstorm Underwriting

2752

Association to the corporation and the renaming of the

2753

Residential Property and Casualty Joint Underwriting Association

2754

as the corporation shall in no way affect the coverage with

2755

respect to covered policies as defined in s. 215.555(2)(c)

2756

provided to these entities by the Florida Hurricane Catastrophe

2757

Fund. The coverage provided by the Florida Hurricane Catastrophe

2758

Fund to the Florida Windstorm Underwriting Association based on

2759

its exposures as of June 30, 2002, and each June 30 thereafter

2760

shall be redesignated as coverage for the high-risk account of

2761

the corporation. Notwithstanding any other provision of law, the

2762

coverage provided by the Florida Hurricane Catastrophe Fund to

2763

the Residential Property and Casualty Joint Underwriting

2764

Association based on its exposures as of June 30, 2002, and each

2765

June 30 thereafter shall be transferred to the personal lines

2766

account and the commercial lines account of the corporation.

2767

Notwithstanding any other provision of law, the high-risk account

2768

shall be treated, for all Florida Hurricane Catastrophe Fund

2769

purposes, as if it were a separate participating insurer with its

2770

own exposures, reimbursement premium, and loss reimbursement.

2771

Likewise, the personal lines and commercial lines accounts shall

2772

be viewed together, for all Florida Hurricane Catastrophe Fund

2773

purposes, as if the two accounts were one and represent a single,

2774

separate participating insurer with its own exposures,

2775

reimbursement premium, and loss reimbursement. The coverage

2776

provided by the Florida Hurricane Catastrophe Fund to the

2777

corporation shall constitute and operate as a full transfer of

2778

coverage from the Florida Windstorm Underwriting Association and

2779

Residential Property and Casualty Joint Underwriting to the

2780

corporation.

2781

     (v)  Notwithstanding any other provision of law:

2782

     1.  The pledge or sale of, the lien upon, and the security

2783

interest in any rights, revenues, or other assets of the

2784

corporation created or purported to be created pursuant to any

2785

financing documents to secure any bonds or other indebtedness of

2786

the corporation shall be and remain valid and enforceable,

2787

notwithstanding the commencement of and during the continuation

2788

of, and after, any rehabilitation, insolvency, liquidation,

2789

bankruptcy, receivership, conservatorship, reorganization, or

2790

similar proceeding against the corporation under the laws of this

2791

state.

2792

     2.  No such proceeding shall relieve the corporation of its

2793

obligation, or otherwise affect its ability to perform its

2794

obligation, to continue to collect, or levy and collect,

2795

assessments, market equalization or other surcharges under

2796

subparagraph (c)11., or any other rights, revenues, or other

2797

assets of the corporation pledged pursuant to any financing

2798

documents.

2799

     3.  Each such pledge or sale of, lien upon, and security

2800

interest in, including the priority of such pledge, lien, or

2801

security interest, any such assessments, market equalization or

2802

other surcharges, or other rights, revenues, or other assets

2803

which are collected, or levied and collected, after the

2804

commencement of and during the pendency of, or after, any such

2805

proceeding shall continue unaffected by such proceeding. As used

2806

in this subsection, the term "financing documents" means any

2807

agreement or agreements, instrument or instruments, or other

2808

document or documents now existing or hereafter created

2809

evidencing any bonds or other indebtedness of the corporation or

2810

pursuant to which any such bonds or other indebtedness has been

2811

or may be issued and pursuant to which any rights, revenues, or

2812

other assets of the corporation are pledged or sold to secure the

2813

repayment of such bonds or indebtedness, together with the

2814

payment of interest on such bonds or such indebtedness, or the

2815

payment of any other obligation or financial product, as defined

2816

in the plan of operation of the corporation related to such bonds

2817

or indebtedness.

2818

     4.  Any such pledge or sale of assessments, revenues,

2819

contract rights, or other rights or assets of the corporation

2820

shall constitute a lien and security interest, or sale, as the

2821

case may be, that is immediately effective and attaches to such

2822

assessments, revenues, or contract rights or other rights or

2823

assets, whether or not imposed or collected at the time the

2824

pledge or sale is made. Any such pledge or sale is effective,

2825

valid, binding, and enforceable against the corporation or other

2826

entity making such pledge or sale, and valid and binding against

2827

and superior to any competing claims or obligations owed to any

2828

other person or entity, including policyholders in this state,

2829

asserting rights in any such assessments, revenues, or contract

2830

rights or other rights or assets to the extent set forth in and

2831

in accordance with the terms of the pledge or sale contained in

2832

the applicable financing documents, whether or not any such

2833

person or entity has notice of such pledge or sale and without

2834

the need for any physical delivery, recordation, filing, or other

2835

action.

2836

     5.  As long as the corporation has any bonds outstanding,

2837

the corporation may not file a voluntary petition under chapter 9

2838

of the federal Bankruptcy Code or such corresponding chapter or

2839

sections as may be in effect, from time to time, and a public

2840

officer or any organization, entity, or other person may not

2841

authorize the corporation to be or become a debtor under chapter

2842

9 of the federal Bankruptcy Code or such corresponding chapter or

2843

sections as may be in effect, from time to time, during any such

2844

period.

2845

     6.  If ordered by a court of competent jurisdiction, the

2846

corporation may assume policies or otherwise provide coverage for

2847

policyholders of an insurer placed in liquidation under chapter

2848

631, under such forms, rates, terms, and conditions as the

2849

corporation deems appropriate, subject to approval by the office.

2850

     (w)1.  The following records of the corporation are

2851

confidential and exempt from the provisions of s. 119.07(1) and

2852

s. 24(a), Art. I of the State Constitution:

2853

     a.  Underwriting files, except that a policyholder or an

2854

applicant shall have access to his or her own underwriting files.

2855

     b.  Claims files, until termination of all litigation and

2856

settlement of all claims arising out of the same incident,

2857

although portions of the claims files may remain exempt, as

2858

otherwise provided by law. Confidential and exempt claims file

2859

records may be released to other governmental agencies upon

2860

written request and demonstration of need; such records held by

2861

the receiving agency remain confidential and exempt as provided

2862

for herein.

2863

     c.  Records obtained or generated by an internal auditor

2864

pursuant to a routine audit, until the audit is completed, or if

2865

the audit is conducted as part of an investigation, until the

2866

investigation is closed or ceases to be active. An investigation

2867

is considered "active" while the investigation is being conducted

2868

with a reasonable, good faith belief that it could lead to the

2869

filing of administrative, civil, or criminal proceedings.

2870

     d.  Matters reasonably encompassed in privileged attorney-

2871

client communications.

2872

     e.  Proprietary information licensed to the corporation

2873

under contract and the contract provides for the confidentiality

2874

of such proprietary information.

2875

     f.  All information relating to the medical condition or

2876

medical status of a corporation employee which is not relevant to

2877

the employee's capacity to perform his or her duties, except as

2878

otherwise provided in this paragraph. Information which is exempt

2879

shall include, but is not limited to, information relating to

2880

workers' compensation, insurance benefits, and retirement or

2881

disability benefits.

2882

     g.  Upon an employee's entrance into the employee assistance

2883

program, a program to assist any employee who has a behavioral or

2884

medical disorder, substance abuse problem, or emotional

2885

difficulty which affects the employee's job performance, all

2886

records relative to that participation shall be confidential and

2887

exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I

2888

of the State Constitution, except as otherwise provided in s.

2889

112.0455(11).

2890

     h.  Information relating to negotiations for financing,

2891

reinsurance, depopulation, or contractual services, until the

2892

conclusion of the negotiations.

2893

     i.  Minutes of closed meetings regarding underwriting files,

2894

and minutes of closed meetings regarding an open claims file

2895

until termination of all litigation and settlement of all claims

2896

with regard to that claim, except that information otherwise

2897

confidential or exempt by law will be redacted.

2898

2899

When an authorized insurer is considering underwriting a risk

2900

insured by the corporation, relevant underwriting files and

2901

confidential claims files may be released to the insurer provided

2902

the insurer agrees in writing, notarized and under oath, to

2903

maintain the confidentiality of such files. When a file is

2904

transferred to an insurer that file is no longer a public record

2905

because it is not held by an agency subject to the provisions of

2906

the public records law. Underwriting files and confidential

2907

claims files may also be released to staff of and the board of

2908

governors of the market assistance plan established pursuant to

2909

s. 627.3515, who must retain the confidentiality of such files,

2910

except such files may be released to authorized insurers that are

2911

considering assuming the risks to which the files apply, provided

2912

the insurer agrees in writing, notarized and under oath, to

2913

maintain the confidentiality of such files. Finally, the

2914

corporation or the board or staff of the market assistance plan

2915

may make the following information obtained from underwriting

2916

files and confidential claims files available to licensed general

2917

lines insurance agents: name, address, and telephone number of

2918

the residential property owner or insured; location of the risk;

2919

rating information; loss history; and policy type. The receiving

2920

licensed general lines insurance agent must retain the

2921

confidentiality of the information received.

2922

     2.  Portions of meetings of the corporation are exempt from

2923

the provisions of s. 286.011 and s. 24(b), Art. I of the State

2924

Constitution wherein confidential underwriting files or

2925

confidential open claims files are discussed. All portions of

2926

corporation meetings which are closed to the public shall be

2927

recorded by a court reporter. The court reporter shall record the

2928

times of commencement and termination of the meeting, all

2929

discussion and proceedings, the names of all persons present at

2930

any time, and the names of all persons speaking. No portion of

2931

any closed meeting shall be off the record. Subject to the

2932

provisions hereof and s. 119.07(1)(e)-(g), the court reporter's

2933

notes of any closed meeting shall be retained by the corporation

2934

for a minimum of 5 years. A copy of the transcript, less any

2935

exempt matters, of any closed meeting wherein claims are

2936

discussed shall become public as to individual claims after

2937

settlement of the claim.

2938

     (x)  It is the intent of the Legislature that the amendments

2939

to this subsection enacted in 2002 should, over time, reduce the

2940

probable maximum windstorm losses in the residual markets and

2941

should reduce the potential assessments to be levied on property

2942

insurers and policyholders statewide. In furtherance of this

2943

intent:

2944

     1.  The board shall, on or before February 1 of each year,

2945

provide a report to the President of the Senate and the Speaker

2946

of the House of Representatives showing the reduction or increase

2947

in the 100-year probable maximum loss attributable to wind-only

2948

coverages and the quota share program under this subsection

2949

combined, as compared to the benchmark 100-year probable maximum

2950

loss of the Florida Windstorm Underwriting Association. For

2951

purposes of this paragraph, the benchmark 100-year probable

2952

maximum loss of the Florida Windstorm Underwriting Association

2953

shall be the calculation dated February 2001 and based on

2954

November 30, 2000, exposures. In order to ensure comparability of

2955

data, the board shall use the same methods for calculating its

2956

probable maximum loss as were used to calculate the benchmark

2957

probable maximum loss.

2958

     2.  Beginning February 1, 2010, if the report under

2959

subparagraph 1. for any year indicates that the 100-year probable

2960

maximum loss attributable to wind-only coverages and the quota

2961

share program combined does not reflect a reduction of at least

2962

25 percent from the benchmark, the board shall reduce the

2963

boundaries of the high-risk area eligible for wind-only coverages

2964

under this subsection in a manner calculated to reduce such

2965

probable maximum loss to an amount at least 25 percent below the

2966

benchmark.

2967

     3.  Beginning February 1, 2015, if the report under

2968

subparagraph 1. for any year indicates that the 100-year probable

2969

maximum loss attributable to wind-only coverages and the quota

2970

share program combined does not reflect a reduction of at least

2971

50 percent from the benchmark, the boundaries of the high-risk

2972

area eligible for wind-only coverages under this subsection shall

2973

be reduced by the elimination of any area that is not seaward of

2974

a line 1,000 feet inland from the Intracoastal Waterway.

2975

     (y)  In enacting the provisions of this section, the

2976

Legislature recognizes that both the Florida Windstorm

2977

Underwriting Association and the Residential Property and

2978

Casualty Joint Underwriting Association have entered into

2979

financing arrangements that obligate each entity to service its

2980

debts and maintain the capacity to repay funds secured under

2981

these financing arrangements. It is the intent of the Legislature

2982

that nothing in this section be construed to compromise,

2983

diminish, or interfere with the rights of creditors under such

2984

financing arrangements. It is further the intent of the

2985

Legislature to preserve the obligations of the Florida Windstorm

2986

Underwriting Association and Residential Property and Casualty

2987

Joint Underwriting Association with regard to outstanding

2988

financing arrangements, with such obligations passing entirely

2989

and unchanged to the corporation and, specifically, to the

2990

applicable account of the corporation. So long as any bonds,

2991

notes, indebtedness, or other financing obligations of the

2992

Florida Windstorm Underwriting Association or the Residential

2993

Property and Casualty Joint Underwriting Association are

2994

outstanding, under the terms of the financing documents

2995

pertaining to them, the governing board of the corporation shall

2996

have and shall exercise the authority to levy, charge, collect,

2997

and receive all premiums, assessments, surcharges, charges,

2998

revenues, and receipts that the associations had authority to

2999

levy, charge, collect, or receive under the provisions of

3000

subsection (2) and this subsection, respectively, as they existed

3001

on January 1, 2002, to provide moneys, without exercise of the

3002

authority provided by this subsection, in at least the amounts,

3003

and by the times, as would be provided under those former

3004

provisions of subsection (2) or this subsection, respectively, so

3005

that the value, amount, and collectability of any assets,

3006

revenues, or revenue source pledged or committed to, or any lien

3007

thereon securing such outstanding bonds, notes, indebtedness, or

3008

other financing obligations will not be diminished, impaired, or

3009

adversely affected by the amendments made by this act and to

3010

permit compliance with all provisions of financing documents

3011

pertaining to such bonds, notes, indebtedness, or other financing

3012

obligations, or the security or credit enhancement for them, and

3013

any reference in this subsection to bonds, notes, indebtedness,

3014

financing obligations, or similar obligations, of the corporation

3015

shall include like instruments or contracts of the Florida

3016

Windstorm Underwriting Association and the Residential Property

3017

and Casualty Joint Underwriting Association to the extent not

3018

inconsistent with the provisions of the financing documents

3019

pertaining to them.

3020

     (z)  The corporation shall not require the securing of flood

3021

insurance as a condition of coverage if the insured or applicant

3022

executes a form approved by the office affirming that flood

3023

insurance is not provided by the corporation and that if flood

3024

insurance is not secured by the applicant or insured in addition

3025

to coverage by the corporation, the risk will not be covered for

3026

flood damage. A corporation policyholder electing not to secure

3027

flood insurance and executing a form as provided herein making a

3028

claim for water damage against the corporation shall have the

3029

burden of proving the damage was not caused by flooding.

3030

Notwithstanding other provisions of this subsection, the

3031

corporation may deny coverage to an applicant or insured who

3032

refuses to execute the form described herein.

3033

     (aa)  A salaried employee of the corporation who performs

3034

policy administration services subsequent to the effectuation of

3035

a corporation policy is not required to be licensed as an agent

3036

under the provisions of s. 626.112.

3037

     (bb)  By February 1, 2007, the corporation shall submit a

3038

report to the President of the Senate, the Speaker of the House

3039

of Representatives, the minority party leaders of the Senate and

3040

the House of Representatives, and the chairs of the standing

3041

committees of the Senate and the House of Representatives having

3042

jurisdiction over matters relating to property and casualty

3043

insurance. In preparing the report, the corporation shall consult

3044

with the Office of Insurance Regulation, the Department of

3045

Financial Services, and any other party the corporation

3046

determines appropriate. The report must include all findings and

3047

recommendations on the feasibility of requiring authorized

3048

insurers that issue and service personal and commercial

3049

residential policies and commercial nonresidential policies that

3050

provide coverage for basic property perils except for the peril

3051

of wind to issue and service for a fee personal and commercial

3052

residential policies and commercial nonresidential policies

3053

providing coverage for the peril of wind issued by the

3054

corporation. The report must include:

3055

     1.  The expense savings to the corporation of issuing and

3056

servicing such policies as determined by a cost-benefit analysis.

3057

     2.  The expenses and liability to authorized insurers

3058

associated with issuing and servicing such policies.

3059

     3.  The effect on service to policyholders of the

3060

corporation relating to issuing and servicing such policies.

3061

     4.  The effect on the producing agent of the corporation of

3062

issuing and servicing such policies.

3063

     5.  Recommendations as to the amount of the fee which should

3064

be paid to authorized insurers for issuing and servicing such

3065

policies.

3066

     6.  The effect that issuing and servicing such policies will

3067

have on the corporation's number of policies, total insured

3068

value, and probable maximum loss.

3069

     (cc)  There shall be no liability on the part of, and no

3070

cause of action of any nature shall arise against, producing

3071

agents of record of the corporation or employees of such agents

3072

for insolvency of any take-out insurer.

3073

     (dd)1. For policies subject to nonrenewal as a result of

3074

the risk being no longer eligible for coverage due to being

3075

valued at $1 million or more, the corporation shall, directly or

3076

through the market assistance plan, make information from

3077

confidential underwriting and claims files of policyholders

3078

available only to licensed general lines agents who register with

3079

the corporation to receive such information according to the

3080

following procedures:

3081

     2. By August 1, 2006, the corporation shall provide such

3082

policyholders who are not eligible for renewal the opportunity to

3083

request in writing, within 30 days after the notification is

3084

sent, that information from their confidential underwriting and

3085

claims files not be released to licensed general lines agents

3086

registered pursuant to this paragraph.

3087

     3. By August 1, 2006, the corporation shall make available

3088

to licensed general lines agents the registration procedures to

3089

be used to obtain confidential information from underwriting and

3090

claims files for such policies not eligible for renewal. As a

3091

condition of registration, the corporation shall require the

3092

licensed general lines agent to attest that the agent has the

3093

experience and relationships with authorized or surplus lines

3094

carriers to attempt to offer replacement coverage for such

3095

policies.

3096

     4. By September 1, 2006, the corporation shall make

3097

available through a secured website to licensed general lines

3098

agents registered pursuant to this paragraph application, rating,

3099

loss history, mitigation, and policy type information relating to

3100

such policies not eligible for renewal and for which the

3101

policyholder has not requested the corporation withhold such

3102

information. The registered licensed general lines agent may use

3103

such information to contact and assist the policyholder in

3104

securing replacement policies, and the agent may disclose to the

3105

policyholder that such information was obtained from the

3106

corporation.

3107

     (dd)(ee) The assets of the corporation may be invested and

3108

managed by the State Board of Administration.

3109

     (ee)(ff) The office may establish a pilot program to offer

3110

optional sinkhole coverage in one or more counties or other

3111

territories of the corporation for the purpose of implementing s.

3112

627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.

3113

Under the pilot program, the corporation is not required to issue

3114

a notice of nonrenewal to exclude sinkhole coverage upon the

3115

renewal of existing policies, but may exclude such coverage using

3116

a notice of coverage change.

3117

     Section 16.  Effective October 1, 2008, and applicable to

3118

policies issued or renewed on or after that date, section

3119

627.714, Florida Statutes, is created to read:

3120

     627.714 Guaranteed renewability for mitigated homes.--A

3121

personal lines residential insurance policy shall be guaranteed

3122

renewable for at least 3 years if the dwelling has been built or

3123

retrofitted to meet the wind-borne-debris protection requirements

3124

of Florida Building Code which apply to the wind-borne-debris

3125

region as defined in the Florida Building Code.

3126

     Section 17.  Effective January 1, 2009, section 689.262,

3127

Florida Statutes, is created to read:

3128

     689.262 Sale of residential property; disclosure of

3129

windstorm mitigation rating.--A purchaser of residential property

3130

must be informed of the windstorm mitigation rating of the

3131

structure, based on the uniform home grading scale adopted

3132

pursuant to s. 215.55865. The rating must be included in the

3133

contract for sale or as a separate document attached to the

3134

contract for sale. The Financial Services Commission may adopt

3135

rules, consistent with other state laws, to administer this

3136

section, including the form of the disclosure and the

3137

requirements for the windstorm mitigation inspection or report

3138

that is required for purposes of determining the rating.

3139

     Section 18. Effective October 1, 2008, section 817.2341,

3140

Florida Statutes, is amended to read:

3141

     817.2341  False or misleading statements or supporting

3142

documents; corrupt obstruction of the lawful regulation of

3143

insurance; penalty.--

3144

     (1)  Any person who willfully files with the department or

3145

office, or who willfully signs for filing with the department or

3146

office, a materially false or materially misleading financial

3147

statement or document in support of such statement required by

3148

law or rule, or a materially false or materially misleading rate

3149

filing, with intent to deceive and with knowledge that the

3150

statement or document is materially false or materially

3151

misleading, commits a felony of the third degree, punishable as

3152

provided in s. 775.082, s. 775.083, or s. 775.084.

3153

     (2)(a)  Any person who makes a false entry of a material

3154

fact in any book, report, or statement relating to a transaction

3155

of an insurer or entity organized pursuant to chapter 624 or

3156

chapter 641, intending to deceive any person about the financial

3157

condition or solvency of the insurer or entity, commits a felony

3158

of the third degree, punishable as provided in s. 775.082, s.

3159

775.083, or s. 775.084.

3160

     (b)  If the false entry of a material fact is made with the

3161

intent to deceive any person as to the impairment of capital, as

3162

defined in s. 631.011(12), of the insurer or entity or is the

3163

significant cause of the insurer or entity being placed in

3164

conservation, rehabilitation, or liquidation by a court, the

3165

person commits a felony of the first degree, punishable as

3166

provided in s. 775.082, s. 775.083, or s. 775.084.

3167

     (3)(a)  Any person who knowingly makes a material false

3168

statement or report to the department or office or any agent of

3169

the department or office, or knowingly and materially overvalues

3170

any property in any document or report prepared to be presented

3171

to the department or office or any agent of the department or

3172

office, commits a felony of the third degree, punishable as

3173

provided in s. 775.082, s. 775.083, or s. 775.084.

3174

     (b)  If the material false statement or report or the

3175

material overvaluation is made with the intent to deceive any

3176

person as to the impairment of capital, as defined in s.

3177

631.011(12), of an insurer or entity organized pursuant to

3178

chapter 624 or chapter 641, or is the significant cause of the

3179

insurer or entity being placed in receivership by a court, the

3180

person commits a felony of the first degree, punishable as

3181

provided in s. 775.082, s. 775.083, or s. 775.084.

3182

     (4) Any person who attempts to corruptly influence,

3183

obstruct, or impede the lawful regulation of the business of

3184

insurance by the department or office, or by any agent or

3185

examiner appointed by the department or office, commits a felony

3186

of the third degree, punishable as provided in s. 775.082, s.

3187

775.083, or s. 775.084.

3188

     Section 19.  Except as otherwise expressly provided in this

3189

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

3190

3191

================ T I T L E  A M E N D M E N T ================

3192

And the title is amended as follows:

3193

     Delete everything before the enacting clause

3194

and insert:

3195

A bill to be entitled

3196

An act relating to insurance; amending s. 215.5595, F.S.;

3197

revising legislative findings with respect to the

3198

Insurance Capital Build-Up Incentive Program and the

3199

appropriation of state funds for surplus notes issued by

3200

residential property insurers; revising the conditions and

3201

requirements for providing funds to insurers under the

3202

program; requiring a commitment by the insurer to meet

3203

minimum premium-to-surplus writing ratios for residential

3204

property insurance and for taking policies out of Citizens

3205

Property Insurance Corporation; allowing the State Board

3206

of Administration to charge a late fee for payment of

3207

remittances; providing that amendments made by the act do

3208

not affect the terms of surplus notes approved prior to a

3209

specified date, but authorizing the board and an insurer

3210

to renegotiate such terms consistent with such amendments;

3211

amending s. 542.20, F.S.; subjecting the business of

3212

insurance to the Florida Antitrust Act; providing

3213

exceptions; amending s. 624.3161, F.S.; authorizing the

3214

Office of Insurance Regulation to require an insurer to

3215

file its claims handling practices and procedures as a

3216

public record based on findings of a market conduct

3217

examination; amending s. 624.418, F.S.; authorizing the

3218

Office of Insurance Regulation to immediately suspend the

3219

certificate of authority of an insurer that fails to

3220

provide information subpoenaed by the office; amending s.

3221

624.4211, F.S.; increasing the maximum amounts of

3222

administrative fines that may be imposed upon an insurer

3223

by the Office of Insurance Regulation for nonwillful and

3224

willful violations of an order or rule of the office or

3225

any provision of the Florida Insurance Code; authorizing

3226

the office to impose a fine for each day of noncompliance

3227

up to a maximum amount; providing factors to consider when

3228

determining the amount of the fine; creating s. 624.4213,

3229

F.S.; specifying requirements for submission of a document

3230

or information to the Office of Insurance Regulation or

3231

the Department of Financial Services in order for a person

3232

to claim that the document is a trade secret; requiring

3233

each page or portion to be labeled as a trade secret and

3234

be separated from non-trade secret material; requiring the

3235

submitting party to include an affidavit certifying

3236

certain information about the documents claimed to be

3237

trade secrets; requiring an award of attorney's fees

3238

against a person who certified a document as trade secret

3239

if a court or administrative tribunal finds that the

3240

document is not a trade secret; providing for

3241

administrative penalties under certain conditions;

3242

creating s. 624.4305, F.S.; requiring an insurer planning

3243

to nonrenew more than a specified number of residential

3244

property insurance polices to notify the Office of

3245

Insurance Regulation and obtain approval; specifying

3246

procedures; prohibiting the office from approving the plan

3247

unless it determines that the insurer has met certain

3248

conditions; amending s. 626.9521, F.S.; increasing the

3249

maximum fines that may be imposed by the office for

3250

nonwillful and willful violations of state law regarding

3251

unfair methods of competition and unfair or deceptive acts

3252

or practices related to insurance; amending s. 626.9541,

3253

F.S.; prohibiting an insurer from failing to promptly

3254

provide to the insured estimates of damage and a good

3255

faith explanation of the insurer's evaluation; prohibiting

3256

an insurer from considering certain factors when

3257

evaluating or adjusting a property insurance claim;

3258

prohibiting an insurer from failing to pay undisputed

3259

amounts of benefits owed under a property insurance policy

3260

within a certain period; amending s. 627.062, F.S.;

3261

requiring that an insurer seeking a rate for property

3262

insurance that is greater than the rate most recently

3263

approved by the Office of Insurance Regulation make a

3264

"file and use" filing for all such rate filings made after

3265

a specified date; revising the factors the office must

3266

consider in reviewing a rate filing; providing that the

3267

cost of reinsurance shall be presumed excessive under

3268

certain conditions and, for reinsurance purchased from

3269

affiliated reinsurers, may not include broker fees;

3270

providing that projected hurricane losses are to be

3271

considered as provided in s. 627.0628, F.S., relating to

3272

hurricane loss models or methods found to be accurate or

3273

reliable by the Florida Commission on Hurricane Loss

3274

Projection Methodology; allowing the office to disapprove

3275

a rate as excessive within 1 year after the rate has been

3276

approved under certain conditions related to nonrenewal of

3277

policies by the insurer; requiring certain officers and

3278

the chief actuary of a property insurer to certify certain

3279

information as part of a rate filing, subject to the

3280

penalty of perjury; requiring that a rate filing contain

3281

all information that supports the filing; providing that

3282

after the office issues a notice of intent to disapprove

3283

the filing, no additional information is admissible in any

3284

subsequent administrative or judicial proceeding;

3285

repealing s. 627.062(6), F.S., relating to the submission

3286

of a disputed rate filing, other than a rate filing for

3287

medical malpractice insurance, to an arbitration panel in

3288

lieu of an administrative hearing if the rate is filed

3289

before a specified date; amending s. 627.0613, F.S.;

3290

deleting cross-references to conform to changes made by

3291

the act; amending s. 627.0628, F.S.; requiring that with

3292

respect to rate filings, insurers must use actuarial

3293

methods or models found to be accurate or reliable by the

3294

Florida Commission on Hurricane Loss Projection

3295

Methodology; deleting cross-references to conform to

3296

changes made by the act; amending s. 627.0629, F.S.;

3297

requiring that the Office of Insurance Regulation develop

3298

and make publicly available before a specified deadline a

3299

proposed method for insurers to establish windstorm

3300

mitigation premium discounts that correlate to the uniform

3301

home rating scale; requiring that the Financial Services

3302

Commission adopt rules before a specified deadline;

3303

requiring insurers to make rate filings pursuant to such

3304

method; authorizing the commission to make changes by rule

3305

to the uniform home grading scale and specify by rule the

3306

minimum required discounts, credits, or other rate

3307

differentials; requiring that such rate differentials be

3308

consistent with generally accepted actuarial principles

3309

and wind loss mitigation studies; amending s. 627.351,

3310

F.S., relating to Citizens Property Insurance Corporation;

3311

deleting a provision to conform to changes made in the

3312

act; deleting provisions defining the terms "homestead

3313

property" and "nonhomestead property"; deleting a

3314

provision providing for the classification of certain

3315

dwellings as "nonhomestead property"; deleting provisions

3316

making dwellings and condominium units that have a

3317

replacement cost above a specified value ineligible for

3318

coverage after a specified date; requiring certain

3319

structures to have opening protections as a condition of

3320

eligibility for coverage after a specified date; requiring

3321

that the corporation cease issuance of new wind-only

3322

coverage beginning on a specified date; deleting outdated

3323

provisions requiring the corporation to submit a report

3324

for approval of offering multiperil coverage; revising

3325

threshold amounts of deficits incurred in a calendar year

3326

on which the decision to levy assessments and the types of

3327

such assessments are based; revising the formula used to

3328

calculate shares of assessments owed by certain assessable

3329

insureds; requiring that the board of governors make

3330

certain determinations before levying emergency

3331

assessments; providing the board of governors with

3332

discretion to set the amount of an emergency assessment

3333

within specified limits; requiring the board of governors

3334

to levy a Citizens policyholder surcharge under certain

3335

conditions; deleting a provision requiring the levy of an

3336

immediate assessment against certain policyholders under

3337

such conditions; requiring that funds collected from the

3338

levy of such surcharges be used for certain purposes;

3339

providing that such surcharges are not considered premium

3340

and are not subject to commissions, fees, or premium

3341

taxes; requiring that the failure to pay such surcharges

3342

be treated as failure to pay premium; requiring that the

3343

amount of any assessment or surcharge which exceeds the

3344

amount of deficits be remitted to and used by the

3345

corporation for specified purposes; deleting provisions

3346

requiring that the plan of operation of the corporation

3347

provide for the levy of a Citizens policyholder surcharge

3348

if regular deficit assessments are levied as a result of

3349

deficits in certain accounts; deleting provisions related

3350

to the calculation, classification, and nonpayment of such

3351

surcharge; providing legislative findings; requiring that

3352

the corporation make an annual filing for each personal or

3353

commercial line of business it writes, beginning on a

3354

specified date; limiting the overall average statewide

3355

premium increase and the increase for an individual

3356

policyholder to a specified amount for rates established

3357

for certain policies during a specified period; deleting a

3358

provision requiring an insurer to purchase bonds that

3359

remain unsold; requiring the corporation to make its

3360

database of policies available to prospective take-out

3361

insurers under certain conditions; requiring the

3362

corporation to require agents to accept or decline

3363

appointment for any policy selected; requiring the

3364

corporation to notify the policyholder of certain

3365

information if an insurer selected his or her policy for a

3366

take-out offer but the policyholder's agent refused to be

3367

appointed; deleting provisions requiring the corporation

3368

to make certain confidential underwriting and claims files

3369

available to agents to conform to changes made by the act

3370

relating to ineligibility of certain dwellings; creating

3371

s. 627.714, F.S.; requiring that personal lines

3372

residential policies be guaranteed renewable for a

3373

specified period if the dwelling meets certain wind-borne-

3374

debris protection requirements; providing for

3375

applicability; creating s. 689.262, F.S.; requiring a

3376

purchaser of residential property to be presented with the

3377

windstorm mitigation rating of the structure; authorizing

3378

the Financial Services Commission to adopt rules; amending

3379

s. 817.2341, F.S.; providing criminal penalties for any

3380

person who willfully files a materially false or

3381

misleading rate filing, under certain conditions, and for

3382

any person who attempts to corruptly influence or obstruct

3383

the lawful regulation of the business of insurance;

3384

providing effective dates.

3/23/2008  12:46:00 PM     597-05571-08

CODING: Words stricken are deletions; words underlined are additions.

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