Florida Senate - 2022 PROPOSED COMMITTEE SUBSTITUTE
Bill No. CS for SB 186
Ì804270{Î804270
576-03098-22
Proposed Committee Substitute by the Committee on Appropriations
(Appropriations Subcommittee on Agriculture, Environment, and
General Government)
1 A bill to be entitled
2 An act relating to Citizens Property Insurance
3 Corporation; amending s. 627.021, F.S.; revising
4 applicability; amending s. 627.351, F.S.; requiring,
5 rather than authorizing, the corporation to use a
6 single account under certain circumstances; revising
7 the method for determining the amounts of potential
8 surcharges to be levied against policyholders under
9 certain circumstances; defining the term “primary
10 residence”; revising conditions for eligibility for
11 coverage with the corporation to require a certain
12 minimum premium; specifying a limit for agent
13 commission rates; revising the policies to which
14 annual rate increases apply; requiring that policies
15 assumed by the corporation from unsound insurers be
16 charged a specified premium until certain conditions
17 are met; defining the term “unsound insurer”;
18 providing that eligible surplus lines insurers may
19 participate, in the same manner and on the same terms
20 as an authorized insurer, in depopulation, take-out,
21 or keep-out programs relating to policies removed from
22 Citizens Property Insurance Corporation; providing
23 certain exceptions, conditions, and requirements
24 relating to such participation by a surplus lines
25 insurer in the corporation’s depopulation, take-out,
26 or keep-out programs; providing thresholds for
27 eligibility for coverage by the corporation for risks
28 that are offered coverage from qualified surplus lines
29 insurers; authorizing information from underwriting
30 files and confidential claims files to be released
31 under certain circumstances by the corporation to
32 specified entities that consider writing or
33 underwriting risks insured by the corporation;
34 specifying that only the corporation’s transfer of a
35 policy file to an insurer, as opposed to the transfer
36 of any file, changes the file’s public record status;
37 making technical changes; amending s. 627.3517, F.S.;
38 making technical changes; amending s. 627.3518, F.S.,
39 and reenacting paragraphs (6)(a) and (7)(a) of that
40 section, relating to the Citizens Property Insurance
41 Corporation policyholder eligibility clearinghouse
42 program, to incorporate the amendments made to s.
43 627.351, F.S., in references thereto; conforming
44 provisions to changes made by the act; providing an
45 effective date.
46
47 Be It Enacted by the Legislature of the State of Florida:
48
49 Section 1. Subsection (2) of section 627.021, Florida
50 Statutes, is amended to read:
51 627.021 Scope of this part.—
52 (2) This part does not apply to:
53 (a) Reinsurance, except joint reinsurance as provided in s.
54 627.311.
55 (b) Insurance against loss of or damage to aircraft, their
56 hulls, accessories, or equipment, or against liability, other
57 than workers’ compensation and employer’s liability, arising out
58 of the ownership, maintenance, or use of aircraft.
59 (c) Insurance of vessels or craft, their cargoes, marine
60 builders’ risks, marine protection and indemnity, or other risks
61 commonly insured under marine insurance policies.
62 (d) Commercial inland marine insurance.
63 (e) Except as may be specifically stated to apply, surplus
64 lines insurance placed under the provisions of ss. 626.913
65 626.937.
66 Section 2. Paragraphs (b), (c), (n), (q), and (x) of
67 subsection (6) of section 627.351, Florida Statutes, are amended
68 to read:
69 627.351 Insurance risk apportionment plans.—
70 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
71 (b)1. All insurers authorized to write one or more subject
72 lines of business in this state are subject to assessment by the
73 corporation and, for the purposes of this subsection, are
74 referred to collectively as “assessable insurers.” Insurers
75 writing one or more subject lines of business in this state
76 pursuant to part VIII of chapter 626 are not assessable
77 insurers; however, insureds who procure one or more subject
78 lines of business in this state pursuant to part VIII of chapter
79 626 are subject to assessment by the corporation and are
80 referred to collectively as “assessable insureds.” An insurer’s
81 assessment liability begins on the first day of the calendar
82 year following the year in which the insurer was issued a
83 certificate of authority to transact insurance for subject lines
84 of business in this state and terminates 1 year after the end of
85 the first calendar year during which the insurer no longer holds
86 a certificate of authority to transact insurance for subject
87 lines of business in this state.
88 2.a. All revenues, assets, liabilities, losses, and
89 expenses of the corporation shall be divided into three separate
90 accounts as follows:
91 (I) A personal lines account for personal residential
92 policies issued by the corporation which provides comprehensive,
93 multiperil coverage on risks that are not located in areas
94 eligible for coverage by the Florida Windstorm Underwriting
95 Association as those areas were defined on January 1, 2002, and
96 for policies that do not provide coverage for the peril of wind
97 on risks that are located in such areas;
98 (II) A commercial lines account for commercial residential
99 and commercial nonresidential policies issued by the corporation
100 which provides coverage for basic property perils on risks that
101 are not located in areas eligible for coverage by the Florida
102 Windstorm Underwriting Association as those areas were defined
103 on January 1, 2002, and for policies that do not provide
104 coverage for the peril of wind on risks that are located in such
105 areas; and
106 (III) A coastal account for personal residential policies
107 and commercial residential and commercial nonresidential
108 property policies issued by the corporation which provides
109 coverage for the peril of wind on risks that are located in
110 areas eligible for coverage by the Florida Windstorm
111 Underwriting Association as those areas were defined on January
112 1, 2002. The corporation may offer policies that provide
113 multiperil coverage and shall offer policies that provide
114 coverage only for the peril of wind for risks located in areas
115 eligible for coverage in the coastal account. Effective July 1,
116 2014, the corporation shall cease offering new commercial
117 residential policies providing multiperil coverage and shall
118 instead continue to offer commercial residential wind-only
119 policies, and may offer commercial residential policies
120 excluding wind. The corporation may, however, continue to renew
121 a commercial residential multiperil policy on a building that is
122 insured by the corporation on June 30, 2014, under a multiperil
123 policy. In issuing multiperil coverage, the corporation may use
124 its approved policy forms and rates for the personal lines
125 account. An applicant or insured who is eligible to purchase a
126 multiperil policy from the corporation may purchase a multiperil
127 policy from an authorized insurer without prejudice to the
128 applicant’s or insured’s eligibility to prospectively purchase a
129 policy that provides coverage only for the peril of wind from
130 the corporation. An applicant or insured who is eligible for a
131 corporation policy that provides coverage only for the peril of
132 wind may elect to purchase or retain such policy and also
133 purchase or retain coverage excluding wind from an authorized
134 insurer without prejudice to the applicant’s or insured’s
135 eligibility to prospectively purchase a policy that provides
136 multiperil coverage from the corporation. It is the goal of the
137 Legislature that there be an overall average savings of 10
138 percent or more for a policyholder who currently has a wind-only
139 policy with the corporation, and an ex-wind policy with a
140 voluntary insurer or the corporation, and who obtains a
141 multiperil policy from the corporation. It is the intent of the
142 Legislature that the offer of multiperil coverage in the coastal
143 account be made and implemented in a manner that does not
144 adversely affect the tax-exempt status of the corporation or
145 creditworthiness of or security for currently outstanding
146 financing obligations or credit facilities of the coastal
147 account, the personal lines account, or the commercial lines
148 account. The coastal account must also include quota share
149 primary insurance under subparagraph (c)2. The area eligible for
150 coverage under the coastal account also includes the area within
151 Port Canaveral, which is bordered on the south by the City of
152 Cape Canaveral, bordered on the west by the Banana River, and
153 bordered on the north by Federal Government property.
154 b. The three separate accounts must be maintained as long
155 as financing obligations entered into by the Florida Windstorm
156 Underwriting Association or Residential Property and Casualty
157 Joint Underwriting Association are outstanding, in accordance
158 with the terms of the corresponding financing documents. If the
159 financing obligations are no longer outstanding, the corporation
160 shall may use a single account for all revenues, assets,
161 liabilities, losses, and expenses of the corporation. Consistent
162 with this subparagraph and prudent investment policies that
163 minimize the cost of carrying debt, the board shall exercise its
164 best efforts to retire existing debt or obtain the approval of
165 necessary parties to amend the terms of existing debt, so as to
166 structure the most efficient plan for consolidating the three
167 separate accounts into a single account.
168 c. Creditors of the Residential Property and Casualty Joint
169 Underwriting Association and the accounts specified in sub-sub
170 subparagraphs a.(I) and (II) may have a claim against, and
171 recourse to, those accounts and no claim against, or recourse
172 to, the account referred to in sub-sub-subparagraph a.(III).
173 Creditors of the Florida Windstorm Underwriting Association have
174 a claim against, and recourse to, the account referred to in
175 sub-sub-subparagraph a.(III) and no claim against, or recourse
176 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
177 (II).
178 d. Revenues, assets, liabilities, losses, and expenses not
179 attributable to particular accounts shall be prorated among the
180 accounts.
181 e. The Legislature finds that the revenues of the
182 corporation are revenues that are necessary to meet the
183 requirements set forth in documents authorizing the issuance of
184 bonds under this subsection.
185 f. The income of the corporation may not inure to the
186 benefit of any private person.
187 3. With respect to a deficit in an account:
188 a. After accounting for the Citizens policyholder surcharge
189 imposed under sub-subparagraph i., if the remaining projected
190 deficit incurred in the coastal account in a particular calendar
191 year:
192 (I) Is not greater than 2 percent of the aggregate
193 statewide direct written premium for the subject lines of
194 business for the prior calendar year, the entire deficit shall
195 be recovered through regular assessments of assessable insurers
196 under paragraph (q) and assessable insureds.
197 (II) Exceeds 2 percent of the aggregate statewide direct
198 written premium for the subject lines of business for the prior
199 calendar year, the corporation shall levy regular assessments on
200 assessable insurers under paragraph (q) and on assessable
201 insureds in an amount equal to the greater of 2 percent of the
202 projected deficit or 2 percent of the aggregate statewide direct
203 written premium for the subject lines of business for the prior
204 calendar year. Any remaining projected deficit shall be
205 recovered through emergency assessments under sub-subparagraph
206 d.
207 b. Each assessable insurer’s share of the amount being
208 assessed under sub-subparagraph a. must be in the proportion
209 that the assessable insurer’s direct written premium for the
210 subject lines of business for the year preceding the assessment
211 bears to the aggregate statewide direct written premium for the
212 subject lines of business for that year. The assessment
213 percentage applicable to each assessable insured is the ratio of
214 the amount being assessed under sub-subparagraph a. to the
215 aggregate statewide direct written premium for the subject lines
216 of business for the prior year. Assessments levied by the
217 corporation on assessable insurers under sub-subparagraph a.
218 must be paid as required by the corporation’s plan of operation
219 and paragraph (q). Assessments levied by the corporation on
220 assessable insureds under sub-subparagraph a. shall be collected
221 by the surplus lines agent at the time the surplus lines agent
222 collects the surplus lines tax required by s. 626.932, and paid
223 to the Florida Surplus Lines Service Office at the time the
224 surplus lines agent pays the surplus lines tax to that office.
225 Upon receipt of regular assessments from surplus lines agents,
226 the Florida Surplus Lines Service Office shall transfer the
227 assessments directly to the corporation as determined by the
228 corporation.
229 c. After accounting for the Citizens policyholder surcharge
230 imposed under sub-subparagraph i., the remaining projected
231 deficits in the personal lines account and in the commercial
232 lines account in a particular calendar year shall be recovered
233 through emergency assessments under sub-subparagraph d.
234 d. Upon a determination by the board of governors that a
235 projected deficit in an account exceeds the amount that is
236 expected to be recovered through regular assessments under sub
237 subparagraph a., plus the amount that is expected to be
238 recovered through surcharges under sub-subparagraph i., the
239 board, after verification by the office, shall levy emergency
240 assessments for as many years as necessary to cover the
241 deficits, to be collected by assessable insurers and the
242 corporation and collected from assessable insureds upon issuance
243 or renewal of policies for subject lines of business, excluding
244 National Flood Insurance policies. The amount collected in a
245 particular year must be a uniform percentage of that year’s
246 direct written premium for subject lines of business and all
247 accounts of the corporation, excluding National Flood Insurance
248 Program policy premiums, as annually determined by the board and
249 verified by the office. The office shall verify the arithmetic
250 calculations involved in the board’s determination within 30
251 days after receipt of the information on which the determination
252 was based. The office shall notify assessable insurers and the
253 Florida Surplus Lines Service Office of the date on which
254 assessable insurers shall begin to collect and assessable
255 insureds shall begin to pay such assessment. The date must be at
256 least 90 days after the date the corporation levies emergency
257 assessments pursuant to this sub-subparagraph. Notwithstanding
258 any other provision of law, the corporation and each assessable
259 insurer that writes subject lines of business shall collect
260 emergency assessments from its policyholders without such
261 obligation being affected by any credit, limitation, exemption,
262 or deferment. Emergency assessments levied by the corporation on
263 assessable insureds shall be collected by the surplus lines
264 agent at the time the surplus lines agent collects the surplus
265 lines tax required by s. 626.932 and paid to the Florida Surplus
266 Lines Service Office at the time the surplus lines agent pays
267 the surplus lines tax to that office. The emergency assessments
268 collected shall be transferred directly to the corporation on a
269 periodic basis as determined by the corporation and held by the
270 corporation solely in the applicable account. The aggregate
271 amount of emergency assessments levied for an account in any
272 calendar year may be less than but may not exceed the greater of
273 10 percent of the amount needed to cover the deficit, plus
274 interest, fees, commissions, required reserves, and other costs
275 associated with financing the original deficit, or 10 percent of
276 the aggregate statewide direct written premium for subject lines
277 of business and all accounts of the corporation for the prior
278 year, plus interest, fees, commissions, required reserves, and
279 other costs associated with financing the deficit.
280 e. The corporation may pledge the proceeds of assessments,
281 projected recoveries from the Florida Hurricane Catastrophe
282 Fund, other insurance and reinsurance recoverables, policyholder
283 surcharges and other surcharges, and other funds available to
284 the corporation as the source of revenue for and to secure bonds
285 issued under paragraph (q), bonds or other indebtedness issued
286 under subparagraph (c)3., or lines of credit or other financing
287 mechanisms issued or created under this subsection, or to retire
288 any other debt incurred as a result of deficits or events giving
289 rise to deficits, or in any other way that the board determines
290 will efficiently recover such deficits. The purpose of the lines
291 of credit or other financing mechanisms is to provide additional
292 resources to assist the corporation in covering claims and
293 expenses attributable to a catastrophe. As used in this
294 subsection, the term “assessments” includes regular assessments
295 under sub-subparagraph a. or subparagraph (q)1. and emergency
296 assessments under sub-subparagraph d. Emergency assessments
297 collected under sub-subparagraph d. are not part of an insurer’s
298 rates, are not premium, and are not subject to premium tax,
299 fees, or commissions; however, failure to pay the emergency
300 assessment shall be treated as failure to pay premium. The
301 emergency assessments shall continue as long as any bonds issued
302 or other indebtedness incurred with respect to a deficit for
303 which the assessment was imposed remain outstanding, unless
304 adequate provision has been made for the payment of such bonds
305 or other indebtedness pursuant to the documents governing such
306 bonds or indebtedness.
307 f. As used in this subsection for purposes of any deficit
308 incurred on or after January 25, 2007, the term “subject lines
309 of business” means insurance written by assessable insurers or
310 procured by assessable insureds for all property and casualty
311 lines of business in this state, but not including workers’
312 compensation or medical malpractice. As used in this sub
313 subparagraph, the term “property and casualty lines of business”
314 includes all lines of business identified on Form 2, Exhibit of
315 Premiums and Losses, in the annual statement required of
316 authorized insurers under s. 624.424 and any rule adopted under
317 this section, except for those lines identified as accident and
318 health insurance and except for policies written under the
319 National Flood Insurance Program or the Federal Crop Insurance
320 Program. For purposes of this sub-subparagraph, the term
321 “workers’ compensation” includes both workers’ compensation
322 insurance and excess workers’ compensation insurance.
323 g. The Florida Surplus Lines Service Office shall determine
324 annually the aggregate statewide written premium in subject
325 lines of business procured by assessable insureds and report
326 that information to the corporation in a form and at a time the
327 corporation specifies to ensure that the corporation can meet
328 the requirements of this subsection and the corporation’s
329 financing obligations.
330 h. The Florida Surplus Lines Service Office shall verify
331 the proper application by surplus lines agents of assessment
332 percentages for regular assessments and emergency assessments
333 levied under this subparagraph on assessable insureds and assist
334 the corporation in ensuring the accurate, timely collection and
335 payment of assessments by surplus lines agents as required by
336 the corporation.
337 i. Upon determination by the board of governors that an
338 account has a projected deficit, the board shall levy a Citizens
339 policyholder surcharge against all policyholders of the
340 corporation.
341 (I) The surcharge must shall be levied as a uniform
342 percentage of the premium for the policy of up to 15 percent of
343 such premium, and must which funds shall be used to offset the
344 deficit, as follows:
345 (A) If the total number of policyholders of the corporation
346 is less than 1 million, a surcharge of 15 percent of the
347 premium.
348 (B) If the total number of policyholders of the corporation
349 is at least 1 million but less than 1.5 million, a surcharge of
350 20 percent of the premium.
351 (C) If the total number of policyholders of the corporation
352 is at least 1.5 million, a surcharge of 25 percent of the
353 premium.
354 (II) The surcharge is payable upon cancellation or
355 termination of the policy, upon renewal of the policy, or upon
356 issuance of a new policy by the corporation within the first 12
357 months after the date of the levy or the period of time
358 necessary to fully collect the surcharge amount.
359 (III) The corporation may not levy any regular assessments
360 under paragraph (q) pursuant to sub-subparagraph a. or sub
361 subparagraph b. with respect to a particular year’s deficit
362 until the corporation has first levied the full amount of the
363 surcharge authorized by this sub-subparagraph.
364 (IV) The surcharge is not considered premium and is not
365 subject to commissions, fees, or premium taxes. However, failure
366 to pay the surcharge shall be treated as failure to pay premium.
367 j. If the amount of any assessments or surcharges collected
368 from corporation policyholders, assessable insurers or their
369 policyholders, or assessable insureds exceeds the amount of the
370 deficits, such excess amounts shall be remitted to and retained
371 by the corporation in a reserve to be used by the corporation,
372 as determined by the board of governors and approved by the
373 office, to pay claims or reduce any past, present, or future
374 plan-year deficits or to reduce outstanding debt.
375 (c) The corporation’s plan of operation:
376 1. Must provide for adoption of residential property and
377 casualty insurance policy forms and commercial residential and
378 nonresidential property insurance forms, which must be approved
379 by the office before use. The corporation shall adopt the
380 following policy forms:
381 a. Standard personal lines policy forms that are
382 comprehensive multiperil policies providing full coverage of a
383 residential property equivalent to the coverage provided in the
384 private insurance market under an HO-3, HO-4, or HO-6 policy.
385 b. Basic personal lines policy forms that are policies
386 similar to an HO-8 policy or a dwelling fire policy that provide
387 coverage meeting the requirements of the secondary mortgage
388 market, but which is more limited than the coverage under a
389 standard policy.
390 c. Commercial lines residential and nonresidential policy
391 forms that are generally similar to the basic perils of full
392 coverage obtainable for commercial residential structures and
393 commercial nonresidential structures in the admitted voluntary
394 market.
395 d. Personal lines and commercial lines residential property
396 insurance forms that cover the peril of wind only. The forms are
397 applicable only to residential properties located in areas
398 eligible for coverage under the coastal account referred to in
399 sub-subparagraph (b)2.a.
400 e. Commercial lines nonresidential property insurance forms
401 that cover the peril of wind only. The forms are applicable only
402 to nonresidential properties located in areas eligible for
403 coverage under the coastal account referred to in sub
404 subparagraph (b)2.a.
405 f. The corporation may adopt variations of the policy forms
406 listed in sub-subparagraphs a.-e. which contain more restrictive
407 coverage.
408 g. Effective January 1, 2013, the corporation shall offer a
409 basic personal lines policy similar to an HO-8 policy with
410 dwelling repair based on common construction materials and
411 methods.
412 2. Must provide that the corporation adopt a program in
413 which the corporation and authorized insurers enter into quota
414 share primary insurance agreements for hurricane coverage, as
415 defined in s. 627.4025(2)(a), for eligible risks, and adopt
416 property insurance forms for eligible risks which cover the
417 peril of wind only.
418 a. As used in this subsection, the term:
419 (II) “Primary residence” means a risk that has a dwelling
420 replacement cost of less than $700,000 or a single condominium
421 unit that has a combined dwelling and contents replacement cost
422 of less than $700,000 and the insured has represented such
423 dwelling as its permanent home on the insurance application or
424 otherwise to the corporation. A policyholder and the
425 policyholder’s spouse may not collectively have more than one
426 primary residence insured with the corporation.
427 (III)(I) “Quota share primary insurance” means an
428 arrangement in which the primary hurricane coverage of an
429 eligible risk is provided in specified percentages by the
430 corporation and an authorized insurer. The corporation and
431 authorized insurer are each solely responsible for a specified
432 percentage of hurricane coverage of an eligible risk as set
433 forth in a quota share primary insurance agreement between the
434 corporation and an authorized insurer and the insurance
435 contract. The responsibility of the corporation or authorized
436 insurer to pay its specified percentage of hurricane losses of
437 an eligible risk, as set forth in the agreement, may not be
438 altered by the inability of the other party to pay its specified
439 percentage of losses. Eligible risks that are provided hurricane
440 coverage through a quota share primary insurance arrangement
441 must be provided policy forms that set forth the obligations of
442 the corporation and authorized insurer under the arrangement,
443 clearly specify the percentages of quota share primary insurance
444 provided by the corporation and authorized insurer, and
445 conspicuously and clearly state that the authorized insurer and
446 the corporation may not be held responsible beyond their
447 specified percentage of coverage of hurricane losses.
448 (I)(II) “Eligible risks” means personal lines residential
449 and commercial lines residential risks that meet the
450 underwriting criteria of the corporation and are located in
451 areas that were eligible for coverage by the Florida Windstorm
452 Underwriting Association on January 1, 2002.
453 b. The corporation may enter into quota share primary
454 insurance agreements with authorized insurers at corporation
455 coverage levels of 90 percent and 50 percent.
456 c. If the corporation determines that additional coverage
457 levels are necessary to maximize participation in quota share
458 primary insurance agreements by authorized insurers, the
459 corporation may establish additional coverage levels. However,
460 the corporation’s quota share primary insurance coverage level
461 may not exceed 90 percent.
462 d. Any quota share primary insurance agreement entered into
463 between an authorized insurer and the corporation must provide
464 for a uniform specified percentage of coverage of hurricane
465 losses, by county or territory as set forth by the corporation
466 board, for all eligible risks of the authorized insurer covered
467 under the agreement.
468 e. Any quota share primary insurance agreement entered into
469 between an authorized insurer and the corporation is subject to
470 review and approval by the office. However, such agreement shall
471 be authorized only as to insurance contracts entered into
472 between an authorized insurer and an insured who is already
473 insured by the corporation for wind coverage.
474 f. For all eligible risks covered under quota share primary
475 insurance agreements, the exposure and coverage levels for both
476 the corporation and authorized insurers shall be reported by the
477 corporation to the Florida Hurricane Catastrophe Fund. For all
478 policies of eligible risks covered under such agreements, the
479 corporation and the authorized insurer must maintain complete
480 and accurate records for the purpose of exposure and loss
481 reimbursement audits as required by fund rules. The corporation
482 and the authorized insurer shall each maintain duplicate copies
483 of policy declaration pages and supporting claims documents.
484 g. The corporation board shall establish in its plan of
485 operation standards for quota share agreements which ensure that
486 there is no discriminatory application among insurers as to the
487 terms of the agreements, pricing of the agreements, incentive
488 provisions if any, and consideration paid for servicing policies
489 or adjusting claims.
490 h. The quota share primary insurance agreement between the
491 corporation and an authorized insurer must set forth the
492 specific terms under which coverage is provided, including, but
493 not limited to, the sale and servicing of policies issued under
494 the agreement by the insurance agent of the authorized insurer
495 producing the business, the reporting of information concerning
496 eligible risks, the payment of premium to the corporation, and
497 arrangements for the adjustment and payment of hurricane claims
498 incurred on eligible risks by the claims adjuster and personnel
499 of the authorized insurer. Entering into a quota sharing
500 insurance agreement between the corporation and an authorized
501 insurer is voluntary and at the discretion of the authorized
502 insurer.
503 3. May provide that the corporation may employ or otherwise
504 contract with individuals or other entities to provide
505 administrative or professional services that may be appropriate
506 to effectuate the plan. The corporation may borrow funds by
507 issuing bonds or by incurring other indebtedness, and shall have
508 other powers reasonably necessary to effectuate the requirements
509 of this subsection, including, without limitation, the power to
510 issue bonds and incur other indebtedness in order to refinance
511 outstanding bonds or other indebtedness. The corporation may
512 seek judicial validation of its bonds or other indebtedness
513 under chapter 75. The corporation may issue bonds or incur other
514 indebtedness, or have bonds issued on its behalf by a unit of
515 local government pursuant to subparagraph (q)2. in the absence
516 of a hurricane or other weather-related event, upon a
517 determination by the corporation, subject to approval by the
518 office, that such action would enable it to efficiently meet the
519 financial obligations of the corporation and that such
520 financings are reasonably necessary to effectuate the
521 requirements of this subsection. The corporation may take all
522 actions needed to facilitate tax-free status for such bonds or
523 indebtedness, including formation of trusts or other affiliated
524 entities. The corporation may pledge assessments, projected
525 recoveries from the Florida Hurricane Catastrophe Fund, other
526 reinsurance recoverables, policyholder surcharges and other
527 surcharges, and other funds available to the corporation as
528 security for bonds or other indebtedness. In recognition of s.
529 10, Art. I of the State Constitution, prohibiting the impairment
530 of obligations of contracts, it is the intent of the Legislature
531 that no action be taken whose purpose is to impair any bond
532 indenture or financing agreement or any revenue source committed
533 by contract to such bond or other indebtedness.
534 4. Must require that the corporation operate subject to the
535 supervision and approval of a board of governors consisting of
536 nine individuals who are residents of this state and who are
537 from different geographical areas of this the state, one of whom
538 is appointed by the Governor and serves solely to advocate on
539 behalf of the consumer. The appointment of a consumer
540 representative by the Governor is deemed to be within the scope
541 of the exemption provided in s. 112.313(7)(b) and is in addition
542 to the appointments authorized under sub-subparagraph a.
543 a. The Governor, the Chief Financial Officer, the President
544 of the Senate, and the Speaker of the House of Representatives
545 shall each appoint two members of the board. At least one of the
546 two members appointed by each appointing officer must have
547 demonstrated expertise in insurance and be deemed to be within
548 the scope of the exemption provided in s. 112.313(7)(b). The
549 Chief Financial Officer shall designate one of the appointees as
550 chair. All board members serve at the pleasure of the appointing
551 officer. All members of the board are subject to removal at will
552 by the officers who appointed them. All board members, including
553 the chair, must be appointed to serve for 3-year terms beginning
554 annually on a date designated by the plan. However, for the
555 first term beginning on or after July 1, 2009, each appointing
556 officer shall appoint one member of the board for a 2-year term
557 and one member for a 3-year term. A board vacancy shall be
558 filled for the unexpired term by the appointing officer. The
559 Chief Financial Officer shall appoint a technical advisory group
560 to provide information and advice to the board in connection
561 with the board’s duties under this subsection. The executive
562 director and senior managers of the corporation shall be engaged
563 by the board and serve at the pleasure of the board. Any
564 executive director appointed on or after July 1, 2006, is
565 subject to confirmation by the Senate. The executive director is
566 responsible for employing other staff as the corporation may
567 require, subject to review and concurrence by the board.
568 b. The board shall create a Market Accountability Advisory
569 Committee to assist the corporation in developing awareness of
570 its rates and its customer and agent service levels in
571 relationship to the voluntary market insurers writing similar
572 coverage.
573 (I) The members of the advisory committee consist of the
574 following 11 persons, one of whom must be elected chair by the
575 members of the committee: four representatives, one appointed by
576 the Florida Association of Insurance Agents, one by the Florida
577 Association of Insurance and Financial Advisors, one by the
578 Professional Insurance Agents of Florida, and one by the Latin
579 American Association of Insurance Agencies; three
580 representatives appointed by the insurers with the three highest
581 voluntary market share of residential property insurance
582 business in this the state; one representative from the Office
583 of Insurance Regulation; one consumer appointed by the board who
584 is insured by the corporation at the time of appointment to the
585 committee; one representative appointed by the Florida
586 Association of Realtors; and one representative appointed by the
587 Florida Bankers Association. All members shall be appointed to
588 3-year terms and may serve for consecutive terms.
589 (II) The committee shall report to the corporation at each
590 board meeting on insurance market issues that which may include
591 rates and rate competition with the voluntary market; service,
592 including policy issuance, claims processing, and general
593 responsiveness to policyholders, applicants, and agents; and
594 matters relating to depopulation.
595 5. Must provide a procedure for determining the eligibility
596 of a risk for coverage, as follows:
597 a. Subject to s. 627.3517, with respect to personal lines
598 residential risks, if the risk is offered coverage from an
599 authorized insurer at the insurer’s approved rate under a
600 standard policy including wind coverage or, if consistent with
601 the insurer’s underwriting rules as filed with the office, a
602 basic policy including wind coverage, for a new application to
603 the corporation for coverage, the risk is not eligible for any
604 policy issued by the corporation unless the premium for coverage
605 from the authorized insurer is more than 20 percent greater than
606 the premium for comparable coverage from the corporation.
607 Whenever an offer of coverage for a personal lines residential
608 risk is received for a policyholder of the corporation at
609 renewal from an authorized insurer, if the offer is equal to or
610 less than the corporation’s renewal premium for comparable
611 coverage, the risk is not eligible for coverage with the
612 corporation unless the premium for coverage from the authorized
613 insurer is more than 20 percent greater than the renewal premium
614 for comparable coverage from the corporation. If the risk is not
615 able to obtain such offer, the risk is eligible for a standard
616 policy including wind coverage or a basic policy including wind
617 coverage issued by the corporation; however, if the risk could
618 not be insured under a standard policy including wind coverage
619 regardless of market conditions, the risk is eligible for a
620 basic policy including wind coverage unless rejected under
621 subparagraph 8. However, a policyholder removed from the
622 corporation through an assumption agreement remains eligible for
623 coverage from the corporation until the end of the assumption
624 period. The corporation shall determine the type of policy to be
625 provided on the basis of objective standards specified in the
626 underwriting manual and based on generally accepted underwriting
627 practices.
628 (I) If the risk accepts an offer of coverage through the
629 market assistance plan or through a mechanism established by the
630 corporation other than a plan established by s. 627.3518, before
631 a policy is issued to the risk by the corporation or during the
632 first 30 days of coverage by the corporation, and the producing
633 agent who submitted the application to the plan or to the
634 corporation is not currently appointed by the insurer, the
635 insurer shall:
636 (A) Pay to the producing agent of record of the policy for
637 the first year, an amount that is the greater of the insurer’s
638 usual and customary commission for the type of policy written or
639 a fee equal to the usual and customary commission of the
640 corporation; or
641 (B) Offer to allow the producing agent of record of the
642 policy to continue servicing the policy for at least 1 year and
643 offer to pay the agent the greater of the insurer’s or the
644 corporation’s usual and customary commission for the type of
645 policy written.
646
647 If the producing agent is unwilling or unable to accept
648 appointment, the new insurer shall pay the agent in accordance
649 with sub-sub-sub-subparagraph (A).
650 (II) If the corporation enters into a contractual agreement
651 for a take-out plan, the producing agent of record of the
652 corporation policy is entitled to retain any unearned commission
653 on the policy, and the insurer shall:
654 (A) Pay to the producing agent of record, for the first
655 year, an amount that is the greater of the insurer’s usual and
656 customary commission for the type of policy written or a fee
657 equal to the usual and customary commission of the corporation;
658 or
659 (B) Offer to allow the producing agent of record to
660 continue servicing the policy for at least 1 year and offer to
661 pay the agent the greater of the insurer’s or the corporation’s
662 usual and customary commission for the type of policy written.
663
664 If the producing agent is unwilling or unable to accept
665 appointment, the new insurer shall pay the agent in accordance
666 with sub-sub-sub-subparagraph (A).
667 b. With respect to commercial lines residential risks, for
668 a new application to the corporation for coverage, if the risk
669 is offered coverage under a policy including wind coverage from
670 an authorized insurer at its approved rate, the risk is not
671 eligible for a policy issued by the corporation unless the
672 premium for coverage from the authorized insurer is more than 15
673 percent greater than the premium for comparable coverage from
674 the corporation. Whenever an offer of coverage for a commercial
675 lines residential risk is received for a policyholder of the
676 corporation at renewal from an authorized insurer, if the offer
677 is equal to or less than the corporation’s renewal premium for
678 comparable coverage, the risk is not eligible for coverage with
679 the corporation. If the risk is not able to obtain any such
680 offer, the risk is eligible for a policy including wind coverage
681 issued by the corporation. However, a policyholder removed from
682 the corporation through an assumption agreement remains eligible
683 for coverage from the corporation until the end of the
684 assumption period.
685 (I) If the risk accepts an offer of coverage through the
686 market assistance plan or through a mechanism established by the
687 corporation other than a plan established by s. 627.3518, before
688 a policy is issued to the risk by the corporation or during the
689 first 30 days of coverage by the corporation, and the producing
690 agent who submitted the application to the plan or the
691 corporation is not currently appointed by the insurer, the
692 insurer shall:
693 (A) Pay to the producing agent of record of the policy, for
694 the first year, an amount that is the greater of the insurer’s
695 usual and customary commission for the type of policy written or
696 a fee equal to the usual and customary commission of the
697 corporation; or
698 (B) Offer to allow the producing agent of record of the
699 policy to continue servicing the policy for at least 1 year and
700 offer to pay the agent the greater of the insurer’s or the
701 corporation’s usual and customary commission for the type of
702 policy written.
703
704 If the producing agent is unwilling or unable to accept
705 appointment, the new insurer shall pay the agent in accordance
706 with sub-sub-sub-subparagraph (A).
707 (II) If the corporation enters into a contractual agreement
708 for a take-out plan, the producing agent of record of the
709 corporation policy is entitled to retain any unearned commission
710 on the policy, and the insurer shall:
711 (A) Pay to the producing agent of record, for the first
712 year, an amount that is the greater of the insurer’s usual and
713 customary commission for the type of policy written or a fee
714 equal to the usual and customary commission of the corporation;
715 or
716 (B) Offer to allow the producing agent of record to
717 continue servicing the policy for at least 1 year and offer to
718 pay the agent the greater of the insurer’s or the corporation’s
719 usual and customary commission for the type of policy written.
720
721 If the producing agent is unwilling or unable to accept
722 appointment, the new insurer shall pay the agent in accordance
723 with sub-sub-sub-subparagraph (A).
724 c. For purposes of determining comparable coverage under
725 sub-subparagraphs a. and b., the comparison must be based on
726 those forms and coverages that are reasonably comparable. The
727 corporation may rely on a determination of comparable coverage
728 and premium made by the producing agent who submits the
729 application to the corporation, made in the agent’s capacity as
730 the corporation’s agent. A comparison may be made solely of the
731 premium with respect to the main building or structure only on
732 the following basis: the same coverage A or other building
733 limits; the same percentage hurricane deductible that applies on
734 an annual basis or that applies to each hurricane for commercial
735 residential property; the same percentage of ordinance and law
736 coverage, if the same limit is offered by both the corporation
737 and the authorized insurer; the same mitigation credits, to the
738 extent the same types of credits are offered both by the
739 corporation and the authorized insurer; the same method for loss
740 payment, such as replacement cost or actual cash value, if the
741 same method is offered both by the corporation and the
742 authorized insurer in accordance with underwriting rules; and
743 any other form or coverage that is reasonably comparable as
744 determined by the board. If an application is submitted to the
745 corporation for wind-only coverage in the coastal account, the
746 premium for the corporation’s wind-only policy plus the premium
747 for the ex-wind policy that is offered by an authorized insurer
748 to the applicant must be compared to the premium for multiperil
749 coverage offered by an authorized insurer, subject to the
750 standards for comparison specified in this subparagraph. If the
751 corporation or the applicant requests from the authorized
752 insurer a breakdown of the premium of the offer by types of
753 coverage so that a comparison may be made by the corporation or
754 its agent and the authorized insurer refuses or is unable to
755 provide such information, the corporation may treat the offer as
756 not being an offer of coverage from an authorized insurer at the
757 insurer’s approved rate.
758 6. Must include rules for classifications of risks and
759 rates.
760 7. Must provide that if premium and investment income for
761 an account attributable to a particular calendar year are in
762 excess of projected losses and expenses for the account
763 attributable to that year, such excess shall be held in surplus
764 in the account. Such surplus must be available to defray
765 deficits in that account as to future years and used for that
766 purpose before assessing assessable insurers and assessable
767 insureds as to any calendar year.
768 8. Must provide objective criteria and procedures to be
769 uniformly applied to all applicants in determining whether an
770 individual risk is so hazardous as to be uninsurable. In making
771 this determination and in establishing the criteria and
772 procedures, the following must be considered:
773 a. Whether the likelihood of a loss for the individual risk
774 is substantially higher than for other risks of the same class;
775 and
776 b. Whether the uncertainty associated with the individual
777 risk is such that an appropriate premium cannot be determined.
778
779 The acceptance or rejection of a risk by the corporation must
780 shall be construed as the private placement of insurance, and
781 the provisions of chapter 120 does do not apply.
782 9. Must provide that the corporation make its best efforts
783 to procure catastrophe reinsurance at reasonable rates, to cover
784 its projected 100-year probable maximum loss as determined by
785 the board of governors. If catastrophe reinsurance is not
786 available at reasonable rates, the corporation need not purchase
787 it, but the corporation shall include the costs of reinsurance
788 to cover its projected 100-year probable maximum loss in its
789 rate calculations even if it does not purchase catastrophe
790 reinsurance.
791 10. The policies issued by the corporation must provide
792 that if the corporation or the market assistance plan obtains an
793 offer from an authorized insurer to cover the risk at its
794 approved rates, the risk is no longer eligible for renewal
795 through the corporation, except as otherwise provided in this
796 subsection.
797 11. Corporation policies and applications must include a
798 notice that the corporation policy could, under this section, be
799 replaced with a policy issued by an authorized insurer which
800 does not provide coverage identical to the coverage provided by
801 the corporation. The notice must also specify that acceptance of
802 corporation coverage creates a conclusive presumption that the
803 applicant or policyholder is aware of this potential.
804 12. May establish, subject to approval by the office,
805 different eligibility requirements and operational procedures
806 for any line or type of coverage for any specified county or
807 area if the board determines that such changes are justified due
808 to the voluntary market being sufficiently stable and
809 competitive in such area or for such line or type of coverage
810 and that consumers who, in good faith, are unable to obtain
811 insurance through the voluntary market through ordinary methods
812 continue to have access to coverage from the corporation. If
813 coverage is sought in connection with a real property transfer,
814 the requirements and procedures may not provide an effective
815 date of coverage later than the date of the closing of the
816 transfer as established by the transferor, the transferee, and,
817 if applicable, the lender.
818 13. Must provide that, with respect to the coastal account,
819 any assessable insurer with a surplus as to policyholders of $25
820 million or less writing 25 percent or more of its total
821 countrywide property insurance premiums in this state may
822 petition the office, within the first 90 days of each calendar
823 year, to qualify as a limited apportionment company. A regular
824 assessment levied by the corporation on a limited apportionment
825 company for a deficit incurred by the corporation for the
826 coastal account may be paid to the corporation on a monthly
827 basis as the assessments are collected by the limited
828 apportionment company from its insureds, but a limited
829 apportionment company must begin collecting the regular
830 assessments not later than 90 days after the regular assessments
831 are levied by the corporation, and the regular assessments must
832 be paid in full within 15 months after being levied by the
833 corporation. A limited apportionment company shall collect from
834 its policyholders any emergency assessment imposed under sub
835 subparagraph (b)3.d. The plan must provide that, if the office
836 determines that any regular assessment will result in an
837 impairment of the surplus of a limited apportionment company,
838 the office may direct that all or part of such assessment be
839 deferred as provided in subparagraph (q)4. However, an emergency
840 assessment to be collected from policyholders under sub
841 subparagraph (b)3.d. may not be limited or deferred.
842 14. Must provide that the corporation appoint as its
843 licensed agents only those agents who throughout such
844 appointments also hold an appointment as defined in s. 626.015
845 by an insurer who is authorized to write and is actually writing
846 or renewing personal lines residential property coverage,
847 commercial residential property coverage, or commercial
848 nonresidential property coverage within this the state.
849 15. Must provide a premium payment plan option to its
850 policyholders which, at a minimum, allows for quarterly and
851 semiannual payment of premiums. A monthly payment plan may, but
852 is not required to, be offered.
853 16. Must limit coverage on mobile homes or manufactured
854 homes built before 1994 to actual cash value of the dwelling
855 rather than replacement costs of the dwelling.
856 17. Must provide coverage for manufactured or mobile home
857 dwellings. Such coverage must also include the following
858 attached structures:
859 a. Screened enclosures that are aluminum framed or screened
860 enclosures that are not covered by the same or substantially the
861 same materials as those of the primary dwelling;
862 b. Carports that are aluminum or carports that are not
863 covered by the same or substantially the same materials as those
864 of the primary dwelling; and
865 c. Patios that have a roof covering that is constructed of
866 materials that are not the same or substantially the same
867 materials as those of the primary dwelling.
868
869 The corporation shall make available a policy for mobile homes
870 or manufactured homes for a minimum insured value of at least
871 $3,000.
872 18. May provide such limits of coverage as the board
873 determines, consistent with the requirements of this subsection.
874 19. May require commercial property to meet specified
875 hurricane mitigation construction features as a condition of
876 eligibility for coverage.
877 20. Must provide that new or renewal policies issued by the
878 corporation on or after January 1, 2012, which cover sinkhole
879 loss do not include coverage for any loss to appurtenant
880 structures, driveways, sidewalks, decks, or patios that are
881 directly or indirectly caused by sinkhole activity. The
882 corporation shall exclude such coverage using a notice of
883 coverage change, which may be included with the policy renewal,
884 and not by issuance of a notice of nonrenewal of the excluded
885 coverage upon renewal of the current policy.
886 21. As of January 1, 2012, must require that the agent
887 obtain from an applicant for coverage from the corporation an
888 acknowledgment signed by the applicant, which includes, at a
889 minimum, the following statement:
890
891 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
892 AND ASSESSMENT LIABILITY:
893
894 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
895 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
896 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
897 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
898 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
899 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
900 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
901 LEGISLATURE.
902 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
903 SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
904 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
905 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN
906 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
907 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
908 ARE REGULATED AND APPROVED BY THE STATE.
909 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
910 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
911 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
912 FLORIDA LEGISLATURE.
913 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
914 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
915 STATE OF FLORIDA.
916
917 a. The corporation shall maintain, in electronic format or
918 otherwise, a copy of the applicant’s signed acknowledgment and
919 provide a copy of the statement to the policyholder as part of
920 the first renewal after the effective date of this subparagraph.
921 b. The signed acknowledgment form creates a conclusive
922 presumption that the policyholder understood and accepted his or
923 her potential surcharge and assessment liability as a
924 policyholder of the corporation.
925 22. The corporation shall pay a producing agent of record a
926 reasonable commission not to exceed the average of commissions
927 paid in the preceding year by the 20 admitted insurers writing
928 the greatest market share of property insurance in this state.
929 (n)1. Rates for coverage provided by the corporation must
930 be actuarially sound and subject to s. 627.062, except as
931 otherwise provided in this paragraph. The corporation shall file
932 its recommended rates with the office at least annually. The
933 corporation shall provide any additional information regarding
934 the rates which the office requires. The office shall consider
935 the recommendations of the board and issue a final order
936 establishing the rates for the corporation within 45 days after
937 the recommended rates are filed. The corporation may not pursue
938 an administrative challenge or judicial review of the final
939 order of the office.
940 2. In addition to the rates otherwise determined pursuant
941 to this paragraph, the corporation shall impose and collect an
942 amount equal to the premium tax provided in s. 624.509 to
943 augment the financial resources of the corporation.
944 3. If After the public hurricane loss-projection model
945 under s. 627.06281 is has been found to be accurate and reliable
946 by the Florida Commission on Hurricane Loss Projection
947 Methodology, it must the model shall be considered when
948 establishing the windstorm portion of the corporation’s rates.
949 The corporation may use the public model results in combination
950 with the results of private models to calculate rates for the
951 windstorm portion of the corporation’s rates. This subparagraph
952 does not require or allow the corporation to adopt rates lower
953 than the rates otherwise required or allowed by this paragraph.
954 4. The corporation must make a recommended actuarially
955 sound rate filing for each personal and commercial line of
956 business it writes.
957 5. Notwithstanding the board’s recommended rates and the
958 office’s final order regarding the corporation’s filed rates
959 under subparagraph 1., the corporation shall annually implement
960 a rate increase that which, except for sinkhole coverage, does
961 not exceed the following for any single personal lines
962 residential policy that covers an insured’s primary residence
963 issued by the corporation or any single commercial lines
964 residential policy issued by the corporation, excluding coverage
965 changes and surcharges:
966 a. Eleven percent for 2022.
967 b. Twelve percent for 2023.
968 c. Thirteen percent for 2024.
969 d. Fourteen percent for 2025.
970 e. Fifteen percent for 2026 and all subsequent years.
971 6. The corporation may also implement an increase to
972 reflect the effect on the corporation of the cash buildup factor
973 pursuant to s. 215.555(5)(b).
974 7. The corporation’s implementation of rates as prescribed
975 in subparagraph 5. must shall cease for any line of business
976 written by the corporation upon the corporation’s implementation
977 of actuarially sound rates. Thereafter, the corporation shall
978 annually make a recommended actuarially sound rate filing for
979 each commercial and personal line of business the corporation
980 writes.
981 8. Policies assumed by the corporation from an unsound
982 insurer shall be charged a premium for coverage that is the
983 higher of the last premium amount charged by the unsound insurer
984 or the premium charged by the corporation applicable to the
985 policy. Premiums established by the unsound insurer shall remain
986 unchanged until such time as the corporation’s rate exceeds this
987 amount and the policy becomes subject to the corporation’s
988 annually approved rate. For purposes of this subparagraph, the
989 term “unsound insurer” means an insurer determined by the Office
990 of Insurance Regulation to be in unsound condition as defined in
991 s. 624.80(2) or an insurer placed in receivership under chapter
992 631.
993 (q)1. The corporation shall certify to the office its needs
994 for annual assessments as to a particular calendar year, and for
995 any interim assessments that it deems to be necessary to sustain
996 operations as to a particular year pending the receipt of annual
997 assessments. Upon verification, the office shall approve such
998 certification, and the corporation shall levy such annual or
999 interim assessments. Such assessments shall be prorated as
1000 provided in paragraph (b). The corporation shall take all
1001 reasonable and prudent steps necessary to collect the amount of
1002 assessments due from each assessable insurer, including, if
1003 prudent, filing suit to collect the assessments, and the office
1004 may provide such assistance to the corporation it deems
1005 appropriate. If the corporation is unable to collect an
1006 assessment from any assessable insurer, the uncollected
1007 assessments shall be levied as an additional assessment against
1008 the assessable insurers and any assessable insurer required to
1009 pay an additional assessment as a result of such failure to pay
1010 shall have a cause of action against such nonpaying assessable
1011 insurer. Assessments shall be included as an appropriate factor
1012 in the making of rates. The failure of a surplus lines agent to
1013 collect and remit any regular or emergency assessment levied by
1014 the corporation is considered to be a violation of s. 626.936
1015 and subjects the surplus lines agent to the penalties provided
1016 in that section.
1017 2. The governing body of any unit of local government, any
1018 residents of which are insured by the corporation, may issue
1019 bonds as defined in s. 125.013 or s. 166.101 from time to time
1020 to fund an assistance program, in conjunction with the
1021 corporation, for the purpose of defraying deficits of the
1022 corporation. In order to avoid needless and indiscriminate
1023 proliferation, duplication, and fragmentation of such assistance
1024 programs, any unit of local government, any residents of which
1025 are insured by the corporation, may provide for the payment of
1026 losses, regardless of whether or not the losses occurred within
1027 or outside of the territorial jurisdiction of the local
1028 government. Revenue bonds under this subparagraph may not be
1029 issued until validated pursuant to chapter 75, unless a state of
1030 emergency is declared by executive order or proclamation of the
1031 Governor pursuant to s. 252.36 making such findings as are
1032 necessary to determine that it is in the best interests of, and
1033 necessary for, the protection of the public health, safety, and
1034 general welfare of residents of this state and declaring it an
1035 essential public purpose to permit certain municipalities or
1036 counties to issue such bonds as will permit relief to claimants
1037 and policyholders of the corporation. Any such unit of local
1038 government may enter into such contracts with the corporation
1039 and with any other entity created pursuant to this subsection as
1040 are necessary to carry out this paragraph. Any bonds issued
1041 under this subparagraph shall be payable from and secured by
1042 moneys received by the corporation from emergency assessments
1043 under sub-subparagraph (b)3.d., and assigned and pledged to or
1044 on behalf of the unit of local government for the benefit of the
1045 holders of such bonds. The funds, credit, property, and taxing
1046 power of the state or of the unit of local government may shall
1047 not be pledged for the payment of such bonds.
1048 3.a. The corporation shall adopt one or more programs
1049 subject to approval by the office for the reduction of both new
1050 and renewal writings in the corporation. Beginning January 1,
1051 2008, any program the corporation adopts for the payment of
1052 bonuses to an insurer for each risk the insurer removes from the
1053 corporation shall comply with s. 627.3511(2) and may not exceed
1054 the amount referenced in s. 627.3511(2) for each risk removed.
1055 The corporation may consider any prudent and not unfairly
1056 discriminatory approach to reducing corporation writings, and
1057 may adopt a credit against assessment liability or other
1058 liability that provides an incentive for insurers to take risks
1059 out of the corporation and to keep risks out of the corporation
1060 by maintaining or increasing voluntary writings in counties or
1061 areas in which corporation risks are highly concentrated and a
1062 program to provide a formula under which an insurer voluntarily
1063 taking risks out of the corporation by maintaining or increasing
1064 voluntary writings will be relieved wholly or partially from
1065 assessments under sub-subparagraph (b)3.a. However, any “take
1066 out bonus” or payment to an insurer must be conditioned on the
1067 property being insured for at least 5 years by the insurer,
1068 unless canceled or nonrenewed by the policyholder. If the policy
1069 is canceled or nonrenewed by the policyholder before the end of
1070 the 5-year period, the amount of the take-out bonus must be
1071 prorated for the time period the policy was insured. When the
1072 corporation enters into a contractual agreement for a take-out
1073 plan, the producing agent of record of the corporation policy is
1074 entitled to retain any unearned commission on such policy, and
1075 the insurer shall either:
1076 (I) Pay to the producing agent of record of the policy, for
1077 the first year, an amount which is the greater of the insurer’s
1078 usual and customary commission for the type of policy written or
1079 a policy fee equal to the usual and customary commission of the
1080 corporation; or
1081 (II) Offer to allow the producing agent of record of the
1082 policy to continue servicing the policy for a period of not less
1083 than 1 year and offer to pay the agent the insurer’s usual and
1084 customary commission for the type of policy written. If the
1085 producing agent is unwilling or unable to accept appointment by
1086 the new insurer, the new insurer shall pay the agent in
1087 accordance with sub-sub-subparagraph (I).
1088 b. Any credit or exemption from regular assessments adopted
1089 under this subparagraph shall last no longer than the 3 years
1090 following the cancellation or expiration of the policy by the
1091 corporation. With the approval of the office, the board may
1092 extend such credits for an additional year if the insurer
1093 guarantees an additional year of renewability for all policies
1094 removed from the corporation, or for 2 additional years if the
1095 insurer guarantees 2 additional years of renewability for all
1096 policies so removed.
1097 c. There shall be no credit, limitation, exemption, or
1098 deferment from emergency assessments to be collected from
1099 policyholders pursuant to sub-subparagraph (b)3.d.
1100 d. Notwithstanding any other law, for purposes of a
1101 depopulation, take-out, or keep-out program adopted by the
1102 corporation, including an initial or renewal offer of coverage
1103 made to a policyholder removed from the corporation pursuant to
1104 such program, an eligible surplus lines insurer may participate
1105 in the program in the same manner and on the same terms as an
1106 authorized insurer, except as provided under this sub
1107 subparagraph.
1108 (I) The policy count of the corporation must be more than
1109 700,000 within the 30 days before the time a takeout offer is
1110 made by a surplus lines insurer.
1111 (II) To qualify for participation, the surplus lines
1112 insurer must first obtain approval from the office for its
1113 depopulation, take-out, or keep-out plan and then comply with
1114 all of the corporation’s requirements for the plan applicable to
1115 admitted insurers and with all statutory provisions applicable
1116 to the removal of policies from the corporation.
1117 (III) In considering a surplus lines insurer’s request for
1118 approval for its plan, the office shall determine whether the
1119 surplus lines insurer meets the following requirements:
1120 (A) Maintains a surplus of $50 million on a company or
1121 pooled basis;
1122 (B) Has a superior, excellent, exceptional, or equally
1123 comparable financial strength rating by a rating agency
1124 acceptable to the office;
1125 (C) Maintains reserves, surplus, reinsurance, and
1126 reinsurance equivalents sufficient to cover the insurer’s 100
1127 year probable maximum hurricane loss at least twice in a single
1128 hurricane season and submits such reinsurance to the office to
1129 review for purposes of the take-out;
1130 (D) Provides prominent notice to the policyholder before
1131 the assumption of the policy that surplus lines policies are not
1132 provided coverage by the Florida Insurance Guaranty Association
1133 and provides an outline of any substantial differences in
1134 coverage between the existing policy and the policy being
1135 offered to the insured; and
1136 (E) Provides policy coverage similar to that provided by
1137 the corporation.
1138 (IV) To obtain approval for a plan, the surplus lines
1139 insurer must file the following with the office:
1140 (A) Information requested by the office to demonstrate
1141 compliance with s. 624.404(3), including biographical
1142 affidavits, fingerprints processed pursuant to s. 624.34, and
1143 the results of criminal history records checks for officers and
1144 directors of the insurer and its parent or holding company;
1145 (B) A service-of-process consent and agreement form
1146 executed by the insurer;
1147 (C) Proof that the insurer has been an eligible or
1148 authorized insurer for at least 3 years;
1149 (D) A duly authenticated copy of the insurer’s current
1150 audited financial statement, in English, which, in the case of
1151 statements originally made in the currencies of other countries,
1152 expresses all monetary values in United States dollars, at an
1153 exchange rate then current and shown in the statement, and
1154 including any additional information relative to the insurer as
1155 the office may request;
1156 (E) A complete certified copy of the latest official
1157 financial statement required by the insurer’s domiciliary state,
1158 if different from the statement required by sub-sub-sub
1159 subparagraph (D); and
1160 (F) If applicable, a copy of the United States trust
1161 account agreement.
1162
1163 This sub-sub-subparagraph does not subject any surplus lines
1164 insurer to requirements in addition to part VIII of chapter 626.
1165 Surplus lines brokers making an offer of coverage under this
1166 sub-subparagraph are not required to comply with s.
1167 626.916(1)(a), (b), (c), or (e).
1168 (V) Within 10 days after the date of assumption, the
1169 surplus lines insurer assuming policies from the corporation
1170 shall remit to the Bureau of Collateral Management within the
1171 Department of Financial Services a special deposit equal to the
1172 unearned premium net of unearned commissions on the assumed
1173 block of business. The surplus lines insurer shall submit to the
1174 office, along with the special deposit, an accounting of the
1175 policies assumed and the amount of unearned premium for such
1176 policies and a sworn affidavit attesting to the accuracy of the
1177 accounting by an officer of the surplus lines insurer.
1178 Thereafter, the surplus lines insurer shall make a filing within
1179 10 days after the end of each calendar quarter attesting to the
1180 unearned premium in force for the previous quarter on policies
1181 assumed from the corporation and shall submit additional funds
1182 with that filing if the special deposit is insufficient to cover
1183 the unearned premium on assumed policies, or shall receive a
1184 return of funds within 60 days if the special deposit exceeds
1185 the amount of unearned premium required for assumed policies.
1186 The special deposit is an asset of the surplus lines insurer
1187 which is held by the department for the benefit of state
1188 policyholders of the surplus lines insurer in the event of the
1189 insolvency of the surplus lines insurer. If an order of
1190 liquidation is entered in any state against the surplus lines
1191 insurer, the department may use the special deposit for payment
1192 of unearned premium or policy claims, return all or part of the
1193 deposit to the domiciliary receiver, or use the funds in
1194 accordance with any action authorized under part I of chapter
1195 631 or in compliance with any order of a court having
1196 jurisdiction over the insolvency.
1197 (VI) In advance of a surplus lines insurer assuming a
1198 policy, surplus lines brokers representing a surplus lines
1199 insurer on a take-out program shall obtain confirmation, in
1200 written or e-mail form, from each producing agent stating that
1201 the agent is willing to participate in the take-out program with
1202 the surplus lines insurer engaging in the take-out program. The
1203 take-out program is also subject to s. 627.3517. If a
1204 policyholder is selected for removal from the corporation by a
1205 surplus lines insurer and an authorized insurer, the corporation
1206 must give priority to the offer of coverage from the authorized
1207 insurer.
1208 (VII)(A) A risk that has a dwelling replacement cost of
1209 $700,000 or more or a single condominium unit that has a
1210 combined dwelling and contents replacement cost of $700,000 or
1211 more is not eligible for coverage by the corporation if it is
1212 offered comparable coverage from a qualified surplus lines
1213 insurer at a premium no greater than the premium charged by the
1214 corporation.
1215 (B) A risk that has a dwelling replacement cost below
1216 $700,000 or a single condominium unit that has a combined
1217 dwelling and contents replacement cost below $700,000 remains
1218 eligible for coverage by the corporation if it is offered
1219 coverage from a qualified surplus lines insurer.
1220 4. The plan shall provide for the deferment, in whole or in
1221 part, of the assessment of an assessable insurer, other than an
1222 emergency assessment collected from policyholders pursuant to
1223 sub-subparagraph (b)3.d., if the office finds that payment of
1224 the assessment would endanger or impair the solvency of the
1225 insurer. In the event an assessment against an assessable
1226 insurer is deferred in whole or in part, the amount by which
1227 such assessment is deferred may be assessed against the other
1228 assessable insurers in a manner consistent with the basis for
1229 assessments set forth in paragraph (b).
1230 5. Effective July 1, 2007, in order to evaluate the costs
1231 and benefits of approved take-out plans, if the corporation pays
1232 a bonus or other payment to an insurer for an approved take-out
1233 plan, it shall maintain a record of the address or such other
1234 identifying information on the property or risk removed in order
1235 to track if and when the property or risk is later insured by
1236 the corporation.
1237 6. Any policy taken out, assumed, or removed from the
1238 corporation is, as of the effective date of the take-out,
1239 assumption, or removal, direct insurance issued by the insurer
1240 and not by the corporation, even if the corporation continues to
1241 service the policies. This subparagraph applies to policies of
1242 the corporation and not policies taken out, assumed, or removed
1243 from any other entity.
1244 7. For a policy taken out, assumed, or removed from the
1245 corporation, the insurer may, for a period of no more than 3
1246 years, continue to use any of the corporation’s policy forms or
1247 endorsements that apply to the policy taken out, removed, or
1248 assumed without obtaining approval from the office for use of
1249 such policy form or endorsement.
1250 (x)1. The following records of the corporation are
1251 confidential and exempt from the provisions of s. 119.07(1) and
1252 s. 24(a), Art. I of the State Constitution:
1253 a. Underwriting files, except that a policyholder or an
1254 applicant shall have access to his or her own underwriting
1255 files. Confidential and exempt underwriting file records may
1256 also be released to other governmental agencies upon written
1257 request and demonstration of need; such records held by the
1258 receiving agency remain confidential and exempt as provided
1259 herein.
1260 b. Claims files, until termination of all litigation and
1261 settlement of all claims arising out of the same incident,
1262 although portions of the claims files may remain exempt, as
1263 otherwise provided by law. Confidential and exempt claims file
1264 records may be released to other governmental agencies upon
1265 written request and demonstration of need; such records held by
1266 the receiving agency remain confidential and exempt as provided
1267 herein.
1268 c. Records obtained or generated by an internal auditor
1269 pursuant to a routine audit, until the audit is completed, or if
1270 the audit is conducted as part of an investigation, until the
1271 investigation is closed or ceases to be active. An investigation
1272 is considered “active” while the investigation is being
1273 conducted with a reasonable, good faith belief that it could
1274 lead to the filing of administrative, civil, or criminal
1275 proceedings.
1276 d. Matters reasonably encompassed in privileged attorney
1277 client communications.
1278 e. Proprietary information licensed to the corporation
1279 under contract and the contract provides for the confidentiality
1280 of such proprietary information.
1281 f. All information relating to the medical condition or
1282 medical status of a corporation employee which is not relevant
1283 to the employee’s capacity to perform his or her duties, except
1284 as otherwise provided in this paragraph. Information that is
1285 exempt includes shall include, but is not limited to,
1286 information relating to workers’ compensation, insurance
1287 benefits, and retirement or disability benefits.
1288 g. Upon an employee’s entrance into the employee assistance
1289 program, a program to assist any employee who has a behavioral
1290 or medical disorder, substance abuse problem, or emotional
1291 difficulty that affects the employee’s job performance, all
1292 records relative to that participation are shall be confidential
1293 and exempt from the provisions of s. 119.07(1) and s. 24(a),
1294 Art. I of the State Constitution, except as otherwise provided
1295 in s. 112.0455(11).
1296 h. Information relating to negotiations for financing,
1297 reinsurance, depopulation, or contractual services, until the
1298 conclusion of the negotiations.
1299 i. Minutes of closed meetings regarding underwriting files,
1300 and minutes of closed meetings regarding an open claims file
1301 until termination of all litigation and settlement of all claims
1302 with regard to that claim, except that information otherwise
1303 confidential or exempt by law must shall be redacted.
1304 2. If an authorized insurer, a reinsurance intermediary, an
1305 eligible surplus lines insurer, or an entity that has filed an
1306 application with the office for licensure as a property and
1307 casualty insurer in this state is considering writing or
1308 assisting in the underwriting of a risk insured by the
1309 corporation, relevant information from both the underwriting
1310 files and confidential claims files may be released to the
1311 insurer, reinsurance intermediary, eligible surplus lines
1312 insurer, or entity that has been created to seek authority to
1313 write property insurance in this state, provided that the
1314 recipient insurer agrees in writing, notarized and under oath,
1315 to maintain the confidentiality of such files. If a policy file
1316 is transferred to an insurer, that policy file is no longer a
1317 public record because it is not held by an agency subject to the
1318 provisions of the public records law. Underwriting files and
1319 confidential claims files may also be released to staff and the
1320 board of governors of the market assistance plan established
1321 pursuant to s. 627.3515, who must retain the confidentiality of
1322 such files, except such files may be released to authorized
1323 insurers that are considering assuming the risks to which the
1324 files apply, provided the insurer agrees in writing, notarized
1325 and under oath, to maintain the confidentiality of such files.
1326 Finally, the corporation or the board or staff of the market
1327 assistance plan may make the following information obtained from
1328 underwriting files and confidential claims files available to an
1329 entity that has obtained a permit to become an authorized
1330 insurer, a reinsurer that may provide reinsurance under s.
1331 624.610, a licensed reinsurance broker, a licensed rating
1332 organization, a modeling company, or a licensed general lines
1333 insurance agent: name, address, and telephone number of the
1334 residential property owner or insured; location of the risk;
1335 rating information; loss history; and policy type. The receiving
1336 person must retain the confidentiality of the information
1337 received and may use the information only for the purposes of
1338 developing a take-out plan or a rating plan to be submitted to
1339 the office for approval or otherwise analyzing the underwriting
1340 of a risk or risks insured by the corporation on behalf of the
1341 private insurance market. A licensed general lines insurance
1342 agent may not use such information for the direct solicitation
1343 of policyholders.
1344 3. A policyholder who has filed suit against the
1345 corporation has the right to discover the contents of his or her
1346 own claims file to the same extent that discovery of such
1347 contents would be available from a private insurer in litigation
1348 as provided by the Florida Rules of Civil Procedure, the Florida
1349 Evidence Code, and other applicable law. Pursuant to subpoena, a
1350 third party has the right to discover the contents of an
1351 insured’s or applicant’s underwriting or claims file to the same
1352 extent that discovery of such contents would be available from a
1353 private insurer by subpoena as provided by the Florida Rules of
1354 Civil Procedure, the Florida Evidence Code, and other applicable
1355 law, and subject to any confidentiality protections requested by
1356 the corporation and agreed to by the seeking party or ordered by
1357 the court. The corporation may release confidential underwriting
1358 and claims file contents and information as it deems necessary
1359 and appropriate to underwrite or service insurance policies and
1360 claims, subject to any confidentiality protections deemed
1361 necessary and appropriate by the corporation.
1362 4. Portions of meetings of the corporation are exempt from
1363 the provisions of s. 286.011 and s. 24(b), Art. I of the State
1364 Constitution wherein confidential underwriting files or
1365 confidential open claims files are discussed. All portions of
1366 corporation meetings which are closed to the public shall be
1367 recorded by a court reporter. The court reporter shall record
1368 the times of commencement and termination of the meeting, all
1369 discussion and proceedings, the names of all persons present at
1370 any time, and the names of all persons speaking. No portion of
1371 any closed meeting shall be off the record. Subject to the
1372 provisions hereof and s. 119.07(1)(d)-(f), the court reporter’s
1373 notes of any closed meeting shall be retained by the corporation
1374 for a minimum of 5 years. A copy of the transcript, less any
1375 exempt matters, of any closed meeting wherein claims are
1376 discussed shall become public as to individual claims after
1377 settlement of the claim.
1378 Section 3. Section 627.3517, Florida Statutes, is amended
1379 to read:
1380 627.3517 Consumer choice.—No provision of s. 627.351, s.
1381 627.3511, or s. 627.3515 shall be construed to impair the right
1382 of any insurance risk apportionment plan policyholder, upon
1383 receipt of any keep-out keepout or take-out offer, to retain his
1384 or her current agent, so long as that agent is duly licensed and
1385 appointed by the insurance risk apportionment plan or otherwise
1386 authorized to place business with the insurance risk
1387 apportionment plan. This right may shall not be canceled,
1388 suspended, impeded, abridged, or otherwise compromised by any
1389 rule, plan of operation, or depopulation plan, whether through
1390 keep-out keepout, take-out, midterm assumption, or any other
1391 means, of any insurance risk apportionment plan or depopulation
1392 plan, including, but not limited to, those described in s.
1393 627.351, s. 627.3511, or s. 627.3515. The commission shall adopt
1394 any rules necessary to cause any insurance risk apportionment
1395 plan or market assistance plan under such sections to
1396 demonstrate that the operations of the plan do not interfere
1397 with, promote, or allow interference with the rights created
1398 under this section. If the policyholder’s current agent is
1399 unable or unwilling to be appointed with the insurer making the
1400 take-out or keep-out keepout offer, the policyholder is shall
1401 not be disqualified from participation in the appropriate
1402 insurance risk apportionment plan because of an offer of
1403 coverage in the voluntary market. An offer of full property
1404 insurance coverage by the insurer currently insuring either the
1405 ex-wind or wind-only coverage on the policy to which the offer
1406 applies is shall not be considered a take-out or keep-out
1407 keepout offer. Any rule, plan of operation, or plan of
1408 depopulation, through keep-out keepout, take-out, midterm
1409 assumption, or any other means, of any property insurance risk
1410 apportionment plan under s. 627.351(2) or (6) is subject to ss.
1411 627.351(2)(b) and (6)(c) and 627.3511(4).
1412 Section 4. Subsection (5) of section 627.3518, Florida
1413 Statutes, is amended, and paragraph (a) of subsection (6) and
1414 paragraph (a) of subsection (7) of that section are reenacted,
1415 to read:
1416 627.3518 Citizens Property Insurance Corporation
1417 policyholder eligibility clearinghouse program.—The purpose of
1418 this section is to provide a framework for the corporation to
1419 implement a clearinghouse program by January 1, 2014.
1420 (5) Notwithstanding s. 627.3517, any applicant for new
1421 coverage from the corporation is not eligible for coverage from
1422 the corporation if provided an offer of coverage from an
1423 authorized insurer through the program at a premium that is at
1424 or below the eligibility threshold established in s.
1425 627.351(6)(c)5.a. Whenever an offer of coverage for a personal
1426 lines risk is received for a policyholder of the corporation at
1427 renewal from an authorized insurer through the program, if the
1428 offer is at or below the eligibility threshold specified in s.
1429 627.351(6)(c)5.a. equal to or less than the corporation’s
1430 renewal premium for comparable coverage, the risk is not
1431 eligible for coverage with the corporation. In the event that an
1432 offer of coverage for a new applicant or a personal lines risk
1433 at renewal is received from an authorized insurer through the
1434 program, and the premium offered exceeds the eligibility
1435 thresholds specified threshold contained in s.
1436 627.351(6)(c)5.a., the applicant or insured may elect to accept
1437 such coverage, or may elect to accept or continue coverage with
1438 the corporation. In the event an offer of coverage for a
1439 personal lines risk is received from an authorized insurer at
1440 renewal through the program, and the premium offered is more
1441 than the corporation’s renewal premium for comparable coverage,
1442 the insured may elect to accept such coverage, or may elect to
1443 accept or continue coverage with the corporation. Section
1444 627.351(6)(c)5.a.(I) does not apply to an offer of coverage from
1445 an authorized insurer obtained through the program. An applicant
1446 for coverage from the corporation who was declared ineligible
1447 for coverage at renewal by the corporation in the previous 36
1448 months due to an offer of coverage pursuant to this subsection
1449 shall be considered a renewal under this section if the
1450 corporation determines that the authorized insurer making the
1451 offer of coverage pursuant to this subsection continues to
1452 insure the applicant and increased the rate on the policy in
1453 excess of the increase allowed for the corporation under s.
1454 627.351(6)(n)5.
1455 (6) Independent insurance agents submitting new
1456 applications for coverage or that are the agent of record on a
1457 renewal policy submitted to the program:
1458 (a) Are granted and must maintain ownership and the
1459 exclusive use of expirations, records, or other written or
1460 electronic information directly related to such applications or
1461 renewals written through the corporation or through an insurer
1462 participating in the program, notwithstanding s.
1463 627.351(6)(c)5.a.(I)(B) and (II)(B). Such ownership is granted
1464 for as long as the insured remains with the agency or until sold
1465 or surrendered in writing by the agent. Contracts with the
1466 corporation or required by the corporation must not amend,
1467 modify, interfere with, or limit such rights of ownership. Such
1468 expirations, records, or other written or electronic information
1469 may be used to review an application, issue a policy, or for any
1470 other purpose necessary for placing such business through the
1471 program.
1472
1473 Applicants ineligible for coverage in accordance with subsection
1474 (5) remain ineligible if their independent agent is unwilling or
1475 unable to enter into a standard or limited agency agreement with
1476 an insurer participating in the program.
1477 (7) Exclusive agents submitting new applications for
1478 coverage or that are the agent of record on a renewal policy
1479 submitted to the program:
1480 (a) Must maintain ownership and the exclusive use of
1481 expirations, records, or other written or electronic information
1482 directly related to such applications or renewals written
1483 through the corporation or through an insurer participating in
1484 the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
1485 (II)(B). Contracts with the corporation or required by the
1486 corporation must not amend, modify, interfere with, or limit
1487 such rights of ownership. Such expirations, records, or other
1488 written or electronic information may be used to review an
1489 application, issue a policy, or for any other purpose necessary
1490 for placing such business through the program.
1491
1492 Applicants ineligible for coverage in accordance with subsection
1493 (5) remain ineligible if their exclusive agent is unwilling or
1494 unable to enter into a standard or limited agency agreement with
1495 an insurer making an offer of coverage to that applicant.
1496 Section 5. This act shall take effect January 1, 2023.