Florida Senate - 2017 CS for SB 420
By the Committee on Banking and Insurance; and Senator Brandes
597-01936-17 2017420c1
1 A bill to be entitled
2 An act relating to flood insurance; amending s.
3 627.0628, F.S.; revising the intervals at which
4 specified standards and guidelines for projecting
5 certain rate filings must be revised by the Florida
6 Commission on Hurricane Loss Projection Methodology;
7 amending s. 627.715, F.S.; authorizing certain
8 insurers to issue insurance policies, contracts, or
9 endorsements providing certain excess coverage for the
10 peril of flood; revising applicability; authorizing an
11 insurer to issue flood insurance policies on a
12 flexible basis; extending the last date of filing with
13 the Office of Insurance Regulation of certain flood
14 coverage rates that may be established and used by an
15 insurer; specifying a condition for an eligible
16 surplus lines insurer before a surplus lines agent may
17 be excepted from a diligent-effort requirement when
18 exporting flood insurance contracts or endorsements to
19 the insurer; deleting the expiration date of the
20 exception; revising applicability of certain
21 notification and filing requirements; revising
22 provisions related to an acknowledgment required
23 before the procurement of a private flood insurance
24 policy for property currently insured under the
25 National Flood Insurance Program; providing an
26 effective date.
27
28 Be It Enacted by the Legislature of the State of Florida:
29
30 Section 1. Paragraph (f) of subsection (3) of section
31 627.0628, Florida Statutes, is amended to read:
32 627.0628 Florida Commission on Hurricane Loss Projection
33 Methodology; public records exemption; public meetings
34 exemption.—
35 (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
36 (f) The commission shall revise previously adopted
37 actuarial methods, principles, standards, models, or output
38 ranges every odd-numbered year for hurricane loss projections.
39 The commission shall revise previously adopted actuarial
40 methods, principles, standards, models, or output ranges no less
41 than every 4 years for flood loss projections.
42 Section 2. Section 627.715, Florida Statutes, is amended to
43 read:
44 627.715 Flood insurance.—An authorized insurer may issue an
45 insurance policy, contract, or endorsement providing personal
46 lines residential coverage for the peril of flood or excess
47 coverage for the peril of flood on any structure or the contents
48 of personal property contained therein, subject to this section.
49 This section does not apply to commercial lines residential or
50 commercial lines nonresidential coverage for the peril of flood.
51 This section also does not apply to coverage for the peril of
52 flood that is excess coverage over any other insurance covering
53 the peril of flood. An insurer may issue flood insurance
54 policies, contracts, or endorsements on a standard, preferred,
55 customized, flexible, or supplemental basis.
56 (1)(a) Except for excess flood insurance policies, policies
57 issued under this section include:
58 1. Standard flood insurance, which must cover only losses
59 from the peril of flood, as defined in paragraph (b), equivalent
60 to that provided under a standard flood insurance policy under
61 the National Flood Insurance Program. Standard flood insurance
62 issued under this section must provide the same coverage,
63 including deductibles and adjustment of losses, as that provided
64 under a standard flood insurance policy under the National Flood
65 Insurance Program.
66 2. Preferred flood insurance, which must include the same
67 coverage as standard flood insurance but:
68 a. Include, within the definition of “flood,” losses from
69 water intrusion originating from outside the structure that are
70 not otherwise covered under the definition of “flood” provided
71 in paragraph (b).
72 b. Include coverage for additional living expenses.
73 c. Require that any loss under personal property or
74 contents coverage that is repaired or replaced be adjusted only
75 on the basis of replacement costs up to the policy limits.
76 3. Customized flood insurance, which must include coverage
77 that is broader than the coverage provided under standard flood
78 insurance.
79 4. Flexible flood insurance, which must cover losses from
80 the peril of flood, as defined in paragraph (b), and may also
81 include coverage for losses from water intrusion originating
82 from outside the structure which is not otherwise covered by the
83 definition of flood. Flexible flood insurance must include one
84 or more of the following provisions:
85 a. An agreement between the insurer and the insured that
86 the flood coverage is in a specified amount, such as coverage
87 that is limited to the total amount of each outstanding mortgage
88 applicable to the covered property.
89 b. A requirement for a deductible in an amount authorized
90 under s. 627.701, including a deductible in an amount authorized
91 for hurricanes.
92 c. A requirement that flood loss to a dwelling be adjusted
93 in accordance with s. 627.7011(3) or adjusted only on the basis
94 of the actual cash value of the property.
95 d. A restriction limiting flood coverage to the principal
96 building defined in the policy.
97 e. A provision including or excluding coverage for
98 additional living expenses.
99 f. A provision excluding coverage for personal property or
100 contents as to the peril of flood.
101 5. Supplemental flood insurance, which may provide coverage
102 designed to supplement a flood policy obtained from the National
103 Flood Insurance Program or from an insurer issuing standard or
104 preferred flood insurance pursuant to this section. Supplemental
105 flood insurance may provide, but need not be limited to,
106 coverage for jewelry, art, deductibles, and additional living
107 expenses.
108 (b) “Flood” means a general and temporary condition of
109 partial or complete inundation of two or more acres of normally
110 dry land area or of two or more properties, at least one of
111 which is the policyholder’s property, from:
112 1. Overflow of inland or tidal waters;
113 2. Unusual and rapid accumulation or runoff of surface
114 waters from any source;
115 3. Mudflow; or
116 4. Collapse or subsidence of land along the shore of a lake
117 or similar body of water as a result of erosion or undermining
118 caused by waves or currents of water exceeding anticipated
119 cyclical levels that result in a flood as defined in this
120 paragraph.
121 (2) Flood coverage deductibles and policy limits pursuant
122 to this section must be prominently noted on the policy
123 declarations page or face page.
124 (3)(a) An insurer may establish and use flood coverage
125 rates in accordance with the rate standards provided in s.
126 627.062.
127 (b) For flood coverage rates filed with the office before
128 October 1, 2025 2019, the insurer may also establish and use
129 such rates in accordance with the rates, rating schedules, or
130 rating manuals filed by the insurer with the office which allow
131 the insurer a reasonable rate of return on flood coverage
132 written in this state. Flood coverage rates established pursuant
133 to this paragraph are not subject to s. 627.062(2)(a) and (f).
134 An insurer shall notify the office of any change to such rates
135 within 30 days after the effective date of the change. The
136 notice must include the name of the insurer and the average
137 statewide percentage change in rates. Actuarial data with regard
138 to such rates for flood coverage must be maintained by the
139 insurer for 2 years after the effective date of such rate change
140 and is subject to examination by the office. The office may
141 require the insurer to incur the costs associated with an
142 examination. Upon examination, the office, in accordance with
143 generally accepted and reasonable actuarial techniques, shall
144 consider the rate factors in s. 627.062(2)(b), (c), and (d), and
145 the standards in s. 627.062(2)(e), to determine if the rate is
146 excessive, inadequate, or unfairly discriminatory. If the office
147 determines that a rate is excessive or unfairly discriminatory,
148 the office shall require the insurer to provide appropriate
149 credit to affected insureds or an appropriate refund to affected
150 insureds who no longer receive coverage from the insurer.
151 (4) A surplus lines agent may export a contract or endorsement
152 providing flood coverage to an eligible surplus lines insurer
153 without making a diligent effort to seek such coverage from
154 three or more authorized insurers under s. 626.916(1) if the
155 surplus lines insurer maintains a superior, excellent,
156 exceptional, or equivalent financial strength rating by a rating
157 agency acceptable to the office s. 626.916(1)(a). This
158 subsection expires July 1, 2017.
159 (5) In addition to any other applicable requirements, an
160 insurer providing flood coverage that is not excess coverage in
161 this state must:
162 (a) Notify the office at least 30 days before writing flood
163 insurance in this state; and
164 (b) File a plan of operation and financial projections or
165 revisions to such plan, as applicable, with the office.
166 (6) Citizens Property Insurance Corporation may not provide
167 insurance for the peril of flood.
168 (7) The Florida Hurricane Catastrophe Fund may not provide
169 reimbursement for losses proximately caused by the peril of
170 flood, including losses that occur during a covered event as
171 defined in s. 215.555(2)(b).
172 (8) When procuring a private flood insurance policy from an
173 authorized insurer or a surplus lines insurer for a property
174 that is currently insured under the National Flood Insurance
175 Program, an agent must receive an acknowledgment signed by the
176 applicant within 20 days before the expiration date of the
177 current coverage. The acknowledgment must notify the applicant
178 that the full risk rate for flood insurance may apply to the
179 property if such insurance is later obtained under the National
180 Flood Insurance Program. If the agent does not receive the
181 acknowledgment, the private flood insurance policy must be
182 canceled and the premium must be remitted to a participant in
183 the National Flood Insurance Program An agent must, upon
184 receiving an application for flood coverage from an authorized
185 or surplus lines insurer for a property receiving flood
186 insurance under the National Flood Insurance Program, obtain an
187 acknowledgment signed by the applicant before placing the
188 coverage with the authorized or surplus lines insurer. The
189 acknowledgment must notify the applicant that, if the applicant
190 discontinues coverage under the National Flood Insurance Program
191 which is provided at a subsidized rate, the full risk rate for
192 flood insurance may apply to the property if the applicant later
193 seeks to reinstate coverage under the program.
194 (9) With respect to the regulation of flood coverage
195 written in this state by authorized insurers, this section
196 supersedes any other provision in the Florida Insurance Code in
197 the event of a conflict.
198 (10) If federal law or rule requires a certification by a
199 state insurance regulatory official as a condition of qualifying
200 for private flood insurance or disaster assistance, the
201 Commissioner of Insurance Regulation may provide the
202 certification, and such certification is not subject to review
203 under chapter 120.
204 (11)(a) An authorized insurer offering flood insurance may
205 request the office to certify that a policy, contract, or
206 endorsement provides coverage for the peril of flood which
207 equals or exceeds the flood coverage offered by the National
208 Flood Insurance Program. To be eligible for certification, such
209 policy, contract, or endorsement must contain a provision
210 stating that it meets the private flood insurance requirements
211 specified in 42 U.S.C. s. 4012a(b) and may not contain any
212 provision that is not in compliance with 42 U.S.C. s. 4012a(b).
213 (b) The authorized insurer or its agent may reference or
214 include a certification under paragraph (a) in advertising or
215 communications with an agent, a lending institution, an insured,
216 or a potential insured only for a policy, contract, or
217 endorsement that is certified under this subsection. The
218 authorized insurer may include a statement that notifies an
219 insured of the certification on the declarations page or other
220 policy documentation related to flood coverage certified under
221 this subsection.
222 (c) An insurer or agent who knowingly misrepresents that a
223 flood policy, contract, or endorsement is certified under this
224 subsection commits an unfair or deceptive act under s. 626.9541.
225 Section 3. This act shall take effect July 1, 2017.