HB 27A

1	A bill to be entitled
2	An act relating to hurricane preparedness and residential
3	property insurance; amending s. 553.73, F.S.; prohibiting
4	the Florida Building Commission from modifying certain
5	foundation codes relating to wind resistance or the
6	prevention of water intrusion unless the modification
7	enhances such provisions; amending s. 553.775, F.S.;
8	conforming a cross-reference; requiring jurisdictions
9	having authority to enforce the Florida Building Code to
10	require wind-borne-debris protection according to
11	specified requirements; requiring that the Florida
12	Building Commission amend the Florida Building Code to
13	reflect the requirements of the act and eliminate certain
14	less stringent requirements; providing an exception;
15	requiring an amendment to the code with respect to certain
16	provisions governing new residential construction;
17	requiring the commission to develop voluntary guidelines
18	for increasing the hurricane resistance of buildings;
19	requiring that the guidelines be included in the
20	commission's report to the 2008 Legislature; amending s.
21	624.404, F.S.; prohibiting an insurer from transacting
22	business in this state if it fails to offer a line of
23	business in this state that is offered in another state;
24	providing an exception; amending s. 627.0613, F.S.;
25	providing for approval of residential property rate
26	filings by the insurance consumer advocate; amending s.
27	627.062, F.S.; requiring that insurance rate increases be
28	"reasonable" rather than "not excessive"; exempting
29	residential property rate filings from "use and file"
30	provisions; excluding reinsurance costs paid to affiliated
31	companies from consideration in residential property rate
32	filings; requiring the full worldwide profits of insurers
33	to be considered as a factor in residential property rate
34	filings; deleting provisions allowing certain residential
35	property rate changes in areas in which a reasonable
36	degree of competition exists; exempting residential
37	property rate filings from provisions allowing arbitration
38	concerning rate filings in certain circumstances;
39	requiring that an insurer include specified attestations
40	of accuracy with residential property rate filings;
41	amending s. 627.0629, F.S.; providing for development of a
42	uniform statewide rating scale and inspection system for
43	properties; requiring use of such a scale rather than
44	location of properties for rate setting; amending s.
45	627.351, F.S.; deleting requirements that a windstorm risk
46	apportionment plan be limited to certain geographic areas;
47	revising provisions to authorize Citizens Property
48	Insurance Corporation to be competitive in the voluntary
49	market; deleting provisions requiring the corporation's
50	rates to be no lower than certain rates; deleting an
51	obsolete provision; amending s. 627.4133, F.S.; limiting
52	cancellation or nonrenewal of certain residential policies
53	to certain times of the year; providing an exception;
54	providing that certain residential policies in force for a
55	specified period and meeting certain requirements cannot
56	be canceled or nonrenewed except for nonpayment of
57	premium; creating specified pilot programs using sales tax
58	revenues; providing for annual reports; providing for
59	future repeal; providing effective dates.
60
61	Be It Enacted by the Legislature of the State of Florida:
62
63	Section 1.  Subsections (2) and (3), paragraph (b) of
64	subsection (4), and subsections (6) and (7) of section 553.73,
65	Florida Statutes, are amended, and subsections (8) through (11)
66	of that section are renumbered as subsections (9) through (12),
67	respectively, to read:
68	553.73  Florida Building Code.--
69	(2)  The Florida Building Code shall contain provisions or
70	requirements for public and private buildings, structures, and
71	facilities relative to structural, mechanical, electrical,
72	plumbing, energy, and gas systems, existing buildings,
73	historical buildings, manufactured buildings, elevators, coastal
74	construction, lodging facilities, food sales and food service
75	facilities, health care facilities, including assisted living
76	facilities, adult day care facilities, hospice residential and
77	inpatient facilities and units, and facilities for the control
78	of radiation hazards, public or private educational facilities,
79	swimming pools, and correctional facilities and enforcement of
80	and compliance with such provisions or requirements. Further,
81	the Florida Building Code must provide for uniform
82	implementation of ss. 515.25, 515.27, and 515.29 by including
83	standards and criteria for residential swimming pool barriers,
84	pool covers, latching devices, door and window exit alarms, and
85	other equipment required therein, which are consistent with the
86	intent of s. 515.23. Technical provisions to be contained within
87	the Florida Building Code are restricted to requirements related
88	to the types of materials used and construction methods and
89	standards employed in order to meet criteria specified in the
90	Florida Building Code. Provisions relating to the personnel,
91	supervision or training of personnel, or any other professional
92	qualification requirements relating to contractors or their
93	workforce may not be included within the Florida Building Code,
94	and subsections (4), (5), (6), and (7), and (8) are not to be
95	construed to allow the inclusion of such provisions within the
96	Florida Building Code by amendment. This restriction applies to
97	both initial development and amendment of the Florida Building
98	Code.
99	(3)  The commission shall select from available national or
100	international model building codes, or other available building
101	codes and standards currently recognized by the laws of this
102	state, to form the foundation for the Florida Building Code. The
103	commission may modify the selected model codes and standards as
104	needed to accommodate the specific needs of this state.
105	Standards or criteria referenced by the selected model codes
106	shall be similarly incorporated by reference. If a referenced
107	standard or criterion requires amplification or modification to
108	be appropriate for use in this state, only the amplification or
109	modification shall be specifically set forth in the Florida
110	Building Code. The Florida Building Commission may approve
111	technical amendments to the code, subject to the requirements of
112	subsections (7) and(8) after the amendments have been subject to
113	the following conditions:
114	(a)  The proposed amendment has been published on the
115	commission's website for a minimum of 45 days and all the
116	associated documentation has been made available to any
117	interested party before any consideration by any Technical
118	Advisory Committee;
119	(b)  In order for a Technical Advisory Committee to make a
120	favorable recommendation to the commission, the proposal must
121	receive a three-fourths vote of the members present at the
122	Technical Advisory Committee meeting and at least half of the
123	regular members must be present in order to conduct a meeting;
124	(c)  After Technical Advisory Committee consideration and a
125	recommendation for approval of any proposed amendment, the
126	proposal must be published on the commission's website for not
127	less than 45 days before any consideration by the commission;
128	and
129	(d)  Any proposal may be modified by the commission based
130	on public testimony and evidence from a public hearing held in
131	accordance with chapter 120.
132
133	The commission shall incorporate within sections of the Florida
134	Building Code provisions which address regional and local
135	concerns and variations. The commission shall make every effort
136	to minimize conflicts between the Florida Building Code, the
137	Florida Fire Prevention Code, and the Life Safety Code.
138	(4)
139	(b)  Local governments may, subject to the limitations of
140	this section, adopt amendments to the technical provisions of
141	the Florida Building Code which apply solely within the
142	jurisdiction of such government and which provide for more
143	stringent requirements than those specified in the Florida
144	Building Code, not more than once every 6 months. A local
145	government may adopt technical amendments that address local
146	needs if:
147	1.  The local governing body determines, following a public
148	hearing which has been advertised in a newspaper of general
149	circulation at least 10 days before the hearing, that there is a
150	need to strengthen the requirements of the Florida Building
151	Code. The determination must be based upon a review of local
152	conditions by the local governing body, which review
153	demonstrates by evidence or data that the geographical
154	jurisdiction governed by the local governing body exhibits a
155	local need to strengthen the Florida Building Code beyond the
156	needs or regional variation addressed by the Florida Building
157	Code, that the local need is addressed by the proposed local
158	amendment, and that the amendment is no more stringent than
159	necessary to address the local need.
160	2.  Such additional requirements are not discriminatory
161	against materials, products, or construction techniques of
162	demonstrated capabilities.
163	3.  Such additional requirements may not introduce a new
164	subject not addressed in the Florida Building Code.
165	4.  The enforcing agency shall make readily available, in a
166	usable format, all amendments adopted pursuant to this section.
167	5.  Any amendment to the Florida Building Code shall be
168	transmitted within 30 days by the adopting local government to
169	the commission. The commission shall maintain copies of all such
170	amendments in a format that is usable and obtainable by the
171	public. Local technical amendments shall not become effective
172	until 30 days after the amendment has been received and
173	published by the commission.
174	6.  Any amendment to the Florida Building Code adopted by a
175	local government pursuant to this paragraph shall be effective
176	only until the adoption by the commission of the new edition of
177	the Florida Building Code every third year. At such time, the
178	commission shall review such amendment for consistency with the
179	criteria in paragraph (8)(7)(a) and adopt such amendment as part
180	of the Florida Building Code or rescind the amendment. The
181	commission shall immediately notify the respective local
182	government of the rescission of any amendment. After receiving
183	such notice, the respective local government may readopt the
184	rescinded amendment pursuant to the provisions of this
185	paragraph.
186	7.  Each county and municipality desiring to make local
187	technical amendments to the Florida Building Code shall by
188	interlocal agreement establish a countywide compliance review
189	board to review any amendment to the Florida Building Code,
190	adopted by a local government within the county pursuant to this
191	paragraph, that is challenged by any substantially affected
192	party for purposes of determining the amendment's compliance
193	with this paragraph. If challenged, the local technical
194	amendments shall not become effective until time for filing an
195	appeal pursuant to subparagraph 8. has expired or, if there is
196	an appeal, until the commission issues its final order
197	determining the adopted amendment is in compliance with this
198	subsection.
199	8.  If the compliance review board determines such
200	amendment is not in compliance with this paragraph, the
201	compliance review board shall notify such local government of
202	the noncompliance and that the amendment is invalid and
203	unenforceable until the local government corrects the amendment
204	to bring it into compliance. The local government may appeal the
205	decision of the compliance review board to the commission. If
206	the compliance review board determines such amendment to be in
207	compliance with this paragraph, any substantially affected party
208	may appeal such determination to the commission. Any such appeal
209	shall be filed with the commission within 14 days of the board's
210	written determination. The commission shall promptly refer the
211	appeal to the Division of Administrative Hearings for the
212	assignment of an administrative law judge. The administrative
213	law judge shall conduct the required hearing within 30 days, and
214	shall enter a recommended order within 30 days of the conclusion
215	of such hearing. The commission shall enter a final order within
216	30 days thereafter. The provisions of chapter 120 and the
217	uniform rules of procedure shall apply to such proceedings. The
218	local government adopting the amendment that is subject to
219	challenge has the burden of proving that the amendment complies
220	with this paragraph in proceedings before the compliance review
221	board and the commission, as applicable. Actions of the
222	commission are subject to judicial review pursuant to s. 120.68.
223	The compliance review board shall determine whether its
224	decisions apply to a respective local jurisdiction or apply
225	countywide.
226	9.  An amendment adopted under this paragraph shall include
227	a fiscal impact statement which documents the costs and benefits
228	of the proposed amendment. Criteria for the fiscal impact
229	statement shall include the impact to local government relative
230	to enforcement, the impact to property and building owners, as
231	well as to industry, relative to the cost of compliance. The
232	fiscal impact statement may not be used as a basis for
233	challenging the amendment for compliance.
234	10.  In addition to subparagraphs 7. and 9., the commission
235	may review any amendments adopted pursuant to this subsection
236	and make nonbinding recommendations related to compliance of
237	such amendments with this subsection.
238	(6)(a)  The commission, by rule adopted pursuant to ss.
239	120.536(1) and 120.54, shall update the Florida Building Code
240	every 3 years. When updating the Florida Building Code, the
241	commission shall select the most current version of the
242	International Building Code, the International Fuel Gas Code,
243	the International Mechanical Code, the International Plumbing
244	Code, and the International Residential Code, all of which are
245	adopted by the International Code Council, and the National
246	Electrical Code, which is adopted by the National Fire
247	Protection Association, to form the foundation codes of the
248	updated Florida Building Code, if the version has been adopted
249	by the applicable model code entity and made available to the
250	public at least 6 months prior to its selection by the
251	commission.
252	(b)  Codes regarding noise contour lines shall be reviewed
253	annually, and the most current federal guidelines shall be
254	adopted.
255	(c)  The commission may modify any portion of the
256	foundation codes only as needed to accommodate the specific
257	needs of this state, maintaining Florida-specific amendments
258	previously adopted by the commission and not addressed by the
259	updated foundation code. Standards or criteria referenced by the
260	codes shall be incorporated by reference. If a referenced
261	standard or criterion requires amplification or modification to
262	be appropriate for use in this state, only the amplification or
263	modification shall be set forth in the Florida Building Code.
264	The commission may approve technical amendments to the updated
265	Florida Building Code after the amendments have been subject to
266	the conditions set forth in paragraphs (3)(a)-(d). Amendments to
267	the foundation codes which are adopted in accordance with this
268	subsection shall be clearly marked in printed versions of the
269	Florida Building Code so that the fact that the provisions are
270	Florida-specific amendments to the foundation codes is readily
271	apparent.
272	(d)  The commission shall further consider the commission's
273	own interpretations, declaratory statements, appellate
274	decisions, and approved statewide and local technical amendments
275	and shall incorporate such interpretations, statements,
276	decisions, and amendments into the updated Florida Building Code
277	only to the extent that they are needed to modify the foundation
278	codes to accommodate the specific needs of the state. A change
279	made by an institute or standards organization to any standard
280	or criterion that is adopted by reference in the Florida
281	Building Code does not become effective statewide until it has
282	been adopted by the commission. Furthermore, the edition of the
283	Florida Building Code which is in effect on the date of
284	application for any permit authorized by the code governs the
285	permitted work for the life of the permit and any extension
286	granted to the permit.
287	(e)  A rule updating the Florida Building Code in
288	accordance with this subsection shall take effect no sooner than
289	6 months after publication of the updated code. Any amendment to
290	the Florida Building Code which is adopted upon a finding by the
291	commission that the amendment is necessary to protect the public
292	from immediate threat of harm takes effect immediately.
293	(f)  Provisions of the foundation codes, including those
294	contained in referenced standards and criteria, relating to wind
295	resistance or the prevention of water intrusion may not be
296	modified to diminish those construction requirements; however,
297	the commission may, subject to conditions in this subsection,
298	modify the provisions to enhance those construction
299	requirements.
300	(7)(f)  Upon the conclusion of a triennial update to the
301	Florida Building Code, notwithstanding the provisions of this
302	subsection or subsection (3) or subsection (6), the commission
303	may address issues identified in this subsection paragraph by
304	amending the code pursuant only to the rule adoption procedures
305	contained in chapter 120. Provisions of the Florida Building
306	Code, including those contained in referenced standards and
307	criteria, relating to wind resistance or the prevention of water
308	intrusion may not be amended pursuant to this subsection to
309	diminish those construction requirements; however, the
310	commission may, subject to conditions in this subsection, amend
311	the provisions to enhance those construction requirements.
312	Following the approval of any amendments to the Florida Building
313	Code by the commission and publication of the amendments on the
314	commission's website, authorities having jurisdiction to enforce
315	the Florida Building Code may enforce the amendments. The
316	commission may approve amendments that are needed to address:
317	(a)1.  Conflicts within the updated code;
318	(b)2.  Conflicts between the updated code and the Florida
319	Fire Prevention Code adopted pursuant to chapter 633;
320	(c)3.  The omission of previously adopted Florida-specific
321	amendments to the updated code if such omission is not supported
322	by a specific recommendation of a technical advisory committee
323	or particular action by the commission; or
324	(d)4.  Unintended results from the integration of
325	previously adopted Florida-specific amendments with the model
326	code.
327	(8)(7)(a)  The commission may approve technical amendments
328	to the Florida Building Code once each year for statewide or
329	regional application upon a finding that the amendment:
330	1.  Is needed in order to accommodate the specific needs of
331	this state.
332	2.  Has a reasonable and substantial connection with the
333	health, safety, and welfare of the general public.
334	3.  Strengthens or improves the Florida Building Code, or
335	in the case of innovation or new technology, will provide
336	equivalent or better products or methods or systems of
337	construction.
338	4.  Does not discriminate against materials, products,
339	methods, or systems of construction of demonstrated
340	capabilities.
341	5.  Does not degrade the effectiveness of the Florida
342	Building Code.
343
344	Furthermore, the Florida Building Commission may approve
345	technical amendments to the code once each year to incorporate
346	into the Florida Building Code its own interpretations of the
347	code which are embodied in its opinions, final orders,
348	declaratory statements, and interpretations of hearing officer
349	panels under s. 553.775(3)(c), but shall do so only to the
350	extent that incorporation of interpretations is needed to modify
351	the foundation codes to accommodate the specific needs of this
352	state. Amendments approved under this paragraph shall be adopted
353	by rule pursuant to ss. 120.536(1) and 120.54, after the
354	amendments have been subjected to the provisions of subsection
355	(3).
356	(b)  A proposed amendment shall include a fiscal impact
357	statement which documents the costs and benefits of the proposed
358	amendment. Criteria for the fiscal impact statement shall be
359	established by rule by the commission and shall include the
360	impact to local government relative to enforcement, the impact
361	to property and building owners, as well as to industry,
362	relative to the cost of compliance.
363	(c)  The commission may not approve any proposed amendment
364	that does not accurately and completely address all requirements
365	for amendment which are set forth in this section. The
366	commission shall require all proposed amendments and information
367	submitted with proposed amendments to be reviewed by commission
368	staff prior to consideration by any technical advisory
369	committee. These reviews shall be for sufficiency only and are
370	not intended to be qualitative in nature. Staff members shall
371	reject any proposed amendment that fails to include a fiscal
372	impact statement. Proposed amendments rejected by members of the
373	staff may not be considered by the commission or any technical
374	advisory committee.
375	(d)  Provisions of the Florida Building Code, including
376	those contained in referenced standards and criteria, relating
377	to wind resistance or the prevention of water intrusion may not
378	be amended pursuant to this subsection to diminish those
379	construction requirements; however, the commission may, subject
380	to conditions in this subsection, amend the provisions to
381	enhance those construction requirements.
382	Section 2.  Subsection (2) of section 553.775, Florida
383	Statutes, is amended to read:
384	553.775  Interpretations.--
385	(2)  Local enforcement agencies, local building officials,
386	state agencies, and the commission shall interpret provisions of
387	the Florida Building Code in a manner that is consistent with
388	declaratory statements and interpretations entered by the
389	commission, except that conflicts between the Florida Fire
390	Prevention Code and the Florida Building Code shall be resolved
391	in accordance with s. 553.73(10)(9)(c) and (d).
392	Section 3.  Upon the effective date of this act, each
393	jurisdiction having authority to enforce the Florida Building
394	Code shall, at a minimum, require wind-borne-debris protection
395	in accordance with s. 1609.1, International Building Code (2006)
396	within the "wind-borne-debris region" as that term is defined in
397	s. 1609.2, International Building Code (2006).
398	Section 4.  (1)  The Florida Building Commission shall
399	amend the Florida Building Code to reflect the application of
400	provisions identified in section 553.73, Florida Statutes, and
401	to eliminate all exceptions that provide less stringent
402	requirements. The amendments by the commission shall apply
403	throughout the state with the exception of the High Velocity
404	Hurricane Zone, which shall be governed as currently provided
405	within the Florida Building Code. The commission shall, in
406	addition, amend the code to require that, at a minimum, in areas
407	where the applicable design wind speed is less than 120 miles
408	per hour, all new residences are designed and constructed to
409	withstand internal pressures. The commission shall fulfill these
410	obligations before July 1, 2007, pursuant only to the provisions
411	of chapter 120, Florida Statutes.
412	(2)  The Florida Building Commission shall develop
413	voluntary "Code Plus" guidelines for increasing the hurricane
414	resistance of buildings. The guidelines must be modeled on the
415	requirements for the High Velocity Hurricane Zone and must
416	identify products, systems, and methods of construction that the
417	commission anticipates could result in stronger construction.
418	The commission shall include these guidelines in its report to
419	the 2008 Legislature.
420	(3)  This section shall take effect upon this act becoming
421	a law.
422	Section 5.  Subsection (8) is added to section 624.404,
423	Florida Statutes, to read:
424	624.404  General eligibility of insurers for certificate of
425	authority.--To qualify for and hold authority to transact
426	insurance in this state, an insurer must be otherwise in
427	compliance with this code and with its charter powers and must
428	be an incorporated stock insurer, an incorporated mutual
429	insurer, or a reciprocal insurer, of the same general type as
430	may be formed as a domestic insurer under this code; except
431	that:
432	(8)  No insurer shall be authorized to transact business in
433	this state if it fails to offer in this state a line of business
434	offered in any other state. The office may waive this
435	requirement to the extent necessary to allow an insurer to offer
436	in this state a product or service not otherwise readily
437	available to the consumers of this state.
438	Section 6.  Subsection (5) is added to section 627.0613,
439	Florida Statutes, to read:
440	627.0613  Consumer advocate.--The Chief Financial Officer
441	must appoint a consumer advocate who must represent the general
442	public of the state before the department and the office. The
443	consumer advocate must report directly to the Chief Financial
444	Officer, but is not otherwise under the authority of the
445	department or of any employee of the department. The consumer
446	advocate has such powers as are necessary to carry out the
447	duties of the office of consumer advocate, including, but not
448	limited to, the powers to:
449	(5)  Approve all residential property rate filings as
450	reasonable before they shall take effect.
451	Section 7.  Subsection (1), paragraphs (a), (b), and (j) of
452	subsection (2), paragraph (a) of subsection (6), and subsection
453	(9) of section 627.062, Florida Statutes, are amended to read:
454	627.062  Rate standards.--
455	(1)  The rates for all classes of insurance to which the
456	provisions of this part are applicable shall be reasonable and
457	shall not be excessive, inadequate, or unfairly discriminatory.
458	(2)  As to all such classes of insurance:
459	(a)  Insurers or rating organizations shall establish and
460	use rates, rating schedules, or rating manuals to allow the
461	insurer a reasonable rate of return on such classes of insurance
462	written in this state. A copy of rates, rating schedules, rating
463	manuals, premium credits or discount schedules, and surcharge
464	schedules, and changes thereto, shall be filed with the office
465	under one of the following procedures:
466	1.  If the filing is made at least 90 days before the
467	proposed effective date and the filing is not implemented during
468	the office's review of the filing and any proceeding and
469	judicial review, then such filing shall be considered a "file
470	and use" filing. In such case, the office shall finalize its
471	review by issuance of a notice of intent to approve or a notice
472	of intent to disapprove within 90 days after receipt of the
473	filing. The notice of intent to approve and the notice of intent
474	to disapprove constitute agency action for purposes of the
475	Administrative Procedure Act. Requests for supporting
476	information, requests for mathematical or mechanical
477	corrections, or notification to the insurer by the office of its
478	preliminary findings shall not toll the 90-day period during any
479	such proceedings and subsequent judicial review. The rate shall
480	be deemed approved if the office does not issue a notice of
481	intent to approve or a notice of intent to disapprove within 90
482	days after receipt of the filing.
483	2.  If the filing is not made in accordance with the
484	provisions of subparagraph 1., such filing shall be made as soon
485	as practicable, but no later than 30 days after the effective
486	date, and shall be considered a "use and file" filing. An
487	insurer making a "use and file" filing is potentially subject to
488	an order by the office to return to policyholders portions of
489	rates found to be excessive, as provided in paragraph (h). This
490	subparagraph does not apply to residential property insurance.
491	(b)  Upon receiving a rate filing, the office shall review
492	the rate filing to determine if a rate is reasonable excessive,
493	inadequate, or unfairly discriminatory. In making that
494	determination, the office shall, in accordance with generally
495	accepted and reasonable actuarial techniques, consider the
496	following factors:
497	1.  Past and prospective loss experience within and without
498	this state.
499	2.  Past and prospective expenses.
500	3.  The degree of competition among insurers for the risk
501	insured.
502	4.  Investment income reasonably expected by the insurer,
503	consistent with the insurer's investment practices, from
504	investable premiums anticipated in the filing, plus any other
505	expected income from currently invested assets representing the
506	amount expected on unearned premium reserves and loss reserves.
507	The commission may adopt rules utilizing reasonable techniques
508	of actuarial science and economics to specify the manner in
509	which insurers shall calculate investment income attributable to
510	such classes of insurance written in this state and the manner
511	in which such investment income shall be used in the calculation
512	of insurance rates. Such manner shall contemplate allowances for
513	an underwriting profit factor and full consideration of
514	investment income which produce a reasonable rate of return;
515	however, investment income from invested surplus shall not be
516	considered.
517	5.  The reasonableness of the judgment reflected in the
518	filing.
519	6.  Dividends, savings, or unabsorbed premium deposits
520	allowed or returned to Florida policyholders, members, or
521	subscribers.
522	7.  The adequacy of loss reserves.
523	8.  The cost of reinsurance. A residential property insurer
524	shall not include costs of reinsurance obtained from an
525	affiliated company.
526	9.  Trend factors, including trends in actual losses per
527	insured unit for the insurer making the filing.
528	10.  Conflagration and catastrophe hazards, if applicable.
529	11.  A reasonable margin for underwriting profit and
530	contingencies. For that portion of the rate covering the risk of
531	hurricanes and other catastrophic losses for which the insurer
532	has not purchased reinsurance and has exposed its capital and
533	surplus to such risk, the office must approve a rating factor
534	that provides the insurer a reasonable rate of return that is
535	commensurate with such risk. For residential property insurers,
536	the full worldwide profit of the insurer shall be considered as
537	a factor in addition to profit from within this state.
538	12.  The cost of medical services, if applicable.
539	13.  Other relevant factors which impact upon the frequency
540	or severity of claims or upon expenses.
541	(j)  Notwithstanding any other provision of law, a
542	residential property rate filing shall not take effect until
543	approved by the consumer advocate as provided under s.
544	627.0613(5). Effective July 1, 2007, notwithstanding any other
545	provision of this section:
546	1.  With respect to any residential property insurance
547	subject to regulation under this section for any area for which
548	the office determines a reasonable degree of competition exists,
549	a rate filing, including, but not limited to, any rate changes,
550	rating factors, territories, classification, discounts, and
551	credits, with respect to any policy form, including endorsements
552	issued with the form, that results in an overall average
553	statewide premium increase or decrease of no more than 5 percent
554	above or below the premium that would result from the insurer's
555	rates then in effect shall not be subject to a determination by
556	the office that the rate is excessive or unfairly discriminatory
557	except as provided in subparagraph 3., or any other provision of
558	law, provided all changes specified in the filing do not result
559	in an overall premium increase of more than 10 percent for any
560	one territory, for reasons related solely to the rate change. As
561	used in this subparagraph, the term "insurer's rates then in
562	effect" includes only rates that have been lawfully in effect
563	under this section or rates that have been determined to be
564	lawful through administrative proceedings or judicial
565	proceedings.
566	2.  An insurer may not make filings under this paragraph
567	with respect to any policy form, including endorsements issued
568	with the form, if the overall premium changes resulting from
569	such filings exceed the amounts specified in this paragraph in
570	any 12-month period. An insurer may proceed under other
571	provisions of this section or other provisions of law if the
572	insurer seeks to exceed the premium or rate limitations of this
573	paragraph.
574	3.  This paragraph does not affect the authority of the
575	office to disapprove a rate as inadequate or to disapprove a
576	filing for the unlawful use of unfairly discriminatory rating
577	factors that are prohibited by the laws of this state. An
578	insurer electing to implement a rate change under this paragraph
579	shall submit a filing to the office at least 40 days prior to
580	the effective date of the rate change. The office shall have 30
581	days after the filing's submission to review the filing and
582	determine if the rate is inadequate or uses unfairly
583	discriminatory rating factors. Absent a finding by the office
584	within such 30-day period that the rate is inadequate or that
585	the insurer has used unfairly discriminatory rating factors, the
586	filing is deemed approved. If the office finds during the 30-day
587	period that the filing will result in inadequate premiums or
588	otherwise endanger the insurer's solvency, the office shall
589	suspend the rate decrease. If the insurer is implementing an
590	overall rate increase, the results of which continue to produce
591	an inadequate rate, such increase shall proceed pending
592	additional action by the office to ensure the adequacy of the
593	rate.
594	4.  This paragraph does not apply to rate filings for any
595	insurance other than residential property insurance.
596
597	The provisions of this subsection shall not apply to workers'
598	compensation and employer's liability insurance and to motor
599	vehicle insurance.
600	(6)(a)  After any action with respect to a rate filing that
601	constitutes agency action for purposes of the Administrative
602	Procedure Act, except for a rate filing for medical malpractice
603	or residential property insurance, an insurer may, in lieu of
604	demanding a hearing under s. 120.57, require arbitration of the
605	rate filing. Arbitration shall be conducted by a board of
606	arbitrators consisting of an arbitrator selected by the office,
607	an arbitrator selected by the insurer, and an arbitrator
608	selected jointly by the other two arbitrators. Each arbitrator
609	must be certified by the American Arbitration Association. A
610	decision is valid only upon the affirmative vote of at least two
611	of the arbitrators. No arbitrator may be an employee of any
612	insurance regulator or regulatory body or of any insurer,
613	regardless of whether or not the employing insurer does business
614	in this state. The office and the insurer must treat the
615	decision of the arbitrators as the final approval of a rate
616	filing. Costs of arbitration shall be paid by the insurer.
617	(9)  An insurer making a rate filing for residential
618	property insurance must include a certification under oath, on a
619	form approved by the office, that the information contained in
620	the filing is accurate and consistent with accepted actuarial
621	principles. The certification must be signed by the chief
622	actuary and a senior officer of the insurer. The burden is on
623	the office to establish that rates are excessive for personal
624	lines residential coverage with a dwelling replacement cost of
625	$1 million or more or for a single condominium unit with a
626	combined dwelling and contents replacement cost of $1 million or
627	more. Upon request of the office, the insurer shall provide to
628	the office such loss and expense information as the office
629	reasonably needs to meet this burden.
630	Section 8.  Subsection (11) is added to section 627.0629,
631	Florida Statutes, to read:
632	627.0629  Residential property insurance; rate filings.--
633	(11)  The department shall develop a uniform statewide
634	rating scale and inspection system for residential properties to
635	be used as the basis for rates. Upon adoption of such a system,
636	all rate filings shall thereafter be based upon the ratings of
637	individual properties rather than upon the location of the
638	properties.
639	Section 9.  Subsection (2) and paragraph (m) of subsection
640	(6) of section 627.351, Florida Statutes, are amended to read:
641	627.351  Insurance risk apportionment plans.--
642	(2)  WINDSTORM INSURANCE RISK APPORTIONMENT.--
643	(a)  Agreements may be made among property insurers with
644	respect to the equitable apportionment among them of insurance
645	which may be afforded applicants who are in good faith entitled
646	to, but are unable to procure, such insurance through ordinary
647	methods; and such insurers may agree among themselves on the use
648	of reasonable rate modifications for such insurance. Such
649	agreements and rate modifications shall be subject to the
650	applicable provisions of this chapter.
651	(b)  The department shall require all insurers holding a
652	certificate of authority to transact property insurance on a
653	direct basis in this state, other than joint underwriting
654	associations and other entities formed pursuant to this section,
655	to provide windstorm coverage to applicants from areas
656	determined to be eligible pursuant to paragraph (c) who in good
657	faith are entitled to, but are unable to procure, such coverage
658	through ordinary means; or it shall adopt a reasonable plan or
659	plans for the equitable apportionment or sharing among such
660	insurers of windstorm coverage, which may include formation of
661	an association for this purpose. As used in this subsection, the
662	term "property insurance" means insurance on real or personal
663	property, as defined in s. 624.604, including insurance for
664	fire, industrial fire, allied lines, farmowners multiperil,
665	homeowners' multiperil, commercial multiperil, and mobile homes,
666	and including liability coverages on all such insurance, but
667	excluding inland marine as defined in s. 624.607(3) and
668	excluding vehicle insurance as defined in s. 624.605(1)(a) other
669	than insurance on mobile homes used as permanent dwellings. The
670	department shall adopt rules that provide a formula for the
671	recovery and repayment of any deferred assessments.
672	1.  For the purpose of this section, properties eligible
673	for such windstorm coverage are defined as dwellings, buildings,
674	and other structures, including mobile homes which are used as
675	dwellings and which are tied down in compliance with mobile home
676	tie-down requirements prescribed by the Department of Highway
677	Safety and Motor Vehicles pursuant to s. 320.8325, and the
678	contents of all such properties. An applicant or policyholder is
679	eligible for coverage only if an offer of coverage cannot be
680	obtained by or for the applicant or policyholder from an
681	admitted insurer at approved rates.
682	2.a.(I)  All insurers required to be members of such
683	association shall participate in its writings, expenses, and
684	losses. Surplus of the association shall be retained for the
685	payment of claims and shall not be distributed to the member
686	insurers. Such participation by member insurers shall be in the
687	proportion that the net direct premiums of each member insurer
688	written for property insurance in this state during the
689	preceding calendar year bear to the aggregate net direct
690	premiums for property insurance of all member insurers, as
691	reduced by any credits for voluntary writings, in this state
692	during the preceding calendar year. For the purposes of this
693	subsection, the term "net direct premiums" means direct written
694	premiums for property insurance, reduced by premium for
695	liability coverage and for the following if included in allied
696	lines: rain and hail on growing crops; livestock; association
697	direct premiums booked; National Flood Insurance Program direct
698	premiums; and similar deductions specifically authorized by the
699	plan of operation and approved by the department. A member's
700	participation shall begin on the first day of the calendar year
701	following the year in which it is issued a certificate of
702	authority to transact property insurance in the state and shall
703	terminate 1 year after the end of the calendar year during which
704	it no longer holds a certificate of authority to transact
705	property insurance in the state. The commissioner, after review
706	of annual statements, other reports, and any other statistics
707	that the commissioner deems necessary, shall certify to the
708	association the aggregate direct premiums written for property
709	insurance in this state by all member insurers.
710	(II)  Effective July 1, 2002, The association shall operate
711	subject to the supervision and approval of a board of governors
712	who are the same individuals that have been appointed by the
713	Treasurer to serve on the board of governors of the Citizens
714	Property Insurance Corporation.
715	(III)  The plan of operation shall provide a formula
716	whereby a company voluntarily providing windstorm coverage in
717	affected areas will be relieved wholly or partially from
718	apportionment of a regular assessment pursuant to sub-sub-
719	subparagraph d.(I) or sub-sub-subparagraph d.(II).
720	(IV)  A company which is a member of a group of companies
721	under common management may elect to have its credits applied on
722	a group basis, and any company or group may elect to have its
723	credits applied to any other company or group.
724	(V)  There shall be no credits or relief from apportionment
725	to a company for emergency assessments collected from its
726	policyholders under sub-sub-subparagraph d.(III).
727	(VI)  The plan of operation may also provide for the award
728	of credits, for a period not to exceed 3 years, from a regular
729	assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
730	subparagraph d.(II) as an incentive for taking policies out of
731	the Residential Property and Casualty Joint Underwriting
732	Association. In order to qualify for the exemption under this
733	sub-sub-subparagraph, the take-out plan must provide that at
734	least 40 percent of the policies removed from the Residential
735	Property and Casualty Joint Underwriting Association cover risks
736	located in Dade, Broward, and Palm Beach Counties or at least 30
737	percent of the policies so removed cover risks located in Dade,
738	Broward, and Palm Beach Counties and an additional 50 percent of
739	the policies so removed cover risks located in other coastal
740	counties, and must also provide that no more than 15 percent of
741	the policies so removed may exclude windstorm coverage. With the
742	approval of the department, the association may waive these
743	geographic criteria for a take-out plan that removes at least
744	the lesser of 100,000 Residential Property and Casualty Joint
745	Underwriting Association policies or 15 percent of the total
746	number of Residential Property and Casualty Joint Underwriting
747	Association policies, provided the governing board of the
748	Residential Property and Casualty Joint Underwriting Association
749	certifies that the take-out plan will materially reduce the
750	Residential Property and Casualty Joint Underwriting
751	Association's 100-year probable maximum loss from hurricanes.
752	With the approval of the department, the board may extend such
753	credits for an additional year if the insurer guarantees an
754	additional year of renewability for all policies removed from
755	the Residential Property and Casualty Joint Underwriting
756	Association, or for 2 additional years if the insurer guarantees
757	2 additional years of renewability for all policies removed from
758	the Residential Property and Casualty Joint Underwriting
759	Association.
760	b.  Assessments to pay deficits in the association under
761	this subparagraph shall be included as an appropriate factor in
762	the making of rates as provided in s. 627.3512.
763	c.  The Legislature finds that the potential for unlimited
764	deficit assessments under this subparagraph may induce insurers
765	to attempt to reduce their writings in the voluntary market, and
766	that such actions would worsen the availability problems that
767	the association was created to remedy. It is the intent of the
768	Legislature that insurers remain fully responsible for paying
769	regular assessments and collecting emergency assessments for any
770	deficits of the association; however, it is also the intent of
771	the Legislature to provide a means by which assessment
772	liabilities may be amortized over a period of years.
773	d.(I)  When the deficit incurred in a particular calendar
774	year is 10 percent or less of the aggregate statewide direct
775	written premium for property insurance for the prior calendar
776	year for all member insurers, the association shall levy an
777	assessment on member insurers in an amount equal to the deficit.
778	(II)  When the deficit incurred in a particular calendar
779	year exceeds 10 percent of the aggregate statewide direct
780	written premium for property insurance for the prior calendar
781	year for all member insurers, the association shall levy an
782	assessment on member insurers in an amount equal to the greater
783	of 10 percent of the deficit or 10 percent of the aggregate
784	statewide direct written premium for property insurance for the
785	prior calendar year for member insurers. Any remaining deficit
786	shall be recovered through emergency assessments under sub-sub-
787	subparagraph (III).
788	(III)  Upon a determination by the board of directors that
789	a deficit exceeds the amount that will be recovered through
790	regular assessments on member insurers, pursuant to sub-sub-
791	subparagraph (I) or sub-sub-subparagraph (II), the board shall
792	levy, after verification by the department, emergency
793	assessments to be collected by member insurers and by
794	underwriting associations created pursuant to this section which
795	write property insurance, upon issuance or renewal of property
796	insurance policies other than National Flood Insurance policies
797	in the year or years following levy of the regular assessments.
798	The amount of the emergency assessment collected in a particular
799	year shall be a uniform percentage of that year's direct written
800	premium for property insurance for all member insurers and
801	underwriting associations, excluding National Flood Insurance
802	policy premiums, as annually determined by the board and
803	verified by the department. The department shall verify the
804	arithmetic calculations involved in the board's determination
805	within 30 days after receipt of the information on which the
806	determination was based. Notwithstanding any other provision of
807	law, each member insurer and each underwriting association
808	created pursuant to this section shall collect emergency
809	assessments from its policyholders without such obligation being
810	affected by any credit, limitation, exemption, or deferment. The
811	emergency assessments so collected shall be transferred directly
812	to the association on a periodic basis as determined by the
813	association. The aggregate amount of emergency assessments
814	levied under this sub-sub-subparagraph in any calendar year may
815	not exceed the greater of 10 percent of the amount needed to
816	cover the original deficit, plus interest, fees, commissions,
817	required reserves, and other costs associated with financing of
818	the original deficit, or 10 percent of the aggregate statewide
819	direct written premium for property insurance written by member
820	insurers and underwriting associations for the prior year, plus
821	interest, fees, commissions, required reserves, and other costs
822	associated with financing the original deficit. The board may
823	pledge the proceeds of the emergency assessments under this sub-
824	sub-subparagraph as the source of revenue for bonds, to retire
825	any other debt incurred as a result of the deficit or events
826	giving rise to the deficit, or in any other way that the board
827	determines will efficiently recover the deficit. The emergency
828	assessments under this sub-sub-subparagraph shall continue as
829	long as any bonds issued or other indebtedness incurred with
830	respect to a deficit for which the assessment was imposed remain
831	outstanding, unless adequate provision has been made for the
832	payment of such bonds or other indebtedness pursuant to the
833	document governing such bonds or other indebtedness. Emergency
834	assessments collected under this sub-sub-subparagraph are not
835	part of an insurer's rates, are not premium, and are not subject
836	to premium tax, fees, or commissions; however, failure to pay
837	the emergency assessment shall be treated as failure to pay
838	premium.
839	(IV)  Each member insurer's share of the total regular
840	assessments under sub-sub-subparagraph (I) or sub-sub-
841	subparagraph (II) shall be in the proportion that the insurer's
842	net direct premium for property insurance in this state, for the
843	year preceding the assessment bears to the aggregate statewide
844	net direct premium for property insurance of all member
845	insurers, as reduced by any credits for voluntary writings for
846	that year.
847	(V)  If regular deficit assessments are made under sub-sub-
848	subparagraph (I) or sub-sub-subparagraph (II), or by the
849	Residential Property and Casualty Joint Underwriting Association
850	under sub-subparagraph (6)(b)3.a. or sub-subparagraph
851	(6)(b)3.b., the association shall levy upon the association's
852	policyholders, as part of its next rate filing, or by a separate
853	rate filing solely for this purpose, a market equalization
854	surcharge in a percentage equal to the total amount of such
855	regular assessments divided by the aggregate statewide direct
856	written premium for property insurance for member insurers for
857	the prior calendar year. Market equalization surcharges under
858	this sub-sub-subparagraph are not considered premium and are not
859	subject to commissions, fees, or premium taxes; however, failure
860	to pay a market equalization surcharge shall be treated as
861	failure to pay premium.
862	e.  The governing body of any unit of local government, any
863	residents of which are insured under the plan, may issue bonds
864	as defined in s. 125.013 or s. 166.101 to fund an assistance
865	program, in conjunction with the association, for the purpose of
866	defraying deficits of the association. In order to avoid
867	needless and indiscriminate proliferation, duplication, and
868	fragmentation of such assistance programs, any unit of local
869	government, any residents of which are insured by the
870	association, may provide for the payment of losses, regardless
871	of whether or not the losses occurred within or outside of the
872	territorial jurisdiction of the local government. Revenue bonds
873	may not be issued until validated pursuant to chapter 75, unless
874	a state of emergency is declared by executive order or
875	proclamation of the Governor pursuant to s. 252.36 making such
876	findings as are necessary to determine that it is in the best
877	interests of, and necessary for, the protection of the public
878	health, safety, and general welfare of residents of this state
879	and the protection and preservation of the economic stability of
880	insurers operating in this state, and declaring it an essential
881	public purpose to permit certain municipalities or counties to
882	issue bonds as will provide relief to claimants and
883	policyholders of the association and insurers responsible for
884	apportionment of plan losses. Any such unit of local government
885	may enter into such contracts with the association and with any
886	other entity created pursuant to this subsection as are
887	necessary to carry out this paragraph. Any bonds issued under
888	this sub-subparagraph shall be payable from and secured by
889	moneys received by the association from assessments under this
890	subparagraph, and assigned and pledged to or on behalf of the
891	unit of local government for the benefit of the holders of such
892	bonds. The funds, credit, property, and taxing power of the
893	state or of the unit of local government shall not be pledged
894	for the payment of such bonds. If any of the bonds remain unsold
895	60 days after issuance, the department shall require all
896	insurers subject to assessment to purchase the bonds, which
897	shall be treated as admitted assets; each insurer shall be
898	required to purchase that percentage of the unsold portion of
899	the bond issue that equals the insurer's relative share of
900	assessment liability under this subsection. An insurer shall not
901	be required to purchase the bonds to the extent that the
902	department determines that the purchase would endanger or impair
903	the solvency of the insurer. The authority granted by this sub-
904	subparagraph is additional to any bonding authority granted by
905	subparagraph 6.
906	3.  The plan shall also provide that any member with a
907	surplus as to policyholders of $20 million or less writing 25
908	percent or more of its total countrywide property insurance
909	premiums in this state may petition the department, within the
910	first 90 days of each calendar year, to qualify as a limited
911	apportionment company. The apportionment of such a member
912	company in any calendar year for which it is qualified shall not
913	exceed its gross participation, which shall not be affected by
914	the formula for voluntary writings. In no event shall a limited
915	apportionment company be required to participate in any
916	apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
917	or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
918	$50 million after payment of available plan funds in any
919	calendar year. However, a limited apportionment company shall
920	collect from its policyholders any emergency assessment imposed
921	under sub-sub-subparagraph 2.d.(III). The plan shall provide
922	that, if the department determines that any regular assessment
923	will result in an impairment of the surplus of a limited
924	apportionment company, the department may direct that all or
925	part of such assessment be deferred. However, there shall be no
926	limitation or deferment of an emergency assessment to be
927	collected from policyholders under sub-sub-subparagraph
928	2.d.(III).
929	4.  The plan shall provide for the deferment, in whole or
930	in part, of a regular assessment of a member insurer under sub-
931	sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but
932	not for an emergency assessment collected from policyholders
933	under sub-sub-subparagraph 2.d.(III), if, in the opinion of the
934	commissioner, payment of such regular assessment would endanger
935	or impair the solvency of the member insurer. In the event a
936	regular assessment against a member insurer is deferred in whole
937	or in part, the amount by which such assessment is deferred may
938	be assessed against the other member insurers in a manner
939	consistent with the basis for assessments set forth in sub-sub-
940	subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
941	5.a.  The plan of operation may include deductibles and
942	rules for classification of risks and rate modifications
943	consistent with the objective of providing and maintaining funds
944	sufficient to pay catastrophe losses.
945	b.  The association may require arbitration of a rate
946	filing under s. 627.062(6). It is the intent of the Legislature
947	that the rates for coverage provided by the association be
948	actuarially sound and not competitive with approved rates
949	charged in the admitted voluntary market such that the
950	association functions as a residual market mechanism to provide
951	insurance only when the insurance cannot be procured in the
952	voluntary market. The plan of operation shall provide a
953	mechanism to assure that, beginning no later than January 1,
954	1999, the rates charged by the association for each line of
955	business are reflective of approved rates in the voluntary
956	market for hurricane coverage for each line of business in the
957	various areas eligible for association coverage.
958	c.  The association shall provide for windstorm coverage on
959	residential properties in limits up to $10 million for
960	commercial lines residential risks and up to $1 million for
961	personal lines residential risks. If coverage with the
962	association is sought for a residential risk valued in excess of
963	these limits, coverage shall be available to the risk up to the
964	replacement cost or actual cash value of the property, at the
965	option of the insured, if coverage for the risk cannot be
966	located in the authorized market. The association must accept a
967	commercial lines residential risk with limits above $10 million
968	or a personal lines residential risk with limits above $1
969	million if coverage is not available in the authorized market.
970	The association may write coverage above the limits specified in
971	this subparagraph with or without facultative or other
972	reinsurance coverage, as the association determines appropriate.
973	d.  The plan of operation must provide objective criteria
974	and procedures, approved by the department, to be uniformly
975	applied for all applicants in determining whether an individual
976	risk is so hazardous as to be uninsurable. In making this
977	determination and in establishing the criteria and procedures,
978	the following shall be considered:
979	(I)  Whether the likelihood of a loss for the individual
980	risk is substantially higher than for other risks of the same
981	class; and
982	(II)  Whether the uncertainty associated with the
983	individual risk is such that an appropriate premium cannot be
984	determined.
985
986	The acceptance or rejection of a risk by the association
987	pursuant to such criteria and procedures must be construed as
988	the private placement of insurance, and the provisions of
989	chapter 120 do not apply.
990	e.  If the risk accepts an offer of coverage through the
991	market assistance program or through a mechanism established by
992	the association, either before the policy is issued by the
993	association or during the first 30 days of coverage by the
994	association, and the producing agent who submitted the
995	application to the association is not currently appointed by the
996	insurer, the insurer shall:
997	(I)  Pay to the producing agent of record of the policy,
998	for the first year, an amount that is the greater of the
999	insurer's usual and customary commission for the type of policy
1000	written or a fee equal to the usual and customary commission of
1001	the association; or
1002	(II)  Offer to allow the producing agent of record of the
1003	policy to continue servicing the policy for a period of not less
1004	than 1 year and offer to pay the agent the greater of the
1005	insurer's or the association's usual and customary commission
1006	for the type of policy written.
1007
1008	If the producing agent is unwilling or unable to accept
1009	appointment, the new insurer shall pay the agent in accordance
1010	with sub-sub-subparagraph (I). Subject to the provisions of s.
1011	627.3517, the policies issued by the association must provide
1012	that if the association obtains an offer from an authorized
1013	insurer to cover the risk at its approved rates under either a
1014	standard policy including wind coverage or, if consistent with
1015	the insurer's underwriting rules as filed with the department, a
1016	basic policy including wind coverage, the risk is no longer
1017	eligible for coverage through the association. Upon termination
1018	of eligibility, the association shall provide written notice to
1019	the policyholder and agent of record stating that the
1020	association policy must be canceled as of 60 days after the date
1021	of the notice because of the offer of coverage from an
1022	authorized insurer. Other provisions of the insurance code
1023	relating to cancellation and notice of cancellation do not apply
1024	to actions under this sub-subparagraph.
1025	f.  When the association enters into a contractual
1026	agreement for a take-out plan, the producing agent of record of
1027	the association policy is entitled to retain any unearned
1028	commission on the policy, and the insurer shall:
1029	(I)  Pay to the producing agent of record of the
1030	association policy, for the first year, an amount that is the
1031	greater of the insurer's usual and customary commission for the
1032	type of policy written or a fee equal to the usual and customary
1033	commission of the association; or
1034	(II)  Offer to allow the producing agent of record of the
1035	association policy to continue servicing the policy for a period
1036	of not less than 1 year and offer to pay the agent the greater
1037	of the insurer's or the association's usual and customary
1038	commission for the type of policy written.
1039
1040	If the producing agent is unwilling or unable to accept
1041	appointment, the new insurer shall pay the agent in accordance
1042	with sub-sub-subparagraph (I).
1043	6.a.  The plan of operation may authorize the formation of
1044	a private nonprofit corporation, a private nonprofit
1045	unincorporated association, a partnership, a trust, a limited
1046	liability company, or a nonprofit mutual company which may be
1047	empowered, among other things, to borrow money by issuing bonds
1048	or by incurring other indebtedness and to accumulate reserves or
1049	funds to be used for the payment of insured catastrophe losses.
1050	The plan may authorize all actions necessary to facilitate the
1051	issuance of bonds, including the pledging of assessments or
1052	other revenues.
1053	b.  Any entity created under this subsection, or any entity
1054	formed for the purposes of this subsection, may sue and be sued,
1055	may borrow money; issue bonds, notes, or debt instruments;
1056	pledge or sell assessments, market equalization surcharges and
1057	other surcharges, rights, premiums, contractual rights,
1058	projected recoveries from the Florida Hurricane Catastrophe
1059	Fund, other reinsurance recoverables, and other assets as
1060	security for such bonds, notes, or debt instruments; enter into
1061	any contracts or agreements necessary or proper to accomplish
1062	such borrowings; and take other actions necessary to carry out
1063	the purposes of this subsection. The association may issue bonds
1064	or incur other indebtedness, or have bonds issued on its behalf
1065	by a unit of local government pursuant to subparagraph (6)(g)2.,
1066	in the absence of a hurricane or other weather-related event,
1067	upon a determination by the association subject to approval by
1068	the department that such action would enable it to efficiently
1069	meet the financial obligations of the association and that such
1070	financings are reasonably necessary to effectuate the
1071	requirements of this subsection. Any such entity may accumulate
1072	reserves and retain surpluses as of the end of any association
1073	year to provide for the payment of losses incurred by the
1074	association during that year or any future year. The association
1075	shall incorporate and continue the plan of operation and
1076	articles of agreement in effect on the effective date of chapter
1077	76-96, Laws of Florida, to the extent that it is not
1078	inconsistent with chapter 76-96, and as subsequently modified
1079	consistent with chapter 76-96. The board of directors and
1080	officers currently serving shall continue to serve until their
1081	successors are duly qualified as provided under the plan. The
1082	assets and obligations of the plan in effect immediately prior
1083	to the effective date of chapter 76-96 shall be construed to be
1084	the assets and obligations of the successor plan created herein.
1085	c.  In recognition of s. 10, Art. I of the State
1086	Constitution, prohibiting the impairment of obligations of
1087	contracts, it is the intent of the Legislature that no action be
1088	taken whose purpose is to impair any bond indenture or financing
1089	agreement or any revenue source committed by contract to such
1090	bond or other indebtedness issued or incurred by the association
1091	or any other entity created under this subsection.
1092	7.  On such coverage, an agent's remuneration shall be that
1093	amount of money payable to the agent by the terms of his or her
1094	contract with the company with which the business is placed.
1095	However, no commission will be paid on that portion of the
1096	premium which is in excess of the standard premium of that
1097	company.
1098	8.  Subject to approval by the department, the association
1099	may establish different eligibility requirements and operational
1100	procedures for any line or type of coverage for any specified
1101	eligible area or portion of an eligible area if the board
1102	determines that such changes to the eligibility requirements and
1103	operational procedures are justified due to the voluntary market
1104	being sufficiently stable and competitive in such area or for
1105	such line or type of coverage and that consumers who, in good
1106	faith, are unable to obtain insurance through the voluntary
1107	market through ordinary methods would continue to have access to
1108	coverage from the association. When coverage is sought in
1109	connection with a real property transfer, such requirements and
1110	procedures shall not provide for an effective date of coverage
1111	later than the date of the closing of the transfer as
1112	established by the transferor, the transferee, and, if
1113	applicable, the lender.
1114	9.  Notwithstanding any other provision of law:
1115	a.  The pledge or sale of, the lien upon, and the security
1116	interest in any rights, revenues, or other assets of the
1117	association created or purported to be created pursuant to any
1118	financing documents to secure any bonds or other indebtedness of
1119	the association shall be and remain valid and enforceable,
1120	notwithstanding the commencement of and during the continuation
1121	of, and after, any rehabilitation, insolvency, liquidation,
1122	bankruptcy, receivership, conservatorship, reorganization, or
1123	similar proceeding against the association under the laws of
1124	this state or any other applicable laws.
1125	b.  No such proceeding shall relieve the association of its
1126	obligation, or otherwise affect its ability to perform its
1127	obligation, to continue to collect, or levy and collect,
1128	assessments, market equalization or other surcharges, projected
1129	recoveries from the Florida Hurricane Catastrophe Fund,
1130	reinsurance recoverables, or any other rights, revenues, or
1131	other assets of the association pledged.
1132	c.  Each such pledge or sale of, lien upon, and security
1133	interest in, including the priority of such pledge, lien, or
1134	security interest, any such assessments, emergency assessments,
1135	market equalization or renewal surcharges, projected recoveries
1136	from the Florida Hurricane Catastrophe Fund, reinsurance
1137	recoverables, or other rights, revenues, or other assets which
1138	are collected, or levied and collected, after the commencement
1139	of and during the pendency of or after any such proceeding shall
1140	continue unaffected by such proceeding.
1141	d.  As used in this subsection, the term "financing
1142	documents" means any agreement, instrument, or other document
1143	now existing or hereafter created evidencing any bonds or other
1144	indebtedness of the association or pursuant to which any such
1145	bonds or other indebtedness has been or may be issued and
1146	pursuant to which any rights, revenues, or other assets of the
1147	association are pledged or sold to secure the repayment of such
1148	bonds or indebtedness, together with the payment of interest on
1149	such bonds or such indebtedness, or the payment of any other
1150	obligation of the association related to such bonds or
1151	indebtedness.
1152	e.  Any such pledge or sale of assessments, revenues,
1153	contract rights or other rights or assets of the association
1154	shall constitute a lien and security interest, or sale, as the
1155	case may be, that is immediately effective and attaches to such
1156	assessments, revenues, contract, or other rights or assets,
1157	whether or not imposed or collected at the time the pledge or
1158	sale is made. Any such pledge or sale is effective, valid,
1159	binding, and enforceable against the association or other entity
1160	making such pledge or sale, and valid and binding against and
1161	superior to any competing claims or obligations owed to any
1162	other person or entity, including policyholders in this state,
1163	asserting rights in any such assessments, revenues, contract, or
1164	other rights or assets to the extent set forth in and in
1165	accordance with the terms of the pledge or sale contained in the
1166	applicable financing documents, whether or not any such person
1167	or entity has notice of such pledge or sale and without the need
1168	for any physical delivery, recordation, filing, or other action.
1169	f.  There shall be no liability on the part of, and no
1170	cause of action of any nature shall arise against, any member
1171	insurer or its agents or employees, agents or employees of the
1172	association, members of the board of directors of the
1173	association, or the department or its representatives, for any
1174	action taken by them in the performance of their duties or
1175	responsibilities under this subsection. Such immunity does not
1176	apply to actions for breach of any contract or agreement
1177	pertaining to insurance, or any willful tort.
1178	(c)  The provisions of paragraph (b) are applicable only
1179	with respect to:
1180	1.  Those areas that were eligible for coverage under this
1181	subsection on April 9, 1993; or
1182	2.  Any county or area as to which the department, after
1183	public hearing, finds that the following criteria exist:
1184	a.  Due to the lack of windstorm insurance coverage in the
1185	county or area so affected, economic growth and development is
1186	being deterred or otherwise stifled in such county or area,
1187	mortgages are in default, and financial institutions are unable
1188	to make loans;
1189	b.  The county or area so affected is enforcing the
1190	structural requirements of the Florida Building Code, as defined
1191	in s. 553.73, for new construction and has included adequate
1192	minimum floor elevation requirements for structures in areas
1193	subject to inundation; and
1194	c.  Extending windstorm insurance coverage to such county
1195	or area is consistent with and will implement and further the
1196	policies and objectives set forth in applicable state laws,
1197	rules, and regulations governing coastal management, coastal
1198	construction, comprehensive planning, beach and shore
1199	preservation, barrier island preservation, coastal zone
1200	protection, and the Coastal Zone Protection Act of 1985.
1201
1202	The department shall consider reports of the Florida Building
1203	Commission when evaluating building code enforcement. Any time
1204	after the department has determined that the criteria referred
1205	to in this subparagraph do not exist with respect to any county
1206	or area of the state, it may, after a subsequent public hearing,
1207	declare that such county or area is no longer eligible for
1208	windstorm coverage through the plan.
1209	(d)  For the purpose of evaluating whether the criteria of
1210	paragraph (c) are met, such criteria shall be applied as the
1211	situation would exist if policies had not been written by the
1212	Florida Residential Property and Casualty Joint Underwriting
1213	Association and property insurance for such policyholders was
1214	not available.
1215	(e)1.  Notwithstanding the provisions of subparagraph (c)2.
1216	or paragraph (d), eligibility shall not be extended to any area
1217	that was not eligible on March 1, 1997, except that the
1218	department may act with respect to any petition on which a
1219	hearing was held prior to May 9, 1997.
1220	2.  Notwithstanding the provisions of subparagraph 1., the
1221	following area is eligible for coverage under this subsection
1222	effective July 1, 2002: the area within Port Canaveral which is
1223	bordered on the south by the City of Cape Canaveral, bordered on
1224	the west by the Banana River, and bordered on the north by
1225	United States Government property.
1226	(c)(f)  As used in this subsection, the term "department"
1227	means the former Department of Insurance.
1228	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
1229	(m)1.a.  Rates for coverage provided by the corporation
1230	shall be actuarially sound and may be not competitive with
1231	approved rates charged in the admitted voluntary market, so that
1232	the corporation functions as a residual market mechanism to
1233	provide insurance only when the insurance cannot be procured in
1234	the voluntary market. Rates shall include an appropriate
1235	catastrophe loading factor that reflects the actual catastrophic
1236	exposure of the corporation. For policies in the personal lines
1237	account and the commercial lines account issued or renewed on or
1238	after March 1, 2007, a rate is deemed inadequate if the rate,
1239	including investment income, is not sufficient to provide for
1240	the procurement of coverage under the Florida Hurricane
1241	Catastrophe Fund and private reinsurance costs, whether or not
1242	reinsurance is procured, and to pay all claims and expenses
1243	reasonably expected to result from a 100-year probable maximum
1244	loss event without resort to any regular or emergency
1245	assessments, long-term debt, state revenues, or other funding
1246	sources. For policies in the high-risk account issued or renewed
1247	on or after March 1, 2007, a rate is deemed inadequate if the
1248	rate, including investment income, is not sufficient to provide
1249	for the procurement of coverage under the Florida Hurricane
1250	Catastrophe Fund and private reinsurance costs, whether or not
1251	reinsurance is procured, and to pay all claims and expenses
1252	reasonably expected to result from a 70-year probable maximum
1253	loss event with resort to any regular or emergency assessments,
1254	long-term debt, state revenues, or other funding sources. For
1255	policies in the high-risk account issued or renewed in 2008 and
1256	2009, the rate must be based upon an 85-year and 100-year
1257	probable maximum loss event, respectively.
1258	b.  It is the intent of the Legislature to reaffirm the
1259	requirement of rate adequacy in the residual market. Recognizing
1260	that rates may comply with the intent expressed in sub-
1261	subparagraph a. and yet be inadequate and recognizing the public
1262	need to limit subsidies within the residual market, it is the
1263	further intent of the Legislature to establish statutory
1264	standards for rate adequacy. Such standards are intended to
1265	supplement the standard specified in s. 627.062(2)(e)3.,
1266	providing that rates are inadequate if they are clearly
1267	insufficient to sustain projected losses and expenses in the
1268	class of business to which they apply.
1269	2.  For each county, the average rates of the corporation
1270	for each line of business for personal lines residential
1271	policies excluding rates for wind-only policies shall be no
1272	lower than the average rates charged by the insurer that had the
1273	highest average rate in that county among the 20 insurers with
1274	the greatest total direct written premium in the state for that
1275	line of business in the preceding year, except that with respect
1276	to mobile home coverages, the average rates of the corporation
1277	shall be no lower than the average rates charged by the insurer
1278	that had the highest average rate in that county among the 5
1279	insurers with the greatest total written premium for mobile home
1280	owner's policies in the state in the preceding year.
1281	2.3.  Rates for personal lines residential wind-only
1282	policies must be actuarially sound and may be not competitive
1283	with approved rates charged by authorized insurers. If the
1284	filing under this subparagraph is made at least 90 days before
1285	the proposed effective date and the filing is not implemented
1286	during the office's review of the filing and any proceeding and
1287	judicial review, such filing shall be considered a "file and
1288	use" filing. In such case, the office shall finalize its review
1289	by issuance of a notice of intent to approve or a notice of
1290	intent to disapprove within 90 days after receipt of the filing.
1291	The notice of intent to approve and the notice of intent to
1292	disapprove constitute agency action for purposes of the
1293	Administrative Procedure Act. Requests for supporting
1294	information, requests for mathematical or mechanical
1295	corrections, or notification to the insurer by the office of its
1296	preliminary findings shall not toll the 90-day period during any
1297	such proceedings and subsequent judicial review. The rate shall
1298	be deemed approved if the office does not issue a notice of
1299	intent to approve or a notice of intent to disapprove within 90
1300	days after receipt of the filing. Corporation rate manuals shall
1301	include a rate surcharge for seasonal occupancy. To ensure that
1302	personal lines residential wind-only rates may be are not
1303	competitive with approved rates charged by authorized insurers,
1304	the corporation, in conjunction with the office, shall develop a
1305	wind-only ratemaking methodology, which methodology shall be
1306	contained in each rate filing made by the corporation with the
1307	office. If the office determines that the wind-only rates or
1308	rating factors filed by the corporation fail to comply with the
1309	wind-only ratemaking methodology provided for in this
1310	subsection, it shall so notify the corporation and require the
1311	corporation to amend its rates or rating factors to come into
1312	compliance within 90 days of notice from the office.
1313	4.  The requirements of this paragraph that rates not be
1314	competitive with approved rates charged by authorized insurers
1315	do not apply in a county or area for which the office determines
1316	that no authorized insurer is offering coverage. The corporation
1317	shall amend its rates or rating factors for the affected county
1318	or area in conjunction with its next rate filing after such
1319	determination is made.
1320	3.5.  For the purposes of establishing a pilot program to
1321	evaluate issues relating to the availability and affordability
1322	of insurance in an area where historically there has been little
1323	market competition, the provisions of subparagraph 2. do not
1324	apply to coverage provided by the corporation in Monroe County
1325	if the office determines that a reasonable degree of competition
1326	does not exist for personal lines residential policies. The
1327	provisions of subparagraph 2. 3. do not apply to coverage
1328	provided by the corporation in Monroe County if the office
1329	determines that a reasonable degree of competition does not
1330	exist for personal lines residential policies in the area of
1331	that county which is eligible for wind-only coverage. In this
1332	county, the rates for personal lines residential coverage shall
1333	be actuarially sound and not excessive, inadequate, or unfairly
1334	discriminatory and are subject to the other provisions of the
1335	paragraph and s. 627.062. The commission shall adopt rules
1336	establishing the criteria for determining whether a reasonable
1337	degree of competition exists for personal lines residential
1338	policies in Monroe County. By March 1, 2006, the office shall
1339	submit a report to the Legislature providing an evaluation of
1340	the implementation of the pilot program affecting Monroe County.
1341	4.6.  Rates for commercial lines coverage shall not be
1342	subject to the requirements of subparagraph 2., but shall be
1343	subject to all other requirements of this paragraph and s.
1344	627.062.
1345	5.7.  Nothing in this paragraph shall require or allow the
1346	corporation to adopt a rate that is inadequate under s. 627.062.
1347	6.8.  The corporation shall certify to the office at least
1348	twice annually that its personal lines rates comply with the
1349	requirements of subparagraphs 1. and, 2., and 3. If any
1350	adjustment in the rates or rating factors of the corporation is
1351	necessary to ensure such compliance, the corporation shall make
1352	and implement such adjustments and file its revised rates and
1353	rating factors with the office. If the office thereafter
1354	determines that the revised rates and rating factors fail to
1355	comply with the provisions of subparagraphs 1. and, 2., and 3.,
1356	it shall notify the corporation and require the corporation to
1357	amend its rates or rating factors in conjunction with its next
1358	rate filing. The office must notify the corporation by
1359	electronic means of any rate filing it approves for any insurer
1360	among the insurers referred to in subparagraph 2.
1361	7.9.  In addition to the rates otherwise determined
1362	pursuant to this paragraph, the corporation shall impose and
1363	collect an amount equal to the premium tax provided for in s.
1364	624.509 to augment the financial resources of the corporation.
1365	8.10.  The corporation shall develop a notice to
1366	policyholders or applicants that the rates of Citizens Property
1367	Insurance Corporation are intended to be higher than the rates
1368	of any admitted carrier and providing other information the
1369	corporation deems necessary to assist consumers in finding other
1370	voluntary admitted insurers willing to insure their property.
1371	9.11.  After the public hurricane loss-projection model
1372	under s. 627.06281 has been found to be accurate and reliable by
1373	the Florida Commission on Hurricane Loss Projection Methodology,
1374	that model shall serve as the minimum benchmark for determining
1375	the windstorm portion of the corporation's rates. This
1376	subparagraph does not require or allow the corporation to adopt
1377	rates lower than the rates otherwise required or allowed by this
1378	paragraph.
1379	Section 10.  Paragraphs (f) and (g) are added to subsection
1380	(2) of section 627.4133, Florida Statutes, to read:
1381	627.4133  Notice of cancellation, nonrenewal, or renewal
1382	premium.--
1383	(2)  With respect to any personal lines or commercial
1384	residential property insurance policy, including, but not
1385	limited to, any homeowner's, mobile home owner's, farmowner's,
1386	condominium association, condominium unit owner's, apartment
1387	building, or other policy covering a residential structure or
1388	its contents:
1389	(f)  No policy governed by this subsection may be canceled
1390	or nonrenewed for any reason other than nonpayment of premium
1391	between April 1 and February 1.
1392	(g)  A policy governed by this subsection that has been in
1393	force for 5 years or longer and for which all payments have been
1394	timely made may not be canceled or nonrenewed for any reason
1395	other than nonpayment of premium while the insurer or an
1396	affiliated company continues to offer new policies in any line
1397	of business in this state.
1398	Section 11.  Pilot programs using sales tax revenues.--
1399	(1)  FINDINGS AND INTENT.--The Legislature finds that there
1400	is a growing economic crisis in insurance that requires bold
1401	action. Statewide, 1 cent of the sales tax generates
1402	approximately $3 billion to $4 billion a year; this amount could
1403	be applied to various insurance sectors to bring fairness and
1404	dependable rates to Floridians. To allow for the private sector
1405	to offer lower rates for insurance coverage, deductibles need to
1406	be higher. The raise in deductibles must be done while
1407	protecting the consumer and the financial obligations from
1408	overexposure. The Legislature intends a two-pronged approach
1409	using an existing 1 cent of Florida sales tax to be specifically
1410	designated to the insurance crisis until the pump is primed on a
1411	fix and critical catch-up items are achieved. The first prong is
1412	the creation of the wind deductible reimbursement co-op pilot
1413	program for named storms. The second prong uses sales tax
1414	revenue to expand the Hurricane Catastrophe Fund and reinsurance
1415	programs for the industry to lower its rates.
1416	(2)  DEFINITIONS.--As used in this section, the term:
1417	(a)  "Department" means the Department of Financial
1418	Services.
1419	(b)  "Pilot region" means the counties of Brevard, Duval,
1420	Lake, Orange, and Seminole.
1421	(c)  "Sales tax revenue" means the general sales and use
1422	tax collected under s. 212.05, Florida Statutes, exclusive of
1423	any discretionary local tax.
1424	(3)  WIND DEDUCTIBLE REIMBURSEMENT CO-OP.--
1425	(a)  Notwithstanding any other law, the Department of
1426	Revenue shall make available to the department one-twelfth of
1427	the sales tax revenue generated annually in the pilot region.
1428	(b)  The department shall use this money in the pilot
1429	region to fund a public-private cooperative called the
1430	Deductible Recovery Coop, Inc.. This nonprofit cooperative is to
1431	facilitate the offer of deductible coverage for the consumer in
1432	the pilot region that keeps the state's exposure down and helps
1433	the private sector to be able to provide lower consumer rates.
1434	(4)  OTHER PROGRAMS IN THE PILOT REGION.--Notwithstanding
1435	any other law, the Department of Revenue shall make available to
1436	the department one-twelfth of the sales tax revenue generated
1437	annually in the pilot region for other programs that benefit
1438	residential property insurance customers. The Legislature shall
1439	annually direct the expenditure of these funds to benefit the
1440	pilot region through such funding to programs as the Hurricane
1441	Catastrophe Fund and the Citizens Property Insurance
1442	Corporation, providing matching dollars for property upgrades
1443	and assisting programs for hurricane loss mitigation.
1444	(5)  REPORT.--The department shall report annually by
1445	December 31 of each year to the Governor, the President of the
1446	Senate, and the Speaker of the House of Representatives
1447	concerning the activities and expenditures of the programs under
1448	this section.
1449	(6)  REPEAL.--This section expires December 31, 2012.
1450	Section 12.  Except as otherwise provided in this act, this
1451	act shall take effect July 1, 2007.

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