HB 1295

CS

CHAMBER ACTION

1	The Insurance Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to the Citizens Property Insurance
7	Corporation; amending s. 627.351, F.S.; revising criteria
8	for rates for coverage provided by the corporation;
9	deleting limitations on certain personal lines residential
10	wind-only policies; deleting an obsolete reporting
11	requirement; specifying nonapplication of certain policy
12	requirements in counties lacking reasonable degrees of
13	competition for certain policies under certain
14	circumstances; authorizing the Financial Services
15	Commission to adopt rules; deleting an obsolete rate
16	methodology panel reporting requirement provision;
17	providing an effective date.
18
19	Be It Enacted by the Legislature of the State of Florida:
20
21	Section 1.  Paragraph (d) of subsection (6) of section
22	627.351, Florida Statutes, is amended to read:
23	627.351  Insurance risk apportionment plans.--
24	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
25	(d)1.  It is the intent of the Legislature that the rates
26	for coverage provided by the corporation be actuarially sound
27	and not competitive with approved rates charged in the admitted
28	voluntary market, so that the corporation functions as a
29	residual market mechanism to provide insurance only when the
30	insurance cannot be procured in the voluntary market. Rates
31	shall include an appropriate catastrophe loading factor that
32	reflects the actual catastrophic exposure of the corporation.
33	2.  For each county, the average rates of the corporation
34	for each line of business for personal lines residential
35	policies excluding rates for wind-only policies shall be no
36	lower than the average rates charged by the insurer that had the
37	highest average rate in that county among the 20 insurers with
38	the greatest total direct written premium in the state for that
39	line of business in the preceding year, except that with respect
40	to mobile home coverages, the average rates of the corporation
41	shall be no lower than the average rates charged by the insurer
42	that had the highest average rate in that county among the 5
43	insurers with the greatest total written premium for mobile home
44	owner's policies in the state in the preceding year.
45	3.  Rates for personal lines residential wind-only policies
46	must be actuarially sound and not competitive with approved
47	rates charged by authorized insurers. However, for personal
48	lines residential wind-only policies issued or renewed between
49	July 1, 2002, and June 30, 2003, the maximum premium increase
50	must be no greater than 10 percent of the Florida Windstorm
51	Underwriting Association premium for that policy in effect on
52	June 30, 2002, as adjusted for coverage changes and seasonal
53	occupancy surcharges. For personal lines residential wind-only
54	policies issued or renewed between July 1, 2003, and June 30,
55	2004, the corporation shall use its existing filed and approved
56	wind-only rating and classification plans, provided, however,
57	that the maximum premium increase must be no greater than 20
58	percent of the premium for that policy in effect on June 30,
59	2003, as adjusted for coverage changes and seasonal occupancy
60	surcharges. Corporation rate manuals shall include a rate
61	surcharge for seasonal occupancy. To ensure that personal lines
62	residential wind-only rates effective on or after July 1, 2004,
63	are not competitive with approved rates charged by authorized
64	insurers, the corporation, in conjunction with the office, shall
65	develop a wind-only ratemaking methodology, which methodology
66	shall be contained in each a rate filing made by the corporation
67	with the office by January 1, 2004. If the office thereafter
68	determines that the wind-only rates or rating factors filed by
69	the corporation fail to comply with the wind-only ratemaking
70	methodology provided for in this subsection, it shall so notify
71	the corporation and require the corporation to amend its rates
72	or rating factors to come into compliance within 90 days of
73	notice from the office. The office shall report to the Speaker
74	of the House of Representatives and the President of the Senate
75	on the provisions of the wind-only ratemaking methodology by
76	January 31, 2004.
77	4.  The provisions of subparagraph 2. do not apply to
78	coverage provided by the corporation in any county for which the
79	office determines that a reasonable degree of competition does
80	not exist for personal lines residential policies. The
81	provisions of subparagraph 3. do not apply to coverage provided
82	by the corporation in any county for which the office determines
83	that a reasonable degree of competition does not exist for
84	personal lines residential policies in the area of that county
85	which is eligible for wind-only coverage. In such counties, the
86	rates for personal lines residential coverage shall be
87	actuarially sound and not excessive, inadequate, or unfairly
88	discriminatory and are subject to the other provisions of this
89	paragraph and s. 627.062. The commission may adopt rules
90	establishing the criteria for determining whether a reasonable
91	degree of competition exists for personal lines residential
92	policies. Beginning October 1, 2005, and each 6 months
93	thereafter, the office shall determine and identify those
94	counties for which a reasonable degree of competition does not
95	exist for purposes of subparagraphs 2. and 3., respectively.
96	5.4.  Rates for commercial lines coverage shall not be
97	subject to the requirements of subparagraph 2., but shall be
98	subject to all other requirements of this paragraph and s.
99	627.062.
100	6.5.  Nothing in this paragraph shall require or allow the
101	corporation to adopt a rate that is inadequate under s. 627.062.
102	7.6.  The corporation shall certify to the office at least
103	twice annually that its personal lines rates comply with the
104	requirements of this paragraph subparagraphs 1. and 2. If any
105	adjustment in the rates or rating factors of the corporation is
106	necessary to ensure such compliance, the corporation shall make
107	and implement such adjustments and file its revised rates and
108	rating factors with the office. If the office thereafter
109	determines that the revised rates and rating factors fail to
110	comply with the provisions of this paragraph subparagraphs 1.
111	and 2., it shall notify the corporation and require the
112	corporation to amend its rates or rating factors in conjunction
113	with its next rate filing. The office must notify the
114	corporation by electronic means of any rate filing it approves
115	for any insurer among the insurers referred to in subparagraph
116	2.
117	8.7.  In addition to the rates otherwise determined
118	pursuant to this paragraph, the corporation shall impose and
119	collect an amount equal to the premium tax provided for in s.
120	624.509 to augment the financial resources of the corporation.
121	9.8.a.  To assist the corporation in developing additional
122	ratemaking methods to assure compliance with this paragraph
123	subparagraphs 1. and 4., the corporation shall appoint a rate
124	methodology panel consisting of one person recommended by the
125	Florida Association of Insurance Agents, one person recommended
126	by the Professional Insurance Agents of Florida, one person
127	recommended by the Florida Association of Insurance and
128	Financial Advisors, one person recommended by the insurer with
129	the highest voluntary market share of residential property
130	insurance business in the state, one person recommended by the
131	insurer with the second-highest voluntary market share of
132	residential property insurance business in the state, one person
133	recommended by an insurer writing commercial residential
134	property insurance in this state, one person recommended by the
135	Office of Insurance Regulation, and one board member designated
136	by the board chairman, who shall serve as chairman of the panel.
137	b.  By January 1, 2004, the rate methodology panel shall
138	provide a report to the corporation of its findings and
139	recommendations for the use of additional ratemaking methods and
140	procedures, including the use of a rate equalization surcharge
141	in an amount sufficient to assure that the total cost of
142	coverage for policyholders or applicants to the corporation is
143	sufficient to comply with subparagraph 1.
144	c.  Within 30 days after such report, the corporation shall
145	present to the President of the Senate, the Speaker of the House
146	of Representatives, the minority party leaders of each house of
147	the Legislature, and the chairs of the standing committees of
148	each house of the Legislature having jurisdiction of insurance
149	issues, a plan for implementing the additional ratemaking
150	methods and an outline of any legislation needed to facilitate
151	use of the new methods.
152	d.  The plan must include a provision that producer
153	commissions paid by the corporation shall not be calculated in
154	such a manner as to include any rate equalization surcharge.
155	However, without regard to the plan to be developed or its
156	implementation, producer commissions paid by the corporation for
157	each account, other than the quota share primary program, shall
158	remain fixed as to percentage, effective rate, calculation, and
159	payment method until January 1, 2004.
160	10.9.  By January 1, 2004, The corporation shall develop a
161	notice to policyholders or applicants that the rates of Citizens
162	Property Insurance Corporation are intended to be higher than
163	the rates of any admitted carrier except when the provisions of
164	subparagraph 4. apply and providing other information the
165	corporation deems necessary to assist consumers in finding other
166	voluntary admitted insurers willing to insure their property.
167	Section 2.  This act shall take effect July 1, 2005.

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