Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
CHAMBER ACTION
Senate House
.
.
1 .
.
2 .
.
3 .
.
4 ______________________________________________________________
5
6
7
8
9
10 ______________________________________________________________
11 Senator Garcia moved the following amendment to amendment
12 (435620):
13
14 Senate Amendment (with title amendment)
15 On page 24, between lines 23 and 24,
16
17 insert:
18 (d)1. It is the intent of the Legislature that the
19 rates for coverage provided by the corporation be actuarially
20 sound and not competitive with approved rates charged in the
21 admitted voluntary market, so that the corporation functions
22 as a residual market mechanism to provide insurance only when
23 the insurance cannot be procured in the voluntary market.
24 Rates shall include an appropriate catastrophe loading factor
25 that reflects the actual catastrophic exposure of the
26 corporation.
27 2. For each county, the average rates of the
28 corporation for each line of business for personal lines
29 residential policies excluding rates for wind-only policies
30 shall be no lower than the average rates charged by the
31 insurer that had the highest average rate in that county among
1
11:39 AM 05/06/05 h193704e2c-40-j08
Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
1 the 20 insurers with the greatest total direct written premium
2 in the state for that line of business in the preceding year,
3 except that with respect to mobile home coverages, the average
4 rates of the corporation shall be no lower than the average
5 rates charged by the insurer that had the highest average rate
6 in that county among the 5 insurers with the greatest total
7 written premium for mobile home owner's policies in the state
8 in the preceding year.
9 3. Rates for personal lines residential wind-only
10 policies must be actuarially sound and not competitive with
11 approved rates charged by authorized insurers. However, for
12 personal lines residential wind-only policies issued or
13 renewed between July 1, 2002, and June 30, 2003, the maximum
14 premium increase must be no greater than 10 percent of the
15 Florida Windstorm Underwriting Association premium for that
16 policy in effect on June 30, 2002, as adjusted for coverage
17 changes and seasonal occupancy surcharges. For personal lines
18 residential wind-only policies issued or renewed between July
19 1, 2003, and June 30, 2004, the corporation shall use its
20 existing filed and approved wind-only rating and
21 classification plans, provided, however, that the maximum
22 premium increase must be no greater than 20 percent of the
23 premium for that policy in effect on June 30, 2003, as
24 adjusted for coverage changes and seasonal occupancy
25 surcharges. Corporation rate manuals shall include a rate
26 surcharge for seasonal occupancy. To ensure that personal
27 lines residential wind-only rates effective on or after July
28 1, 2004, are not competitive with approved rates charged by
29 authorized insurers, the corporation, in conjunction with the
30 office, shall develop a wind-only ratemaking methodology,
31 which methodology shall be contained in a rate filing made by
2
11:39 AM 05/06/05 h193704e2c-40-j08
Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
1 the corporation with the office by January 1, 2004. If the
2 office thereafter determines that the wind-only rates or
3 rating factors filed by the corporation fail to comply with
4 the wind-only ratemaking methodology provided for in this
5 subsection, it shall so notify the corporation and require the
6 corporation to amend its rates or rating factors to come into
7 compliance within 90 days of notice from the office. The
8 office shall report to the Speaker of the House of
9 Representatives and the President of the Senate on the
10 provisions of the wind-only ratemaking methodology by January
11 31, 2004.
12 4. For the purposes of establishing a pilot program to
13 evaluate issues relating to the availability and affordability
14 of insurance in an area where historically there has been
15 little market competition, the provisions of subparagraph 2.
16 do not apply to coverage provided by the corporation in Monroe
17 County if the office determines that a reasonable degree of
18 competition does not exist for personal lines residential
19 policies. The provisions of subparagraph 3. do not apply to
20 coverage provided by the corporation in Monroe County if the
21 office determines that a reasonable degree of competition does
22 not exist for personal lines residential policies in the area
23 of that county which is eligible for wind-only coverage. In
24 this county, the rates for personal lines residential coverage
25 shall be actuarially sound and not excessive, inadequate, or
26 unfairly discriminatory and are subject to the other
27 provisions of this paragraph and s. 627.062. The commission
28 shall adopt rules establishing the criteria for determining
29 whether a reasonable degree of competition exists for personal
30 lines residential policies in Monroe County. By March 1, 2006,
31 the office shall submit a report to the Legislature providing
3
11:39 AM 05/06/05 h193704e2c-40-j08
Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
1 an evaluation of the implementation of the pilot program
2 affecting Monroe County.
3 5.4. Rates for commercial lines coverage shall not be
4 subject to the requirements of subparagraph 2., but shall be
5 subject to all other requirements of this paragraph and s.
6 627.062.
7 6.5. Nothing in this paragraph shall require or allow
8 the corporation to adopt a rate that is inadequate under s.
9 627.062.
10 7.6. The corporation shall certify to the office at
11 least twice annually that its personal lines rates comply with
12 the requirements of subparagraphs 1. and 2. If any adjustment
13 in the rates or rating factors of the corporation is necessary
14 to ensure such compliance, the corporation shall make and
15 implement such adjustments and file its revised rates and
16 rating factors with the office. If the office thereafter
17 determines that the revised rates and rating factors fail to
18 comply with the provisions of subparagraphs 1. and 2., it
19 shall notify the corporation and require the corporation to
20 amend its rates or rating factors in conjunction with its next
21 rate filing. The office must notify the corporation by
22 electronic means of any rate filing it approves for any
23 insurer among the insurers referred to in subparagraph 2.
24 8.7. In addition to the rates otherwise determined
25 pursuant to this paragraph, the corporation shall impose and
26 collect an amount equal to the premium tax provided for in s.
27 624.509 to augment the financial resources of the corporation.
28 9.8.a. To assist the corporation in developing
29 additional ratemaking methods to assure compliance with
30 subparagraphs 1. and 5. 4., the corporation shall appoint a
31 rate methodology panel consisting of one person recommended by
4
11:39 AM 05/06/05 h193704e2c-40-j08
Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
1 the Florida Association of Insurance Agents, one person
2 recommended by the Professional Insurance Agents of Florida,
3 one person recommended by the Florida Association of Insurance
4 and Financial Advisors, one person recommended by the insurer
5 with the highest voluntary market share of residential
6 property insurance business in the state, one person
7 recommended by the insurer with the second-highest voluntary
8 market share of residential property insurance business in the
9 state, one person recommended by an insurer writing commercial
10 residential property insurance in this state, one person
11 recommended by the Office of Insurance Regulation, and one
12 board member designated by the board chairman, who shall serve
13 as chairman of the panel.
14 b. By January 1, 2004, the rate methodology panel
15 shall provide a report to the corporation of its findings and
16 recommendations for the use of additional ratemaking methods
17 and procedures, including the use of a rate equalization
18 surcharge in an amount sufficient to assure that the total
19 cost of coverage for policyholders or applicants to the
20 corporation is sufficient to comply with subparagraph 1.
21 c. Within 30 days after such report, the corporation
22 shall present to the President of the Senate, the Speaker of
23 the House of Representatives, the minority party leaders of
24 each house of the Legislature, and the chairs of the standing
25 committees of each house of the Legislature having
26 jurisdiction of insurance issues, a plan for implementing the
27 additional ratemaking methods and an outline of any
28 legislation needed to facilitate use of the new methods.
29 d. The plan must include a provision that producer
30 commissions paid by the corporation shall not be calculated in
31 such a manner as to include any rate equalization surcharge.
5
11:39 AM 05/06/05 h193704e2c-40-j08
Florida Senate - 2005 SENATOR AMENDMENT
Bill No. HB 1937, 2nd Eng.
Barcode 095560
1 However, without regard to the plan to be developed or its
2 implementation, producer commissions paid by the corporation
3 for each account, other than the quota share primary program,
4 shall remain fixed as to percentage, effective rate,
5 calculation, and payment method until January 1, 2004.
6 10.9. By January 1, 2004, the corporation shall
7 develop a notice to policyholders or applicants that the rates
8 of Citizens Property Insurance Corporation are intended to be
9 higher than the rates of any admitted carrier and providing
10 other information the corporation deems necessary to assist
11 consumers in finding other voluntary admitted insurers willing
12 to insure their property.
13
14
15 ================ T I T L E A M E N D M E N T ===============
16 And the title is amended as follows:
17 On page 61, line 21, after the semicolon,
18
19 insert:
20 establishing a pilot program; specifying
21 nonapplication of certain policy requirements
22 in a county lacking reasonable degrees of
23 competition for certain policies under certain
24 circumstances; requiring the commission to
25 adopt rules;
26
27
28
29
30
31
6
11:39 AM 05/06/05 h193704e2c-40-j08