Florida Senate - 2013                                    SB 1248
       By Senator Hays
       11-00820A-13                                          20131248__
    1                        A bill to be entitled                      
    2         An act relating to hurricane mitigation; transferring
    3         responsibility for the public model for hurricane loss
    4         projection from the Office of Insurance Regulation to
    5         the Division of Emergency Management; amending s.
    6         215.559, F.S.; revising provisions relating to the
    7         Hurricane Loss Mitigation Program; deleting provisions
    8         specifying how program funds are to be spent,
    9         including the Manufactured Housing and Mobile Home
   10         Mitigation and Enhancement Program, and the Florida
   11         International University International Hurricane
   12         Research Center; deleting reports prepared by
   13         Tallahassee Community College and a report prepared by
   14         the division; specifying program components, including
   15         responsibility for the public model for hurricane loss
   16         projections, which includes the charging of an access
   17         fee, the development of a mitigation database,
   18         mitigation credits and inspections, mitigation grants,
   19         mitigation outreach, and mitigation research;
   20         authorizing the division to leverage program funding;
   21         repealing s. 627.06281, F.S., relating to the public
   22         hurricane loss projection model; transferring
   23         provisions of that section to ss. 212.559 and
   24         627.06292, F.S.; amending s. 627.0629, F.S.; revising
   25         factors that must be considered or included in the
   26         rate filings for residential property insurance;
   27         reordering and amending s. 627.06292, F.S.; revising
   28         provisions relating to the public model for hurricane
   29         loss projections; conforming a cross-reference;
   30         amending s. 627.351, F.S.; conforming a cross
   31         reference; deleting obsolete provisions; providing an
   32         effective date.
   34  Be It Enacted by the Legislature of the State of Florida:
   36         Section 1. Responsibility for the public hurricane loss
   37  projection model currently located in the Office of Insurance
   38  Regulation of the Department of Financial Services is
   39  transferred to the Division of Emergency Management in the
   40  Executive Office of the Governor by a type two transfer, as
   41  provided in s. 20.06(2), Florida Statutes.
   42         Section 2. Section 215.559, Florida Statutes, is amended to
   43  read:
   44         (Substantial rewording of section. See
   45         s. 215.559, F.S., for present text.)
   46         215.559 Hurricane Loss Mitigation Program.—A Hurricane Loss
   47  Mitigation Program is established in the Division of Emergency
   48  Management.
   49         (1) ANNUAL APPROPRIATION.—The $10 million annual
   50  appropriation authorized under s. 215.555(7) from the Florida
   51  Hurricane Catastrophe Fund shall be used for the purposes
   52  specified in that subsection and to coordinate and centralize
   53  mitigation efforts in this state in accordance with the program
   54  established in this section. Of that amount:
   55         (a) Seven million dollars shall be used for mitigation
   56  programs to improve the hazard resistance of residential
   57  property in this state, including loans, subsidies, grants,
   58  demonstration projects, and direct assistance; educating state
   59  residents concerning hazard risk and risk reduction or
   60  mitigation; hurricane mitigation research; and other efforts to
   61  prevent or reduce losses or reduce the cost of rebuilding after
   62  a disaster.
   63         (b) Three million dollars shall be used to retrofit
   64  existing facilities used as public hurricane shelters. The
   65  division shall annually prioritize the use of these funds for
   66  projects included in the annual report of the Shelter Retrofit
   67  Report prepared in accordance with s. 252.385(3). The division
   68  shall give funding priority to projects in regional planning
   69  council regions that have shelter deficits and to projects that
   70  maximize the use of state funds.
   71         (2) ADVISORY COUNCIL.—An advisory council is created to
   72  provide advice and assistance to the division regarding
   73  administration of the public hurricane model, the mitigation
   74  database, and the development of appropriate standards for
   75  mitigation credits.
   76         (a) The advisory council is composed of:
   77         1.The director of the Division of Emergency Management, or
   78  his or her designee.
   79         2. A representative from the Office of Insurance
   80  Regulation.
   81         3.The chief executive officer of Citizens Property
   82  Insurance Corporation, or his or her designee.
   83         4.The Insurance Consumer Advocate, or his or her designee.
   84         5. The lead scientist from the team that runs the public
   85  hurricane loss projection model, or his or her designee.
   86         6.Three representatives from educational institutions with
   87  programs dedicated to mitigation research or testing, selected
   88  by the director of the Division of Emergency Management.
   89         7. A representative of property insurers recommended by the
   90  Chief Financial Officer.
   91         8. A representative of reinsurers recommended by the Chief
   92  Financial Officer.
   93         9. A representative designated by the Florida Building
   94  Commission.
   95         10. A representative designated by the Building Officials
   96  Association of Florida.
   97         11.The chief executive officer of the Institute for
   98  Business and Home Safety, or his or her designee.
   99         12.The chief executive officer of the Federal Alliance for
  100  Safe Homes, Inc., or his or her designee.
  101         13. A real estate professional recommended by Florida
  102  Realtors.
  103         (b) Beginning the first fiscal year after July 1, 2013,
  104  members of the advisory council serve 2-year terms. Members
  105  serve without compensation, but are entitled to reimbursement as
  106  provided in s. 112.061 for per diem and travel expenses incurred
  107  in the performance of their official duties. All members of the
  108  advisory council shall sign the same code of ethics form used by
  109  the Executive Office of the Governor.
  110         (3) PROGRAM COMPONENTS.—The division shall develop and
  111  administer a comprehensive and coordinated program for hurricane
  112  damage mitigation which includes:
  113         (a) Hurricane loss projection model.—The division is
  114  responsible for the supervision and administration of the public
  115  model for hurricane loss projections developed, maintained, and
  116  updated by the Florida International University center
  117  established pursuant to s. 627.06292.
  118         1.A property insurer may have access to and use the public
  119  model, including all assumptions and factors and all detailed
  120  loss results, for the purpose of calculating rate indications in
  121  a rate filing and for analytical purposes, including any
  122  analysis or evaluation of the model required under actuarial
  123  standards of practice.
  124         2. The division may charge a fee for private sector access
  125  to and use of the public model, which may not exceed the
  126  reasonable costs associated with the operation and maintenance
  127  of the model by the division. Such fees do not apply to access
  128  and use of the model by the Office of Insurance Regulation.
  129         (b) Mitigation database.—The division shall develop a
  130  centralized public database that contains information regarding
  131  the inspection and mitigation of residential property throughout
  132  the state. The purpose of this database is to accurately collect
  133  all information regarding the construction and mitigation
  134  features for each property. The mitigation database may contain,
  135  but is not limited to, the elements of the loss and exposure
  136  data reported for the hurricane loss projection model under s.
  137  627.06292, with the exception of proprietary information
  138  submitted by insurers relating to reserves for future payments.
  139         (c) Mitigation credits and inspections.—The division, in
  140  consultation with the council, shall establish mitigation
  141  features eligible for mitigation credit to be published yearly
  142  and used for hurricane mitigation inspection forms adopted
  143  pursuant to s. 627.711. Using the hurricane loss projection
  144  model, methodology shall be developed to incorporate appropriate
  145  standards for mitigation credits into any model approved by the
  146  Florida Commission on Hurricane Loss Projection Methodology
  147  under s. 627.0628. The methodology established shall be applied
  148  in the commission’s review of the public model.
  149         (d) Mitigation grants.—Financial grants shall be used to
  150  encourage property owners to retrofit their properties to make
  151  them less vulnerable to hurricane damage. The division shall
  152  establish objective, reasonable criteria for prioritizing grant
  153  applications in accordance with the division’s standard
  154  operating procedures as set forth in state and federal law.
  155         (e) Mitigation outreach.—The division shall conduct
  156  outreach to stakeholders interested in mitigation in order to
  157  promote a better understanding of risk and the reduction of risk
  158  in the form of mitigation practices and policies.
  159         (f) Mitigation research.The division shall research
  160  mitigation practices and products in order to better inform the
  161  public and the division’s mitigation initiatives.
  162         (4) FUNDING.—Moneys provided to the division under this
  163  section are intended to supplement, not supplant, the division’s
  164  other funding sources. The division may seek out and leverage
  165  local, state, federal, or private funds to enhance financial
  166  resources for mitigation initiatives.
  167         Section 3. Section 627.06281, Florida Statutes, is
  168  repealed.
  169         Section 4. Subsection (1) of section 627.0629, Florida
  170  Statutes, is amended to read:
  171         627.0629 Residential property insurance; rate filings.—
  172         (1) It is the intent of the Legislature that insurers
  173  provide savings to consumers who install or implement windstorm
  174  damage mitigation techniques, alterations, or solutions to their
  175  properties to prevent windstorm losses. Therefore, a rate filing
  176  for residential property insurance must include actuarially
  177  reasonable discounts, credits, or other rate differentials, or
  178  appropriate reductions in deductibles, for properties on which
  179  fixtures or construction techniques demonstrated to reduce the
  180  amount of loss in a windstorm have been installed or
  181  implemented. The fixtures or construction techniques must
  182  include, but are not limited to, fixtures or construction
  183  techniques that enhance roof strength, roof covering
  184  performance, roof-to-wall strength, wall-to-floor-to-foundation
  185  strength, opening protection, and window, door, and skylight
  186  strength. Credits, discounts, or other rate differentials, or
  187  appropriate reductions in deductibles, for fixtures and
  188  construction techniques that meet the minimum requirements of
  189  the Florida Building Code must be included in the rate filing.
  190  The hurricane loss projection model established pursuant to s.
  191  627.06292 shall be used to establish the appropriate methodology
  192  for determining such office shall determine the discounts,
  193  credits, other rate differentials, and appropriate reductions in
  194  deductibles that reflect the full actuarial value of such
  195  revaluation, which may be used by insurers in rate filings.
  196         Section 5. Section 627.06292, Florida Statutes, is
  197  reordered and amended to read:
  198         627.06292 Public model for hurricane loss projections;
  199  annual report Reports of hurricane loss data and associated
  200  exposure data; public records exemption.—The Florida
  201  International University center is established to conduct
  202  hurricane research and study hurricane mitigation for the
  203  purposes of developing, maintaining, and updating a public model
  204  for hurricane loss projections.
  205         (1) Within 30 days after receipt of a written request for
  206  loss data and associated exposure data from the Division of
  207  Emergency Management, property insurers and licensed rating and
  208  advisory organizations that compile property insurance loss data
  209  shall provide loss data and associated exposure data, including
  210  data related to property insurance policies, to the center. The
  211  loss data and associated exposure data provided may be provided
  212  electronically.
  213         (2) The public model shall be submitted to the Florida
  214  Commission on Hurricane Loss Projection Methodology for review
  215  under s. 627.0628. The Office of Insurance Regulation may
  216  continue to use the model for its review of rate filings
  217  pursuant to ss. 627.062 and 627.351 until such time as the
  218  Florida Commission on Hurricane Loss Projection Methodology
  219  determines that the public model is not accurate or reliable
  220  pursuant to the same process and standards as the commission
  221  uses for the review of other hurricane loss projection models.
  222         (5)(1) Reports of hurricane loss data and associated
  223  exposure data that are specific to a particular insurance
  224  company, as reported by an insurer or a licensed rating
  225  organization to the office or to a center pursuant to this
  226  section at a state university pursuant to s. 627.06281, are
  227  exempt from s. 119.07(1) and s. 24(a), Art. I of the State
  228  Constitution.
  229         (4)(2) For the purposes of this section, the term “loss
  230  data and associated exposure data” means the type, age, wind
  231  mitigation features, and location of each property insured; the
  232  amount and type of coverage written on each of those properties;
  233  the amount, date, and type of damage paid for by the insurer on
  234  each property; and the amount of any reserves held by an insurer
  235  for future payments or expenses on damages associated with the
  236  date or dates of occurrence of hurricanes.
  237         (3) Annually by On October 1, 2011, and on each October 1
  238  thereafter, the Florida International University center that
  239  develops, maintains, and updates the public model for hurricane
  240  loss projections shall publish a report summarizing loss data
  241  and associated exposure data collected from residential property
  242  insurers and licensed rating and advisory organizations. The
  243  Florida International University center shall submit the report
  244  annually, on or before October 1, to the Governor, the President
  245  of the Senate, and the Speaker of the House of Representatives.
  246         (a) Such report must include a summary of the data supplied
  247  by residential property insurers and licensed rating and
  248  advisory organizations from September 1 of the prior year to
  249  August 31 of the current year, and must include the following
  250  information:
  251         1. The total amount of insurance written by county.
  252         2. The number of property insurance policies by county.
  253         3. The number of property insurance policies by county and
  254  by construction type.
  255         4. The number of property insurance policies by county and
  256  by decade of construction.
  257         5. The number of property insurance policies by county and
  258  by deductible amount.
  259         6. The number of property insurance policies by county and
  260  by wind mitigation features if when the information is supplied
  261  by the residential property insurer or licensed rating and
  262  advisory organization.
  263         7. The total amount of hurricane losses by county and by
  264  decade of construction.
  265         8. The total amount of hurricane losses by county and by
  266  deductible amount.
  267         9. The total amount of hurricane losses by county and by
  268  wind mitigation features if when the information is supplied by
  269  the residential property insurer or licensed rating and advisory
  270  organization.
  271         (b) Separate compilations of the data obtained shall be
  272  presented in order to use the public model for calculating rate
  273  indications and to update, validate, or calibrate the public
  274  model. Additional detail and a description of the operation and
  275  maintenance of the public model may be included in the report.
  276         (c) The report may not contain any information that
  277  identifies a specific insurer or policyholder.
  278         Section 6. Paragraph (n) of subsection (6) of section
  279  627.351, Florida Statutes, is amended to read:
  280         627.351 Insurance risk apportionment plans.—
  282         (n)1. Rates for coverage provided by the corporation must
  283  be actuarially sound and subject to s. 627.062, except as
  284  otherwise provided in this paragraph.
  285         1. The corporation shall file its recommended rates with
  286  the office at least annually. The corporation shall provide any
  287  additional information regarding the rates which the office
  288  requires. The office shall consider the recommendations of the
  289  board and issue a final order establishing the rates for the
  290  corporation within 45 days after the recommended rates are
  291  filed. The corporation may not pursue an administrative
  292  challenge or judicial review of the final order of the office.
  293         2. In addition to the rates otherwise determined pursuant
  294  to this paragraph, The corporation shall also impose and collect
  295  an amount equal to the premium tax provided in s. 624.509 to
  296  augment the financial resources of the corporation.
  297         3. After the public hurricane loss-projection model under
  298  s. 627.06292 s. 627.06281 has been found to be accurate and
  299  reliable by the Florida Commission on Hurricane Loss Projection
  300  Methodology, the model must shall serve as the minimum benchmark
  301  for determining the windstorm portion of the corporation’s
  302  rates. This subparagraph does not require or allow the
  303  corporation to adopt rates lower than the rates otherwise
  304  required or allowed by this paragraph.
  305         4. The rate filings for the corporation which were approved
  306  by the office and took effect January 1, 2007, are rescinded,
  307  except for those rates that were lowered. As soon as possible,
  308  the corporation shall begin using the lower rates that were in
  309  effect on December 31, 2006, and provide refunds to
  310  policyholders who paid higher rates as a result of that rate
  311  filing. The rates in effect on December 31, 2006, remain in
  312  effect for the 2007 and 2008 calendar years except for any rate
  313  change that results in a lower rate. The next rate change that
  314  may increase rates shall take effect pursuant to a new rate
  315  filing recommended by the corporation and established by the
  316  office, subject to this paragraph.
  317         5. Beginning on July 15, 2009, and annually thereafter, the
  318  corporation shall must make a recommended actuarially sound rate
  319  filing for each personal and commercial line of business it
  320  writes, to be effective no earlier than January 1, 2010.
  321         6. Beginning on or after January 1, 2010, and
  322  Notwithstanding the board’s recommended rates and the office’s
  323  final order regarding the corporation’s filed rates under
  324  subparagraph 1., the corporation shall annually implement a rate
  325  increase that which, except for sinkhole coverage, does not
  326  exceed 10 percent for any single policy issued by the
  327  corporation, excluding coverage changes and surcharges.
  328         7. The corporation may also implement an increase to
  329  reflect the effect on the corporation of the cash buildup factor
  330  pursuant to s. 215.555(5)(b).
  331         8. The corporation’s implementation of rates as prescribed
  332  in subparagraph 6. shall cease for any line of business written
  333  by the corporation upon the corporation’s implementation of
  334  actuarially sound rates. Thereafter, the corporation shall
  335  annually make a recommended actuarially sound rate filing for
  336  each commercial and personal line of business the corporation
  337  writes.
  338         Section 7. This act shall take effect July 1, 2013.