September 24, 2020
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Bill No. CS/CS/SB 2860
Amendment No. 275103
Senate House

1Representatives Gelber and Taylor offered the following:
3     Amendment to Amendment (439287) (with title amendment)
4     Between lines 2452 and 2453, insert:
5     Section 22.  Effective June 1, 2009, paragraph (h) is added
6to subsection (1) of section 215.555, Florida Statutes,
7paragraphs (a), (c), and (e) of subsection (2), subsection (3),
8paragraph (c) of subsection (4), and paragraphs (a) and (b) of
9subsection (6) of that section are amended, and subsection (18)
10is added to that section, to read:
11     215.555  Florida Hurricane Catastrophe Fund.--
12     (1)  FINDINGS AND PURPOSE.--The Legislature finds and
13declares as follows:
14     (h)1.  The Legislature further finds that, as of January
152008, more than 15 years of efforts to use state regulatory,
16financial, and insurance mechanisms to ensure availability and
17affordability of residential property insurance coverage have
18failed to satisfactorily achieve these goals.
19     2.  The continuing lack of available, affordable coverage
20creates a substantial burden on the state's economy.
21     3.  The unsatisfactory performance of a system intended to
22provide available, affordable coverage for windstorm losses in
23this state indicates that, in light of this state's unique
24exposure to windstorm losses, windstorm may be an uninsurable
25peril in all or parts of this state as the concept of
26insurability is commonly understood. Therefore, a restructured
27system of protecting homeowners from windstorm losses is
28necessary to maintain the viability of the economy of this
30     (2)  DEFINITIONS.--As used in this section:
31     (a)  "Actuarially indicated" means, with respect to
32premiums paid by insurers for reimbursement provided by the fund
33under subsection (4) and premiums paid by insureds for windstorm
34coverage provided under subsection (18), an amount determined
35according to principles of actuarial science to be adequate, but
36not excessive, in the aggregate, to pay current and future
37obligations and expenses of the fund, including additional
38amounts if needed to pay debt service on revenue bonds issued
39under this section and to provide required debt service coverage
40in excess of the amounts required to pay actual debt service on
41revenue bonds issued under subsection (6), and:
42     1.  With respect to premiums paid by insurers for
43reimbursement under subsection (4), determined according to
44principles of actuarial science to reflect each insurer's
45relative exposure to hurricane losses; or
46     2.  With respect to premiums paid by insureds for windstorm
47coverage under subsection (18), determined according to
48principles of actuarial science to reflect each insured's
49relative exposure to windstorm losses.
50     (c)  "Covered policy" means any insurance policy covering
51residential property in this state, including, but not limited
52to, any homeowner's, mobile home owner's, farm owner's,
53condominium association, condominium unit owner's, tenant's, or
54apartment building policy, or any other policy covering a
55residential structure or its contents issued by any authorized
56insurer, including a commercial self-insurance fund holding a
57certificate of authority issued by the Office of Insurance
58Regulation under s. 624.462, the Citizens Property Insurance
59Corporation, and any joint underwriting association or similar
60entity created under law. The term "covered policy" includes any
61collateral protection insurance policy covering personal
62residences which protects both the borrower's and the lender's
63financial interests, in an amount at least equal to the coverage
64for the dwelling in place under the lapsed homeowner's policy,
65if such policy can be accurately reported as required in
66subsection (5). Additionally, covered policies include policies
67covering the peril of wind removed from the Florida Residential
68Property and Casualty Joint Underwriting Association or from the
69Citizens Property Insurance Corporation, created under s.
70627.351(6), or from the Florida Windstorm Underwriting
71Association, created under s. 627.351(2), by an authorized
72insurer under the terms and conditions of an executed assumption
73agreement between the authorized insurer and such association or
74Citizens Property Insurance Corporation. Each assumption
75agreement between the association and such authorized insurer or
76Citizens Property Insurance Corporation must be approved by the
77Office of Insurance Regulation before the effective date of the
78assumption, and the Office of Insurance Regulation must provide
79written notification to the board within 15 working days after
80such approval. "Covered policy" does not include any policy that
81excludes wind coverage or hurricane coverage or any reinsurance
82agreement and does not include any policy otherwise meeting this
83definition which is issued by a surplus lines insurer or a
84reinsurer. All commercial residential excess policies and all
85deductible buy-back policies that, based on sound actuarial
86principles, require individual ratemaking shall be excluded by
87rule if the actuarial soundness of the fund is not jeopardized.
88For this purpose, the term "excess policy" means a policy that
89provides insurance protection for large commercial property
90risks and that provides a layer of coverage above a primary
91layer insured by another insurer. Effective June 1, 2010, the
92term "covered policy" does not include any policy providing
93personal lines residential property insurance coverage as
94defined in subsection (18).
95     (e)  "Retention" means the amount of losses below which an
96insurer is not entitled to reimbursement from the fund. An
97insurer's retention shall be calculated as follows:
98     1.  The board shall calculate and report to each insurer
99the retention multiples for that year. For the contract year
100beginning June 1, 2005, the retention multiple shall be equal to
101$4.5 billion divided by the total estimated reimbursement
102premium for the contract year; for the contract year beginning
103June 1, 2006, through the contract year beginning June 1, 2009
104subsequent years, the retention multiple shall be equal to $4.5
105billion, adjusted based upon the reported exposure from the
106prior contract year to reflect the percentage growth in exposure
107to the fund for covered policies since 2004, divided by the
108total estimated reimbursement premium for the contract year. For
109the contract year beginning June 1, 2010, the retention multiple
110shall be equal to $1 billion divided by the total estimated
111reimbursement premium for the contract year; for subsequent
112years, the retention multiple shall be equal to $1 billion,
113adjusted based upon the reported exposure from the prior
114contract year to reflect the percentage growth in exposure to
115the fund for covered policies since 2009, divided by the total
116estimated reimbursement premium for the contract year. Total
117reimbursement premium for purposes of the calculation under this
118subparagraph shall be estimated using the assumption that all
119insurers have selected the 90-percent coverage level.
120     2.  The retention multiple as determined under subparagraph
1211. shall be adjusted to reflect the coverage level elected by
122the insurer. For insurers electing the 90-percent coverage
123level, the adjusted retention multiple is 100 percent of the
124amount determined under subparagraph 1. For insurers electing
125the 75-percent coverage level, the retention multiple is 120
126percent of the amount determined under subparagraph 1. For
127insurers electing the 45-percent coverage level, the adjusted
128retention multiple is 200 percent of the amount determined under
129subparagraph 1.
130     3.  An insurer shall determine its provisional retention by
131multiplying its provisional reimbursement premium by the
132applicable adjusted retention multiple and shall determine its
133actual retention by multiplying its actual reimbursement premium
134by the applicable adjusted retention multiple.
135     4.  For insurers who experience multiple covered events
136causing loss during the contract year, beginning June 1, 2005,
137each insurer's full retention shall be applied to each of the
138covered events causing the two largest losses for that insurer.
139For each other covered event resulting in losses, the insurer's
140retention shall be reduced to one-third of the full retention.
141The reimbursement contract shall provide for the reimbursement
142of losses for each covered event based on the full retention
143with adjustments made to reflect the reduced retentions after
144January 1 of the contract year provided the insurer reports its
145losses as specified in the reimbursement contract.
147created the Florida Hurricane Catastrophe Fund to be
148administered by the State Board of Administration. Moneys in the
149fund may not be expended, loaned, or appropriated except to pay
150obligations of the fund arising out of reimbursement contracts
151entered into under subsection (4), payment of debt service on
152revenue bonds issued under subsection (6), costs of the
153mitigation program under subsection (7), costs of procuring
154reinsurance, costs of the Florida Windstorm Insurance Program
155under subsection (18), and costs of administration of the fund.
156The board shall invest the moneys in the fund pursuant to ss.
157215.44-215.52. Except as otherwise provided in this section,
158earnings from all investments shall be retained in the fund. The
159board may employ or contract with such staff and professionals
160as the board deems necessary for the administration of the fund.
161The board may adopt such rules as are reasonable and necessary
162to implement this section and shall specify interest due on any
163delinquent remittances, which interest may not exceed the fund's
164rate of return plus 5 percent. Such rules must conform to the
165Legislature's specific intent in establishing the fund as
166expressed in subsection (1), must enhance the fund's potential
167ability to respond to claims for covered events, must contain
168general provisions so that the rules can be applied with
169reasonable flexibility so as to accommodate insurers in
170situations of an unusual nature or where undue hardship may
171result, except that such flexibility may not in any way impair,
172override, supersede, or constrain the public purpose of the
173fund, and must be consistent with sound insurance practices. The
174board may, by rule, provide for the exemption from subsections
175(4) and (5) of insurers writing covered policies with less than
176$10 million in aggregate exposure for covered policies if the
177exemption does not affect the actuarial soundness of the fund.
179     (c)1.a.  The contract shall also provide that the
180obligation of the board with respect to all contracts covering a
181particular contract year shall not exceed the actual claims-
182paying capacity of the fund up to a limit of $15 billion for
183that contract year adjusted based upon the reported exposure
184from the prior contract year to reflect the percentage growth in
185exposure to the fund for covered policies since 2003, provided
186the dollar growth in the limit may not increase in any year by
187an amount greater than the dollar growth of the balance of the
188fund as of December 31, less any premiums or interest
189attributable to optional coverage, as defined by rule which
190occurred over the prior calendar year. This sub-subparagraph
191expires June 1, 2010.
192     b.  For the contract year beginning June 1, 2010, and
193subsequent contract years, the contract shall provide that the
194obligation of the board with respect to all reimbursement
195contracts covering a particular contract year shall not exceed
196$3 billion for that contract year plus an adjustment based upon
197the reported exposure from the prior contract year to reflect
198the percentage growth in exposure of the fund for commercial
199lines residential policies since 2009.
200     2.  In May before the start of the upcoming contract year
201and in October during the contract year, the board shall publish
202in the Florida Administrative Weekly a statement of the fund's
203estimated borrowing capacity and the projected balance of the
204fund as of December 31. After the end of each calendar year, the
205board shall notify insurers of the estimated borrowing capacity
206and the balance of the fund as of December 31 to provide
207insurers with data necessary to assist them in determining their
208retention and projected payout from the fund for loss
209reimbursement purposes. In conjunction with the development of
210the premium formula, as provided for in subsection (5), the
211board shall publish factors or multiples that assist insurers in
212determining their retention and projected payout for the next
213contract year. For all regulatory and reinsurance purposes, an
214insurer may calculate its projected payout from the fund as its
215share of the total fund premium for the current contract year
216multiplied by the sum of the projected balance of the fund as of
217December 31 and the estimated borrowing capacity for that
218contract year as reported under this subparagraph.
219     (6)  REVENUE BONDS.--
220     (a)  General provisions.--
221     1.  Upon the occurrence of a hurricane and a determination
222that the moneys in the fund are or will be insufficient to pay
223reimbursement at the levels promised in the reimbursement
224contracts, the board may take the necessary steps under
225paragraph (c) or paragraph (d) for the issuance of revenue bonds
226for the benefit of the fund. The proceeds of such revenue bonds
227may be used to make reimbursement payments under reimbursement
228contracts; to refinance or replace previously existing
229borrowings or financial arrangements; to pay interest on bonds;
230to fund reserves for the bonds; to pay expenses incident to the
231issuance or sale of any bond issued under this section,
232including costs of validating, printing, and delivering the
233bonds, costs of printing the official statement, costs of
234publishing notices of sale of the bonds, and related
235administrative expenses; or for such other purposes related to
236the financial obligations of the fund as the board may
237determine. The term of the bonds may not exceed 30 years. The
238board may pledge or authorize the corporation to pledge all or a
239portion of all revenues under subsection (5) and under paragraph
240(b) to secure such revenue bonds and the board may execute such
241agreements between the board and the issuer of any revenue bonds
242and providers of other financing arrangements under paragraph
243(7)(b) as the board deems necessary to evidence, secure,
244preserve, and protect such pledge. If reimbursement premiums
245received under subsection (5) or earnings on such premiums are
246used to pay debt service on revenue bonds, such premiums and
247earnings shall be used only after the use of the moneys derived
248from assessments under paragraph (b). The funds, credit,
249property, or taxing power of the state or political subdivisions
250of the state shall not be pledged for the payment of such bonds.
251The board may also enter into agreements under paragraph (c) or
252paragraph (d) for the purpose of issuing revenue bonds in the
253absence of a hurricane upon a determination that such action
254would maximize the ability of the fund to meet future
256     2.  The Legislature finds and declares that the issuance of
257bonds under this subsection is for the public purpose of paying
258the proceeds of the bonds to insurers as required by the
259contracts entered into under subsection (4), thereby enabling
260insurers to pay the claims of policyholders to assure that
261policyholders are able to pay the cost of construction,
262reconstruction, repair, and restoration, and other costs
263associated with damage to property of policyholders of covered
264policies after the occurrence of a hurricane, and for the public
265purpose of paying claims of policyholders under subsection (18)
266to ensure that policyholders are able to pay the costs of
267construction, reconstruction, repair, and restoration and other
268costs associated with damage to their property after a hurricane
269or other windstorm.
270     (b)  Emergency assessments.--
271     1.a.  If the board determines that the amount of revenue
272produced under subsections subsection (5) and (18) is
273insufficient to fund the obligations, costs, and expenses of the
274fund and the corporation, including repayment of revenue bonds
275and that portion of the debt service coverage not met by
276reimbursement premiums, the board shall direct the Office of
277Insurance Regulation to levy, by order, an emergency assessment
278on direct premiums for all property and casualty lines of
279business in this state, including property and casualty business
280of surplus lines insurers regulated under part VIII of chapter
281626, but not including any workers' compensation premiums or
282medical malpractice premiums. As used in this subsection, the
283term "property and casualty business" includes all lines of
284business identified on Form 2, Exhibit of Premiums and Losses,
285in the annual statement required of authorized insurers by s.
286624.424 and any rule adopted under this section, except for
287those lines identified as accident and health insurance and
288except for policies written under the National Flood Insurance
289Program. The assessment shall be specified as a percentage of
290direct written premium and is subject to annual adjustments by
291the board in order to meet debt obligations. The same percentage
292shall apply to all policies in lines of business subject to the
293assessment issued or renewed during the 12-month period
294beginning on the effective date of the assessment. This sub-
295subparagraph expires June 1, 2010; however, the expiration of
296this sub-subparagraph does not affect any assessments levied
297under this sub-subparagraph prior to that date.
298     b.  Effective June 1, 2010, if the board determines that
299the amount of revenue produced under subsections (5) and (18) is
300insufficient to fund the obligations, costs, and expenses of the
301fund and the corporation, including repayment of revenue bonds
302and that portion of the debt service coverage not met by
303reimbursement premiums, the board shall direct the Office of
304Insurance Regulation to levy, by order, an emergency assessment
305on direct premiums for all personal lines and commercial lines
306policies providing property insurance coverage, including
307policies issued by the Florida Windstorm Insurance Program under
308subsection (18). The assessment shall be specified as a
309percentage of direct written premium and is subject to annual
310adjustments by the board in order to meet debt obligations. The
311same percentage shall apply to all policies in lines of business
312subject to the assessment issued or renewed during the 12-month
313period beginning on the effective date of the assessment. An
314insurer that is not a participating insurer within the meaning
315provided in subsection (18) may not be assessed under this sub-
316subparagraph to fund the obligations, costs, and expenses of the
317Florida Windstorm Insurance Program.
318     2.a.  A premium is not subject to an annual assessment
319under this paragraph in excess of 6 percent of premium with
320respect to obligations arising out of losses attributable to any
321one contract year, and a premium is not subject to an aggregate
322annual assessment under this paragraph in excess of 10 percent
323of premium. This sub-subparagraph expires June 1, 2010; however,
324the expiration of this sub-subparagraph does not affect any
325assessments levied under this sub-subparagraph prior to that
327     b.  Effective June 1, 2010, the total amount of emergency
328assessments under this paragraph with respect to any year may
329not exceed 10 percent of the statewide total gross written
330premium for all insurers for personal lines and commercial lines
331policies providing property insurance coverage, including
332policies issued by the Florida Windstorm Insurance Program under
333subsection (18), for the prior year. However, if the fund
334deficit with respect to any year exceeds such amount and bonds
335are issued to defray the deficit, the total amount of emergency
336assessments with respect to such deficit may not in any year
337exceed 10 percent of the deficit or such lesser percentage as is
338sufficient to retire the bonds as determined by the board.
339     c.  An annual assessment under this paragraph shall
340continue as long as the revenue bonds issued with respect to
341which the assessment was imposed are outstanding, including any
342bonds the proceeds of which were used to refund the revenue
343bonds, unless adequate provision has been made for the payment
344of the bonds under the documents authorizing issuance of the
346     3.  Emergency assessments shall be collected from
347policyholders. Emergency assessments shall be remitted by
348insurers as a percentage of direct written premium for the
349preceding calendar quarter as specified in the order from the
350Office of Insurance Regulation. The office shall verify the
351accurate and timely collection and remittance of emergency
352assessments and shall report the information to the board in a
353form and at a time specified by the board. Each insurer
354collecting assessments shall provide the information with
355respect to premiums and collections as may be required by the
356office to enable the office to monitor and verify compliance
357with this paragraph.
358     4.  With respect to assessments of surplus lines premiums,
359each surplus lines agent shall collect the assessment at the
360same time as the agent collects the surplus lines tax required
361by s. 626.932, and the surplus lines agent shall remit the
362assessment to the Florida Surplus Lines Service Office created
363by s. 626.921 at the same time as the agent remits the surplus
364lines tax to the Florida Surplus Lines Service Office. The
365emergency assessment on each insured procuring coverage and
366filing under s. 626.938 shall be remitted by the insured to the
367Florida Surplus Lines Service Office at the time the insured
368pays the surplus lines tax to the Florida Surplus Lines Service
369Office. The Florida Surplus Lines Service Office shall remit the
370collected assessments to the fund or corporation as provided in
371the order levied by the Office of Insurance Regulation. The
372Florida Surplus Lines Service Office shall verify the proper
373application of such emergency assessments and shall assist the
374board in ensuring the accurate and timely collection and
375remittance of assessments as required by the board. The Florida
376Surplus Lines Service Office shall annually calculate the
377aggregate written premium on property and casualty business,
378other than workers' compensation and medical malpractice,
379procured through surplus lines agents and insureds procuring
380coverage and filing under s. 626.938 and shall report the
381information to the board in a form and at a time specified by
382the board.
383     5.  Any assessment authority not used for a particular
384contract year may be used for a subsequent contract year. If,
385for a subsequent contract year, the board determines that the
386amount of revenue produced under subsection (5) is insufficient
387to fund the obligations, costs, and expenses of the fund and the
388corporation, including repayment of revenue bonds and that
389portion of the debt service coverage not met by reimbursement
390premiums, the board shall direct the Office of Insurance
391Regulation to levy an emergency assessment up to an amount not
392exceeding the amount of unused assessment authority from a
393previous contract year or years, plus an additional 4 percent
394provided that the assessments in the aggregate do not exceed the
395limits specified in subparagraph 2. This subparagraph expires
396June 1, 2010; however, the expiration of this subparagraph does
397not affect any assessments levied under this subparagraph prior
398to that date.
399     6.  The assessments otherwise payable to the corporation
400under this paragraph shall be paid to the fund unless and until
401the Office of Insurance Regulation and the Florida Surplus Lines
402Service Office have received from the corporation and the fund a
403notice, which shall be conclusive and upon which they may rely
404without further inquiry, that the corporation has issued bonds
405and the fund has no agreements in effect with local governments
406under paragraph (c). On or after the date of the notice and
407until the date the corporation has no bonds outstanding, the
408fund shall have no right, title, or interest in or to the
409assessments, except as provided in the fund's agreement with the
411     7.  Emergency assessments are not premium and are not
412subject to the premium tax, to the surplus lines tax, to any
413fees, or to any commissions. An insurer is liable for all
414assessments that it collects and must treat the failure of an
415insured to pay an assessment as a failure to pay the premium. An
416insurer is not liable for uncollectible assessments.
417     8.  When an insurer is required to return an unearned
418premium, it shall also return any collected assessment
419attributable to the unearned premium. A credit adjustment to the
420collected assessment may be made by the insurer with regard to
421future remittances that are payable to the fund or corporation,
422but the insurer is not entitled to a refund.
423     9.  When a surplus lines insured or an insured who has
424procured coverage and filed under s. 626.938 is entitled to the
425return of an unearned premium, the Florida Surplus Lines Service
426Office shall provide a credit or refund to the agent or such
427insured for the collected assessment attributable to the
428unearned premium prior to remitting the emergency assessment
429collected to the fund or corporation.
430     10.  The exemption of medical malpractice insurance
431premiums from emergency assessments under this paragraph is
432repealed May 31, 2010, and medical malpractice insurance
433premiums shall be subject to emergency assessments attributable
434to loss events occurring in the contract years commencing on
435June 1, 2010.
437     (a)  Creation; purpose.--The Florida Windstorm Insurance
438Program is created within the Florida Hurricane Catastrophe
439Fund. The purpose of the program is to provide personal lines
440residential windstorm insurance coverage for properties
441throughout the state.
442     (b)  Definitions.--The definitions in subsection (2) apply
443to the program, except as modified by this paragraph. As used in
444this subsection:
445     1.  "Board" means the State Board of Administration.
446     2.  "Participating insurer" means an insurer providing
447personal lines residential property insurance coverage for
448nonwindstorm perils that administers windstorm coverage on
449behalf of the program.
450     3.  "Personal lines residential property insurance
451coverage" consists of the type of coverage provided by
452homeowner's, mobile home owner's, dwelling, tenant's,
453condominium unit owner's, cooperative unit owner's, and similar
454policies. The term "personal lines residential property
455insurance coverage" does not include the type of coverage
456provided by condominium association, cooperative association,
457apartment building, and similar policies, including policies
458covering the common elements of a homeowners' association.
459     4.  "Program" means the Florida Windstorm Insurance Program
460created under this subsection.
461     5.  "Windstorm coverage" means coverage for loss or damage
462to personal lines residential property caused by wind, wind
463gusts, hail, rain, tornadoes, cyclones, tropical storms, or
464hurricanes. The term "windstorm coverage" does not include
465coverage for loss or damage to residential property caused by
466flood, storm surge, or rising water.
467     (c)  Coverage provided; standards; policy forms.--
468     1.  The program shall issue a policy providing windstorm
469coverage to each personal lines residential risk covered by a
470participating insurer, except if inconsistent with the
471underwriting standards adopted under the program. Coverage shall
472include structure, contents, additional living expenses,
473emergency debris removal, and temporary repairs after loss.
474     2.  The board shall adopt by rule standards for the
475program, including, but not limited to, standards relating to
476underwriting, mitigation discounts, deductibles, cancellation
477and nonrenewal, and recordkeeping.
478     3.  The board shall adopt by rule policy forms to be used
479for program policies. Program policies must comply with part X
480of chapter 627. The board shall also adopt by rule such notices,
481coverage summaries, and outlines of coverage as are required by
482law or as the board deems appropriate, including a notice
483informing an insured of the duties of the program and the duties
484of the participating insurer.
485     4.  The policy for coverage of a structure may not exceed
486$2 million. The board shall establish by rule policy limits for
487coverage of contents, additional living expenses, emergency
488debris removal, and temporary repairs after loss.
489     5.  This subsection does not restrict an insured's ability
490to exclude windstorm coverage, hurricane coverage, or contents
491coverage under s. 627.712.
492     6.  Any residential property covered by the program that
493sustains a total loss for windstorm coverage more than three
494times in any given 10-year period shall no longer be eligible
495for coverage under the program.
496     (d)  Participating insurers.--
497     1.  The board shall adopt by rule a form for the contract
498between the program and a participating insurer specifying the
499respective rights and duties of the program and the
500participating insurer. The contract shall be effective for a
501term of 5 years.
502     2.  Any insurer writing personal lines residential property
503insurance coverage may elect to, and Citizens Property Insurance
504Corporation shall, enter into a contract with the program under
505which the program agrees to issue a policy providing windstorm
506coverage to each insured for which the participating insurer
507provides a policy providing personal lines residential property
508insurance coverage for other perils, except as provided in sub-
509subparagraph 3.b., and under which the participating insurer
510agrees to administer the program policy. In the case of a group
511of two or more insurers under common ownership, all members of
512the group writing personal lines residential property insurance
513coverage must make the same election as to participation or
514nonparticipation in the program.
515     3.  The contract shall require the participating insurer
517     a.  Collect premiums for program coverage as established by
518the program and apply deductibles, discounts, surcharges,
519credits, and limits as established by the program.
520     b.  Administer the windstorm coverage under the program
521policy and provide the program policy to each of its personal
522lines residential property insureds, except to the extent
523inconsistent with program underwriting standards or the property
524owner's option to exclude coverage under s. 627.712(2) or (3).
525     c.  Comply with program rules and standards relating to
526program policies, including underwriting, and cancellation and
528     d.  Provide application processing, premium processing,
529claims processing, and adjusting services in accordance with
530program rules and standards.
531     4.  An insurer has a fiduciary duty to the program to
532fairly adjust claims and allocate losses between windstorm and
533nonwindstorm perils.
534     5.  The program shall establish an annual audit process to
535determine each participating insurer's compliance with the
536requirements of the contract.
537     (e)  Program powers and duties.--
538     1.  The program shall make claims payments directly to
539insureds based on the information provided to the program by the
540participating insurer. The contract between the program and the
541participating insurer may provide that the participating insurer
542shall make claims payments to the insured on behalf of the
543program, but only to the extent the program has advanced funds
544to the participating insurer for the purpose of paying claims.
545     2.  The contract between the program and the participating
546insurer shall require the program to pay the participating
547insurer's loss adjustment expense, reasonable acquisition costs
548not to exceed the usual and customary amount for each individual
549component of such costs, litigation costs, and judgments
550attributable to program policies, except to the extent that the
551costs or expenses are the result of the participating insurer's
552breach of the contract or breach of its fiduciary duty.
553     3.  If a participating insurer fails to substantially
554comply with its obligations under the program contract or
555breaches its fiduciary duty to the program, the program may
556impose any combination of the following sanctions: suspension of
557the participating insurer's ability to participate in the
558program for a period not to exceed 5 years, actual damages plus
559a penalty of up to 50 percent, or liquidated damages as
560specified in the program contract.
561     4.  There shall be no liability on the part of, and no
562cause of action of any nature shall arise against, any
563participating insurer or its agents or employees, the program or
564its employees, or members of the board for any action taken by
565such persons or entities in the performance of their respective
566duties or responsibilities under this subsection. Such immunity
567does not apply to:
568     a.  Any of the foregoing persons or entities for any
569willful tort.
570     b.  The program, a participating insurer, or a
571participating insurer's producing agents for breach of any
572written contract or written agreement pertaining to insurance
574     c.  The program or the fund with respect to issuance or
575payment of debt.
576     d.  Any participating insurer with respect to any action by
577the program to enforce a participating insurer's obligations to
578the program under this subsection.
579     e.  The program in any action for breach of contract or for
580benefits under a policy issued by the program. In any such
581action, the program shall be liable to the policyholders and
582beneficiaries for attorney's fees as provided in s. 627.428.
583     5.  The termination of an insurer's participation in the
584program terminates the program policies the insurer had been
585administering, and such policies remain in effect until their
586expiration date unless terminated for some other cause. The
587insurer shall continue to have a duty to administer such
588policies unless the program makes other arrangements for the
589administration of such policies.
590     (f)  Ratemaking.--
591     1.  The board shall select an independent consultant to
592recommend to the board a rate plan for program coverage.
593     2.a.  Program rates must be as close as possible to
594actuarially indicated rates, taking into account the state's
595need to restore or maintain affordability of property insurance
596coverage for property owners and the cost of reinsurance and
597other risk-transfer mechanisms.
598     b.  Except as otherwise provided in this paragraph, rates
599may not be excessive, inadequate, or unfairly discriminatory
600within the meaning provided in s. 627.062 and must provide the
601mitigation discounts and other loss-prevention incentives
602specified in s. 627.0629.
603     c.  In the aggregate, the rates must generate premium
604revenue equal to or greater than the statewide average annual
605insured windstorm loss, based on an average of all models
606currently determined to meet the standards and guidelines of the
607Florida Commission on Hurricane Loss Projection Methodology plus
609     d.  If the board determines that the cash balance of the
610fund, net of the proceeds of any pre-event debt instruments, is
611less than $1 billion, the board may add to the rates determined
612under this subparagraph a rapid cash buildup premium surcharge
613of not more than 25 percent.
614     3.  Annually, after a public hearing, the board shall adopt
615a rate plan pursuant to this paragraph. A rate plan takes effect
616upon its approval by the unanimous vote of all members of the
617board or at a later date specified in the rate plan and remains
618in effect until the effective date of a subsequently adopted
619rate plan.
620     4.  The rate plan recommended to or adopted by the board is
621not subject to any other regulatory review or approval. The rate
622plan as adopted is final agency action for purposes of chapter
623120 and is subject to judicial review in the manner provided in
624s. 120.68, except judicial review must be sought in the District
625Court of Appeal, First District, regardless of where any party
627     (g)  Reinsurance; annual report.--
628     1.  The program may procure reinsurance or other financial
629alternatives at any loss level.
630     2.  The program shall annually engage in negotiations to
631procure reinsurance or other financial alternatives to transfer
632some or all of the risk of loss in excess of the program's 100-
633year probable maximum loss.
634     3.a.  The program shall annually procure reinsurance or
635other financial alternatives to transfer at least 50 percent of
636the risk of loss between the program's 50-year probable maximum
637loss and the program's 100-year probable maximum loss. The board
638may structure such reinsurance and other financial alternatives
639in such layer or layers, and with such percentages of retained
640liability in a particular layer, as the board deems appropriate.
641     b.  The program shall annually procure reinsurance or other
642financial alternatives to transfer at least the first 50 percent
643of the risk of loss between the program's 100-year probable
644maximum loss and the program's 250-year probable maximum loss.
645     c.  The board may, with respect to any year, waive or
646modify the requirements of this subparagraph only if the board
647finds, after a public hearing and by a unanimous vote of all
648members of the board, that transferring risk as required by this
649subparagraph would not be a cost-effective means of reducing the
650potential assessment liability of property owners.
651     4.  The board shall provide an annual report to the
652President of the Senate and the Speaker of the House of
653Representatives describing the state of the market for
654reinsurance and other risk-transfer mechanisms, summarizing
655negotiations for reinsurance and other financial alternatives to
656transfer program risk, and explaining the program's actions with
657regard to reinsurance and other financial alternatives.
658     (h)  Personal lines residential windstorm coverage issued
659by nonparticipating insurers.--Windstorm coverage under a
660personal lines residential property insurance policy issued by
661an insurer that is not a participating insurer is subject to s.
662627.062, except that the rates for such coverage may be
663disapproved only if they are inadequate or unfairly
665     (i)  Transition.--It is the intent of the Legislature that
666participating insurers continue to provide windstorm coverage to
667their existing policyholders under policies providing personal
668lines residential property insurance coverage until the first
669renewal date on or after June 1, 2009, at which time the
670windstorm coverage shall be provided under a program policy. For
671that purpose, a participating insurer remains eligible for
672coverage under subsection (4) during the contract year beginning
673June 1, 2009, to the extent the participating insurer has in
674force policies defined as covered policies under subsection (2).
675The replacement of windstorm coverage under a participating
676insurer's policy providing personal lines residential property
677insurance coverage with windstorm coverage under a program
678policy does not constitute a cancellation or nonrenewal for
679purposes of s. 627.4133 or any other purposes under the
680Insurance Code. With respect to noncommercial residential
681property insurance policy renewals taking effect on or after
682June 1, 2009, and before June 1, 2010, the notice of renewal
683premium shall include a notice, in a form specified by the
684board, that, as of the policy renewal date, windstorm coverage
685will be provided under a program policy administered by the
686insurer and coverage for other perils will be provided under a
687residential property insurance policy issued by the insurer.
688     Section 23.  State Board of Administration; implementation
689of the Florida Windstorm Insurance Program.--No later than
690January 1, 2009, the State Board of Administration shall adopt
691all contract forms, rules, standards, policy forms, mitigation
692discounts, and rates required to implement the Florida Windstorm
693Insurance Program created by s. 215.555, Florida Statutes, as
694amended by this act.
695     Section 24.  Paragraph (gg) is added to subsection (6) of
696section 627.351, Florida Statutes, to read:
697     627.351  Insurance risk apportionment plans.--
699     (gg)  Notwithstanding any provision of this subsection or
700s. 627.3517:
701     1.  On or after June 1, 2009, the corporation may not issue
702or renew any personal lines residential property insurance
703policy providing windstorm-only coverage.
704     2.a.  In order to facilitate the transfer of policies of
705the corporation from the corporation to the competitive market
706and in order to provide a capital contribution to the Florida
707Windstorm Insurance Program, the corporation shall offer
708insurers the opportunity to bid on the right to provide
709nonwindstorm coverage to current personal lines residential
710policyholders of the corporation, to take effect on the
711policyholder's first renewal date on or after June 1, 2009, or
712through an assumption agreement effective on or after June 1,
714     b.  The corporation shall prepare blocks of business that
715are balanced as to geographic location and insured value and
716shall offer the blocks of business at auction beginning no later
717than October 1, 2008. The insurer that prevails in the auction
718shall have an exclusive right to enter into an assumption
719agreement with the corporation under which the participating
720insurer assumes the nonwindstorm coverage for the remainder of
721the policy term and the Florida Windstorm Insurance Program
722assumes the windstorm coverage for the remainder of the policy
723term. If an assumption occurs, any renewal shall be at the
724participating insurer's rates as to the nonwindstorm coverage
725and the Florida Windstorm Insurance Program rates as to the
726windstorm coverage. Any assumptions under this sub-subparagraph
727must take effect no later than May 31, 2010.
728     c.  The provisions of s. 627.3517 do not apply to any offer
729to replace coverage by the corporation with personal lines
730residential property insurance coverage provided by a
731participating insurer as defined in s. 215.555(18), including
732any assumption under this subparagraph.
733     d.  The corporation shall transfer all proceeds of the
734auctions to the Florida Hurricane Catastrophe Fund, which shall
735treat the proceeds as a capital contribution for the benefit of
736the Florida Windstorm Insurance Program.
737     3.  Effective June 1, 2009, the corporation may not issue
738or renew a policy providing personal lines residential property
739insurance coverage if the owner of the property has received an
740offer of coverage from a participating insurer as defined in s.
741215.555(18), provided the participating insurer has provided the
742corporation with notice of the offer of coverage at least 30
743days prior to the renewal date or expected issuance date of the
744corporation's policy.
745     4.  No later than December 31, 2010, the corporation shall
746transfer to the Florida Hurricane Catastrophe Fund an additional
747capital contribution for the benefit of the Florida Windstorm
748Insurance Program. The contribution shall consist of the
749corporation's surplus as to policyholders, multiplied by a
751     a.  The numerator of which is the total structural insured
752value as of June 1, 2010, for risks covered by all policies
753issued by the corporation; and
754     b.  The denominator of which is the total structural
755insured value as of June 1, 2009, for risks covered by all
756policies issued by the corporation.
757     Section 25.  Effective June 1, 2009, subsection (1) of
758section 627.712, Florida Statutes, is amended to read:
759     627.712  Residential windstorm coverage required;
760availability of exclusions for windstorm or contents.--
761     (1)  Effective upon the date of issuance of the policy or
762the date of the first renewal on or after June 1, 2009, an
763insurer issuing or renewing a residential property insurance
764policy must provide windstorm coverage as part of the policy
765issued by the insurer or under a separate policy issued by the
766Florida Windstorm Insurance Program under s. 215.555 and
767administered by the insurer. This subsection does not apply with
768respect to risks that are eligible for wind-only coverage from
769Citizens Property Insurance Corporation under s. 627.351(6).
T I T L E  A M E N D M E N T
773     Remove line 2652 and insert:
774certain structures; amending s. 215.555, F.S.; providing
775additional legislative findings; revising certain definitions;
776providing for application of the Florida Hurricane Catastrophe
777Fund to costs of the Florida Windstorm Insurance Program;
778revising certain reimbursement contract board obligation
779limitations; providing for future expiration of certain
780limitations; revising legislative findings and declarations
781relating to revenue bonds; providing for application to coverage
782of costs of property damage under policies issued under the
783Florida Windstorm Insurance Program; revising emergency
784assessment requirement provisions to include application to
785policies issued under the Florida Windstorm Insurance Program;
786providing for future expiration of certain provisions; creating
787the Florida Windstorm Insurance Program within the Florida
788Hurricane Catastrophe Fund; providing a purpose; providing
789definitions; providing requirements for coverage, standards, and
790policy forms under the program; providing limitations; providing
791for administration of the program by the State Board of
792Administration; requiring the board to adopt rules; providing an
793eligibility limitation on certain properties' participation in
794the program; providing requirements for insurers participating
795in the program; providing contract requirements; providing for
796participating insurer compliance audits; specifying powers and
797duties of the program; providing claims payment requirements;
798providing for payment of certain insurer's costs and expenses;
799providing for penalties for insurers for certain actions;
800specifying absence of liability for certain actions; providing
801for effect of termination of an insurer's participation;
802specifying ratemaking requirements; authorizing the board to add
803a rapid cash buildup premium surcharge to rates under certain
804circumstances; requiring the board to adopt a rate plan;
805providing requirements for procuring reinsurance; authorizing
806the board to waive or modify certain reinsurance requirements;
807requiring an annual report to the Legislature; requiring
808windstorm coverage under certain insurance policies issued by
809certain insurers to be subject to certain rate standards
810requirements; providing transitional requirements; specifying
811requirements for the board in implementing the program; amending
812s. 627.351, F.S.; prohibiting the Citizens Property Insurance
813Corporation from issuing or renewing certain windstorm-only
814insurance policies after a certain date; providing requirements
815for transfer of policies of the corporation to the program;
816providing for transfer of certain proceeds and funds to the
817Florida Hurricane Catastrophe Fund for certain purposes;
818amending s. 627.712, F.S.; revising windstorm coverage
819requirements for insurers; providing effective dates.

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