HB 0557CS

CHAMBER ACTION



2The Committee on Insurance recommends the following:
3
4     Committee Substitute
5     Remove the entire bill and insert:
6
A bill to be entitled
7An act relating to insurance; amending s. 20.121, F.S.;
8requiring the Division of Consumer Services of the
9Department of Financial Services to designate an employee
10as primary contract for consumers on issues involving
11sinkholes; amending s. 501.137, F.S.; requiring an
12insurer to reinstate, under certain circumstances, an
13insurance policy that is canceled due to failure of the
14lender to pay a premium for which sufficient escrow funds
15are on deposit; requiring that the lender reimburse the
16property owner for any penalties or fees paid for
17purposes of reinstating the policy; requiring the lender
18to pay the increased cost of insurance premiums for a
19specified period of time under certain conditions;
20amending s. 624.4622, F.S.; requiring certain local
21government self-insurance funds to be organized as a
22commercial self-insurance fund or a group self-insurance
23fund under certain circumstances; requiring certain local
24government self-insurance funds to file certain financial
25statements for a certain period of time; providing
26statement requirements; amending s. 624.610, F.S.;
27providing additional investment requirements and
28authorizations for certain trust funds and trusteed
29surplus for reinsurers; amending s. 625.081, F.S.;
30excepting credit disability insurance from certain health
31insurance reserve requirements; providing an exception;
32amending s. 625.121, F.S.; providing additional minimum
33standards for valuation of insurance policies and
34contracts; providing reserve requirements for credit life
35and disability policies; amending s. 626.321, F.S.;
36revising licensure requirements for personal lines agents
37transacting baggage and motor vehicle excess liability
38insurance; creating s. 625.9743, F.S.; providing claim
39settlement practices for motor vehicle insurance;
40providing requirements, standards, procedures,
41limitations, and proscriptions; providing alternative
42loss adjustment or settlement methodologies; providing
43requirements and criteria; creating s. 626.9744, F.S.;
44providing claim settlement practices for property
45insurance; providing requirements and standards to be
46followed by insurers; providing limitations; amending s.
47627.351, F.S.; authorizing the motor vehicle insurance
48risk apportionment plan to require additional proof from
49insureds of having certain insurance prior to canceling
50coverage; providing certain notice requirements for
51bringing certain actions against the plan; providing for
52future repeal; amending s. 627.4091, F.S.; providing
53additional disclosure requirements with respect to a
54refusal to insure; amending s. 627.4133, F.S.; requiring
55a property insurer to reinstate a policy on property
56secured by a mortgage canceled due to a lender's failing
57to timely pay premium; restricting the use of certain
58claims as a cause for cancellation or nonrenewal;
59amending s. 627.476, F.S.; providing for the Financial
60Services Commission to adopt updated mortality tables by
61rule; creating s. 627.7077, F.S.; providing for a
62feasibility and cost-benefit study for a proposed Florida
63Sinkhole Insurance Facility; providing study requirements
64and criteria; requiring a report to the commission and
65the Legislature; providing for funding of the study;
66providing a severability clause; amending s. 627.848,
67F.S.; revising insurance contract cancellation
68requirements for premium finance companies; requiring the
69Legislative Auditing Committee to contract with the
70Florida State University College of Business' Department
71of Risk Management and Insurance to analyze factors
72affecting premium levels and availability of personal
73lines property and casualty insurance to consumers;
74specifying applicable factors for analysis; providing for
75funding of the study; requiring assistance from certain
76state agencies; amending s. 627.838, F.S.; deleting a
77filing fee; amending s. 627.849, F.S.; deleting a form
78filing fee; repealing s. 625.131, F.S., relating to
79special reserve bases for credit life and disability
80policies; providing construction to clarify application
81or effect of the act on civil actions and settlements or
82adjustments of claims; providing an effective date.
83
84Be It Enacted by the Legislature of the State of Florida:
85
86     Section 1.  Paragraph (h) of subsection (2) of section
8720.121, Florida Statutes, is amended to read:
88     20.121  Department of Financial Services.--There is created
89a Department of Financial Services.
90     (2)  DIVISIONS.--The Department of Financial Services shall
91consist of the following divisions:
92     (h)  The Division of Consumer Services, which shall include
93a Bureau of Funeral and Cemetery Services.
94     1.  The Division of Consumer Services shall perform the
95following functions concerning products or services regulated by
96the Department of Financial Services or by either office of the
97Financial Services Commission:
98     a.  Receive inquiries and complaints from consumers.;
99     b.  Prepare and disseminate such information as the
100department deems appropriate to inform or assist consumers.;
101     c.  Provide direct assistance and advocacy for consumers
102who request such assistance or advocacy.;
103     d.  With respect to apparent or potential violations of law
104or applicable rules by a person or entity licensed by the
105department or by either office of the commission, report such
106apparent or potential violation to the appropriate division of
107the department or office of the commission, which may take such
108further action as it deems appropriate.
109     e.  Designate an employee of the division as primary
110contact for consumers on issues relating to sinkholes.
111     2.  Any person licensed or issued a certificate of
112authority by the department or by the Office of Insurance
113Regulation shall respond, in writing, to the Division of
114Consumer Services within 20 days after receipt of a written
115request for information from the division concerning a consumer
116complaint. The response must address the issues and allegations
117raised in this complaint. The division may, in its discretion,
118impose an administrative penalty for failure to comply with this
119subparagraph in an amount up to $2,500 per violation upon any
120entity licensed by the department or the Office of Insurance
121Regulation and $250 for the first violation, $500 for the second
122violation and up to $1,000 per violation thereafter upon any
123individual licensed by the department or the Office of Insurance
124Regulation.
125     3.  The department may adopt rules to implement the
126provisions of this paragraph.
127     4.  The powers, duties, and responsibilities expressed or
128granted in this paragraph shall not limit the powers, duties,
129and responsibilities of the Department of Financial Services,
130the Financial Services Commission, the Office of Insurance
131Regulation, or the Office of Financial Regulation set forth
132elsewhere in the Florida Statutes.
133     Section 2.  Section 501.137, Florida Statutes, is amended
134to read:
135     501.137  Mortgage lenders; tax and insurance payments from
136escrow accounts; duties.--
137     (1)  Every lender of money, whether a natural person or an
138artificial entity, whose loans are secured by a mortgage on real
139estate located within the state and who receives funds
140incidental thereto or in connection therewith for the payment of
141property taxes or hazard insurance premiums when such funds are
142held in escrow by or on behalf of the lender, shall promptly pay
143such taxes or insurance premiums when such taxes or premiums
144become due and adequate escrow funds are deposited, so that the
145maximum tax discount available may be obtained with regard to
146the taxable property and so that insurance coverage on the
147property does not lapse.
148     (2)  If an escrow account for such taxes or insurance
149premiums is deficient, the lender shall notify the property
150owner within 15 days after the lender receives the notification
151of taxes due from the county tax collector or receives the
152notification from the insurer that a premium is due.
153     (3)(a)  If the lender, as a result of neglect, fails to pay
154any tax or insurance premium when the tax or premium is due and
155there are sufficient escrow funds on deposit to pay the tax or
156premium, and if the property owner suffers a loss as a result of
157such failure, then the lender is will be liable for such loss,;
158except, however, that, with respect to any loss which would
159otherwise have been insured, the extent of such liability shall
160not exceed the coverage limits of any insurance policy which has
161lapsed.
162     (b)  If the lender violates paragraph (a) and the premium
163payment is not more than 90 days overdue, the insurer shall
164reinstate the insurance policy, retroactive to the date of
165cancellation, and the lender shall reimburse the property owner
166for any penalty or fees imposed by the insurer and paid by the
167property owner for purposes of reinstating the policy.
168     (c)  If the lender violates paragraph (a) and the premium
169payment is more than 90 days overdue or if the insurer refuses
170to reinstate the insurance policy, the lender shall pay the
171difference between the cost of the previous insurance policy and
172a new, comparable insurance policy for a period of 2 years.
173     (4)  At the expiration of the annual accounting period, the
174lender shall issue to the property owner an annual statement of
175the escrow account.
176     Section 3.  Subsections (3) and (4) are added to section
177624.4622, Florida Statutes, to read:
178     624.4622  Local government self-insurance funds.--
179     (3)  Notwithstanding the provisions of subsection (2), a
180local government self-insurance fund created under this section
181after October 1, 2004, shall initially be organized as a
182commercial self-insurance fund under s. 624.462 or a group self-
183insurance fund under s. 624.4621 and, for the first 5 years of
184its existence, shall be subject to all the requirements applied
185to commercial self-insurance funds or to group self-insurance
186funds, respectively.
187     (4)(a)  A local government self-insurance fund formed after
188January 1, 2005, shall, for its first 5 fiscal years, file with
189the office full and true statements of its financial condition,
190transactions, and affairs. An annual statement covering the
191preceding fiscal year shall be filed within 60 days after the
192end of the fund's fiscal year and quarterly statements shall be
193filed within 45 days after each such date. The office may, for
194good cause, grant an extension of time for filing an annual or
195quarterly statement. The statements shall contain information
196generally included in insurers' financial statements prepared in
197accordance with generally accepted insurance accounting
198principles and practices and in a form generally used by
199insurers for financial statements, sworn to by at least two
200executive officers of the self-insurance fund. The form for
201financial statements shall be the form currently approved by the
202National Association of Insurance Commissioners for use by
203property and casualty insurers.
204     (b)  Each annual statement shall contain a statement of
205opinion on loss and loss adjustment expense reserves made by a
206member of the American Academy of Actuaries. Workpapers in
207support of the statement of opinion must be provided to the
208office upon request.
209     Section 4.  Paragraph (c) of subsection (3) of section
210624.610, Florida Statutes, is amended to read:
211     624.610  Reinsurance.--
212     (3)
213     (c)1.  Credit must be allowed when the reinsurance is ceded
214to an assuming insurer that maintains a trust fund in a
215qualified United States financial institution, as defined in
216paragraph (5)(b), for the payment of the valid claims of its
217United States ceding insurers and their assigns and successors
218in interest. To enable the office to determine the sufficiency
219of the trust fund, the assuming insurer shall report annually to
220the office information substantially the same as that required
221to be reported on the NAIC Annual Statement form by authorized
222insurers. The assuming insurer shall submit to examination of
223its books and records by the office and bear the expense of
224examination.
225     2.a.  Credit for reinsurance must not be granted under this
226subsection unless the form of the trust and any amendments to
227the trust have been approved by:
228     (I)  The insurance regulator of the state in which the
229trust is domiciled; or
230     (II)  The insurance regulator of another state who,
231pursuant to the terms of the trust instrument, has accepted
232principal regulatory oversight of the trust.
233     b.  The form of the trust and any trust amendments must be
234filed with the insurance regulator of every state in which the
235ceding insurer beneficiaries of the trust are domiciled. The
236trust instrument must provide that contested claims are valid
237and enforceable upon the final order of any court of competent
238jurisdiction in the United States. The trust must vest legal
239title to its assets in its trustees for the benefit of the
240assuming insurer's United States ceding insurers and their
241assigns and successors in interest. The trust and the assuming
242insurer are subject to examination as determined by the
243insurance regulator.
244     c.  The trust remains in effect for as long as the assuming
245insurer has outstanding obligations due under the reinsurance
246agreements subject to the trust. No later than February 28 of
247each year, the trustee of the trust shall report to the
248insurance regulator in writing the balance of the trust and list
249the trust's investments at the preceding year end, and shall
250certify that the trust will not expire prior to the following
251December 31.
252     3.  The following requirements apply to the following
253categories of assuming insurer:
254     a.  The trust fund for a single assuming insurer consists
255of funds in trust in an amount not less than the assuming
256insurer's liabilities attributable to reinsurance ceded by
257United States ceding insurers, and, in addition, the assuming
258insurer shall maintain a trusteed surplus of not less than $20
259million. Not less than 50 percent of the funds in the trust
260covering the assuming insurer's liabilities attributable to
261reinsurance ceded by the United States ceding insurers and
262trusteed surplus shall consist of assets of a quality
263substantially similar to that required in part II of chapter
264625. Clean, irrevocable, unconditional, and evergreen letters of
265credit, issued or confirmed by a qualified United States
266financial institution, as defined in paragraph (5)(a), effective
267no later than December 31 of the year for which the filing is
268made, and in the possession of the trust on or before the filing
269date of its annual statement, may be used to fund the remainder
270of the trust and trusteed surplus.
271     b.(I)  In the case of a group including incorporated and
272individual unincorporated underwriters:
273     (A)  For reinsurance ceded under reinsurance agreements
274with an inception, amendment, or renewal date on or after August
2751, 1995, the trust consists of a trusteed account in an amount
276not less than the group's several liabilities attributable to
277business ceded by United States domiciled ceding insurers to any
278member of the group;
279     (B)  For reinsurance ceded under reinsurance agreements
280with an inception date on or before July 31, 1995, and not
281amended or renewed after that date, notwithstanding the other
282provisions of this section, the trust consists of a trusteed
283account in an amount not less than the group's several insurance
284and reinsurance liabilities attributable to business written in
285the United States; and
286     (C)  In addition to these trusts, the group shall maintain
287in trust a trusteed surplus of which $100 million must be held
288jointly for the benefit of the United States domiciled ceding
289insurers of any member of the group for all years of account.
290     (II)  The incorporated members of the group must not be
291engaged in any business other than underwriting of a member of
292the group, and are subject to the same level of regulation and
293solvency control by the group's domiciliary regulator as the
294unincorporated members.
295     (III)  Within 90 days after its financial statements are
296due to be filed with the group's domiciliary regulator, the
297group shall provide to the insurance regulator an annual
298certification by the group's domiciliary regulator of the
299solvency of each underwriter member or, if a certification is
300unavailable, financial statements, prepared by independent
301public accountants, of each underwriter member of the group.
302     Section 5.  Section 625.081, Florida Statutes, is amended
303to read:
304     625.081  Reserve for health insurance.--For all health
305insurance policies, the insurer shall maintain an active life
306reserve which places a sound value on the insurer's liabilities
307under such policies; is not less than the reserve according to
308appropriate standards set forth in rules issued by the
309commission; and, with the exception of credit disability
310insurance, in no event, is less in the aggregate than the pro
311rata gross unearned premiums for such policies.
312     Section 6.  Paragraphs (a), (e), and (f) of subsection (5)
313and subsection (13) of section 625.121, Florida Statutes, are
314amended, and paragraphs (k) and (l) are added to subsection (5)
315of said section, to read:
316     625.121  Standard Valuation Law; life insurance.--
317     (5)  MINIMUM STANDARD FOR VALUATION OF POLICIES AND
318CONTRACTS ISSUED ON OR AFTER OPERATIVE DATE OF STANDARD
319NONFORFEITURE LAW.--Except as otherwise provided in paragraph
320(h) and subsections (6), (11), and (14), the minimum standard
321for the valuation of all such policies and contracts issued on
322or after the operative date of s. 627.476 (Standard
323Nonforfeiture Law for Life Insurance) shall be the
324commissioners' reserve valuation method defined in subsections
325(7), (11), and (14); 5 percent interest for group annuity and
326pure endowment contracts and 3.5 percent interest for all other
327such policies and contracts, or in the case of life insurance
328policies and contracts, other than annuity and pure endowment
329contracts, issued on or after July 1, 1973, 4 percent interest
330for such policies issued prior to October 1, 1979, and 4.5
331percent interest for such policies issued on or after October 1,
3321979; and the following tables:
333     (a)  For all ordinary policies of life insurance issued on
334the standard basis, excluding any disability and accidental
335death benefits in such policies:
336     1.  For policies issued prior to the operative date of s.
337627.476(9), the commissioners' 1958 Standard Ordinary Mortality
338Table; except that, for any category of such policies issued on
339female risks, modified net premiums and present values, referred
340to in subsection (7), may be calculated according to an age not
341more than 6 years younger than the actual age of the insured.;
342and
343     2.  For policies issued on or after the operative date of
344s. 627.476(9), the commissioners' 1980 Standard Ordinary
345Mortality Table or, at the election of the insurer for any one
346or more specified plans of life insurance, the commissioners'
3471980 Standard Ordinary Mortality Table with Ten-Year Select
348Mortality Factors.
349     3.  For policies issued on or after July 1, 2004, ordinary
350mortality tables adopted after 1980 by the National Association
351of Insurance Commissioners, adopted by rule by the commission
352for use in determining the minimum standard of valuation for
353such policies.
354     (e)  For total and permanent disability benefits in or
355supplementary to ordinary policies or contracts:
356     1.  For policies or contracts issued on or after January 1,
3571966, the tables of period 2 disablement rates and the 1930 to
3581950 termination rates of the 1952 disability study of the
359Society of Actuaries, with due regard to the type of benefit.;
360     2.  For policies or contracts issued on or after January 1,
3611961, and prior to January 1, 1966, either those tables or, at
362the option of the insurer, the class three disability table
363(1926).; and
364     3.  For policies issued prior to January 1, 1961, the class
365three disability table (1926).
366     4.  For policies or contracts issued on or after July 1,
3672004, tables of disablement rates and termination rates adopted
368after 1980 by the National Association of Insurance
369Commissioners, adopted by rule by the commission for use in
370determining the minimum standard of valuation for those policies
371or contracts.
372
373Any such table for active lives shall be combined with a
374mortality table permitted for calculating the reserves for life
375insurance policies.
376     (f)  For accidental death benefits in or supplementary to
377policies:
378     1.  For policies issued on or after January 1, 1966, the
3791959 Accidental Death Benefits Table.;
380     2.  For policies issued on or after January 1, 1961, and
381prior to January 1, 1966, either that table or, at the option of
382the insurer, the Intercompany Double Indemnity Mortality Table.;
383and
384     3.  For policies issued prior to January 1, 1961, the
385Intercompany Double Indemnity Mortality Table.
386     4.  For policies issued on or after July 1, 2004, tables of
387accidental death benefits adopted after 1980 by the National
388Association of Insurance Commissioners, adopted by rule by the
389commission for use in determining the minimum standard of
390valuation for those policies.
391
392Either table shall be combined with a mortality table permitted
393for calculating the reserves for life insurance policies.
394     (k)  For individual annuity and pure endowment contracts
395issued on or after July 1, 2004, excluding any disability and
396accidental death benefits purchased under those contracts,
397individual annuity mortality tables adopted after 1980 by the
398National Association of Insurance Commissioners, adopted by rule
399by the commission for use in determining the minimum standard of
400valuation for those contracts.
401     (l)  For all annuities and pure endowments purchased on or
402after July 1, 2004, under group annuity and pure endowment
403contracts, excluding any disability and accidental death
404benefits purchased under those contracts, group annuity
405mortality tables adopted after 1980 by the National Association
406of Insurance Commissioners, adopted by rule by the commission
407for use in determining the minimum standard of valuation for
408those contracts.
409     (13)  APPLICABILITY TO CREDIT LIFE AND DISABILITY INSURANCE
410POLICIES.--
411     (a)  For policies issued prior to January 1, 2004:
412     1.  The minimum reserve for single-premium credit
413disability insurance, monthly premium credit life insurance, and
414monthly premium credit disability insurance shall be the
415unearned gross premium.
416     2.  As to single-premium credit life insurance policies,
417the insurer shall establish and maintain reserves which are not
418less than the value, at the valuation date, of the risk for the
419unexpired portion of the period for which the premium has been
420paid as computed on the basis of the commissioners' 1980
421Standard Ordinary Mortality Table plus 3.5 percent interest. At
422the discretion of the office, the insurer may make a reasonable
423assumption as to the ages at which net premiums are to be
424determined. In lieu of such basis, reserves based upon unearned
425gross premiums may be used at the option of the insurer.
426     (b)  For policies issued on or after January 1, 2004:
427     1.  The minimum reserve for single-premium credit
428disability insurance shall be:
429     a.  The unearned gross premium; or
430     b.  Based upon a morbidity table that is adopted by the
431National Association of Insurance Commissioners and is specified
432in a rule the commission shall adopt pursuant to s. 625.121(14).
433     2.  The minimum reserve for monthly premium credit
434disability insurance shall be the unearned gross premium.
435     3.  The minimum reserve for monthly premium credit life
436insurance shall be the unearned gross premium.
437     4.  As to single-premium credit life insurance policies,
438the insurer shall establish and maintain reserves which are not
439less than the value, at the valuation date, of the risk for the
440unexpired portion of the period for which the premium has been
441paid as computed on the basis of the commissioners' 1980
442Standard Ordinary Mortality Table or any ordinary mortality
443table adopted after 1980 by the National Association of
444Insurance Commissioners, that is approved by rule adopted by the
445commission for use in determining the minimum standard of
446valuation for such policies and an interest rate determined in
447accordance with s. 625.121(6). At the discretion of the office,
448the insurer may make a reasonable assumption as to the ages at
449which net premiums are to be determined. In lieu of such basis,
450reserves based upon unearned gross premiums may be used at the
451option of the insurer. This section does not apply as to those
452credit life insurance policies for which reserves are computed
453and maintained as required under s. 625.131.
454     Section 7.  Paragraph (d) of subsection (1) of section
455626.321, Florida Statutes, is amended to read:
456     626.321  Limited licenses.--
457     (1)  The department shall issue to a qualified individual,
458or a qualified individual or entity under paragraphs (c), (d),
459(e), and (i), a license as agent authorized to transact a
460limited class of business in any of the following categories:
461     (d)  Baggage and motor vehicle excess liability
462insurance.--
463     1.  License covering only insurance of personal effects
464except as provided in subparagraph 2. The license may be issued
465only:
466     a.  To a full-time salaried employee of a common carrier or
467a full-time salaried employee or owner of a transportation
468ticket agency, which person is engaged in the sale or handling
469of transportation of baggage and personal effects of travelers,
470and may authorize the sale of such insurance only in connection
471with such transportation; or
472     b.  To the full-time salaried employee of a licensed
473general lines agent, a full-time salaried employee of a business
474which offers motor vehicles for rent or lease, or to a business
475entity that office of a business which offers motor vehicles for
476rent or lease if insurance sales activities authorized by the
477license are in connection with and incidental to the rental of a
478motor vehicle limited to full-time salaried employees. An entity
479applying for a license under this paragraph:
480     (I)  Is required to submit only one application for a
481license under s. 626.171. The requirements of s. 626.171(5)
482shall apply only to the officers and directors of the entity
483submitting the application.
484     (II)  Is required to obtain a license for each office,
485branch office, or place of business making use of the entity's
486business name by applying to the department for the license on a
487simplified application form developed by rule of the department
488for this purpose.
489     (III)  Is required to pay the applicable fees for a license
490as prescribed in s. 624.501, be appointed under s. 626.112, and
491pay the prescribed appointment fee under s. 624.501. A licensed
492and appointed entity shall be directly responsible and
493accountable for all acts of the licensee's employees.
494
495The purchaser of baggage insurance shall be provided written
496information disclosing that the insured's homeowner's policy may
497provide coverage for loss of personal effects and that the
498purchase of such insurance is not required in connection with
499the purchase of tickets or in connection with the lease or
500rental of a motor vehicle.
501     2.  A business entity that office licensed pursuant to
502subparagraph 1., or a person licensed pursuant to subparagraph
5031. who is a full-time salaried employee of a business which
504offers motor vehicles for rent or lease, may include lessees
505under a master contract providing coverage to the lessor or may
506transact excess motor vehicle liability insurance providing
507coverage in excess of the standard liability limits provided by
508the lessor in its lease to a person renting or leasing a motor
509vehicle from the licensee's employer for liability arising in
510connection with the negligent operation of the leased or rented
511motor vehicle, provided that the lease or rental agreement is
512for not more than 30 days; that the lessee is not provided
513coverage for more than 30 consecutive days per lease period,
514and, if the lease is extended beyond 30 days, the coverage may
515be extended one time only for a period not to exceed an
516additional 30 days; that the lessee is given written notice that
517his or her personal insurance policy providing coverage on an
518owned motor vehicle may provide additional excess coverage; and
519that the purchase of the insurance is not required in connection
520with the lease or rental of a motor vehicle. The excess
521liability insurance may be provided to the lessee as an
522additional insured on a policy issued to the licensee's
523employer.
524     3.  A business entity that office licensed pursuant to
525subparagraph 1., or a person licensed pursuant to subparagraph
5261. who is a full-time salaried employee of a business which
527offers motor vehicles for rent or lease, may, as an agent of an
528insurer, transact insurance that provides coverage for the
529liability of the lessee to the lessor for damage to the leased
530or rented motor vehicle if:
531     a.  The lease or rental agreement is for not more than 30
532days; or the lessee is not provided coverage for more than 30
533consecutive days per lease period, but, if the lease is extended
534beyond 30 days, the coverage may be extended one time only for a
535period not to exceed an additional 30 days;
536     b.  The lessee is given written notice that his or her
537personal insurance policy that provides coverage on an owned
538motor vehicle may provide such coverage with or without a
539deductible; and
540     c.  The purchase of the insurance is not required in
541connection with the lease or rental of a motor vehicle.
542     Section 8.  Section 626.9743, Florida Statutes, is created
543to read:
544     626.9743  Claim settlement practices relating to motor
545vehicle insurance.--
546     (1)  This section shall apply to the adjustment and
547settlement of personal and commercial motor vehicle insurance
548claims.
549     (2)  An insurer may not, when liability and damages owed
550under the policy are reasonably clear, recommend that a third-
551party claimant make a claim under his or her own policy solely
552to avoid paying the claim under the policy issued by that
553insurer.
554     (3)  An insurer that elects to repair a motor vehicle and
555requires a specific repair shop for vehicle repairs shall cause
556the damaged vehicle to be restored to its physical condition as
557to performance and appearance prior to the loss at no additional
558cost to the insured or third-party claimant other than as stated
559in the policy.
560     (4)  An insurer may not require the use of replacement
561parts in the repair of a motor vehicle which are not at least
562equivalent in kind and quality to the damaged parts prior to the
563loss in terms of fit, appearance, and performance.
564     (5)  When the insurance policy provides for the adjustment
565and settlement of first-party motor vehicle total losses on the
566basis of actual cash value or replacement with another of like
567kind and quality, the insurer shall use one of the following
568methods:
569     (a)  The insurer may elect a cash settlement based upon the
570actual cost to purchase a comparable motor vehicle, including
571sales tax, if applicable pursuant to the provisions of
572subsection (9). Such cost may be derived from:
573     1.  When comparable motor vehicles are available in the
574local market area, the cost of two or more such comparable motor
575vehicles available within the preceding 90 days;
576     2.  The retail cost as determined from a generally
577recognized source such as a guidebook or electronic database
578that is generally available to the public; or
579     3.  The retail cost using two or more quotations obtained
580by the insurer from two or more licensed dealers in the local
581market area; or
582     (b)  The insurer may elect to offer a replacement motor
583vehicle that is a specified comparable motor vehicle available
584to the insured, including sales tax, if applicable pursuant to
585subsection (9), paid for by the insurer at no cost other than
586any deductible provided in the policy and betterment as provided
587in subsection (6). The offer must be documented with the
588insurer's claim file. For purposes of this subsection, a
589comparable motor vehicle is one that is made by the same
590manufacturer, of the same or newer model year, and of similar
591body type and has similar options and mileage as the insured
592vehicle. Additionally, a comparable motor vehicle must be in as
593good or better overall condition as was the insured vehicle and
594must be available for inspection within a reasonable distance of
595the insured's residence;
596     (c)  When a motor vehicle total loss is adjusted or settled
597on a basis that varies from the methods described in paragraph
598(a) or paragraph (b), the determination of value must be
599supported by documentation, and any deductions from value must
600be itemized and specified in appropriate dollar amounts. The
601basis for such settlement shall be explained to the claimant in
602writing, if requested, and a copy of the explanation shall be
603retained with the insurer's claim file; or
604     (d)  Any other method agreed to by the claimant.
605     (6)  When the amount offered in settlement reflects a
606reduction by the insurer because of betterment or depreciation,
607information pertaining to the reduction shall be maintained with
608the insurer's claim file. Deductions shall be itemized and
609specific as to dollar amount and shall accurately reflect the
610value assigned to the betterment or depreciation. The basis for
611any deduction shall be explained to the claimant in writing, if
612requested, and a copy of the explanation shall be maintained
613with the insurer's claim file.
614     (7)  Every insurer shall, if partial losses are settled on
615the basis of a written estimate prepared by or for the insurer,
616supply the insured a copy of the estimate upon which the
617settlement is based.
618     (8)  Every insurer shall provide notice to an insured
619before termination of payment for previously authorized storage
620charges, and the notice shall provide 72 hours for the insured
621to remove the motor vehicle from storage before terminating
622payment of the storage charges.
623     (9)  If sales tax will necessarily be incurred by a
624claimant upon replacement of a total loss or upon repair of a
625partial loss, the insurer may defer payment of the sales tax
626unless and until the obligation has actually been incurred.
627     (10)  Nothing in this section shall be construed to
628preclude enforcement of policy provisions relating to disputes
629pertaining to settlement of claims.
630     Section 9.  Section 626.9744, Florida Statutes, is created
631to read:
632     626.9744  Claim settlement practices relating to property
633insurance.--Unless otherwise provided by the policy, when a
634homeowner's insurance policy provides for the adjustment and
635settlement of first-party losses based on repair or replacement
636cost, the following requirements apply:
637     (1)  When a loss requires repair or replacement of an item
638or part, any physical damage incurred in making such repair or
639replacement which is covered and not otherwise limited or
640excluded by the policy shall be included in the loss to the
641extent of any applicable limits. The insured may not be required
642to pay for betterment required by ordinance or code except for
643the applicable deductible, unless specifically excluded or
644limited by the policy.
645     (2)  When a loss requires replacement of items and the
646replaced items do not match in quality, color, or size, the
647insurer shall make reasonable repairs or replacement of items in
648adjoining areas in the interest of uniformity of appearance. In
649determining the extent of the repairs or replacement of items in
650adjoining areas, the insurer may consider the cost of repairing
651or replacing the undamaged portions of the property, the degree
652of uniformity that can be achieved without such cost, the
653remaining useful life of the undamaged portion, and other
654relevant factors.
655     (3)  This section shall not be construed to make the
656insurer a warrantor of the repairs made pursuant to this
657section.
658     (4)  Nothing in this section shall be construed to preclude
659enforcement of policy provisions relating to disputes pertaining
660to settlement of claims.
661     Section 10.  Subsection (1) of section 627.351, Florida
662Statutes, is amended to read:
663     627.351  Insurance risk apportionment plans.--
664     (1)  MOTOR VEHICLE INSURANCE RISK
665APPORTIONMENT.--Agreements may be made among casualty and surety
666Agreements may be made among casualty and surety insurers with
667respect to the equitable apportionment among them of insurance
668which may be afforded applicants who are in good faith entitled
669to, but are unable to, procure such insurance through ordinary
670methods, and such insurers may agree among themselves on the use
671of reasonable rate modifications for such insurance. Such
672agreements and rate modifications shall be subject to the
673approval of the office. The office shall, after consultation
674with the insurers licensed to write automobile liability
675insurance in this state, adopt a reasonable plan or plans for
676the equitable apportionment among such insurers of applicants
677for such insurance who are in good faith entitled to, but are
678unable to, procure such insurance through ordinary methods, and,
679when such plan has been adopted, all such insurers shall
680subscribe thereto and shall participate therein. Such plan or
681plans shall include rules for classification of risks and rates
682therefor. The plan or plans shall make available noncancelable
683coverage as provided in s. 627.7275(2). Any insured placed with
684the plan shall be notified of the fact that insurance coverage
685is being afforded through the plan and not through the private
686market, and such notification shall be given in writing within
68710 days of such placement. To assure that plan rates are made
688adequate to pay claims and expenses, insurers shall develop a
689means of obtaining loss and expense experience at least
690annually, and the plan shall file such experience, when
691available, with the office in sufficient detail to make a
692determination of rate adequacy. Prior to the filing of such
693experience with the office, the plan shall poll each member
694insurer as to the need for an actuary who is a member of the
695Casualty Actuarial Society and who is not affiliated with the
696plan's statistical agent to certify the plan's rate adequacy. If
697a majority of those insurers responding indicate a need for such
698certification, the plan shall include the certification as part
699of its experience filing. Such experience shall be filed with
700the office not more than 9 months following the end of the
701annual statistical period under review, together with a rate
702filing based on said experience. The office shall initiate
703proceedings to disapprove the rate and so notify the plan or
704shall finalize its review within 60 days of receipt of the
705filing. Notification to the plan by the office of its
706preliminary findings, which include a point of entry to the plan
707pursuant to chapter 120, shall toll the 60-day period during any
708such proceedings and subsequent judicial review. The rate shall
709be deemed approved if the office does not issue notice to the
710plan of its preliminary findings within 60 days of the filing.
711In addition to provisions for claims and expenses, the
712ratemaking formula shall include a factor for projected claims
713trending and 5 percent for contingencies. In no instance shall
714the formula include a renewal discount for plan insureds.
715However, the plan shall reunderwrite each insured on an annual
716basis, based upon all applicable rating factors approved by the
717office. Trend factors shall not be found to be inappropriate if
718not in excess of trend factors normally used in the development
719of residual market rates by the appropriate licensed rating
720organization. Each application for coverage in the plan shall
721include, in boldfaced 12-point type immediately preceding the
722applicant's signature, the following statement:
723
724     "THIS INSURANCE IS BEING AFFORDED THROUGH THE FLORIDA JOINT
725UNDERWRITING ASSOCIATION AND NOT THROUGH THE PRIVATE MARKET.
726PLEASE BE ADVISED THAT COVERAGE WITH A PRIVATE INSURER MAY BE
727AVAILABLE FROM ANOTHER AGENT AT A LOWER COST. AGENT AND COMPANY
728LISTINGS ARE AVAILABLE IN THE LOCAL YELLOW PAGES."
729
730The plan shall annually report to the office the number and
731percentage of plan insureds who are not surcharged due to their
732driving record.
733     (a)  The plan may require from the insured proof that he or
734she has obtained the mandatory types and amounts of insurance
735from another admitted carrier prior to the cancellation of a
736policy the insured obtained from the plan and prior to the
737return of any unearned premium the insured paid for such
738coverage from the plan. This paragraph shall not apply to any
739person that provides proof of sale or inoperability of the
740vehicle covered under the policy purchased from the plan or
741relocation outside this state.
742     (b)  Notwithstanding the requirements of s. 624.155(3)(a),
743as a condition precedent to bringing an action against the plan
744under s. 624.155, the department and the plan must have been
745given 90 days' written notice of the violation. If the
746department returns a notice for lack of specificity, the 90-day
747time period shall not begin until a proper notice is filed. This
748notice must comply with the information requirements of s.
749624.155(3)(b). Effective October 1, 2007, this paragraph is
750repealed unless reenacted by the Legislature prior to such date.
751     Section 11.  Subsection (5) is added to section 627.4091,
752Florida Statutes, to read:
753     627.4091  Specific reasons for denial, cancellation, or
754nonrenewal.--
755     (5)  When an insurer refuses to provide coverage to an
756applicant due to adverse underwriting information, the insurer
757shall:
758     (a)  Provide to the applicant specific information
759regarding the reasons for the refusal to insure.
760     (b)  If the reason for the refusal to insure is based on a
761loss underwriting history or report from a consumer reporting
762agency, to the extent applicable, identify the loss underwriting
763history and notify the applicant of his or her right under the
764federal Fair and Accurate Credit Transactions Act to obtain a
765copy of the report from the consumer reporting agency.
766     Section 12.  Subsections (4) and (5) are added to section
767627.4133, Florida Statutes, to read:
768     627.4133  Notice of cancellation, nonrenewal, or renewal
769premium.--
770     (4)  An insurer that cancels a property insurance policy on
771property secured by a mortgage due to the failure of the lender
772to timely pay the premium when due shall reinstate the policy as
773required by s. 501.137.
774     (5)  A single claim on a personal lines residential
775property insurance policy which is the result of water damage
776may not be used as the sole cause for cancellation or nonrenewal
777unless the insurer can demonstrate that the insured has failed
778to take action as requested by the insurer to prevent a future
779similar occurrence of damage to the insured property.
780     Section 13.  Paragraph (h) of subsection (9) of section
781627.476, Florida Statutes, is amended to read:
782     627.476  Standard Nonforfeiture Law for Life Insurance.--
783     (9)  CALCULATION OF ADJUSTED PREMIUMS AND PRESENT VALUES
784FOR POLICIES ISSUED AFTER OPERATIVE DATE OF THIS SUBSECTION.--
785     (h)  All adjusted premiums and present values referred to
786in this section shall for all policies of ordinary insurance be
787calculated on the basis of the Commissioners' 1980 Standard
788Ordinary Mortality Table or, at the election of the insurer for
789any one or more specified plans of life insurance, the
790Commissioners' 1980 Standard Ordinary Mortality Table with Ten-
791Year Select Mortality Factors; shall for all policies of
792industrial insurance be calculated on the basis of the
793Commissioners' 1961 Standard Industrial Mortality Table; and
794shall for all policies issued in a particular calendar year be
795calculated on the basis of a rate of interest not exceeding the
796nonforfeiture interest rate as defined in this subsection for
797policies issued in that calendar year. However:
798     1.  At the option of the insurer, calculations for all
799policies issued in a particular calendar year may be made on the
800basis of a rate of interest not exceeding the nonforfeiture
801interest rate, as defined in this subsection, for policies
802issued in the immediately preceding calendar year.
803     2.  Under any paid-up nonforfeiture benefit, including any
804paid-up dividend additions, any cash surrender value available,
805whether or not required by subsection (2), shall be calculated
806on the basis of the mortality table and rate of interest used in
807determining the amount of such paid-up nonforfeiture benefit and
808paid-up dividend additions, if any.
809     3.  An insurer may calculate the amount of any guaranteed
810paid-up nonforfeiture benefit, including any paid-up additions
811under the policy, on the basis of an interest rate no lower than
812that specified in the policy for calculating cash surrender
813values.
814     4.  In calculating the present value of any paid-up term
815insurance with accompanying pure endowment, if any, offered as a
816nonforfeiture benefit, the rates of mortality assumed may be not
817more than those shown in the Commissioners' 1980 Extended Term
818Insurance Table for policies of ordinary insurance and not more
819than the Commissioners' 1961 Industrial Extended Term Insurance
820Table for policies of industrial insurance.
821     5.  In lieu of the mortality tables specified in this
822section, at the option of the insurance company and subject to
823rules adopted by the commission, the insurance company may
824substitute:
825     a.  The 1958 CSO or CET Smoker and Nonsmoker Mortality
826Tables, whichever is applicable, for policies issued on or after
827the operative date of this subsection and before January 1,
8281989;
829     b.  The 1980 CSO or CET Smoker and Nonsmoker Mortality
830Tables, whichever is applicable, for policies issued on or after
831the operative date of this subsection;
832     c.  A mortality table that is a blend of the sex-distinct
8331980 CSO or CET mortality table standard, whichever is
834applicable, or a mortality table that is a blend of the sex-
835distinct 1980 CSO or CET smoker and nonsmoker mortality table
836standards, whichever is applicable, for policies that are
837subject to the United States Supreme Court decision in Arizona
838Governing Committee v. Norris to prevent unfair discrimination
839in employment situations.
840     6.  Ordinary mortality tables adopted after 1980 by the
841National Association of Insurance Commissioners, adopted by rule
842by the commission for use in determining the minimum
843nonforfeiture standard, may be substituted for the
844commissioners' 1980 Standard Ordinary Mortality Table with or
845without Ten-Year Select Mortality Factors or for the
846commissioners' 1980 Extended Term Insurance Table.
847     7.6.  For insurance issued on a substandard basis, the
848calculation of any such adjusted premiums and present values may
849be based on appropriate modifications of the aforementioned
850tables.
851     Section 14.  Section 627.7077, Florida Statutes, is created
852to read:
853     627.7077  Florida Sinkhole Insurance Facility; matters
854related to affordability and availability of sinkhole insurance;
855feasibility study.--
856     (1)  The Florida State University College of Business'


CODING: Words stricken are deletions; words underlined are additions.