Florida Senate - 2014                             CS for SB 1672
       
       
        
       By the Committees on Commerce and Tourism; and Banking and
       Insurance
       
       
       
       
       577-03927A-14                                         20141672c1
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         626.854, F.S.; prohibiting a public adjuster or public
    4         adjuster apprentice from choosing the persons or
    5         entities that will perform repair work; amending s.
    6         627.351, F.S.; postponing the date that new
    7         construction or substantial improvement is not
    8         eligible for coverage by the corporation; deleting
    9         reference to the Residential Property and Casualty
   10         Joint Underwriting Association with respect to issuing
   11         certain residential or commercial policies; requiring
   12         the corporation to cease offering new commercial
   13         residential policies providing multiperil coverage
   14         after a certain date and providing that the
   15         corporation continue offering commercial residential
   16         wind-only policies; authorizing the corporation to
   17         offer commercial residential policies excluding wind;
   18         providing exceptions; specifying the amount of the
   19         surcharge to be assessed against personal lines,
   20         commercial lines, and coastal accounts to cover a
   21         projected deficit; requiring the corporation’s board
   22         to contract with the Division of Administrative
   23         Hearings to hear protests of the corporation’s
   24         decisions regarding the purchase of commodities and
   25         contractual services and issue a recommended order;
   26         requiring the board to take final action in a public
   27         meeting; revising the date for submitting the annual
   28         loss ratio report for residential coverage; amending
   29         s. 627.3518, F.S.; defining the term “surplus lines
   30         insurer”; requiring the corporation to implement
   31         procedures for diverting ineligible applicants and
   32         existing policyholders for commercial residential
   33         coverage from the corporation by a certain date;
   34         deleting the requirement that the corporation report
   35         such procedures to the Legislature; authorizing
   36         eligible surplus lines insurers to participate in the
   37         corporation’s clearinghouse program and providing
   38         criteria for such eligibility; conforming cross
   39         references; providing that certain applicants who
   40         accept an offer from a surplus lines insurer are
   41         considered a renewal; repealing s. 627.3519, F.S.,
   42         relating to an annual report requirement relating to
   43         aggregate net probable maximum losses; amending s.
   44         627.35191, F.S.; requiring the corporation to annually
   45         provide certain estimates for the next 12-month period
   46         to the Legislature and the Financial Services
   47         Commission; amending s. 627.701, F.S.; increasing the
   48         amount of the deductible that an insurer must offer
   49         for residential property insurance; amending s.
   50         627.711, F.S.; prohibiting a mitigation inspector from
   51         offering or delivering compensation, and an insurance
   52         agency, agent, customer representative, or employee
   53         from accepting compensation for referring an owner to
   54         the inspector or inspection company; authorizing an
   55         insurer to exempt a uniform mitigation verification
   56         form from independent verification under certain
   57         circumstances; providing that the form provided to the
   58         corporation is not subject to verification and the
   59         property is not subject to reinspection under certain
   60         circumstances; providing effective dates.
   61          
   62  Be It Enacted by the Legislature of the State of Florida:
   63  
   64         Section 1. Subsection (18) of section 626.854, Florida
   65  Statutes, is renumbered as subsection (19) and amended, and
   66  subsection (18) is added to that section, to read:
   67         626.854 “Public adjuster” defined; prohibitions.—The
   68  Legislature finds that it is necessary for the protection of the
   69  public to regulate public insurance adjusters and to prevent the
   70  unauthorized practice of law.
   71         (18) A public adjuster, a public adjuster apprentice, or
   72  any person acting on behalf of an adjuster or apprentice may not
   73  enter into a contract or accept a power of attorney that vests
   74  in the public adjuster, the public adjuster apprentice, or the
   75  person acting on behalf of the adjuster or apprentice the
   76  effective authority to choose the persons or entities that will
   77  perform repair work.
   78         (19)(18)The provisions of Subsections (5)-(18) (5)-(17)
   79  apply only to residential property insurance policies and
   80  condominium unit owner policies as described defined in s.
   81  718.111(11).
   82         Section 2. Paragraphs (a), (b), (e), and (hh) of subsection
   83  (6) of section 627.351, Florida Statutes, are amended to read:
   84         627.351 Insurance risk apportionment plans.—
   85         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   86         (a) The public purpose of this subsection is to ensure that
   87  there is an orderly market for property insurance for residents
   88  and businesses of this state.
   89         1. The Legislature finds that private insurers are
   90  unwilling or unable to provide affordable property insurance
   91  coverage in this state to the extent sought and needed. The
   92  absence of affordable property insurance threatens the public
   93  health, safety, and welfare and likewise threatens the economic
   94  health of the state. The state, therefore, has a compelling
   95  public interest and a public purpose to assist in assuring that
   96  property in the state is insured and that it is insured at
   97  affordable rates so as to facilitate the remediation,
   98  reconstruction, and replacement of damaged or destroyed property
   99  in order to reduce or avoid the negative effects on otherwise
  100  resulting to the public health, safety, and welfare, to the
  101  economy of the state, and to the revenues of the state and local
  102  governments which are needed to provide for the public welfare.
  103  It is necessary, therefore, to provide affordable property
  104  insurance to applicants who are in good faith entitled to
  105  procure insurance through the voluntary market but are unable to
  106  do so. The Legislature intends, therefore, that affordable
  107  property insurance be provided and that it continue to be
  108  provided, as long as necessary, through Citizens Property
  109  Insurance Corporation, a government entity that is an integral
  110  part of the state, and that is not a private insurance company.
  111  To that end, the corporation shall strive to increase the
  112  availability of affordable property insurance in this state,
  113  while achieving efficiencies and economies, and while providing
  114  service to policyholders, applicants, and agents which is no
  115  less than the quality generally provided in the voluntary
  116  market, for the achievement of the foregoing public purposes.
  117  Because it is essential for this government entity to have the
  118  maximum financial resources to pay claims following a
  119  catastrophic hurricane, it is further the intent of the
  120  Legislature that the corporation continue to be an integral part
  121  of the state, and that the income of the corporation be exempt
  122  from federal income taxation, and that interest on the debt
  123  obligations issued by the corporation be exempt from federal
  124  income taxation.
  125         2. The Residential Property and Casualty Joint Underwriting
  126  Association originally created by this statute shall be known as
  127  the Citizens Property Insurance Corporation. The corporation
  128  shall provide insurance for residential and commercial property,
  129  for applicants who are entitled, but, in good faith, are unable
  130  to procure insurance through the voluntary market. The
  131  corporation shall operate pursuant to a plan of operation
  132  approved by order of the Financial Services Commission. The plan
  133  is subject to continuous review by the commission. The
  134  commission may, by order, withdraw approval of all or part of a
  135  plan if the commission determines that conditions have changed
  136  since approval was granted and that the purposes of the plan
  137  require changes in the plan. For the purposes of this
  138  subsection, residential coverage includes both personal lines
  139  residential coverage, which consists of the type of coverage
  140  provided by homeowner’s, mobile home owner’s, dwelling,
  141  tenant’s, condominium unit owner’s, and similar policies; and
  142  commercial lines residential coverage, which consists of the
  143  type of coverage provided by condominium association, apartment
  144  building, and similar policies.
  145         3. With respect to coverage for personal lines residential
  146  structures:
  147         a. Effective January 1, 2014, a structure that has a
  148  dwelling replacement cost of $1 million or more, or a single
  149  condominium unit that has a combined dwelling and contents
  150  replacement cost of $1 million or more is not eligible for
  151  coverage by the corporation. Such dwellings insured by the
  152  corporation on December 31, 2013, may continue to be covered by
  153  the corporation until the end of the policy term. The office
  154  shall approve the method used by the corporation for valuing the
  155  dwelling replacement costs under cost for the purposes of this
  156  subparagraph. If a policyholder is insured by the corporation
  157  before being determined to be ineligible pursuant to this
  158  subparagraph and such policyholder files a lawsuit challenging
  159  the determination, the policyholder may remain insured by the
  160  corporation until the conclusion of the litigation.
  161         b. Effective January 1, 2015, a structure that has a
  162  dwelling replacement cost of $900,000 or more, or a single
  163  condominium unit that has a combined dwelling and contents
  164  replacement cost of $900,000 or more, is not eligible for
  165  coverage by the corporation. Such dwellings insured by the
  166  corporation on December 31, 2014, may continue to be covered by
  167  the corporation only until the end of the policy term.
  168         c. Effective January 1, 2016, a structure that has a
  169  dwelling replacement cost of $800,000 or more, or a single
  170  condominium unit that has a combined dwelling and contents
  171  replacement cost of $800,000 or more, is not eligible for
  172  coverage by the corporation. Such dwellings insured by the
  173  corporation on December 31, 2015, may continue to be covered by
  174  the corporation until the end of the policy term.
  175         d. Effective January 1, 2017, a structure that has a
  176  dwelling replacement cost of $700,000 or more, or a single
  177  condominium unit that has a combined dwelling and contents
  178  replacement cost of $700,000 or more, is not eligible for
  179  coverage by the corporation. Such dwellings insured by the
  180  corporation on December 31, 2016, may continue to be covered by
  181  the corporation until the end of the policy term.
  182  
  183  The requirements of sub-subparagraphs b.-d. do not apply in
  184  counties where the office determines there is not a reasonable
  185  degree of competition. In such counties a personal lines
  186  residential structure that has a dwelling replacement cost of
  187  less than $1 million, or a single condominium unit that has a
  188  combined dwelling and contents replacement cost of less than $1
  189  million, is eligible for coverage by the corporation.
  190         4. It is the intent of the Legislature that policyholders,
  191  applicants, and agents of the corporation receive service and
  192  treatment of the highest possible level but never less than that
  193  generally provided in the voluntary market. It is also intended
  194  that the corporation be held to service standards no less than
  195  those applied to insurers in the voluntary market by the office
  196  with respect to responsiveness, timeliness, customer courtesy,
  197  and overall dealings with policyholders, applicants, or agents
  198  of the corporation.
  199         5.a. Effective January 1, 2009, a personal lines
  200  residential structure that is located in the “wind-borne debris
  201  region,” as defined in s. 1609.2, International Building Code
  202  (2006), and that has an insured value on the structure of
  203  $750,000 or more is not eligible for coverage by the corporation
  204  unless the structure has opening protections as required under
  205  the Florida Building Code for a newly constructed residential
  206  structure in that area. A residential structure is deemed to
  207  comply with this subparagraph if it has shutters or opening
  208  protections on all openings and if such opening protections
  209  complied with the Florida Building Code at the time they were
  210  installed.
  211         b. Any major structure as defined in s. 161.54(6)(a) for
  212  which a permit is applied on or after July 1, 2015 2014, for new
  213  construction or substantial improvement as defined in s.
  214  161.54(12) is not eligible for coverage by the corporation if
  215  the structure is seaward of the coastal construction control
  216  line established pursuant to s. 161.053 or is within the Coastal
  217  Barrier Resources System as designated by 16 U.S.C. ss. 3501
  218  3510.
  219         (b)1. All insurers authorized to write one or more subject
  220  lines of business in this state are subject to assessment by the
  221  corporation and, for the purposes of this subsection, are
  222  referred to collectively as “assessable insurers.” Insurers
  223  writing one or more subject lines of business in this state
  224  pursuant to part VIII of chapter 626 are not assessable
  225  insurers; however, but insureds who procure one or more subject
  226  lines of business in this state pursuant to part VIII of chapter
  227  626 are subject to assessment by the corporation and are
  228  referred to collectively as “assessable insureds.” An insurer’s
  229  assessment liability begins on the first day of the calendar
  230  year following the year in which the insurer was issued a
  231  certificate of authority to transact insurance for subject lines
  232  of business in this state and terminates 1 year after the end of
  233  the first calendar year during which the insurer no longer holds
  234  a certificate of authority to transact insurance for subject
  235  lines of business in this state.
  236         2.a. All revenues, assets, liabilities, losses, and
  237  expenses of the corporation shall be divided into three separate
  238  accounts as follows:
  239         (I) A personal lines account for personal residential
  240  policies issued by the corporation, or issued by the Residential
  241  Property and Casualty Joint Underwriting Association and renewed
  242  by the corporation, which provides comprehensive, multiperil
  243  coverage on risks that are not located in areas eligible for
  244  coverage by the Florida Windstorm Underwriting Association as
  245  those areas were defined on January 1, 2002, and for policies
  246  that do not provide coverage for the peril of wind on risks that
  247  are located in such areas;
  248         (II) A commercial lines account for commercial residential
  249  and commercial nonresidential policies issued by the
  250  corporation, or issued by the Residential Property and Casualty
  251  Joint Underwriting Association and renewed by the corporation,
  252  which provides coverage for basic property perils on risks that
  253  are not located in areas eligible for coverage by the Florida
  254  Windstorm Underwriting Association as those areas were defined
  255  on January 1, 2002, and for policies that do not provide
  256  coverage for the peril of wind on risks that are located in such
  257  areas; and
  258         (III) A coastal account for personal residential policies
  259  and commercial residential and commercial nonresidential
  260  property policies issued by the corporation, or transferred to
  261  the corporation, which provides coverage for the peril of wind
  262  on risks that are located in areas eligible for coverage by the
  263  Florida Windstorm Underwriting Association as those areas were
  264  defined on January 1, 2002. The corporation may offer policies
  265  that provide multiperil coverage and the corporation shall
  266  continue to offer policies that provide coverage only for the
  267  peril of wind for risks located in areas eligible for coverage
  268  in the coastal account. Effective July 1, 2014, the corporation
  269  shall cease offering new commercial residential policies
  270  providing multiperil coverage and shall instead continue to
  271  offer commercial residential wind-only policies, and may offer
  272  commercial residential policies excluding wind. The corporation
  273  may, however, continue to renew a commercial residential
  274  multiperil policy on a building that is insured by the
  275  corporation on June 30, 2014, under a multiperil policy. In
  276  issuing multiperil coverage, the corporation may use its
  277  approved policy forms and rates for the personal lines account.
  278  An applicant or insured who is eligible to purchase a multiperil
  279  policy from the corporation may purchase a multiperil policy
  280  from an authorized insurer without prejudice to the applicant’s
  281  or insured’s eligibility to prospectively purchase a policy that
  282  provides coverage only for the peril of wind from the
  283  corporation. An applicant or insured who is eligible for a
  284  corporation policy that provides coverage only for the peril of
  285  wind may elect to purchase or retain such policy and also
  286  purchase or retain coverage excluding wind from an authorized
  287  insurer without prejudice to the applicant’s or insured’s
  288  eligibility to prospectively purchase a policy that provides
  289  multiperil coverage from the corporation. It is the goal of the
  290  Legislature that there be an overall average savings of 10
  291  percent or more for a policyholder who currently has a wind-only
  292  policy with the corporation, and an ex-wind policy with a
  293  voluntary insurer or the corporation, and who obtains a
  294  multiperil policy from the corporation. It is the intent of the
  295  Legislature that the offer of multiperil coverage in the coastal
  296  account be made and implemented in a manner that does not
  297  adversely affect the tax-exempt status of the corporation or
  298  creditworthiness of or security for currently outstanding
  299  financing obligations or credit facilities of the coastal
  300  account, the personal lines account, or the commercial lines
  301  account. The coastal account must also include quota share
  302  primary insurance under subparagraph (c)2. The area eligible for
  303  coverage under the coastal account also includes the area within
  304  Port Canaveral, which is bordered on the south by the City of
  305  Cape Canaveral, bordered on the west by the Banana River, and
  306  bordered on the north by Federal Government property.
  307         b. The three separate accounts must be maintained as long
  308  as financing obligations entered into by the Florida Windstorm
  309  Underwriting Association or Residential Property and Casualty
  310  Joint Underwriting Association are outstanding, in accordance
  311  with the terms of the corresponding financing documents. If the
  312  financing obligations are no longer outstanding, the corporation
  313  may use a single account for all revenues, assets, liabilities,
  314  losses, and expenses of the corporation. Consistent with this
  315  subparagraph and prudent investment policies that minimize the
  316  cost of carrying debt, the board shall exercise its best efforts
  317  to retire existing debt or obtain the approval of necessary
  318  parties to amend the terms of existing debt, so as to structure
  319  the most efficient plan for consolidating to consolidate the
  320  three separate accounts into a single account.
  321         c. Creditors of the Residential Property and Casualty Joint
  322  Underwriting Association and the accounts specified in sub-sub
  323  subparagraphs a.(I) and (II) may have a claim against, and
  324  recourse to, those accounts and no claim against, or recourse
  325  to, the account referred to in sub-sub-subparagraph a.(III).
  326  Creditors of the Florida Windstorm Underwriting Association have
  327  a claim against, and recourse to, the account referred to in
  328  sub-sub-subparagraph a.(III) and no claim against, or recourse
  329  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
  330  (II).
  331         d. Revenues, assets, liabilities, losses, and expenses not
  332  attributable to particular accounts shall be prorated among the
  333  accounts.
  334         e. The Legislature finds that the revenues of the
  335  corporation are revenues that are necessary to meet the
  336  requirements set forth in documents authorizing the issuance of
  337  bonds under this subsection.
  338         f. The income of the corporation may not inure to the
  339  benefit of any private person.
  340         3. With respect to a deficit in an account:
  341         a. After accounting for the Citizens policyholder surcharge
  342  imposed under sub-subparagraph i., if the remaining projected
  343  deficit incurred in the coastal account in a particular calendar
  344  year:
  345         (I) Is not greater than 2 percent of the aggregate
  346  statewide direct written premium for the subject lines of
  347  business for the prior calendar year, the entire deficit shall
  348  be recovered through regular assessments of assessable insurers
  349  under paragraph (q) and assessable insureds.
  350         (II) Exceeds 2 percent of the aggregate statewide direct
  351  written premium for the subject lines of business for the prior
  352  calendar year, the corporation shall levy regular assessments on
  353  assessable insurers under paragraph (q) and on assessable
  354  insureds in an amount equal to the greater of 2 percent of the
  355  projected deficit or 2 percent of the aggregate statewide direct
  356  written premium for the subject lines of business for the prior
  357  calendar year. Any remaining projected deficit shall be
  358  recovered through emergency assessments under sub-subparagraph
  359  d.
  360         b. Each assessable insurer’s share of the amount being
  361  assessed under sub-subparagraph a. must be in the proportion
  362  that the assessable insurer’s direct written premium for the
  363  subject lines of business for the year preceding the assessment
  364  bears to the aggregate statewide direct written premium for the
  365  subject lines of business for that year. The assessment
  366  percentage applicable to each assessable insured is the ratio of
  367  the amount being assessed under sub-subparagraph a. to the
  368  aggregate statewide direct written premium for the subject lines
  369  of business for the prior year. Assessments levied by the
  370  corporation on assessable insurers under sub-subparagraph a.
  371  must be paid as required by the corporation’s plan of operation
  372  and paragraph (q). Assessments levied by the corporation on
  373  assessable insureds under sub-subparagraph a. shall be collected
  374  by the surplus lines agent at the time the surplus lines agent
  375  collects the surplus lines tax required by s. 626.932, and paid
  376  to the Florida Surplus Lines Service Office at the time the
  377  surplus lines agent pays the surplus lines tax to that office.
  378  Upon receipt of regular assessments from surplus lines agents,
  379  the Florida Surplus Lines Service Office shall transfer the
  380  assessments directly to the corporation as determined by the
  381  corporation.
  382         c. After accounting for the Citizens policyholder surcharge
  383  imposed under sub-subparagraph i., the remaining projected
  384  deficits in the personal lines account and in the commercial
  385  lines account in a particular calendar year shall be recovered
  386  through emergency assessments under sub-subparagraph d.
  387         d. Upon a determination by the board of governors that a
  388  projected deficit in an account exceeds the amount that is
  389  expected to be recovered through regular assessments under sub
  390  subparagraph a., plus the amount that is expected to be
  391  recovered through surcharges under sub-subparagraph i., the
  392  board, after verification by the office, shall levy emergency
  393  assessments for as many years as necessary to cover the
  394  deficits, to be collected by assessable insurers and the
  395  corporation and collected from assessable insureds upon issuance
  396  or renewal of policies for subject lines of business, excluding
  397  National Flood Insurance policies. The amount collected in a
  398  particular year must be a uniform percentage of that year’s
  399  direct written premium for subject lines of business and all
  400  accounts of the corporation, excluding National Flood Insurance
  401  Program policy premiums, as annually determined by the board and
  402  verified by the office. The office shall verify the arithmetic
  403  calculations involved in the board’s determination within 30
  404  days after receipt of the information on which the determination
  405  was based. The office shall notify assessable insurers and the
  406  Florida Surplus Lines Service Office of the date on which
  407  assessable insurers shall begin to collect and assessable
  408  insureds shall begin to pay such assessment. The date must be at
  409  least may be not less than 90 days after the date the
  410  corporation levies emergency assessments pursuant to this sub
  411  subparagraph. Notwithstanding any other provision of law, the
  412  corporation and each assessable insurer that writes subject
  413  lines of business shall collect emergency assessments from its
  414  policyholders without such obligation being affected by any
  415  credit, limitation, exemption, or deferment. Emergency
  416  assessments levied by the corporation on assessable insureds
  417  shall be collected by the surplus lines agent at the time the
  418  surplus lines agent collects the surplus lines tax required by
  419  s. 626.932 and paid to the Florida Surplus Lines Service Office
  420  at the time the surplus lines agent pays the surplus lines tax
  421  to that office. The emergency assessments collected shall be
  422  transferred directly to the corporation on a periodic basis as
  423  determined by the corporation and held by the corporation solely
  424  in the applicable account. The aggregate amount of emergency
  425  assessments levied for an account under this sub-subparagraph in
  426  any calendar year may be less than but may not exceed the
  427  greater of 10 percent of the amount needed to cover the deficit,
  428  plus interest, fees, commissions, required reserves, and other
  429  costs associated with financing the original deficit, or 10
  430  percent of the aggregate statewide direct written premium for
  431  subject lines of business and all accounts of the corporation
  432  for the prior year, plus interest, fees, commissions, required
  433  reserves, and other costs associated with financing the deficit.
  434         e. The corporation may pledge the proceeds of assessments,
  435  projected recoveries from the Florida Hurricane Catastrophe
  436  Fund, other insurance and reinsurance recoverables, policyholder
  437  surcharges and other surcharges, and other funds available to
  438  the corporation as the source of revenue for and to secure bonds
  439  issued under paragraph (q), bonds or other indebtedness issued
  440  under subparagraph (c)3., or lines of credit or other financing
  441  mechanisms issued or created under this subsection, or to retire
  442  any other debt incurred as a result of deficits or events giving
  443  rise to deficits, or in any other way that the board determines
  444  will efficiently recover such deficits. The purpose of the lines
  445  of credit or other financing mechanisms is to provide additional
  446  resources to assist the corporation in covering claims and
  447  expenses attributable to a catastrophe. As used in this
  448  subsection, the term “assessments” includes regular assessments
  449  under sub-subparagraph a. or subparagraph (q)1. and emergency
  450  assessments under sub-subparagraph d. Emergency assessments
  451  collected under sub-subparagraph d. are not part of an insurer’s
  452  rates, are not premium, and are not subject to premium tax,
  453  fees, or commissions; however, failure to pay the emergency
  454  assessment shall be treated as failure to pay premium. The
  455  emergency assessments under sub-subparagraph d. shall continue
  456  as long as any bonds issued or other indebtedness incurred with
  457  respect to a deficit for which the assessment was imposed remain
  458  outstanding, unless adequate provision has been made for the
  459  payment of such bonds or other indebtedness pursuant to the
  460  documents governing such bonds or indebtedness.
  461         f. As used in this subsection for purposes of any deficit
  462  incurred on or after January 25, 2007, the term “subject lines
  463  of business” means insurance written by assessable insurers or
  464  procured by assessable insureds for all property and casualty
  465  lines of business in this state, but not including workers’
  466  compensation or medical malpractice. As used in this sub
  467  subparagraph, the term “property and casualty lines of business”
  468  includes all lines of business identified on Form 2, Exhibit of
  469  Premiums and Losses, in the annual statement required of
  470  authorized insurers under s. 624.424 and any rule adopted under
  471  this section, except for those lines identified as accident and
  472  health insurance and except for policies written under the
  473  National Flood Insurance Program or the Federal Crop Insurance
  474  Program. For purposes of this sub-subparagraph, the term
  475  “workers’ compensation” includes both workers’ compensation
  476  insurance and excess workers’ compensation insurance.
  477         g. The Florida Surplus Lines Service Office shall determine
  478  annually the aggregate statewide written premium in subject
  479  lines of business procured by assessable insureds and report
  480  that information to the corporation in a form and at a time the
  481  corporation specifies to ensure that the corporation can meet
  482  the requirements of this subsection and the corporation’s
  483  financing obligations.
  484         h. The Florida Surplus Lines Service Office shall verify
  485  the proper application by surplus lines agents of assessment
  486  percentages for regular assessments and emergency assessments
  487  levied under this subparagraph on assessable insureds and assist
  488  the corporation in ensuring the accurate, timely collection and
  489  payment of assessments by surplus lines agents as required by
  490  the corporation.
  491         i. In 2008 or thereafter, Upon a determination by the board
  492  of governors that an account has a projected deficit, the board
  493  shall levy a Citizens policyholder surcharge against all
  494  policyholders of the corporation.
  495         (I) The surcharge shall be levied as a uniform percentage
  496  of the premium for all corporation policyholders for the policy
  497  of up to 10 percent of the policy premium for deficits in the
  498  personal lines account, up to 15 percent of the policy such
  499  premium for deficits in the commercial lines account, and up to
  500  20 percent of the policy premium for deficits in the coastal
  501  account, which funds shall be used to offset the deficit.
  502         (II) The surcharge is payable upon cancellation or
  503  termination of the policy, upon renewal of the policy, or upon
  504  issuance of a new policy by the corporation within the first 12
  505  months after the date of the levy or the period of time
  506  necessary to fully collect the surcharge amount.
  507         (III) The corporation may not levy any regular assessments
  508  under paragraph (q) pursuant to sub-subparagraph a. or sub
  509  subparagraph b. with respect to a particular year’s deficit
  510  until the corporation has first levied the full amount of the
  511  surcharge authorized by this sub-subparagraph.
  512         (IV) The surcharge is not considered premium and is not
  513  subject to commissions, fees, or premium taxes. However, failure
  514  to pay the surcharge shall be treated as failure to pay premium.
  515         j. If the amount of any assessments or surcharges collected
  516  from corporation policyholders, assessable insurers or their
  517  policyholders, or assessable insureds exceeds the amount of the
  518  deficits, such excess amounts shall be remitted to and retained
  519  by the corporation in a reserve to be used by the corporation,
  520  as determined by the board of governors and approved by the
  521  office, to pay claims or reduce any past, present, or future
  522  plan-year deficits or to reduce outstanding debt.
  523         (e) The corporation is subject to s. 287.057 for the
  524  purchase of commodities and contractual services except as
  525  otherwise provided in this paragraph. Services provided by
  526  tradepersons or technical experts to assist a licensed adjuster
  527  in the evaluation of individual claims are not subject to the
  528  procurement requirements of this section. Additionally, the
  529  procurement of financial services providers and underwriters
  530  must be made pursuant to s. 627.3513. Contracts for goods or
  531  services valued at or more than $100,000 are subject to approval
  532  by the board.
  533         1. The corporation is an agency for purposes of s. 287.057,
  534  except that, for purposes of s. 287.057(22), the corporation is
  535  an eligible user.
  536         a. The authority of the Department of Management Services
  537  and the Chief Financial Officer under s. 287.057 extends to the
  538  corporation as if the corporation were an agency.
  539         b. The executive director of the corporation is the agency
  540  head under s. 287.057, except for resolution of bid protests for
  541  which the board would serve as the agency head.
  542         2. The corporation must provide notice of a decision or
  543  intended decision concerning a solicitation, contract award, or
  544  exceptional purchase by electronic posting. Such notice must
  545  contain the following statement: “Failure to file a protest
  546  within the time prescribed in this section constitutes a waiver
  547  of proceedings.”
  548         a. A person adversely affected by the corporation’s
  549  decision or intended decision to award a contract pursuant to s.
  550  287.057(1) or (3)(c) who elects to challenge the decision must
  551  file a written notice of protest with the executive director of
  552  the corporation within 72 hours after the corporation posts a
  553  notice of its decision or intended decision. For a protest of
  554  the terms, conditions, and specifications contained in a
  555  solicitation, including any provisions governing the methods for
  556  ranking bids, proposals, replies, awarding contracts, reserving
  557  rights of further negotiation, or modifying or amending any
  558  contract, the notice of protest must be filed in writing within
  559  72 hours after the posting of the solicitation. Saturdays,
  560  Sundays, and state holidays are excluded in the computation of
  561  the 72-hour time period.
  562         b. A formal written protest must be filed within 10 days
  563  after the date the notice of protest is filed. The formal
  564  written protest must state with particularity the facts and law
  565  upon which the protest is based. Upon receipt of a formal
  566  written protest that has been timely filed, the corporation must
  567  stop the solicitation or contract award process until the
  568  subject of the protest is resolved by final board action unless
  569  the executive director sets forth in writing particular facts
  570  and circumstances that require the continuance of the
  571  solicitation or contract award process without delay in order to
  572  avoid an immediate and serious danger to the public health,
  573  safety, or welfare.
  574         (I) The corporation must provide an opportunity to resolve
  575  the protest by mutual agreement between the parties within 7
  576  business days after receipt of the formal written protest.
  577         (II) If the subject of a protest is not resolved by mutual
  578  agreement within 7 business days, the corporation’s board must
  579  transmit the protest to the Division of Administrative Hearings
  580  and contract with the division to conduct a hearing to determine
  581  the merits of the protest and to issue a recommended order place
  582  the protest on the agenda and resolve it at its next regularly
  583  scheduled meeting. The contract must provide for the corporation
  584  to reimburse the division for any costs incurred by the division
  585  for court reporters, transcript preparation, travel, facility
  586  rental, and other customary hearing costs in the manner set
  587  forth in s. 120.65(9). The division has jurisdiction to
  588  determine the facts and law concerning the protest and to issue
  589  a recommended order. The division’s rules and procedures apply
  590  to these proceedings; the division’s applicable bond
  591  requirements do not apply. The protest must be heard by the
  592  division board at a publicly noticed meeting in accordance with
  593  procedures established by the division board.
  594         c. In a protest of an invitation-to-bid or request-for
  595  proposals procurement, submissions made after the bid or
  596  proposal opening which amend or supplement the bid or proposal
  597  may not be considered. In protesting an invitation-to-negotiate
  598  procurement, submissions made after the corporation announces
  599  its intent to award a contract, reject all replies, or withdraw
  600  the solicitation that amends or supplements the reply may not be
  601  considered. Unless otherwise provided by law, the burden of
  602  proof rests with the party protesting the corporation’s action.
  603  In a competitive-procurement protest, other than a rejection of
  604  all bids, proposals, or replies, the corporation’s board must
  605  conduct a de novo proceeding to determine whether the
  606  corporation’s proposed action is contrary to the corporation’s
  607  governing statutes, the corporation’s rules or policies, or the
  608  solicitation specifications. The standard of proof for the
  609  proceeding is whether the corporation’s action was clearly
  610  erroneous, contrary to competition, arbitrary, or capricious. In
  611  any bid-protest proceeding contesting an intended corporation
  612  action to reject all bids, proposals, or replies, the standard
  613  of review by the board is whether the corporation’s intended
  614  action is illegal, arbitrary, dishonest, or fraudulent.
  615         d. Failure to file a notice of protest or failure to file a
  616  formal written protest constitutes a waiver of proceedings.
  617         3. The board, acting as agency head, shall consider the
  618  recommended order of an administrative law judge in a public
  619  meeting and take final action on the protest. Contract actions
  620  and decisions by the board under this paragraph are final. Any
  621  further legal remedy lies with the First District Court of
  622  Appeal must be made in the Circuit Court of Leon County.
  623         (hh) The corporation shall must prepare a report for each
  624  calendar year outlining both the statewide average and county
  625  specific details of the loss ratio attributable to losses that
  626  are not catastrophic losses for residential coverage provided by
  627  the corporation, which information must be presented to the
  628  office and available for public inspection on the Internet
  629  website of the corporation by March 1 January 15th of the
  630  following calendar year.
  631         Section 3. Paragraph (e) is added to subsection (1) of
  632  section 627.3518, Florida Statutes, subsection (2) and paragraph
  633  (e) of subsection (4) of that section are amended, present
  634  subsections (5) through (10) of that section are redesignated as
  635  subsections (6) through (11), respectively, present subsection
  636  (11) is redesignated as subsection (13), new subsections (5) and
  637  (12) are added to that section, and present subsections (5)
  638  through (7) of that section are amended, to read:
  639         627.3518 Citizens Property Insurance Corporation
  640  policyholder eligibility clearinghouse program.—The purpose of
  641  this section is to provide a framework for the corporation to
  642  implement a clearinghouse program by January 1, 2014.
  643         (1) As used in this section, the term:
  644         (e) “Surplus lines insurer” means an unauthorized insurer
  645  that has been made eligible by the office to issue coverage
  646  under the Surplus Lines Law.
  647         (2) In order to confirm eligibility with the corporation
  648  and to enhance the access of new applicants for coverage and
  649  existing policyholders of the corporation to offers of coverage
  650  from authorized insurers and surplus lines insurers, the
  651  corporation shall establish a program for personal residential
  652  risks in order to facilitate the diversion of ineligible
  653  applicants and existing policyholders from the corporation into
  654  the voluntary insurance market. The corporation shall also
  655  develop appropriate procedures for facilitating the diversion of
  656  ineligible applicants and existing policyholders for commercial
  657  residential coverage into the private insurance market and
  658  implement these procedures by October 1, 2015 shall report such
  659  procedures to the President of the Senate and the Speaker of the
  660  House of Representatives by January 1, 2014.
  661         (4) Any authorized insurer may participate in the program;
  662  however, participation is not mandatory for any insurer.
  663  Insurers making offers of coverage to new applicants or renewal
  664  policyholders through the program:
  665         (e) May participate through their single-designated
  666  managing general agent or broker; however, the provisions of
  667  paragraph (7)(a) (6)(a) regarding ownership, control, and use of
  668  the expirations continue to apply.
  669         (5) Effective January 1, 2015, an eligible surplus lines
  670  insurer may make an offer of similar coverage on a risk
  671  submitted though the clearinghouse program if no offers of
  672  coverage were submitted by authorized insurers participating in
  673  the program and the office determines that the eligible surplus
  674  lines insurer:
  675         (a) Maintains a surplus of $50 million on a company or
  676  pooled basis;
  677         (b) Is rated as having a superior, excellent, exceptional,
  678  or equally comparable financial strength by a rating agency
  679  acceptable to the office;
  680         (c) Maintains reserves, surplus, reinsurance, and
  681  reinsurance equivalents to cover the eligible surplus lines
  682  insurer’s 100-year probable maximum hurricane loss at least
  683  twice in a single hurricane season, and submits such reinsurance
  684  to the office for review for purposes of participation in the
  685  program; and
  686         (d) Provides prominent notice to the policyholder:
  687         1. That the policyholder does not have to accept an offer
  688  of coverage from a surplus lines insurer;
  689         2. That an offer of coverage from a surplus lines insurer
  690  does not affect whether the policyholder is eligible for
  691  coverage from the corporation;
  692         3. That a policyholder who accepts an offer of coverage
  693  from a surplus lines insurer may, at any time, submit a new
  694  application for coverage to the corporation;
  695         4. That surplus lines policies are not covered by the
  696  Florida Insurance Guaranty Association;
  697         5. That rates for surplus lines insurance are not subject
  698  to review by the office; and
  699         6. Of any additional information required by the office.
  700  
  701  Such notice must be signed by the policyholder and kept on file
  702  with the surplus lines insurer for as long as the policyholder
  703  remains insured by the surplus lines insurer.
  704         (6)(5) Notwithstanding s. 627.3517, an any applicant for
  705  new coverage from the corporation is not eligible for coverage
  706  from the corporation if provided an offer of coverage from an
  707  authorized insurer through the program at a premium that is at
  708  or below the eligibility threshold established in s.
  709  627.351(6)(c)5.a. or b. Whenever an offer of coverage for a
  710  personal lines or commercial lines residential risk is received
  711  for a policyholder of the corporation at renewal from an
  712  authorized insurer through the program, if the offer is equal to
  713  or less than the corporation’s renewal premium for comparable
  714  coverage, the risk is not eligible for coverage with the
  715  corporation. If In the event an offer of coverage for a new
  716  applicant is received from an authorized insurer through the
  717  program, and the premium offered exceeds the eligibility
  718  threshold contained in s. 627.351(6)(c)5.a. or b., the applicant
  719  or insured may elect to accept such coverage, or may elect to
  720  accept or continue coverage with the corporation. If In the
  721  event an offer of coverage for a personal lines or commercial
  722  lines residential risk is received from an authorized insurer at
  723  renewal through the program, and if the premium offered is more
  724  than the corporation’s renewal premium for comparable coverage,
  725  the insured may elect to accept such coverage, or may elect to
  726  accept or continue coverage with the corporation. Section
  727  627.351(6)(c)5.a.(I) or b.(I) does not apply to an offer of
  728  coverage from an authorized insurer obtained through the
  729  program. An applicant for personal lines residential coverage
  730  from the corporation who was declared ineligible for coverage at
  731  renewal by the corporation in the previous 36 months due to an
  732  offer of coverage pursuant to this subsection is shall be
  733  considered a renewal under this section if the corporation
  734  determines that the authorized insurer making the offer of
  735  coverage pursuant to this subsection continues to insure the
  736  applicant and increased the rate on the policy in excess of the
  737  increase allowed for the corporation under s. 627.351(6)(n)6.
  738         (7)(6) Independent insurance agents submitting new
  739  applications for coverage or that are the agent of record on a
  740  renewal policy submitted to the program:
  741         (a) Are granted and must maintain ownership and the
  742  exclusive use of expirations, records, or other written or
  743  electronic information directly related to such applications or
  744  renewals written through the corporation or through an insurer
  745  participating in the program, notwithstanding s.
  746  627.351(6)(c)5.a.(I)(B) and (II)(B) and b.(I)(B) and (II)(B).
  747  Such ownership is granted for as long as the insured remains
  748  with the agency or until sold or surrendered in writing by the
  749  agent. Contracts with the corporation or required by the
  750  corporation must not amend, modify, interfere with, or limit
  751  such rights of ownership. Such expirations, records, or other
  752  written or electronic information may be used to review an
  753  application, issue a policy, or for any other purpose necessary
  754  for placing such business through the program.
  755         (b) May not be required to be appointed by any insurer
  756  participating in the program for policies written solely through
  757  the program, notwithstanding the provisions of s. 626.112.
  758         (c) May accept an appointment from an any insurer
  759  participating in the program.
  760         (d) May enter into either a standard or limited agency
  761  agreement with the insurer, at the insurer’s option.
  762  
  763  Applicants ineligible for coverage in accordance with subsection
  764  (6) (5) remain ineligible if their independent agent is
  765  unwilling or unable to enter into a standard or limited agency
  766  agreement with an insurer participating in the program.
  767         (8)(7) Exclusive agents submitting new applications for
  768  coverage or that are the agent of record on a renewal policy
  769  submitted to the program:
  770         (a) Must maintain ownership and the exclusive use of
  771  expirations, records, or other written or electronic information
  772  directly related to such applications or renewals written
  773  through the corporation or through an insurer participating in
  774  the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
  775  (II)(B) and b.(I)(B) and (II)(B). Contracts with the corporation
  776  or required by the corporation must not amend, modify, interfere
  777  with, or limit such rights of ownership. Such expirations,
  778  records, or other written or electronic information may be used
  779  to review an application, issue a policy, or for any other
  780  purpose necessary for placing such business through the program.
  781         (b) May not be required to be appointed by any insurer
  782  participating in the program for policies written solely through
  783  the program, notwithstanding the provisions of s. 626.112.
  784         (c) Must only facilitate the placement of an offer of
  785  coverage from an insurer whose limited servicing agreement is
  786  approved by that exclusive agent’s exclusive insurer.
  787         (d) May enter into a limited servicing agreement with the
  788  insurer making an offer of coverage, and only after the
  789  exclusive agent’s insurer has approved the limited servicing
  790  agreement terms. The exclusive agent’s insurer must approve a
  791  limited service agreement for the program for an any insurer for
  792  which it has approved a service agreement for other purposes.
  793  
  794  Applicants ineligible for coverage in accordance with subsection
  795  (6) (5) remain ineligible if their exclusive agent is unwilling
  796  or unable to enter into a standard or limited agency agreement
  797  with an insurer making an offer of coverage to that applicant.
  798         (12) An applicant for coverage from the corporation who was
  799  a policyholder of the corporation within the previous 36 months
  800  and who subsequently accepted an offer of coverage from a
  801  surplus lines insurer is considered a renewal under this
  802  section.
  803         Section 4. Section 627.3519, Florida Statutes, is repealed.
  804         Section 5. Section 627.35191, Florida Statutes, is amended
  805  to read:
  806         627.35191 Required reports Annual report of aggregate net
  807  probable maximum losses, financing options, and potential
  808  assessments.—
  809         (1) By No later than February 1 of each year, the Florida
  810  Hurricane Catastrophe Fund and Citizens Property Insurance
  811  Corporation shall each submit a report to the Legislature and
  812  the Financial Services Commission identifying their respective
  813  aggregate net probable maximum losses, financing options, and
  814  potential assessments. The report issued by the fund and the
  815  corporation must include their respective 50-year, 100-year, and
  816  250-year probable maximum losses; analysis of all reasonable
  817  financing strategies for each such probable maximum loss,
  818  including the amount and term of debt instruments; specification
  819  of the percentage assessments that would be needed to support
  820  each of the financing strategies; and calculations of the
  821  aggregate assessment burden on Florida property and casualty
  822  policyholders for each of the probable maximum losses.
  823         (2) In May of each year, Citizens Property Insurance
  824  Corporation shall also provide to the Legislature and the
  825  Financial Services Commission a statement of the estimated
  826  borrowing capacity of the corporation for the next 12-month
  827  period, the estimated claims-paying capacity of the corporation,
  828  and the corporation’s estimated balance as of December 31 of the
  829  current calendar year. Such estimates must take into account
  830  that the corporation, the Florida Hurricane Catastrophe Fund,
  831  and the Florida Insurance Guaranty Association may all be
  832  concurrently issuing debt instruments following a catastrophic
  833  event.
  834         Section 6. Effective January 1, 2015, subsection (7) of
  835  section 627.701, Florida Statutes, is amended to read:
  836         627.701 Liability of insureds; coinsurance; deductibles.—
  837         (7) Before Prior to issuing a personal lines residential
  838  property insurance policy on or after January 1, 2015 April 1,
  839  1997, or before prior to the first renewal of a residential
  840  property insurance policy on or after January 1, 2015 April 1,
  841  1997, the insurer must offer a deductible equal to $1,000 $500
  842  applicable to losses from perils other than hurricane. The
  843  insurer must provide the policyholder with notice of the
  844  availability of the deductible specified in this subsection in a
  845  form approved by the office at least once every 3 years. The
  846  failure to provide such notice constitutes a violation of this
  847  code but does not affect the coverage provided under the policy.
  848  An insurer may require a higher deductible only as part of a
  849  deductible program lawfully in effect on June 1, 1996, or as
  850  part of a similar deductible program.
  851         Section 7. Present subsections (6) through (8) of section
  852  627.711, Florida Statues, are renumbered as subsections (7)
  853  through (9), respectively, a new subsection (6) is added to that
  854  section, and present subsection (8) of that section is amended,
  855  to read:
  856         627.711 Notice of premium discounts for hurricane loss
  857  mitigation; uniform mitigation verification inspection form.—
  858         (6)(a) An authorized mitigation inspector may not directly
  859  or indirectly offer or deliver any compensation, inducement, or
  860  reward to an insurance agency, insurance agent, customer
  861  representative, or an employee of an insurance agency for the
  862  referral of the owner of the inspected property to the inspector
  863  or the inspection company. Section 455.227(1)(k) applies to
  864  applicable licensees in violation of this paragraph.
  865         (b) An insurance agency, insurance agent, customer
  866  representative, or an employee of an insurance agency may not
  867  directly or indirectly receive or accept any compensation,
  868  inducement, or reward from an authorized mitigation inspector
  869  for the referral of the owner of the inspected property to the
  870  inspector or the inspection company. Sections 626.621(2) and
  871  626.6215(5)(d) apply to a violation of this paragraph.
  872         (9)(8) At its expense, the insurer may require that a
  873  uniform mitigation verification form provided by a policyholder,
  874  a policyholder’s agent, or an authorized mitigation inspector or
  875  inspection company be independently verified by an inspector, an
  876  inspection company, or an independent third-party quality
  877  assurance provider that which possesses a quality assurance
  878  program before accepting the uniform mitigation verification
  879  form as valid. At its option, the insurer may exempt from
  880  independent verification a uniform mitigation verification form
  881  completed by an authorized mitigation inspector or inspection
  882  company that possesses a quality assurance program approved by
  883  the insurer. A uniform mitigation verification form provided by
  884  a policyholder, a policyholder’s agent, or an authorized
  885  mitigation inspector or inspection company to Citizens Property
  886  Insurance Corporation is not subject to independent verification
  887  and the property is not subject to reinspection by the
  888  corporation, absent material changes to the structure during the
  889  term stated on the form, if the form was signed by an authorized
  890  mitigation inspector and submitted to, reviewed by, and verified
  891  by a quality assurance program approved by the corporation
  892  before submission of the form to the corporation.
  893         Section 8. Except as otherwise expressly provided in this
  894  act, this act shall take effect July 1, 2014.