Florida Senate - 2012                        COMMITTEE AMENDMENT
       Bill No. SB 1346
       
       
       
       
       
       
                                Barcode 796246                          
       
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  03/03/2012           .                                
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       The Committee on Budget (Alexander) recommended the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraph (e) of subsection (2), paragraphs (b)
    6  and (c) of subsection (4), and paragraph (b) of subsection (5)
    7  of section 215.555, Florida Statutes, are amended to read:
    8         215.555 Florida Hurricane Catastrophe Fund.—
    9         (2) DEFINITIONS.—As used in this section:
   10         (e) “Retention” means the amount of losses below which an
   11  insurer is not entitled to reimbursement from the fund. An
   12  insurer’s retention shall be calculated as follows:
   13         1. The board shall calculate and report to each insurer the
   14  retention multiples for that year.
   15         a. For the contract year beginning June 1, 2005, the
   16  retention multiple shall be equal to $4.5 billion divided by the
   17  total estimated reimbursement premium for the contract year; for
   18  subsequent years, up to and including the 2012-2013 contract
   19  year, the retention multiple shall be equal to $4.5 billion,
   20  adjusted based upon the reported exposure for the contract year
   21  occurring 2 years before the particular contract year to reflect
   22  the percentage growth in exposure to the fund for covered
   23  policies since 2004, divided by the total estimated
   24  reimbursement premium for the contract year.
   25         b. For the 2012-2013 contract year, the total reimbursement
   26  premium for purposes of the calculation under this subparagraph
   27  shall be estimated using the assumption that all insurers have
   28  selected the 90-percent coverage level.
   29         c. In order to implement the phase-in of reduced coverage
   30  levels as provided in paragraph (4)(b), total reimbursement
   31  premium for purposes of the calculation under this subparagraph
   32  shall be estimated using the following assumptions:
   33         (I) For the 2013-2014 contract year, the assumption is that
   34  all insurers have selected the 85-percent coverage level.
   35         (II) For the 2014-2015 contract year and subsequent
   36  contract years, the assumption is that all insurers have
   37  selected the 80-percent coverage level.
   38         2. The retention multiple as determined under subparagraph
   39  1. shall be adjusted to reflect the coverage level elected by
   40  the insurer.
   41         a. For an insurer electing the maximum coverage level
   42  available under paragraph (4)(b) for a particular contract year
   43  For insurers electing the 90-percent coverage level, the
   44  adjusted retention multiple is 100 percent of the amount
   45  determined under subparagraph 1.
   46         b. In order to implement the phase-in of reduced coverage
   47  levels as provided in paragraph (4)(b), for an insurer electing
   48  a coverage level other than the maximum coverage level, the
   49  adjusted retention multiple is as follows:
   50         (I) With respect to the 2012-2013 contract year, for an
   51  insurer For insurers electing the 75-percent coverage level, the
   52  retention multiple is 90/75ths 120 percent of the amount
   53  determined under subparagraph 1., and for an insurer For
   54  insurers electing the 45-percent coverage level, the adjusted
   55  retention multiple is 90/45ths 200 percent of the amount
   56  determined under subparagraph 1.
   57         (II) With respect to the 2013-2014 contract year, for an
   58  insurer electing the 75-percent coverage level, the retention
   59  multiple is 85/75ths of the amount determined under subparagraph
   60  1., and for an insurer electing the 45-percent coverage level,
   61  the retention multiple is 85/45ths of the amount determined
   62  under subparagraph 1.
   63         (III) With respect to the 2014-2015 contract year and
   64  subsequent contract years, for an insurer electing the 75
   65  percent coverage level, the retention multiple is 80/75ths of
   66  the amount determined under subparagraph 1., and for an insurer
   67  electing the 45-percent coverage level, the retention multiple
   68  is 80/45ths of the amount determined under subparagraph 1.
   69         3. An insurer shall determine its provisional retention by
   70  multiplying its provisional reimbursement premium by the
   71  applicable adjusted retention multiple and shall determine its
   72  actual retention by multiplying its actual reimbursement premium
   73  by the applicable adjusted retention multiple.
   74         4. For insurers who experience multiple covered events
   75  causing loss during the contract year, beginning June 1, 2005,
   76  each insurer’s full retention shall be applied to each of the
   77  covered events causing the two largest losses for that insurer.
   78  For each other covered event resulting in losses, the insurer’s
   79  retention shall be reduced to one-third of the full retention.
   80  The reimbursement contract must shall provide for the
   81  reimbursement of losses for each covered event based on the full
   82  retention with adjustments made to reflect the reduced
   83  retentions on or after January 1 of the contract year provided
   84  the insurer reports its losses as specified in the reimbursement
   85  contract.
   86         (4) REIMBURSEMENT CONTRACTS.—
   87         (b)1. The contract shall contain a promise by the board to
   88  reimburse the insurer for a specified percentage 45 percent, 75
   89  percent, or 90 percent of its losses from each covered event in
   90  excess of the insurer’s retention, plus 5 percent of the
   91  reimbursed losses to cover loss adjustment expenses. The
   92  available coverage levels are as follows:
   93         a. For the 2012-2013 contract year, 90 percent, 75 percent,
   94  and 45 percent.
   95         b. For the 2013-2014 contract year, 85 percent, 75 percent,
   96  and 45 percent.
   97         c. For the 2014-2015 contract year, 80 percent, 75 percent,
   98  and 45 percent.
   99         2.a. The insurer must elect one of the percentage coverage
  100  levels specified in this paragraph and may, upon renewal of a
  101  reimbursement contract, elect a lower percentage coverage level
  102  if no revenue bonds issued under subsection (6) after a covered
  103  event are outstanding, or elect a higher percentage coverage
  104  level, regardless of whether or not revenue bonds are
  105  outstanding. All members of an insurer group must elect the same
  106  percentage coverage level. A Any joint underwriting association,
  107  risk apportionment plan, or other entity created under s.
  108  627.351 must elect the maximum 90-percent coverage level
  109  available under subparagraph 1.
  110         b. In order to implement the phase-in of reduced coverage
  111  levels as provided in subparagraph 1., and notwithstanding sub
  112  subparagraph a., if revenue bonds issued under subsection (6)
  113  after a covered event are outstanding and the insurer has
  114  elected the maximum coverage level available under subparagraph
  115  1., the insurer must, upon renewal of the reimbursement
  116  contract, elect the maximum coverage level available under
  117  subparagraph 1. for the renewal contract year.
  118         3. The contract must shall provide that reimbursement
  119  amounts shall not be reduced by reinsurance paid or payable to
  120  the insurer from other sources.
  121         4. Notwithstanding any other provision contained in this
  122  section, the board shall make available to insurers that
  123  purchased coverage provided by this subparagraph in 2008,
  124  insurers qualifying as limited apportionment companies under s.
  125  627.351(6)(c), and insurers that have been approved to
  126  participate in the Insurance Capital Build-Up Incentive Program
  127  pursuant to s. 215.5595 a contract or contract addendum that
  128  provides an additional amount of reimbursement coverage of up to
  129  $10 million. The premium to be charged for this additional
  130  reimbursement coverage shall be 50 percent of the additional
  131  reimbursement coverage provided, which must shall include one
  132  prepaid reinstatement. The minimum retention level that an
  133  eligible participating insurer must retain associated with this
  134  additional coverage layer is 30 percent of the insurer’s surplus
  135  as of December 31, 2008, for the 2009-2010 contract year; as of
  136  December 31, 2009, for the 2010-2011 contract year; and as of
  137  December 31, 2010, for the 2011-2012 contract year. This
  138  coverage is shall be in addition to all other coverage that may
  139  be provided under this section. The coverage provided by the
  140  fund under this subparagraph is shall be in addition to the
  141  claims-paying capacity as defined in subparagraph (c)1., but
  142  only with respect to those insurers that select the additional
  143  coverage option and meet the requirements of this subparagraph.
  144  The claims-paying capacity with respect to all other
  145  participating insurers and limited apportionment companies that
  146  do not select the additional coverage option shall be limited to
  147  their reimbursement premium’s proportionate share of the actual
  148  claims-paying capacity otherwise defined in subparagraph (c)1.
  149  and as provided for under the terms of the reimbursement
  150  contract. The optional coverage retention as specified shall be
  151  accessed before the mandatory coverage under the reimbursement
  152  contract, but once the limit of coverage selected under this
  153  option is exhausted, the insurer’s retention under the mandatory
  154  coverage applies will apply. This coverage will apply and be
  155  paid concurrently with mandatory coverage. This subparagraph
  156  expires on May 31, 2012.
  157         (c)1. The contract must shall also provide that the
  158  obligation of the board with respect to all contracts covering a
  159  particular contract year shall not exceed the actual claims
  160  paying capacity of the fund up to the limit specified in this
  161  subparagraph.
  162         a. For the 2012-2013 contract year, the limit is $17
  163  billion.
  164         b. For the 2013-2014 contract year, the limit is $16
  165  billion.
  166         c. For the 2014-2015 contract year, the limit is $15
  167  billion.
  168         d. For contract years after the 2014-2015 contract year, if
  169  a limit of $17 billion for that contract year, unless the board
  170  determines that there is sufficient estimated claims-paying
  171  capacity to provide $15 $17 billion of capacity for the current
  172  contract year and an additional $15 $17 billion of capacity for
  173  subsequent contract years. If the board makes such a
  174  determination, the estimated claims-paying capacity for the
  175  particular contract year shall be determined by adding to the
  176  $15 $17 billion limit one-half of the fund’s estimated claims
  177  paying capacity in excess of $30 $34 billion. However, the
  178  dollar growth in the limit may not increase in any year by an
  179  amount greater than the dollar growth of the balance of the fund
  180  as of December 31, less any premiums or interest attributable to
  181  optional coverage, as defined by rule, which occurred over the
  182  prior calendar year.
  183         2. In May and October of the contract year, the board shall
  184  publish in the Florida Administrative Weekly a statement of the
  185  fund’s estimated borrowing capacity, the fund’s estimated
  186  claims-paying capacity, and the projected balance of the fund as
  187  of December 31. After the end of each calendar year, the board
  188  shall notify insurers of the estimated borrowing capacity,
  189  estimated claims-paying capacity, and the balance of the fund as
  190  of December 31 to provide insurers with data necessary to assist
  191  them in determining their retention and projected payout from
  192  the fund for loss reimbursement purposes. In conjunction with
  193  the development of the premium formula, as provided for in
  194  subsection (5), the board shall publish factors or multiples
  195  that assist insurers in determining their retention and
  196  projected payout for the next contract year. For all regulatory
  197  and reinsurance purposes, an insurer may calculate its projected
  198  payout from the fund as its share of the total fund premium for
  199  the current contract year multiplied by the sum of the projected
  200  balance of the fund as of December 31 and the estimated
  201  borrowing capacity for that contract year as reported under this
  202  subparagraph.
  203         (5) REIMBURSEMENT PREMIUMS.—
  204         (b) The State Board of Administration shall select an
  205  independent consultant to develop a formula for determining the
  206  actuarially indicated premium to be paid to the fund. The
  207  formula shall specify, for each zip code or other limited
  208  geographical area, the amount of premium to be paid by an
  209  insurer for each $1,000 of insured value under covered policies
  210  in that zip code or other area. In establishing premiums, the
  211  board shall consider the coverage elected under paragraph (4)(b)
  212  and any factors that tend to enhance the actuarial
  213  sophistication of ratemaking for the fund, including
  214  deductibles, type of construction, type of coverage provided,
  215  relative concentration of risks, and other such factors deemed
  216  by the board to be appropriate.
  217         1. The formula must provide for a cash build-up factor as
  218  follows:. For the 2009-2010 contract year, the factor is 5
  219  percent. For the 2010-2011 contract year, the factor is 10
  220  percent.
  221         a. For the 2011-2012 contract year, the factor is 15
  222  percent.
  223         b. For the 2012-2013 contract year, the factor is 20
  224  percent.
  225         c. For the 2013-2014 contract year and thereafter, the
  226  factor is 25 percent.
  227         2. The formula may provide for a procedure to determine the
  228  premiums to be paid by new insurers that begin writing covered
  229  policies after the beginning of a contract year, taking into
  230  consideration when the insurer starts writing covered policies,
  231  the potential exposure of the insurer, the potential exposure of
  232  the fund, the administrative costs to the insurer and to the
  233  fund, and any other factors deemed appropriate by the board. The
  234  formula must be approved by unanimous vote of the board. The
  235  board may, at any time, revise the formula pursuant to the
  236  procedure provided in this paragraph.
  237         (6) REVENUE BONDS.—
  238         (d) State Board of Administration Florida Hurricane
  239  Catastrophe Fund Finance Corporation.—
  240         1. In addition to the findings and declarations in
  241  subsection (1), the Legislature also finds and declares that:
  242         a. The public benefits corporation created under this
  243  paragraph shall will provide a mechanism necessary for the cost
  244  effective and efficient issuance of bonds. This mechanism will
  245  eliminate unnecessary costs in the bond issuance process,
  246  thereby increasing the amounts available to pay reimbursement
  247  for losses to property sustained as a result of hurricane
  248  damage.
  249         b. The purpose of such bonds is to fund reimbursements
  250  through the Florida Hurricane Catastrophe Fund to pay for the
  251  costs of construction, reconstruction, repair, restoration, and
  252  other costs associated with damage to properties of
  253  policyholders of covered policies due to the occurrence of a
  254  hurricane.
  255         c. The efficacy of the financing mechanism will be enhanced
  256  by the corporation’s ownership of the assessments, by insulating
  257  the insulation of the assessments from possible bankruptcy
  258  proceedings, and by covenants of the state with the
  259  corporation’s bondholders.
  260         2.a. There is created a public benefits corporation, which
  261  is an instrumentality of the state, to be known as the State
  262  Board of Administration Florida Hurricane Catastrophe Fund
  263  Finance Corporation.
  264         a.b. The corporation shall operate under a five-member
  265  board of directors consisting of the Governor or a designee, the
  266  Chief Financial Officer or a designee, the Attorney General or a
  267  designee, the director of the Division of Bond Finance of the
  268  State Board of Administration, and the Chief Operating Officer
  269  senior employee of the State Board of Administration responsible
  270  for operations of the Florida Hurricane Catastrophe Fund.
  271         b.c. The corporation has all of the powers of corporations
  272  under chapter 607 and under chapter 617, subject only to the
  273  provisions of this subsection.
  274         c.d. The corporation may issue bonds and engage in such
  275  other financial transactions as are necessary to provide
  276  sufficient funds to achieve the purposes of this section.
  277         d.e. The corporation may invest in any of the investments
  278  authorized under s. 215.47.
  279         e.f. There shall be no liability on the part of, and no
  280  cause of action shall arise against, any board members or
  281  employees of the corporation for any actions taken by them in
  282  the performance of their duties under this paragraph.
  283         3.a. In actions under chapter 75 to validate any bonds
  284  issued by the corporation, the notice required by s. 75.06 shall
  285  be published only in Leon County and in two newspapers of
  286  general circulation in the state, and the complaint and order of
  287  the court shall be served only on the State Attorney of the
  288  Second Judicial Circuit.
  289         b. The state hereby covenants with holders of bonds of the
  290  corporation that the state will not repeal or abrogate the power
  291  of the board to direct the Office of Insurance Regulation to
  292  levy the assessments and to collect the proceeds of the revenues
  293  pledged to the payment of such bonds as long as any such bonds
  294  remain outstanding unless adequate provision has been made for
  295  the payment of such bonds pursuant to the documents authorizing
  296  the issuance of such bonds.
  297         4. The bonds of the corporation are not a debt of the state
  298  or of any political subdivision, and neither the state nor any
  299  political subdivision is liable on such bonds. The corporation
  300  does not have the power to pledge the credit, the revenues, or
  301  the taxing power of the state or of any political subdivision.
  302  The credit, revenues, or taxing power of the state or of any
  303  political subdivision shall not be deemed to be pledged to the
  304  payment of any bonds of the corporation.
  305         5.a. The property, revenues, and other assets of the
  306  corporation; the transactions and operations of the corporation
  307  and the income from such transactions and operations; and all
  308  bonds issued under this paragraph and interest on such bonds are
  309  exempt from taxation by the state and any political subdivision,
  310  including the intangibles tax under chapter 199 and the income
  311  tax under chapter 220. This exemption does not apply to any tax
  312  imposed by chapter 220 on interest, income, or profits on debt
  313  obligations owned by corporations other than the State Board of
  314  Administration Florida Hurricane Catastrophe Fund Finance
  315  Corporation.
  316         b. All bonds of the corporation shall be and constitute
  317  legal investments without limitation for all public bodies of
  318  this state; for all banks, trust companies, savings banks,
  319  savings associations, savings and loan associations, and
  320  investment companies; for all administrators, executors,
  321  trustees, and other fiduciaries; for all insurance companies and
  322  associations and other persons carrying on an insurance
  323  business; and for all other persons who are now or may hereafter
  324  be authorized to invest in bonds or other obligations of the
  325  state and shall be and constitute eligible securities to be
  326  deposited as collateral for the security of any state, county,
  327  municipal, or other public funds. This sub-subparagraph shall be
  328  considered as additional and supplemental authority and shall
  329  not be limited without specific reference to this sub
  330  subparagraph.
  331         6. The corporation and its corporate existence shall
  332  continue until terminated by law; however, no such law will not
  333  shall take effect if as long as the corporation has bonds
  334  outstanding unless adequate provision has been made for the
  335  payment of such bonds pursuant to the documents authorizing the
  336  issuance of such bonds. Upon termination of the existence of the
  337  corporation, all of its rights and properties in excess of its
  338  obligations shall pass to and be vested in the state.
  339         7. The State Board of Administration Finance Corporation is
  340  for all purposes the successor to the Florida Hurricane
  341  Catastrophe Fund Finance Corporation.
  342         Section 2. Effective July 1, 2012, paragraphs (b), (c),
  343  (q), and (w) of subsection (6) of section 627.351, Florida
  344  Statutes, are amended to read:
  345         627.351 Insurance risk apportionment plans.—
  346         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  347         (b)1. All insurers authorized to write one or more subject
  348  lines of business in this state are subject to assessment by the
  349  corporation and, for the purposes of this subsection, are
  350  referred to collectively as “assessable insurers.” Insurers
  351  writing one or more subject lines of business in this state
  352  pursuant to part VIII of chapter 626 are not assessable
  353  insurers, but insureds who procure one or more subject lines of
  354  business in this state pursuant to part VIII of chapter 626 are
  355  subject to assessment by the corporation and are referred to
  356  collectively as “assessable insureds.” An insurer’s assessment
  357  liability begins on the first day of the calendar year following
  358  the year in which the insurer was issued a certificate of
  359  authority to transact insurance for subject lines of business in
  360  this state and terminates 1 year after the end of the first
  361  calendar year during which the insurer no longer holds a
  362  certificate of authority to transact insurance for subject lines
  363  of business in this state.
  364         2.a. All revenues, assets, liabilities, losses, and
  365  expenses of the corporation shall be divided into three separate
  366  accounts as follows:
  367         (I) A personal lines account for personal residential
  368  policies issued by the corporation, or issued by the Residential
  369  Property and Casualty Joint Underwriting Association and renewed
  370  by the corporation, which provides comprehensive, multiperil
  371  coverage on risks that are not located in areas eligible for
  372  coverage by the Florida Windstorm Underwriting Association as
  373  those areas were defined on January 1, 2002, and for policies
  374  that do not provide coverage for the peril of wind on risks that
  375  are located in such areas;
  376         (II) A commercial lines account for commercial residential
  377  and commercial nonresidential policies issued by the
  378  corporation, or issued by the Residential Property and Casualty
  379  Joint Underwriting Association and renewed by the corporation,
  380  which provides coverage for basic property perils on risks that
  381  are not located in areas eligible for coverage by the Florida
  382  Windstorm Underwriting Association as those areas were defined
  383  on January 1, 2002, and for policies that do not provide
  384  coverage for the peril of wind on risks that are located in such
  385  areas; and
  386         (III) A coastal account for personal residential policies
  387  and commercial residential and commercial nonresidential
  388  property policies issued by the corporation, or transferred to
  389  the corporation, which provides coverage for the peril of wind
  390  on risks that are located in areas eligible for coverage by the
  391  Florida Windstorm Underwriting Association as those areas were
  392  defined on January 1, 2002. The corporation may offer policies
  393  that provide multiperil coverage and the corporation shall
  394  continue to offer policies that provide coverage only for the
  395  peril of wind for risks located in areas eligible for coverage
  396  in the coastal account. In issuing multiperil coverage, the
  397  corporation may use its approved policy forms and rates for the
  398  personal lines account. An applicant or insured who is eligible
  399  to purchase a multiperil policy from the corporation may
  400  purchase a multiperil policy from an authorized insurer without
  401  prejudice to the applicant’s or insured’s eligibility to
  402  prospectively purchase a policy that provides coverage only for
  403  the peril of wind from the corporation. An applicant or insured
  404  who is eligible for a corporation policy that provides coverage
  405  only for the peril of wind may elect to purchase or retain such
  406  policy and also purchase or retain coverage excluding wind from
  407  an authorized insurer without prejudice to the applicant’s or
  408  insured’s eligibility to prospectively purchase a policy that
  409  provides multiperil coverage from the corporation. It is the
  410  goal of the Legislature that there be an overall average savings
  411  of 10 percent or more for a policyholder who currently has a
  412  wind-only policy with the corporation, and an ex-wind policy
  413  with a voluntary insurer or the corporation, and who obtains a
  414  multiperil policy from the corporation. It is the intent of the
  415  Legislature that the offer of multiperil coverage in the coastal
  416  account be made and implemented in a manner that does not
  417  adversely affect the tax-exempt status of the corporation or
  418  creditworthiness of or security for currently outstanding
  419  financing obligations or credit facilities of the coastal
  420  account, the personal lines account, or the commercial lines
  421  account. The coastal account must also include quota share
  422  primary insurance under subparagraph (c)2. The area eligible for
  423  coverage under the coastal account also includes the area within
  424  Port Canaveral, which is bordered on the south by the City of
  425  Cape Canaveral, bordered on the west by the Banana River, and
  426  bordered on the north by Federal Government property.
  427         b. The three separate accounts must be maintained as long
  428  as financing obligations entered into by the Florida Windstorm
  429  Underwriting Association or Residential Property and Casualty
  430  Joint Underwriting Association are outstanding, in accordance
  431  with the terms of the corresponding financing documents. If the
  432  financing obligations are no longer outstanding, the corporation
  433  may use a single account for all revenues, assets, liabilities,
  434  losses, and expenses of the corporation. Consistent with this
  435  subparagraph and prudent investment policies that minimize the
  436  cost of carrying debt, the board shall exercise its best efforts
  437  to retire existing debt or obtain the approval of necessary
  438  parties to amend the terms of existing debt, so as to structure
  439  the most efficient plan to consolidate the three separate
  440  accounts into a single account.
  441         c. Creditors of the Residential Property and Casualty Joint
  442  Underwriting Association and the accounts specified in sub-sub
  443  subparagraphs a.(I) and (II) may have a claim against, and
  444  recourse to, those accounts and no claim against, or recourse
  445  to, the account referred to in sub-sub-subparagraph a.(III).
  446  Creditors of the Florida Windstorm Underwriting Association have
  447  a claim against, and recourse to, the account referred to in
  448  sub-sub-subparagraph a.(III) and no claim against, or recourse
  449  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
  450  (II).
  451         d. Revenues, assets, liabilities, losses, and expenses not
  452  attributable to particular accounts shall be prorated among the
  453  accounts.
  454         e. The Legislature finds that the revenues of the
  455  corporation are revenues that are necessary to meet the
  456  requirements set forth in documents authorizing the issuance of
  457  bonds under this subsection.
  458         f. No part of The income of the corporation may not inure
  459  to the benefit of any private person.
  460         3. With respect to a deficit in an account:
  461         a. After accounting for the Citizens policyholder surcharge
  462  imposed under sub-subparagraph i. h., if the remaining projected
  463  deficit incurred in the coastal account in a particular calendar
  464  year:
  465         (I) Is not greater than 2 6 percent of the aggregate
  466  statewide direct written premium for the subject lines of
  467  business for the prior calendar year, the entire deficit shall
  468  be recovered through regular assessments of assessable insurers
  469  under paragraph (q) and assessable insureds.
  470         (II) Exceeds 2 6 percent of the aggregate statewide direct
  471  written premium for the subject lines of business for the prior
  472  calendar year, the corporation shall levy regular assessments on
  473  assessable insurers under paragraph (q) and on assessable
  474  insureds in an amount equal to the greater of 2 6 percent of the
  475  projected deficit or 2 6 percent of the aggregate statewide
  476  direct written premium for the subject lines of business for the
  477  prior calendar year. Any remaining projected deficit shall be
  478  recovered through emergency assessments under sub-subparagraph
  479  d. c.
  480         b. Each assessable insurer’s share of the amount being
  481  assessed under sub-subparagraph a. must be in the proportion
  482  that the assessable insurer’s direct written premium for the
  483  subject lines of business for the year preceding the assessment
  484  bears to the aggregate statewide direct written premium for the
  485  subject lines of business for that year. The assessment
  486  percentage applicable to each assessable insured is the ratio of
  487  the amount being assessed under sub-subparagraph a. to the
  488  aggregate statewide direct written premium for the subject lines
  489  of business for the prior year. Assessments levied by the
  490  corporation on assessable insurers under sub-subparagraph a.
  491  must be paid as required by the corporation’s plan of operation
  492  and paragraph (q). Assessments levied by the corporation on
  493  assessable insureds under sub-subparagraph a. shall be collected
  494  by the surplus lines agent at the time the surplus lines agent
  495  collects the surplus lines tax required by s. 626.932, and paid
  496  to the Florida Surplus Lines Service Office at the time the
  497  surplus lines agent pays the surplus lines tax to that office.
  498  Upon receipt of regular assessments from surplus lines agents,
  499  the Florida Surplus Lines Service Office shall transfer the
  500  assessments directly to the corporation as determined by the
  501  corporation.
  502         c.After accounting for the Citizens policyholder surcharge
  503  imposed under sub-subparagraph i., the remaining projected
  504  deficits in the personal lines account and in the commercial
  505  lines account in a particular calendar year shall be recovered
  506  through emergency assessments under sub-subparagraph d.
  507         d.c. Upon a determination by the board of governors that a
  508  projected deficit in an account exceeds the amount that is
  509  expected to will be recovered through regular assessments under
  510  sub-subparagraph a., plus the amount that is expected to be
  511  recovered through surcharges under sub-subparagraph i. h., the
  512  board, after verification by the office, shall levy emergency
  513  assessments for as many years as necessary to cover the
  514  deficits, to be collected by assessable insurers and the
  515  corporation and collected from assessable insureds upon issuance
  516  or renewal of policies for subject lines of business, excluding
  517  National Flood Insurance policies. The amount collected in a
  518  particular year must be a uniform percentage of that year’s
  519  direct written premium for subject lines of business and all
  520  accounts of the corporation, excluding National Flood Insurance
  521  Program policy premiums, as annually determined by the board and
  522  verified by the office. The office shall verify the arithmetic
  523  calculations involved in the board’s determination within 30
  524  days after receipt of the information on which the determination
  525  was based. The office shall notify assessable insurers and the
  526  Florida Surplus Lines Service Office of the date on which
  527  assessable insurers shall begin to collect and assessable
  528  insureds shall begin to pay such assessment. The date may be not
  529  less than 90 days after the date the corporation levies
  530  emergency assessments pursuant to this sub-subparagraph.
  531  Notwithstanding any other provision of law, the corporation and
  532  each assessable insurer that writes subject lines of business
  533  shall collect emergency assessments from its policyholders
  534  without such obligation being affected by any credit,
  535  limitation, exemption, or deferment. Emergency assessments
  536  levied by the corporation on assessable insureds shall be
  537  collected by the surplus lines agent at the time the surplus
  538  lines agent collects the surplus lines tax required by s.
  539  626.932 and paid to the Florida Surplus Lines Service Office at
  540  the time the surplus lines agent pays the surplus lines tax to
  541  that office. The emergency assessments collected shall be
  542  transferred directly to the corporation on a periodic basis as
  543  determined by the corporation and held by the corporation solely
  544  in the applicable account. The aggregate amount of emergency
  545  assessments levied for an account under this sub-subparagraph in
  546  any calendar year may be less than but not exceed the greater of
  547  10 percent of the amount needed to cover the deficit, plus
  548  interest, fees, commissions, required reserves, and other costs
  549  associated with financing the original deficit, or 10 percent of
  550  the aggregate statewide direct written premium for subject lines
  551  of business and all accounts of the corporation for the prior
  552  year, plus interest, fees, commissions, required reserves, and
  553  other costs associated with financing the deficit.
  554         e.d. The corporation may pledge the proceeds of
  555  assessments, projected recoveries from the Florida Hurricane
  556  Catastrophe Fund, other insurance and reinsurance recoverables,
  557  policyholder surcharges and other surcharges, and other funds
  558  available to the corporation as the source of revenue for and to
  559  secure bonds issued under paragraph (q), bonds or other
  560  indebtedness issued under subparagraph (c)3., or lines of credit
  561  or other financing mechanisms issued or created under this
  562  subsection, or to retire any other debt incurred as a result of
  563  deficits or events giving rise to deficits, or in any other way
  564  that the board determines will efficiently recover such
  565  deficits. The purpose of the lines of credit or other financing
  566  mechanisms is to provide additional resources to assist the
  567  corporation in covering claims and expenses attributable to a
  568  catastrophe. As used in this subsection, the term “assessments”
  569  includes regular assessments under sub-subparagraph a. or
  570  subparagraph (q)1. and emergency assessments under sub
  571  subparagraph d. Emergency assessments collected under sub
  572  subparagraph d. are not part of an insurer’s rates, are not
  573  premium, and are not subject to premium tax, fees, or
  574  commissions; however, failure to pay the emergency assessment
  575  shall be treated as failure to pay premium. The emergency
  576  assessments under sub-subparagraph d. c. shall continue as long
  577  as any bonds issued or other indebtedness incurred with respect
  578  to a deficit for which the assessment was imposed remain
  579  outstanding, unless adequate provision has been made for the
  580  payment of such bonds or other indebtedness pursuant to the
  581  documents governing such bonds or indebtedness.
  582         f.e. As used in this subsection for purposes of any deficit
  583  incurred on or after January 25, 2007, the term “subject lines
  584  of business” means insurance written by assessable insurers or
  585  procured by assessable insureds for all property and casualty
  586  lines of business in this state, but not including workers’
  587  compensation or medical malpractice. As used in this sub
  588  subparagraph, the term “property and casualty lines of business”
  589  includes all lines of business identified on Form 2, Exhibit of
  590  Premiums and Losses, in the annual statement required of
  591  authorized insurers under s. 624.424 and any rule adopted under
  592  this section, except for those lines identified as accident and
  593  health insurance and except for policies written under the
  594  National Flood Insurance Program or the Federal Crop Insurance
  595  Program. For purposes of this sub-subparagraph, the term
  596  “workers’ compensation” includes both workers’ compensation
  597  insurance and excess workers’ compensation insurance.
  598         g.f. The Florida Surplus Lines Service Office shall
  599  determine annually the aggregate statewide written premium in
  600  subject lines of business procured by assessable insureds and
  601  report that information to the corporation in a form and at a
  602  time the corporation specifies to ensure that the corporation
  603  can meet the requirements of this subsection and the
  604  corporation’s financing obligations.
  605         h.g. The Florida Surplus Lines Service Office shall verify
  606  the proper application by surplus lines agents of assessment
  607  percentages for regular assessments and emergency assessments
  608  levied under this subparagraph on assessable insureds and assist
  609  the corporation in ensuring the accurate, timely collection and
  610  payment of assessments by surplus lines agents as required by
  611  the corporation.
  612         i.h.If a deficit is incurred in any account In 2008 or
  613  thereafter, upon a determination by the board of governors that
  614  an account has a projected deficit, the board shall levy a
  615  Citizens policyholder surcharge against all policyholders of the
  616  corporation.
  617         (I) The surcharge shall be levied as a uniform percentage
  618  of the premium for the policy of up to 15 percent of such
  619  premium, which funds shall be used to offset the deficit.
  620         (II) The surcharge is payable upon cancellation or
  621  termination of the policy, upon renewal of the policy, or upon
  622  issuance of a new policy by the corporation within the first 12
  623  months after the date of the levy or the period of time
  624  necessary to fully collect the surcharge amount.
  625         (III) The corporation may not levy any regular assessments
  626  under paragraph (q) pursuant to sub-subparagraph a. or sub
  627  subparagraph b. with respect to a particular year’s deficit
  628  until the corporation has first levied the full amount of the
  629  surcharge authorized by this sub-subparagraph.
  630         (IV) The surcharge is not considered premium and is not
  631  subject to commissions, fees, or premium taxes. However, failure
  632  to pay the surcharge shall be treated as failure to pay premium.
  633         j.i. If the amount of any assessments or surcharges
  634  collected from corporation policyholders, assessable insurers or
  635  their policyholders, or assessable insureds exceeds the amount
  636  of the deficits, such excess amounts shall be remitted to and
  637  retained by the corporation in a reserve to be used by the
  638  corporation, as determined by the board of governors and
  639  approved by the office, to pay claims or reduce any past,
  640  present, or future plan-year deficits or to reduce outstanding
  641  debt.
  642         (c) The corporation’s plan of operation:
  643         1. Must provide for adoption of residential property and
  644  casualty insurance policy forms and commercial residential and
  645  nonresidential property insurance forms, which must be approved
  646  by the office before use. The corporation shall adopt the
  647  following policy forms:
  648         a. Standard personal lines policy forms that are
  649  comprehensive multiperil policies providing full coverage of a
  650  residential property equivalent to the coverage provided in the
  651  private insurance market under an HO-3, HO-4, or HO-6 policy.
  652         b. Basic personal lines policy forms that are policies
  653  similar to an HO-8 policy or a dwelling fire policy that provide
  654  coverage meeting the requirements of the secondary mortgage
  655  market, but which is more limited than the coverage under a
  656  standard policy.
  657         c. Commercial lines residential and nonresidential policy
  658  forms that are generally similar to the basic perils of full
  659  coverage obtainable for commercial residential structures and
  660  commercial nonresidential structures in the admitted voluntary
  661  market.
  662         d. Personal lines and commercial lines residential property
  663  insurance forms that cover the peril of wind only. The forms are
  664  applicable only to residential properties located in areas
  665  eligible for coverage under the coastal account referred to in
  666  sub-subparagraph (b)2.a.
  667         e. Commercial lines nonresidential property insurance forms
  668  that cover the peril of wind only. The forms are applicable only
  669  to nonresidential properties located in areas eligible for
  670  coverage under the coastal account referred to in sub
  671  subparagraph (b)2.a.
  672         f. The corporation may adopt variations of the policy forms
  673  listed in sub-subparagraphs a.-e. which contain more restrictive
  674  coverage.
  675         2. Must provide that the corporation adopt a program in
  676  which the corporation and authorized insurers enter into quota
  677  share primary insurance agreements for hurricane coverage, as
  678  defined in s. 627.4025(2)(a), for eligible risks, and adopt
  679  property insurance forms for eligible risks which cover the
  680  peril of wind only.
  681         a. As used in this subsection, the term:
  682         (I) “Quota share primary insurance” means an arrangement in
  683  which the primary hurricane coverage of an eligible risk is
  684  provided in specified percentages by the corporation and an
  685  authorized insurer. The corporation and authorized insurer are
  686  each solely responsible for a specified percentage of hurricane
  687  coverage of an eligible risk as set forth in a quota share
  688  primary insurance agreement between the corporation and an
  689  authorized insurer and the insurance contract. The
  690  responsibility of the corporation or authorized insurer to pay
  691  its specified percentage of hurricane losses of an eligible
  692  risk, as set forth in the agreement, may not be altered by the
  693  inability of the other party to pay its specified percentage of
  694  losses. Eligible risks that are provided hurricane coverage
  695  through a quota share primary insurance arrangement must be
  696  provided policy forms that set forth the obligations of the
  697  corporation and authorized insurer under the arrangement,
  698  clearly specify the percentages of quota share primary insurance
  699  provided by the corporation and authorized insurer, and
  700  conspicuously and clearly state that the authorized insurer and
  701  the corporation may not be held responsible beyond their
  702  specified percentage of coverage of hurricane losses.
  703         (II) “Eligible risks” means personal lines residential and
  704  commercial lines residential risks that meet the underwriting
  705  criteria of the corporation and are located in areas that were
  706  eligible for coverage by the Florida Windstorm Underwriting
  707  Association on January 1, 2002.
  708         b. The corporation may enter into quota share primary
  709  insurance agreements with authorized insurers at corporation
  710  coverage levels of 90 percent and 50 percent.
  711         c. If the corporation determines that additional coverage
  712  levels are necessary to maximize participation in quota share
  713  primary insurance agreements by authorized insurers, the
  714  corporation may establish additional coverage levels. However,
  715  the corporation’s quota share primary insurance coverage level
  716  may not exceed 90 percent.
  717         d. Any quota share primary insurance agreement entered into
  718  between an authorized insurer and the corporation must provide
  719  for a uniform specified percentage of coverage of hurricane
  720  losses, by county or territory as set forth by the corporation
  721  board, for all eligible risks of the authorized insurer covered
  722  under the agreement.
  723         e. Any quota share primary insurance agreement entered into
  724  between an authorized insurer and the corporation is subject to
  725  review and approval by the office. However, such agreement shall
  726  be authorized only as to insurance contracts entered into
  727  between an authorized insurer and an insured who is already
  728  insured by the corporation for wind coverage.
  729         f. For all eligible risks covered under quota share primary
  730  insurance agreements, the exposure and coverage levels for both
  731  the corporation and authorized insurers shall be reported by the
  732  corporation to the Florida Hurricane Catastrophe Fund. For all
  733  policies of eligible risks covered under such agreements, the
  734  corporation and the authorized insurer must maintain complete
  735  and accurate records for the purpose of exposure and loss
  736  reimbursement audits as required by fund rules. The corporation
  737  and the authorized insurer shall each maintain duplicate copies
  738  of policy declaration pages and supporting claims documents.
  739         g. The corporation board shall establish in its plan of
  740  operation standards for quota share agreements which ensure that
  741  there is no discriminatory application among insurers as to the
  742  terms of the agreements, pricing of the agreements, incentive
  743  provisions if any, and consideration paid for servicing policies
  744  or adjusting claims.
  745         h. The quota share primary insurance agreement between the
  746  corporation and an authorized insurer must set forth the
  747  specific terms under which coverage is provided, including, but
  748  not limited to, the sale and servicing of policies issued under
  749  the agreement by the insurance agent of the authorized insurer
  750  producing the business, the reporting of information concerning
  751  eligible risks, the payment of premium to the corporation, and
  752  arrangements for the adjustment and payment of hurricane claims
  753  incurred on eligible risks by the claims adjuster and personnel
  754  of the authorized insurer. Entering into a quota sharing
  755  insurance agreement between the corporation and an authorized
  756  insurer is voluntary and at the discretion of the authorized
  757  insurer.
  758         3.a. May provide that the corporation may employ or
  759  otherwise contract with individuals or other entities to provide
  760  administrative or professional services that may be appropriate
  761  to effectuate the plan. The corporation may borrow funds by
  762  issuing bonds or by incurring other indebtedness, and shall have
  763  other powers reasonably necessary to effectuate the requirements
  764  of this subsection, including, without limitation, the power to
  765  issue bonds and incur other indebtedness in order to refinance
  766  outstanding bonds or other indebtedness. The corporation may
  767  seek judicial validation of its bonds or other indebtedness
  768  under chapter 75. The corporation may issue bonds or incur other
  769  indebtedness, or have bonds issued on its behalf by a unit of
  770  local government pursuant to subparagraph (q)2. in the absence
  771  of a hurricane or other weather-related event, upon a
  772  determination by the corporation, subject to approval by the
  773  office, that such action would enable it to efficiently meet the
  774  financial obligations of the corporation and that such
  775  financings are reasonably necessary to effectuate the
  776  requirements of this subsection. The corporation may take all
  777  actions needed to facilitate tax-free status for such bonds or
  778  indebtedness, including formation of trusts or other affiliated
  779  entities. The corporation may pledge assessments, projected
  780  recoveries from the Florida Hurricane Catastrophe Fund, other
  781  reinsurance recoverables, policyholder surcharges market
  782  equalization and other surcharges, and other funds available to
  783  the corporation as security for bonds or other indebtedness. In
  784  recognition of s. 10, Art. I of the State Constitution,
  785  prohibiting the impairment of obligations of contracts, it is
  786  the intent of the Legislature that no action be taken whose
  787  purpose is to impair any bond indenture or financing agreement
  788  or any revenue source committed by contract to such bond or
  789  other indebtedness.
  790         b. To ensure that the corporation is operating in an
  791  efficient and economic manner while providing quality service to
  792  policyholders, applicants, and agents, the board shall
  793  commission an independent third-party consultant having
  794  expertise in insurance company management or insurance company
  795  management consulting to prepare a report and make
  796  recommendations on the relative costs and benefits of
  797  outsourcing various policy issuance and service functions to
  798  private servicing carriers or entities performing similar
  799  functions in the private market for a fee, rather than
  800  performing such functions in-house. In making such
  801  recommendations, the consultant shall consider how other
  802  residual markets, both in this state and around the country,
  803  outsource appropriate functions or use servicing carriers to
  804  better match expenses with revenues that fluctuate based on a
  805  widely varying policy count. The report must be completed by
  806  July 1, 2012. Upon receiving the report, the board shall develop
  807  a plan to implement the report and submit the plan for review,
  808  modification, and approval to the Financial Services Commission.
  809  Upon the commission’s approval of the plan, the board shall
  810  begin implementing the plan by January 1, 2013.
  811         4. Must require that the corporation operate subject to the
  812  supervision and approval of a board of governors consisting of
  813  eight individuals who are residents of this state, from
  814  different geographical areas of this state.
  815         a. The Governor, the Chief Financial Officer, the President
  816  of the Senate, and the Speaker of the House of Representatives
  817  shall each appoint two members of the board. At least one of the
  818  two members appointed by each appointing officer must have
  819  demonstrated expertise in insurance and is deemed to be within
  820  the scope of the exemption provided in s. 112.313(7)(b). The
  821  Chief Financial Officer shall designate one of the appointees as
  822  chair. All board members serve at the pleasure of the appointing
  823  officer. All members of the board are subject to removal at will
  824  by the officers who appointed them. All board members, including
  825  the chair, must be appointed to serve for 3-year terms beginning
  826  annually on a date designated by the plan. However, for the
  827  first term beginning on or after July 1, 2009, each appointing
  828  officer shall appoint one member of the board for a 2-year term
  829  and one member for a 3-year term. A board vacancy shall be
  830  filled for the unexpired term by the appointing officer. The
  831  Chief Financial Officer shall appoint a technical advisory group
  832  to provide information and advice to the board in connection
  833  with the board’s duties under this subsection. The executive
  834  director and senior managers of the corporation shall be engaged
  835  by the board and serve at the pleasure of the board. Any
  836  executive director appointed on or after July 1, 2006, is
  837  subject to confirmation by the Senate. The executive director is
  838  responsible for employing other staff as the corporation may
  839  require, subject to review and concurrence by the board.
  840         b. The board shall create a Market Accountability Advisory
  841  Committee to assist the corporation in developing awareness of
  842  its rates and its customer and agent service levels in
  843  relationship to the voluntary market insurers writing similar
  844  coverage.
  845         (I) The members of the advisory committee consist of the
  846  following 11 persons, one of whom must be elected chair by the
  847  members of the committee: four representatives, one appointed by
  848  the Florida Association of Insurance Agents, one by the Florida
  849  Association of Insurance and Financial Advisors, one by the
  850  Professional Insurance Agents of Florida, and one by the Latin
  851  American Association of Insurance Agencies; three
  852  representatives appointed by the insurers with the three highest
  853  voluntary market share of residential property insurance
  854  business in the state; one representative from the Office of
  855  Insurance Regulation; one consumer appointed by the board who is
  856  insured by the corporation at the time of appointment to the
  857  committee; one representative appointed by the Florida
  858  Association of Realtors; and one representative appointed by the
  859  Florida Bankers Association. All members shall be appointed to
  860  3-year terms and may serve for consecutive terms.
  861         (II) The committee shall report to the corporation at each
  862  board meeting on insurance market issues which may include rates
  863  and rate competition with the voluntary market; service,
  864  including policy issuance, claims processing, and general
  865  responsiveness to policyholders, applicants, and agents; and
  866  matters relating to depopulation.
  867         5. Must provide a procedure for determining the eligibility
  868  of a risk for coverage, as follows:
  869         a. Subject to s. 627.3517, with respect to personal lines
  870  residential risks, if the risk is offered coverage from an
  871  authorized insurer at the insurer’s approved rate under a
  872  standard policy including wind coverage or, if consistent with
  873  the insurer’s underwriting rules as filed with the office, a
  874  basic policy including wind coverage, for a new application to
  875  the corporation for coverage, the risk is not eligible for any
  876  policy issued by the corporation unless the premium for coverage
  877  from the authorized insurer is more than 15 percent greater than
  878  the premium for comparable coverage from the corporation. If the
  879  risk is not able to obtain such offer, the risk is eligible for
  880  a standard policy including wind coverage or a basic policy
  881  including wind coverage issued by the corporation; however, if
  882  the risk could not be insured under a standard policy including
  883  wind coverage regardless of market conditions, the risk is
  884  eligible for a basic policy including wind coverage unless
  885  rejected under subparagraph 8. However, a policyholder of the
  886  corporation or a policyholder removed from the corporation
  887  through an assumption agreement until the end of the assumption
  888  period remains eligible for coverage from the corporation
  889  regardless of any offer of coverage from an authorized insurer
  890  or surplus lines insurer. The corporation shall determine the
  891  type of policy to be provided on the basis of objective
  892  standards specified in the underwriting manual and based on
  893  generally accepted underwriting practices.
  894         (I) If the risk accepts an offer of coverage through the
  895  market assistance plan or through a mechanism established by the
  896  corporation before a policy is issued to the risk by the
  897  corporation or during the first 30 days of coverage by the
  898  corporation, and the producing agent who submitted the
  899  application to the plan or to the corporation is not currently
  900  appointed by the insurer, the insurer shall:
  901         (A) Pay to the producing agent of record of the policy for
  902  the first year, an amount that is the greater of the insurer’s
  903  usual and customary commission for the type of policy written or
  904  a fee equal to the usual and customary commission of the
  905  corporation; or
  906         (B) Offer to allow the producing agent of record of the
  907  policy to continue servicing the policy for at least 1 year and
  908  offer to pay the agent the greater of the insurer’s or the
  909  corporation’s usual and customary commission for the type of
  910  policy written.
  911  
  912  If the producing agent is unwilling or unable to accept
  913  appointment, the new insurer shall pay the agent in accordance
  914  with sub-sub-sub-subparagraph (A).
  915         (II) If the corporation enters into a contractual agreement
  916  for a take-out plan, the producing agent of record of the
  917  corporation policy is entitled to retain any unearned commission
  918  on the policy, and the insurer shall:
  919         (A) Pay to the producing agent of record, for the first
  920  year, an amount that is the greater of the insurer’s usual and
  921  customary commission for the type of policy written or a fee
  922  equal to the usual and customary commission of the corporation;
  923  or
  924         (B) Offer to allow the producing agent of record to
  925  continue servicing the policy for at least 1 year and offer to
  926  pay the agent the greater of the insurer’s or the corporation’s
  927  usual and customary commission for the type of policy written.
  928  
  929  If the producing agent is unwilling or unable to accept
  930  appointment, the new insurer shall pay the agent in accordance
  931  with sub-sub-sub-subparagraph (A).
  932         b. With respect to commercial lines residential risks, for
  933  a new application to the corporation for coverage, if the risk
  934  is offered coverage under a policy including wind coverage from
  935  an authorized insurer at its approved rate, the risk is not
  936  eligible for a policy issued by the corporation unless the
  937  premium for coverage from the authorized insurer is more than 15
  938  percent greater than the premium for comparable coverage from
  939  the corporation. If the risk is not able to obtain any such
  940  offer, the risk is eligible for a policy including wind coverage
  941  issued by the corporation. However, a policyholder of the
  942  corporation or a policyholder removed from the corporation
  943  through an assumption agreement until the end of the assumption
  944  period remains eligible for coverage from the corporation
  945  regardless of an offer of coverage from an authorized insurer or
  946  surplus lines insurer.
  947         (I) If the risk accepts an offer of coverage through the
  948  market assistance plan or through a mechanism established by the
  949  corporation before a policy is issued to the risk by the
  950  corporation or during the first 30 days of coverage by the
  951  corporation, and the producing agent who submitted the
  952  application to the plan or the corporation is not currently
  953  appointed by the insurer, the insurer shall:
  954         (A) Pay to the producing agent of record of the policy, for
  955  the first year, an amount that is the greater of the insurer’s
  956  usual and customary commission for the type of policy written or
  957  a fee equal to the usual and customary commission of the
  958  corporation; or
  959         (B) Offer to allow the producing agent of record of the
  960  policy to continue servicing the policy for at least 1 year and
  961  offer to pay the agent the greater of the insurer’s or the
  962  corporation’s usual and customary commission for the type of
  963  policy written.
  964  
  965  If the producing agent is unwilling or unable to accept
  966  appointment, the new insurer shall pay the agent in accordance
  967  with sub-sub-sub-subparagraph (A).
  968         (II) If the corporation enters into a contractual agreement
  969  for a take-out plan, the producing agent of record of the
  970  corporation policy is entitled to retain any unearned commission
  971  on the policy, and the insurer shall:
  972         (A) Pay to the producing agent of record, for the first
  973  year, an amount that is the greater of the insurer’s usual and
  974  customary commission for the type of policy written or a fee
  975  equal to the usual and customary commission of the corporation;
  976  or
  977         (B) Offer to allow the producing agent of record to
  978  continue servicing the policy for at least 1 year and offer to
  979  pay the agent the greater of the insurer’s or the corporation’s
  980  usual and customary commission for the type of policy written.
  981  
  982  If the producing agent is unwilling or unable to accept
  983  appointment, the new insurer shall pay the agent in accordance
  984  with sub-sub-sub-subparagraph (A).
  985         c. For purposes of determining comparable coverage under
  986  sub-subparagraphs a. and b., the comparison must be based on
  987  those forms and coverages that are reasonably comparable. The
  988  corporation may rely on a determination of comparable coverage
  989  and premium made by the producing agent who submits the
  990  application to the corporation, made in the agent’s capacity as
  991  the corporation’s agent. A comparison may be made solely of the
  992  premium with respect to the main building or structure only on
  993  the following basis: the same coverage A or other building
  994  limits; the same percentage hurricane deductible that applies on
  995  an annual basis or that applies to each hurricane for commercial
  996  residential property; the same percentage of ordinance and law
  997  coverage, if the same limit is offered by both the corporation
  998  and the authorized insurer; the same mitigation credits, to the
  999  extent the same types of credits are offered both by the
 1000  corporation and the authorized insurer; the same method for loss
 1001  payment, such as replacement cost or actual cash value, if the
 1002  same method is offered both by the corporation and the
 1003  authorized insurer in accordance with underwriting rules; and
 1004  any other form or coverage that is reasonably comparable as
 1005  determined by the board. If an application is submitted to the
 1006  corporation for wind-only coverage in the coastal account, the
 1007  premium for the corporation’s wind-only policy plus the premium
 1008  for the ex-wind policy that is offered by an authorized insurer
 1009  to the applicant must be compared to the premium for multiperil
 1010  coverage offered by an authorized insurer, subject to the
 1011  standards for comparison specified in this subparagraph. If the
 1012  corporation or the applicant requests from the authorized
 1013  insurer a breakdown of the premium of the offer by types of
 1014  coverage so that a comparison may be made by the corporation or
 1015  its agent and the authorized insurer refuses or is unable to
 1016  provide such information, the corporation may treat the offer as
 1017  not being an offer of coverage from an authorized insurer at the
 1018  insurer’s approved rate.
 1019         6. Must include rules for classifications of risks and
 1020  rates.
 1021         7. Must provide that if premium and investment income for
 1022  an account attributable to a particular calendar year are in
 1023  excess of projected losses and expenses for the account
 1024  attributable to that year, such excess shall be held in surplus
 1025  in the account. Such surplus must be available to defray
 1026  deficits in that account as to future years and used for that
 1027  purpose before assessing assessable insurers and assessable
 1028  insureds as to any calendar year.
 1029         8. Must provide objective criteria and procedures to be
 1030  uniformly applied to all applicants in determining whether an
 1031  individual risk is so hazardous as to be uninsurable. In making
 1032  this determination and in establishing the criteria and
 1033  procedures, the following must be considered:
 1034         a. Whether the likelihood of a loss for the individual risk
 1035  is substantially higher than for other risks of the same class;
 1036  and
 1037         b. Whether the uncertainty associated with the individual
 1038  risk is such that an appropriate premium cannot be determined.
 1039  
 1040  The acceptance or rejection of a risk by the corporation shall
 1041  be construed as the private placement of insurance, and the
 1042  provisions of chapter 120 do not apply.
 1043         9. Must provide that the corporation make its best efforts
 1044  to procure catastrophe reinsurance at reasonable rates, to cover
 1045  its projected 100-year probable maximum loss as determined by
 1046  the board of governors.
 1047         10. Must ensure that the policies issued by the corporation
 1048  must provide that if the corporation or the market assistance
 1049  plan obtains an offer from an authorized insurer to cover the
 1050  risk at its approved rates, the risk is no longer eligible for
 1051  renewal through the corporation, except as otherwise provided in
 1052  this subsection.
 1053         11. Must ensure that corporation policies and applications
 1054  must include a notice that the corporation policy could, under
 1055  this section, be replaced with a policy issued by an authorized
 1056  insurer which does not provide coverage identical to the
 1057  coverage provided by the corporation. The notice must also
 1058  specify that acceptance of corporation coverage creates a
 1059  conclusive presumption that the applicant or policyholder is
 1060  aware of this potential.
 1061         12. May establish, subject to approval by the office,
 1062  different eligibility requirements and operational procedures
 1063  for any line or type of coverage for any specified county or
 1064  area if the board determines that such changes are justified due
 1065  to the voluntary market being sufficiently stable and
 1066  competitive in such area or for such line or type of coverage
 1067  and that consumers who, in good faith, are unable to obtain
 1068  insurance through the voluntary market through ordinary methods
 1069  continue to have access to coverage from the corporation. If
 1070  coverage is sought in connection with a real property transfer,
 1071  the requirements and procedures may not provide an effective
 1072  date of coverage later than the date of the closing of the
 1073  transfer as established by the transferor, the transferee, and,
 1074  if applicable, the lender.
 1075         13. Must provide that, with respect to the coastal account,
 1076  any assessable insurer with a surplus as to policyholders of $25
 1077  million or less writing 25 percent or more of its total
 1078  countrywide property insurance premiums in this state may
 1079  petition the office, within the first 90 days of each calendar
 1080  year, to qualify as a limited apportionment company. A regular
 1081  assessment levied by the corporation on a limited apportionment
 1082  company for a deficit incurred by the corporation for the
 1083  coastal account may be paid to the corporation on a monthly
 1084  basis as the assessments are collected by the limited
 1085  apportionment company from its insureds pursuant to s. 627.3512,
 1086  but a limited apportionment company must begin collecting the
 1087  regular assessments not later than 90 days after the regular
 1088  assessments are levied by the corporation, and the regular
 1089  assessments assessment must be paid in full within 15 12 months
 1090  after being levied by the corporation. A limited apportionment
 1091  company shall collect from its policyholders any emergency
 1092  assessment imposed under sub-subparagraph (b)3.d. The plan must
 1093  provide that, if the office determines that any regular
 1094  assessment will result in an impairment of the surplus of a
 1095  limited apportionment company, the office may direct that all or
 1096  part of such assessment be deferred as provided in subparagraph
 1097  (q)4. However, an emergency assessment to be collected from
 1098  policyholders under sub-subparagraph (b)3.d. may not be limited
 1099  or deferred.
 1100         14. Must provide that the corporation appoint as its
 1101  licensed agents only those agents who also hold an appointment
 1102  as defined in s. 626.015(3) with an insurer who at the time of
 1103  the agent’s initial appointment by the corporation is authorized
 1104  to write and is actually writing personal lines residential
 1105  property coverage, commercial residential property coverage, or
 1106  commercial nonresidential property coverage within the state.
 1107         15. Must provide a premium payment plan option to its
 1108  policyholders which, at a minimum, allows for quarterly and
 1109  semiannual payment of premiums. A monthly payment plan may, but
 1110  is not required to, be offered.
 1111         16. Must limit coverage on mobile homes or manufactured
 1112  homes built before 1994 to actual cash value of the dwelling
 1113  rather than replacement costs of the dwelling.
 1114         17. May provide such limits of coverage as the board
 1115  determines, consistent with the requirements of this subsection.
 1116         18. May require commercial property to meet specified
 1117  hurricane mitigation construction features as a condition of
 1118  eligibility for coverage.
 1119         19. Must provide that new or renewal policies issued by the
 1120  corporation on or after January 1, 2012, which cover sinkhole
 1121  loss do not include coverage for any loss to appurtenant
 1122  structures, driveways, sidewalks, decks, or patios that are
 1123  directly or indirectly caused by sinkhole activity. The
 1124  corporation shall exclude such coverage using a notice of
 1125  coverage change, which may be included with the policy renewal,
 1126  and not by issuance of a notice of nonrenewal of the excluded
 1127  coverage upon renewal of the current policy.
 1128         20. As of January 1, 2012, must require that the agent
 1129  obtain from an applicant for coverage from the corporation an
 1130  acknowledgement signed by the applicant, which includes, at a
 1131  minimum, the following statement:
 1132  
 1133   ACKNOWLEDGEMENT OF POTENTIAL SURCHARGEAND ASSESSMENT LIABILITY: 
 1134  
 1135         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
 1136  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
 1137  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
 1138  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 1139  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
 1140  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
 1141  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 1142  LEGISLATURE.
 1143         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
 1144  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
 1145  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
 1146  FLORIDA LEGISLATURE.
 1147         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
 1148  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
 1149  STATE OF FLORIDA.
 1150  
 1151         a. The corporation shall maintain, in electronic format or
 1152  otherwise, a copy of the applicant’s signed acknowledgement and
 1153  provide a copy of the statement to the policyholder as part of
 1154  the first renewal after the effective date of this subparagraph.
 1155         b. The signed acknowledgement form creates a conclusive
 1156  presumption that the policyholder understood and accepted his or
 1157  her potential surcharge and assessment liability as a
 1158  policyholder of the corporation.
 1159         (q)1. The corporation shall certify to the office its needs
 1160  for annual assessments as to a particular calendar year, and for
 1161  any interim assessments that it deems to be necessary to sustain
 1162  operations as to a particular year pending the receipt of annual
 1163  assessments. Upon verification, the office shall approve such
 1164  certification, and the corporation shall levy such annual or
 1165  interim assessments. Such assessments shall be prorated as
 1166  provided in paragraph (b). The corporation shall take all
 1167  reasonable and prudent steps necessary to collect the amount of
 1168  assessments assessment due from each assessable insurer,
 1169  including, if prudent, filing suit to collect the assessments,
 1170  and the office may provide such assistance to the corporation it
 1171  deems appropriate such assessment. If the corporation is unable
 1172  to collect an assessment from any assessable insurer, the
 1173  uncollected assessments shall be levied as an additional
 1174  assessment against the assessable insurers and any assessable
 1175  insurer required to pay an additional assessment as a result of
 1176  such failure to pay shall have a cause of action against such
 1177  nonpaying assessable insurer. Assessments shall be included as
 1178  an appropriate factor in the making of rates. The failure of a
 1179  surplus lines agent to collect and remit any regular or
 1180  emergency assessment levied by the corporation is considered to
 1181  be a violation of s. 626.936 and subjects the surplus lines
 1182  agent to the penalties provided in that section.
 1183         2. The governing body of any unit of local government, any
 1184  residents of which are insured by the corporation, may issue
 1185  bonds as defined in s. 125.013 or s. 166.101 from time to time
 1186  to fund an assistance program, in conjunction with the
 1187  corporation, for the purpose of defraying deficits of the
 1188  corporation. In order to avoid needless and indiscriminate
 1189  proliferation, duplication, and fragmentation of such assistance
 1190  programs, any unit of local government, any residents of which
 1191  are insured by the corporation, may provide for the payment of
 1192  losses, regardless of whether or not the losses occurred within
 1193  or outside of the territorial jurisdiction of the local
 1194  government. Revenue bonds under this subparagraph may not be
 1195  issued until validated pursuant to chapter 75, unless a state of
 1196  emergency is declared by executive order or proclamation of the
 1197  Governor pursuant to s. 252.36 making such findings as are
 1198  necessary to determine that it is in the best interests of, and
 1199  necessary for, the protection of the public health, safety, and
 1200  general welfare of residents of this state and declaring it an
 1201  essential public purpose to permit certain municipalities or
 1202  counties to issue such bonds as will permit relief to claimants
 1203  and policyholders of the corporation. Any such unit of local
 1204  government may enter into such contracts with the corporation
 1205  and with any other entity created pursuant to this subsection as
 1206  are necessary to carry out this paragraph. Any bonds issued
 1207  under this subparagraph shall be payable from and secured by
 1208  moneys received by the corporation from emergency assessments
 1209  under sub-subparagraph (b)3.d., and assigned and pledged to or
 1210  on behalf of the unit of local government for the benefit of the
 1211  holders of such bonds. The funds, credit, property, and taxing
 1212  power of the state or of the unit of local government shall not
 1213  be pledged for the payment of such bonds.
 1214         3.a. The corporation shall adopt one or more programs
 1215  subject to approval by the office for the reduction of both new
 1216  and renewal writings in the corporation. Beginning January 1,
 1217  2008, any program the corporation adopts for the payment of
 1218  bonuses to an insurer for each risk the insurer removes from the
 1219  corporation shall comply with s. 627.3511(2) and may not exceed
 1220  the amount referenced in s. 627.3511(2) for each risk removed.
 1221  The corporation may consider any prudent and not unfairly
 1222  discriminatory approach to reducing corporation writings, and
 1223  may adopt a credit against assessment liability or other
 1224  liability that provides an incentive for insurers to take risks
 1225  out of the corporation and to keep risks out of the corporation
 1226  by maintaining or increasing voluntary writings in counties or
 1227  areas in which corporation risks are highly concentrated and a
 1228  program to provide a formula under which an insurer voluntarily
 1229  taking risks out of the corporation by maintaining or increasing
 1230  voluntary writings will be relieved wholly or partially from
 1231  assessments under sub-subparagraphs (b)3.a. and b. However, any
 1232  “take-out bonus” or payment to an insurer must be conditioned on
 1233  the property being insured for at least 5 years by the insurer,
 1234  unless canceled or nonrenewed by the policyholder. If the policy
 1235  is canceled or nonrenewed by the policyholder before the end of
 1236  the 5-year period, the amount of the take-out bonus must be
 1237  prorated for the time period the policy was insured. When the
 1238  corporation enters into a contractual agreement for a take-out
 1239  plan, the producing agent of record of the corporation policy is
 1240  entitled to retain any unearned commission on such policy, and
 1241  the insurer shall either:
 1242         (I) Pay to the producing agent of record of the policy, for
 1243  the first year, an amount which is the greater of the insurer’s
 1244  usual and customary commission for the type of policy written or
 1245  a policy fee equal to the usual and customary commission of the
 1246  corporation; or
 1247         (II) Offer to allow the producing agent of record of the
 1248  policy to continue servicing the policy for a period of not less
 1249  than 1 year and offer to pay the agent the insurer’s usual and
 1250  customary commission for the type of policy written. If the
 1251  producing agent is unwilling or unable to accept appointment by
 1252  the new insurer, the new insurer shall pay the agent in
 1253  accordance with sub-sub-subparagraph (I).
 1254         b. Any credit or exemption from regular assessments adopted
 1255  under this subparagraph shall last no longer than the 3 years
 1256  following the cancellation or expiration of the policy by the
 1257  corporation. With the approval of the office, the board may
 1258  extend such credits for an additional year if the insurer
 1259  guarantees an additional year of renewability for all policies
 1260  removed from the corporation, or for 2 additional years if the
 1261  insurer guarantees 2 additional years of renewability for all
 1262  policies so removed.
 1263         c. There shall be no credit, limitation, exemption, or
 1264  deferment from emergency assessments to be collected from
 1265  policyholders pursuant to sub-subparagraph (b)3.d.
 1266         4. The plan shall provide for the deferment, in whole or in
 1267  part, of the assessment of an assessable insurer, other than an
 1268  emergency assessment collected from policyholders pursuant to
 1269  sub-subparagraph (b)3.d., if the office finds that payment of
 1270  the assessment would endanger or impair the solvency of the
 1271  insurer. In the event an assessment against an assessable
 1272  insurer is deferred in whole or in part, the amount by which
 1273  such assessment is deferred may be assessed against the other
 1274  assessable insurers in a manner consistent with the basis for
 1275  assessments set forth in paragraph (b).
 1276         5. Effective July 1, 2007, in order to evaluate the costs
 1277  and benefits of approved take-out plans, if the corporation pays
 1278  a bonus or other payment to an insurer for an approved take-out
 1279  plan, it shall maintain a record of the address or such other
 1280  identifying information on the property or risk removed in order
 1281  to track if and when the property or risk is later insured by
 1282  the corporation.
 1283         6. Any policy taken out, assumed, or removed from the
 1284  corporation is, as of the effective date of the take-out,
 1285  assumption, or removal, direct insurance issued by the insurer
 1286  and not by the corporation, even if the corporation continues to
 1287  service the policies. This subparagraph applies to policies of
 1288  the corporation and not policies taken out, assumed, or removed
 1289  from any other entity.
 1290         (w) Notwithstanding any other provision of law:
 1291         1. The pledge or sale of, the lien upon, and the security
 1292  interest in any rights, revenues, or other assets of the
 1293  corporation created or purported to be created pursuant to any
 1294  financing documents to secure any bonds or other indebtedness of
 1295  the corporation shall be and remain valid and enforceable,
 1296  notwithstanding the commencement of and during the continuation
 1297  of, and after, any rehabilitation, insolvency, liquidation,
 1298  bankruptcy, receivership, conservatorship, reorganization, or
 1299  similar proceeding against the corporation under the laws of
 1300  this state.
 1301         2. The No such proceeding does not shall relieve the
 1302  corporation of its obligation, or otherwise affect its ability
 1303  to perform its obligation, to continue to collect, or levy and
 1304  collect, assessments, policyholder surcharges market
 1305  equalization or other surcharges under sub-subparagraph (b)3.i.
 1306  subparagraph (c)10., or any other rights, revenues, or other
 1307  assets of the corporation pledged pursuant to any financing
 1308  documents.
 1309         3. Each such pledge or sale of, lien upon, and security
 1310  interest in, including the priority of such pledge, lien, or
 1311  security interest, any such assessments, policyholder surcharges
 1312  market equalization or other surcharges, or other rights,
 1313  revenues, or other assets which are collected, or levied and
 1314  collected, after the commencement of and during the pendency of,
 1315  or after, any such proceeding shall continue unaffected by such
 1316  proceeding. As used in this subsection, the term “financing
 1317  documents” means any agreement or agreements, instrument or
 1318  instruments, or other document or documents now existing or
 1319  hereafter created evidencing any bonds or other indebtedness of
 1320  the corporation or pursuant to which any such bonds or other
 1321  indebtedness has been or may be issued and pursuant to which any
 1322  rights, revenues, or other assets of the corporation are pledged
 1323  or sold to secure the repayment of such bonds or indebtedness,
 1324  together with the payment of interest on such bonds or such
 1325  indebtedness, or the payment of any other obligation or
 1326  financial product, as defined in the plan of operation of the
 1327  corporation related to such bonds or indebtedness.
 1328         4. Any such pledge or sale of assessments, revenues,
 1329  contract rights, or other rights or assets of the corporation
 1330  shall constitute a lien and security interest, or sale, as the
 1331  case may be, that is immediately effective and attaches to such
 1332  assessments, revenues, or contract rights or other rights or
 1333  assets, whether or not imposed or collected at the time the
 1334  pledge or sale is made. Any such pledge or sale is effective,
 1335  valid, binding, and enforceable against the corporation or other
 1336  entity making such pledge or sale, and valid and binding against
 1337  and superior to any competing claims or obligations owed to any
 1338  other person or entity, including policyholders in this state,
 1339  asserting rights in any such assessments, revenues, or contract
 1340  rights or other rights or assets to the extent set forth in and
 1341  in accordance with the terms of the pledge or sale contained in
 1342  the applicable financing documents, whether or not any such
 1343  person or entity has notice of such pledge or sale and without
 1344  the need for any physical delivery, recordation, filing, or
 1345  other action.
 1346         5. As long as the corporation has any bonds outstanding,
 1347  the corporation may not file a voluntary petition under chapter
 1348  9 of the federal Bankruptcy Code or such corresponding chapter
 1349  or sections as may be in effect, from time to time, and a public
 1350  officer or any organization, entity, or other person may not
 1351  authorize the corporation to be or become a debtor under chapter
 1352  9 of the federal Bankruptcy Code or such corresponding chapter
 1353  or sections as may be in effect, from time to time, during any
 1354  such period.
 1355         6. If ordered by a court of competent jurisdiction, the
 1356  corporation may assume policies or otherwise provide coverage
 1357  for policyholders of an insurer placed in liquidation under
 1358  chapter 631, under such forms, rates, terms, and conditions as
 1359  the corporation deems appropriate, subject to approval by the
 1360  office.
 1361         Section 3. Except as otherwise expressly provided in this
 1362  act, this act shall take effect upon becoming law.
 1363  
 1364  ================= T I T L E  A M E N D M E N T ================
 1365         And the title is amended as follows:
 1366         Delete everything before the enacting clause
 1367  and insert:
 1368                        A bill to be entitled                      
 1369         An act relating to property insurance; amending s.
 1370         215.555, F.S.; revising the definition of “retention”;
 1371         providing for calculation of an insurer’s
 1372         reimbursement premium and retention under the
 1373         reimbursement contract; revising coverage levels
 1374         available under the reimbursement contract; revising
 1375         aggregate coverage limits; providing for the phase-in
 1376         of changes to coverage levels and limits; amending s.
 1377         627.351, F.S.; conforming cross-references; reducing
 1378         to 2 percent from 6 percent the amount of the
 1379         projected deficit in the coastal account for the prior
 1380         calendar year which is recovered through regular
 1381         assessments; requiring that remaining projected
 1382         deficits in personal and commercial lines accounts be
 1383         recovered through emergency assessments after
 1384         accounting for the Citizens policyholder surcharge;
 1385         requiring the Office of Insurance Regulation of the
 1386         Financial Services Commission to notify assessable
 1387         insurers and the Florida Surplus Lines Service Office
 1388         of the dates assessable insurers shall collect and pay
 1389         emergency assessments; removing reference to
 1390         recoupment of residual market deficit assessments;
 1391         requiring the board of governors to make a
 1392         determination that an account has a projected deficit
 1393         before it levies a Citizens policy holder surcharge;
 1394         requiring that a limited apportionment company begin
 1395         collecting regular assessments within 90 days and pay
 1396         in full within 15 months after the assessment is
 1397         levied; authorizing the Office of Insurance Regulation
 1398         to assist the Citizens Property Insurance Corporation
 1399         in the collection of assessments; replacing the term
 1400         “market equalization surcharge” with the term
 1401         “policyholder surcharge”; providing effective dates.