Florida Senate - 2008 COMMITTEE AMENDMENT
Bill No. SB 2860
411274
Senate
Comm: RCS
3/25/2008
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House
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The Committee on Banking and Insurance (Atwater and Posey)
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recommended the following amendment:
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Senate Amendment (with title amendment)
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Delete everything after the enacting clause
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and insert:
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Section 1. Section 215.5595, Florida Statutes, is amended
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to read:
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215.5595 Insurance Capital Build-Up Incentive Program.--
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(1) Upon entering the 2008 2006 hurricane season, the
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Legislature finds that:
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(a) The losses in Florida from eight hurricanes in 2004 and
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2005 have seriously strained the resources of both the voluntary
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insurance market and the public sector mechanisms of Citizens
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Property Insurance Corporation and the Florida Hurricane
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Catastrophe Fund.
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(b) Private reinsurance is much less available and at a
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significantly greater cost to residential property insurers as
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compared to 1 year ago, particularly for amounts below the
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insurer's retention or retained losses that must be paid before
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reimbursement is provided by the Florida Hurricane Catastrophe
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Fund.
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(c) The Office of Insurance Regulation has reported that
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the insolvency of certain insurers may be imminent.
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(d) Hurricane forecast experts predict that the 2006
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hurricane season will be an active hurricane season and that the
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Atlantic and Gulf Coast regions face an active hurricane cycle of
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10 to 20 years or longer.
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(b)(e) Citizens Property Insurance Corporation has over 1.2
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million policies in force and has the largest market share of any
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insurer writing residential property insurer in the state, and
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faces the threat of a catastrophic loss that The number of
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cancellations or nonrenewals of residential property insurance
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policies is expected to increase and the number of new
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residential policies written in the voluntary market are likely
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to decrease, causing increased policy growth and exposure to the
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state insurer of last resort, Citizens Property Insurance
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Corporation, and threatening to increase the deficit of the
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corporation, currently estimated to be over $1.7 billion. This
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deficit must be funded by assessments against insurers and
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policyholders, unless otherwise funded by the state.
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(c)(f) Policyholders are subject to high increased premiums
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and assessments that are increasingly making such coverage
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unaffordable and that may force policyholders to sell their homes
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and even leave the state.
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(d)(g) The increased risk to the public sector and private
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sector continues to pose poses a serious threat to the economy of
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this state, particularly the building and financing of
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residential structures, and existing mortgages may be placed in
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default.
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(h) The losses from 2004 and 2005, combined with the
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expectation that the increase in hurricane activity will continue
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for the foreseeable future, have caused both insurers and
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reinsurers to limit the capital they are willing to commit to
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covering the hurricane risk in Florida; attracting new capital to
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the Florida market is a critical priority; and providing a low-
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cost source of capital would enable insurers to write additional
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residential property insurance coverage and act to mitigate
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premium increases.
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(e)(i) Appropriating state funds to be exchanged for used
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as surplus notes issued by for residential property insurers,
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under conditions requiring the insurer to contribute additional
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private sector capital and to write a minimum level of premiums
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for residential hurricane coverage, is a valid and important
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public purpose.
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(f) Extending the Insurance Capital Build-up Incentive
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Program will provide an incentive for investors to commit
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additional capital to Florida's residential insurance market.
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(2) The purpose of this section is to provide funds in
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exchange for surplus notes to be issued by to new or existing
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authorized residential property insurers under the Insurance
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Capital Build-Up Incentive Program administered by the State
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Board of Administration, under the following conditions:
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(a) The amount of state funds provided in exchange for a
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the surplus note to for any insurer or insurer group, other than
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an insurer writing only manufactured housing policies, may not
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exceed $25 million or 20 percent of the total amount of funds
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appropriated for available under the program, whichever is
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greater. The amount of the surplus note for any insurer or
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insurer group writing residential property insurance covering
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only manufactured housing may not exceed $7 million.
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(b) The insurer must contribute an amount of new capital to
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its surplus which is at least equal to the amount of the surplus
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note and must apply to the board by July 1, 2006. If an insurer
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applies after July 1, 2006, but before June 1, 2007, the amount
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of the surplus note is limited to one-half of the new capital
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that the insurer contributes to its surplus, except that an
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insurer writing only manufactured housing policies is eligible to
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receive a surplus note of up to $7 million. For purposes of this
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section, new capital must be in the form of cash or cash
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equivalents as specified in s. 625.012(1).
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(c) The insurer's surplus, new capital, and the surplus
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note must total at least $50 million, except for insurers writing
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residential property insurance covering only manufactured
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housing. The insurer's surplus, new capital, and the surplus note
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must total at least $14 million for insurers writing only
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residential property insurance covering manufactured housing
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policies as provided in paragraph (a).
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(d) The insurer must commit to increase its writings of
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residential property insurance, including the peril of wind, and
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to meet meeting a minimum writing ratio of net written premium to
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surplus of at least 1:1 for the first year after receiving the
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state funds, 1.5:1 for the second year, and 2:1 for the remaining
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term of the surplus note. Alternatively, the insurer must meet a
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minimum writing ratio of gross written premium to surplus of at
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least 3:1 for the first year after receiving the state funds,
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4.5:1 for the second year, and 6:1 for the remaining term of the
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surplus note. The writing ratios, which shall be determined by
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the Office of Insurance Regulation and certified quarterly to the
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board. For this purpose, the term "premium" "net written premium"
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means net written premium for residential property insurance in
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Florida, including the peril of wind, and "surplus" refers to the
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entire surplus of the insurer. The insurer must also commit to
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writing at least one-third of its net or gross written premium
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for new policies, not including renewal premiums, for policies
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taken out of Citizens Property Insurance Corporation, during each
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of the first 3 years after receiving the state funds in exchange
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for the surplus note, which shall be determined by the Office of
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Insurance Regulation and certified annually to the board. The
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office may determine that an insurer meets the requirement for
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taking policies out of Citizens, by written notice to the board,
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upon a finding that the insurer made offers of coverage to
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policyholders of Citizens which would have resulted in meeting
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this requirement had the policyholders accepted the offer. If the
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required ratio or the required writings for policies taken out of
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Citizens is not maintained during the term of the surplus note,
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the board may increase the interest rate, accelerate the
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repayment of interest and principal, or shorten the term of the
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surplus note, subject to approval by the Commissioner of
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Insurance of payments by the insurer of principal and interest as
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provided in paragraph (f).
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(e) If the requirements of this section are met, the board
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may approve an application by an insurer for funds in exchange
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for issuance of a surplus note, unless the board determines that
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the financial condition of the insurer and its business plan for
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writing residential property insurance in Florida places an
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unreasonably high level of financial risk to the state of
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nonpayment in full of the interest and principal. The board shall
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consult with the Office of Insurance Regulation and may contract
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with independent financial and insurance consultants in making
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this determination.
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(f) The surplus note must be repayable to the state with a
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term of 20 years. The surplus note shall accrue interest on the
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unpaid principal balance at a rate equivalent to the 10-year U.S.
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Treasury Bond rate, require the payment only of interest during
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the first 3 years, and include such other terms as approved by
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the board. The board may charge late fees up to 5 percent for
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late payments or other late remittances. Payment of principal, or
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interest, or late fees by the insurer on the surplus note must be
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approved by the Commissioner of Insurance, who shall approve such
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payment unless the commissioner determines that such payment will
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substantially impair the financial condition of the insurer. If
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such a determination is made, the commissioner shall approve such
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payment that will not substantially impair the financial
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condition of the insurer.
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(g) The total amount of funds available for the program is
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limited to the amount appropriated by the Legislature for this
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purpose. If the amount of surplus notes requested by insurers
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exceeds the amount of funds available, the board may prioritize
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insurers that are eligible and approved, with priority for
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funding given to insurers writing only manufactured housing
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policies, regardless of the date of application, based on the
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financial strength of the insurer, the viability of its proposed
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business plan for writing additional residential property
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insurance in the state, and the effect on competition in the
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residential property insurance market. Between insurers writing
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residential property insurance covering manufactured housing,
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priority shall be given to the insurer writing the highest
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percentage of its policies covering manufactured housing.
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(h) The board may allocate portions of the funds available
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for the program and establish dates for insurers to apply for
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surplus notes from such allocation which are earlier than the
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dates established in paragraph (b).
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(h)(i) Notwithstanding paragraph (d), a newly formed
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manufactured housing insurer that is eligible for a surplus note
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under this section shall meet the premium to surplus ratio
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provisions of s. 624.4095.
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(i)(j) As used in this section, "an insurer writing only
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manufactured housing policies" includes:
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1. A Florida domiciled insurer that begins writing personal
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lines residential manufactured housing policies in Florida after
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March 1, 2007, and that removes a minimum of 50,000 policies from
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Citizens Property Insurance Corporation without accepting a
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bonus, provided at least 25 percent of its policies cover
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manufactured housing. Such an insurer may count any funds above
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the minimum capital and surplus requirement that were contributed
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into the insurer after March 1, 2007, as new capital under this
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section.
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2. A Florida domiciled insurer that writes at least 40
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percent of its policies covering manufactured housing in Florida.
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(3) As used in this section, the term:
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(a) "Board" means the State Board of Administration.
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(b) "Program" means the Insurance Capital Build-Up
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Incentive Program established by this section.
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(4) The state funds provided to the insurer in exchange for
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the A surplus note provided to an insurer pursuant to this
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section are is considered borrowed surplus an asset of the
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insurer pursuant to s. 628.401 s. 625.012.
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(5) If an insurer that receives funds in exchange for
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issuance of a surplus note pursuant to this section is rendered
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insolvent, the state is a class 3 creditor pursuant to s. 631.271
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for the unpaid principal and interest on the surplus note.
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(6) The board shall adopt rules prescribing the procedures,
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administration, and criteria for approving the applications of
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insurers to receive funds in exchange for issuance of surplus
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notes pursuant to this section, which may be adopted pursuant to
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the procedures for emergency rules of chapter 120. Otherwise,
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actions and determinations by the board pursuant to this section
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are exempt from chapter 120.
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(7) The board shall invest and reinvest the funds
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appropriated for the program in accordance with s. 215.47 and
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consistent with board policy.
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(8) The amendments to this section enacted in 2008 do not
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affect the terms or conditions of the surplus notes that were
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approved prior to January 1, 2008. However, the board may
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renegotiate the terms of any surplus note issued by an insurer
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prior to January 2008 under this program, upon the agreement of
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the insurer and the board, consistent with the requirements of
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this section as amended in 2008.
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Section 2. Section 542.20, Florida Statutes, is amended to
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read:
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542.20 Exemptions.--
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(1) Any activity or conduct exempt under Florida statutory
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or common law or exempt from the provisions of the antitrust laws
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of the United States is exempt from the provisions of this
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chapter, except as provided in subsection (2).
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(2) The business of insurance is subject to the provisions
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of this chapter. This chapter does not prohibit a rating
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organization or advisory organization from collecting claims,
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loss, or expense data from insurers and filing rates or advisory
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rates with the Office of Insurance Regulation.
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Section 3. Subsection (6) is added to section 624.3161,
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Florida Statutes, to read:
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624.3161 Market conduct examinations.--
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(6) Based on the findings of a market conduct examination,
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the office may require an insurer to file its claims-handling
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practices and procedures with the office for review and
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inspection. Such claims-handling practices and procedures are
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public records and are not trade secrets or otherwise exempt from
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the provisions of s. 119.07(1). As used in this section, "claims-
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handling practices and procedures" are any policies, guidelines,
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rules, protocols, standard operating procedures, instructions, or
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directives that govern or guide how and the manner in which an
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insured's claims for benefits under any policy will be processed.
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Section 4. Subsection (4) is added to section 624.418,
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Florida Statutes, to read:
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624.418 Suspension, revocation of certificate of authority
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for violations and special grounds.--
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(4) The failure of an insurer to provide documents or
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information subpoenaed by the office constitutes an immediate and
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serious danger to the public health, safety, and welfare; and the
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office may, at its discretion, without prior notice or the
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opportunity for a hearing immediately suspend the insurer's
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certificate of authority.
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Section 5. Subsections (2) and (3) of section 624.4211,
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Florida Statutes, are amended, and subsections (5) and (6) are
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added to that section, to read:
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624.4211 Administrative fine in lieu of suspension or
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revocation.--
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(2) With respect to any nonwillful violation, such fine may
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shall not exceed $25,000 $2,500 per violation. In no event shall
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such fine exceed an aggregate amount of $10,000 for all
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nonwillful violations arising out of the same action. If When an
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insurer discovers a nonwillful violation, the insurer shall
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correct the violation and, if restitution is due, make
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restitution to all affected persons. Such restitution shall
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include interest at 12 percent per year from either the date of
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the violation or the date of inception of the affected person's
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policy, at the insurer's option. The restitution may be a credit
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against future premiums due provided that the interest
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accumulates shall accumulate until the premiums are due. If the
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amount of restitution due to any person is $50 or more and the
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insurer wishes to credit it against future premiums, it shall
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notify such person that she or he may receive a check instead of
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a credit. If the credit is on a policy that which is not renewed,
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the insurer shall pay the restitution to the person to whom it is
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due.
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(3) With respect to any knowing and willful violation of a
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lawful order or rule of the office or commission or a provision
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of this code, the office may impose a fine upon the insurer in an
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amount not to exceed $100,000 $20,000 for each such violation. In
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no event shall such fine exceed an aggregate amount of $100,000
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for all knowing and willful violations arising out of the same
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action. In addition to such fines, the such insurer shall make
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restitution when due in accordance with the provisions of
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subsection (2).
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(5) The office may impose an administrative fine for each
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day the insurer is not in compliance with the Florida Insurance
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Code up to a maximum of $25,000 per violation per day.
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(6) In determining the amount of the fine, the office shall
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consider:
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(a) The degree of consumer harm caused or potentially
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caused by the violation;
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(b) Whether the violation constitutes an immediate danger
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to the public;
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(c) Whether the violation is a repeat violation or similar
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to past violations by the insurer;
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(d) The effect on the solvency of the insurer;
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(e) The premium volume of the insurer; and
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(f) The effect that fining the insurer will have on the
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insurer's compliance with the Florida Insurance Code.
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Section 6. Section 624.4213, Florida Statutes, is created to
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read:
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624.4213 Trade secret documents.--
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(1) If any person who is required to submit documents or
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other information to the office or department pursuant to the
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Insurance Code or by rule or order of the office, department, or
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commission claims that such submission contains a trade secret,
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such person may file with the office or department a notice of
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trade secret as provided in this section. Failure to do so
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constitutes a waiver of any claim by such person that the
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document or information is a trade secret.
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(a) Each page of such document or specific portion of a
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document claimed to be a trade secret must be clearly marked as
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"trade secret."
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(b) All material marked as a trade secret must be separated
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from all non-trade secret material, such as being submitted in a
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separate envelope clearly marked as "trade secret."
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(c) In submitting a notice of trade secret to the office or
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department, the submitting party must include an affidavit
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certifying under oath to the truth of the following statements
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concerning all documents or information that are claimed to be
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trade secrets:
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1. [I consider/My company considers] this information a
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trade secret that has value and provides an advantage or an
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opportunity to obtain an advantage over those who do not know or
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use it.
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2. [I have/My company has] taken measures to prevent the
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disclosure of the information to anyone other that those who have
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been selected to have access for limited purposes, and [I
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intend/my company intends] to continue to take such measures.
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3. The information is not, and has not been, reasonably
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obtainable without [my/our] consent by other persons by use of
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legitimate means.
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4. The information is not publicly available elsewhere.
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(2) If a court or administrative tribunal finds that any
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document or information certified as a trade secret, submitted to
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the office or department under this section, and subsequently
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requested by a third party is not a trade secret, the company or
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the person certifying such document or information as a trade
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secret is liable for an award of reasonable attorney's fees and
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costs to the third party seeking access to such documents. In
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addition, it is a violation of the Florida Insurance Code if the
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office or department finds that the person submitting the
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document or information knew, or should have known, that the
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document or information is not a trade secret.
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(3) The office or department may disclose a trade secret,
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together with the claim that it is a trade secret, to an officer
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or employee of another governmental agency whose use of the trade
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secret is within the scope of his or her employment.
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Section 7. Section 624.4305, Florida Statutes, is created to
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read:
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624.4305 Nonrenewal of residential property insurance
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policies.--
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(1) Any insurer planning to nonrenew more than 10,000
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residential property insurance policies in this state shall give
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90 days' notice in writing to the office prior to the issuance of
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any notices of nonrenewal. The notice must set forth the
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insurer's reasons for such action, the effective dates of
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nonrenewal, and any arrangements that have been made for other
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insurers to offer coverage to affected policyholders.
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(2) The insurer may not issue a notice of nonrenewal to
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such policyholders unless the office approves or fails to
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disapprove the nonrenewal plan within 90 days after receiving the
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notice from the insurer. The office may not approve the plan
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unless it finds that the insurer has staggered the nonrenewals
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over a reasonable period relative to the number of nonrenewals,
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or has made arrangements for offers of replacement coverage, such
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that the actions are not hazardous to policyholders or the
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public.
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Section 8. Subsection (2) of section 626.9521, Florida
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Statutes, is amended to read:
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626.9521 Unfair methods of competition and unfair or
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deceptive acts or practices prohibited; penalties.--
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(2) Any person who violates any provision of this part
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shall be subject to a fine in an amount not greater than $25,000
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$2,500 for each nonwillful violation and not greater than
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$100,000 $20,000 for each willful violation. Fines under this
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subsection may not exceed an aggregate amount of $10,000 for all
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nonwillful violations arising out of the same action or an
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aggregate amount of $100,000 for all willful violations arising
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out of the same action. The fines authorized by this subsection
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may be imposed in addition to any other applicable penalty.
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Section 9. Paragraph (i) of subsection (1) of section
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626.9541, Florida Statutes, is amended to read:
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626.9541 Unfair methods of competition and unfair or
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deceptive acts or practices defined.--
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(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
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ACTS.--The following are defined as unfair methods of competition
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and unfair or deceptive acts or practices:
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(i) Unfair claim settlement practices.--
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1. Attempting to settle claims on the basis of an
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application, when serving as a binder or intended to become a
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part of the policy, or any other material document that is which
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was altered without notice to, or knowledge or consent of, the
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insured;
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2. A material misrepresentation made to an insured or any
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other person having an interest in the proceeds payable under a
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such contract or policy, for the purpose and with the intent of
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effecting settlement of such claims, loss, or damage under such
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contract or policy on less favorable terms than those provided
402
in, and contemplated by, the such contract or policy; or
403
3. Committing or performing with such frequency as to
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indicate a general business practice any of the following:
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a. Failing to adopt and implement standards for the proper
406
investigation of claims.;
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b. Misrepresenting pertinent facts or insurance policy
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provisions relating to coverages at issue.;
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c. Failing to acknowledge and act promptly upon
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communications with respect to claims.;
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d. Denying claims without conducting reasonable
412
investigations based upon available information.;
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e. Failing to affirm or deny full or partial coverage of
414
claims, and, as to partial coverage, the dollar amount or extent
415
of coverage, or failing to provide a written statement that the
416
claim is being investigated, upon the written request of the
417
insured within 30 days after proof-of-loss statements have been
418
completed.;
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f. Failing to promptly provide a reasonable explanation in
420
writing to the insured of the basis in the insurance policy, in
421
relation to the facts or applicable law, for denial of a claim or
422
for the offer of a compromise settlement.;
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g. Failing to promptly notify the insured of any additional
424
information necessary for the processing of a claim.; or
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h. Failing to clearly explain the nature of the requested
426
information and the reasons why such information is necessary.
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i. Failing to promptly provide to the insured estimates of
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damage and a good faith explanation in writing of the insurer's
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evaluation of benefits and the basis for the evaluation.
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4. Giving consideration to the age, race, income level,
431
education, credit score, or any other personal characteristic of
432
a policyholder when evaluating, adjusting, settling, or
433
attempting to settle a property insurance claim; or
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5. Failing to pay undisputed amounts of partial or full
435
benefits owed under first-party property insurance policies
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within 30 days after determining the amounts of partial or full
437
benefits and agreeing to coverage. This subparagraph controls to
438
the extent of any conflict with any other provision of law.
439
Section 10. Paragraphs (a), (b), and (g) of subsection (2)
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and subsection (9) of section 627.062, Florida Statutes, are
441
amended to read:
442
627.062 Rate standards.--
443
(2) As to all such classes of insurance:
444
(a) Insurers or rating organizations shall establish and
445
use rates, rating schedules, or rating manuals to allow the
446
insurer a reasonable rate of return on such classes of insurance
447
written in this state. A copy of rates, rating schedules, rating
448
manuals, premium credits or discount schedules, and surcharge
449
schedules, and changes thereto, shall be filed with the office
450
under one of the following procedures except as provided in
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subparagraph 3.:
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1. If the filing is made at least 90 days before the
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proposed effective date and the filing is not implemented during
454
the office's review of the filing and any proceeding and judicial
455
review, then such filing shall be considered a "file and use"
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filing. In such case, the office shall finalize its review by
457
issuance of a notice of intent to approve or a notice of intent
458
to disapprove within 90 days after receipt of the filing. The
459
notice of intent to approve and the notice of intent to
460
disapprove constitute agency action for purposes of the
461
Administrative Procedure Act. Requests for supporting
462
information, requests for mathematical or mechanical corrections,
463
or notification to the insurer by the office of its preliminary
464
findings shall not toll the 90-day period during any such
465
proceedings and subsequent judicial review. The rate shall be
466
deemed approved if the office does not issue a notice of intent
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to approve or a notice of intent to disapprove within 90 days
468
after receipt of the filing.
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2. If the filing is not made in accordance with the
470
provisions of subparagraph 1., such filing shall be made as soon
471
as practicable, but no later than 30 days after the effective
472
date, and shall be considered a "use and file" filing. An insurer
473
making a "use and file" filing is potentially subject to an order
474
by the office to return to policyholders portions of rates found
475
to be excessive, as provided in paragraph (h).
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3. For all property insurance filings made or submitted
477
after January 25, 2007, but before December 31, 2008, an insurer
478
seeking a rate that is greater than the rate most recently
479
approved by the office shall make a "file and use" filing. This
480
subparagraph applies to property insurance only. For purposes of
481
this subparagraph, motor vehicle collision and comprehensive
482
coverages are not considered to be property coverages.
483
(b) Upon receiving a rate filing, the office shall review
484
the rate filing to determine if a rate is excessive, inadequate,
485
or unfairly discriminatory. In making that determination, the
486
office shall, in accordance with generally accepted and
487
reasonable actuarial techniques, consider the following factors:
488
1. Past and prospective loss experience within and without
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this state.
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2. Past and prospective expenses.
491
3. The degree of competition among insurers for the risk
492
insured.
493
4. Investment income reasonably expected by the insurer,
494
consistent with the insurer's investment practices, from
495
investable premiums anticipated in the filing, plus any other
496
expected income from currently invested assets representing the
497
amount expected on unearned premium reserves and loss reserves.
498
The commission may adopt rules using utilizing reasonable
499
techniques of actuarial science and economics to specify the
500
manner in which insurers shall calculate investment income
501
attributable to such classes of insurance written in this state
502
and the manner in which such investment income shall be used to
503
calculate in the calculation of insurance rates. Such manner
504
shall contemplate allowances for an underwriting profit factor
505
and full consideration of investment income which produce a
506
reasonable rate of return; however, investment income from
507
invested surplus may shall not be considered.
508
5. The reasonableness of the judgment reflected in the
509
filing.
510
6. Dividends, savings, or unabsorbed premium deposits
511
allowed or returned to Florida policyholders, members, or
512
subscribers.
513
7. The adequacy of loss reserves.
514
8. The cost of reinsurance, subject to the following
515
conditions:.
516
a. The cost of reinsurance shall be presumed to be
517
excessive if the annual expected recoveries are less than 40
518
percent of the annual reinsurance premium for reinsurance
519
purchased from affiliated reinsurers, or less than 20 percent of
520
the annual reinsurance premium for reinsurance purchased from
521
unaffiliated reinsurers after excluding the Florida Hurricane
522
Catastrophe Fund. The insurer may rebut this presumption by
523
providing documentation to the office demonstrating that the
524
annual expected recovery must deviate from such requirements in
525
order to ensure the financial soundness of the insurer.
526
b. For reinsurance purchased from affiliated reinsurers,
527
the costs may not include any broker fees.
528
c. The cost of catastrophe reinsurance shall be presumed to
529
be excessive to the extent that the amount of reinsurance
530
coverage was based on estimates of probable maximum loss which
531
are in excess of estimates using a hurricane loss model or method
532
found to be acceptable or reliable by the Florida Commission on
533
Hurricane Loss Projection Methodology, as provided in s.
534
627.0628.
535
9. Trend factors, including trends in actual losses per
536
insured unit for the insurer making the filing.
537
10. Conflagration and catastrophe hazards, if applicable.
538
11. Projected hurricane losses, if applicable, which must
539
be estimated using a model or method found to be acceptable or
540
reliable by the Florida Commission on Hurricane Loss Projection
541
Methodology, and as further provided in s. 627.0628.
542
12.11. A reasonable margin for underwriting profit and
543
contingencies. For that portion of the rate covering the risk of
544
hurricanes and other catastrophic losses for which the insurer
545
has not purchased reinsurance and has exposed its capital and
546
surplus to such risk, the office must approve a rating factor
547
that provides the insurer a reasonable rate of return that is
548
commensurate with such risk.
549
13.12. The cost of medical services, if applicable.
550
14.13. Other relevant factors which impact upon the
551
frequency or severity of claims or upon expenses.
552
(g) The office may at any time review a rate, rating
553
schedule, rating manual, or rate change; the pertinent records of
554
the insurer; and market conditions. If the office finds on a
555
preliminary basis that a rate may be excessive, inadequate, or
556
unfairly discriminatory, the office shall initiate proceedings to
557
disapprove the rate and shall so notify the insurer. However, the
558
office may not disapprove as excessive any rate for which it has
559
given final approval or which has been deemed approved for a
560
period of 1 year after the effective date of the filing unless
561
the office finds that a material misrepresentation or material
562
error was made by the insurer or was contained in the filing, or
563
unless the insurer has nonrenewed a number or percentage of
564
policies which the office determines may result in the insurer
565
having an excessive rate. Upon being so notified, the insurer or
566
rating organization shall, within 60 days, file with the office
567
all information which, in the belief of the insurer or
568
organization, proves the reasonableness, adequacy, and fairness
569
of the rate or rate change. The office shall issue a notice of
570
intent to approve or a notice of intent to disapprove pursuant to
571
the procedures of paragraph (a) within 90 days after receipt of
572
the insurer's initial response. In such instances and in any
573
administrative proceeding relating to the legality of the rate,
574
the insurer or rating organization shall carry the burden of
575
proof by a preponderance of the evidence to show that the rate is
576
not excessive, inadequate, or unfairly discriminatory. After the
577
office notifies an insurer that a rate may be excessive,
578
inadequate, or unfairly discriminatory, unless the office
579
withdraws the notification, the insurer shall not alter the rate
580
except to conform with the office's notice until the earlier of
581
120 days after the date the notification was provided or 180 days
582
after the date of the implementation of the rate. The office may,
583
subject to chapter 120, disapprove without the 60-day
584
notification any rate increase filed by an insurer within the
585
prohibited time period or during the time that the legality of
586
the increased rate is being contested.
587
588
The provisions of this subsection shall not apply to workers'
589
compensation and employer's liability insurance and to motor
590
vehicle insurance.
591
(9)(a) Effective March 1, 2007, The chief executive officer
592
or chief financial officer of a property insurer and the chief
593
actuary of a property insurer must certify under oath and subject
594
to the penalty of perjury, on a form approved by the commission,
595
the following information, which must accompany a rate filing:
596
1. The signing officer and actuary have reviewed the rate
597
filing;
598
2. Based on the signing officer's and actuary's knowledge,
599
the rate filing does not contain any untrue statement of a
600
material fact or omit to state a material fact necessary in order
601
to make the statements made, in light of the circumstances under
602
which such statements were made, not misleading;
603
3. Based on the signing officer's and actuary's knowledge,
604
the information and other factors described in paragraph (2)(b),
605
including, but not limited to, investment income, fairly present
606
in all material respects the basis of the rate filing for the
607
periods presented in the filing; and
608
4. Based on the signing officer's and actuary's knowledge,
609
the rate filing reflects all premium savings that are reasonably
610
expected to result from legislative enactments and are in
611
accordance with generally accepted and reasonable actuarial
612
techniques;.
613
5. Based on the signing officer's and actuary's knowledge,
614
the actuary responsible for preparing the rate filing reviewed
615
the rate indications used by the office in approving the
616
insurer's last rate filing, if made available to the insurer for
617
review, and identified factors used in the current rate filing
618
which are inconsistent with the factors used by the office in
619
developing such rate indications; and
620
6. Based on the signing officer's and actuary's knowledge,
621
the number and type of policies that the insurer intends to
622
nonrenew during the year following the proposed effective date of
623
the rate filing, and that the rate filing reflects the reduced
624
risk of loss associated with such nonrenewals.
625
(b) A signing officer or actuary knowingly making a false
626
certification under this subsection commits a violation of s.
627
626.9541(1)(e) and is subject to the penalties under s. 626.9521.
628
(c) Failure to provide such certification by the officer
629
and actuary shall result in the rate filing being disapproved
630
without prejudice to be refiled.
631
(d) A properly certified rate filing must contain all
632
information that the insurer intends to support the rate filing,
633
unless the office requests additional information to support the
634
filing. If the office issues a notice of intent to disapprove the
635
filing, additional information related to the rate filing is not
636
admissible to justify the rate in any subsequent administrative
637
or legal proceeding, other than expert opinion.
638
(e)(d) The commission may adopt rules and forms pursuant to
639
ss. 120.536(1) and 120.54 to administer this subsection.
640
Section 11. Subsection (6) of section 627.062, Florida
641
Statutes, is repealed.
642
Section 12. Subsection (1) of section 627.0613, Florida
643
Statutes, is amended to read:
644
627.0613 Consumer advocate.--The Chief Financial Officer
645
must appoint a consumer advocate who must represent the general
646
public of the state before the department and the office. The
647
consumer advocate must report directly to the Chief Financial
648
Officer, but is not otherwise under the authority of the
649
department or of any employee of the department. The consumer
650
advocate has such powers as are necessary to carry out the duties
651
of the office of consumer advocate, including, but not limited
652
to, the powers to:
653
(1) Recommend to the department or office, by petition, the
654
commencement of any proceeding or action; appear in any
655
proceeding or action before the department or office; or appear
656
in any proceeding before the Division of Administrative Hearings
657
or arbitration panel specified in s. 627.062(6) relating to
658
subject matter under the jurisdiction of the department or
659
office.
660
Section 13. Paragraph (c) of subsection (1) and paragraph
661
(c) of subsection (3) of section 627.0628, Florida Statutes, are
662
amended to read:
663
627.0628 Florida Commission on Hurricane Loss Projection
664
Methodology; public records exemption; public meetings
665
exemption.--
666
(1) LEGISLATIVE FINDINGS AND INTENT.--
667
(c) It is the intent of the Legislature to create the
668
Florida Commission on Hurricane Loss Projection Methodology as a
669
panel of experts to provide the most actuarially sophisticated
670
guidelines and standards for projection of hurricane losses
671
possible, given the current state of actuarial science. It is the
672
further intent of the Legislature that such standards and
673
guidelines must be used by the State Board of Administration in
674
developing reimbursement premium rates for the Florida Hurricane
675
Catastrophe Fund, and, subject to paragraph (3)(c), must may be
676
used by insurers in rate filings under s. 627.062 unless the way
677
in which such standards and guidelines were applied by the
678
insurer was erroneous, as shown by a preponderance of the
679
evidence.
680
(3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.--
681
(c) With respect to a rate filing under s. 627.062, an
682
insurer must may employ and may not modify or adjust actuarial
683
methods, principles, standards, models, or output ranges found by
684
the commission to be accurate or reliable in determining to
685
determine hurricane loss factors used for use in a rate filing
686
and in determining probable maximum loss levels for reinsurance
687
costs included in a rate filing under s. 627.062. However, such
688
findings and factors are admissible and relevant in consideration
689
of a rate filing by the office or in any arbitration or
690
administrative or judicial review only if the office and the
691
consumer advocate appointed pursuant to s. 627.0613 have access
692
to all of the assumptions and factors that were used in
693
developing the actuarial methods, principles, standards, models,
694
or output ranges, and are not precluded from disclosing such
695
information in a rate proceeding. In any rate hearing under s.
696
120.57 or in any arbitration proceeding under s. 627.062(6), the
697
hearing officer or, judge, or arbitration panel may determine
698
whether the office and the consumer advocate were provided with
699
access to all of the assumptions and factors that were used in
700
developing the actuarial methods, principles, standards, models,
701
or output ranges and may to determine their admissibility.
702
Section 14. Subsection (1) of section 627.0629, Florida
703
Statutes, is amended to read:
704
627.0629 Residential property insurance; rate filings.--
705
(1)(a) It is the intent of the Legislature that insurers
706
must provide savings to consumers who install or implement
707
windstorm damage mitigation techniques, alterations, or solutions
708
to their properties to prevent windstorm losses. A rate filing
709
for residential property insurance must include actuarially
710
reasonable discounts, credits, or other rate differentials, or
711
appropriate reductions in deductibles, for properties on which
712
fixtures or construction techniques demonstrated to reduce the
713
amount of loss in a windstorm have been installed or implemented.
714
The fixtures or construction techniques shall include, but not be
715
limited to, fixtures or construction techniques which enhance
716
roof strength, roof covering performance, roof-to-wall strength,
717
wall-to-floor-to-foundation strength, opening protection, and
718
window, door, and skylight strength. Credits, discounts, or other
719
rate differentials, or appropriate reductions in deductibles, for
720
fixtures and construction techniques which meet the minimum
721
requirements of the Florida Building Code must be included in the
722
rate filing. All insurance companies must make a rate filing
723
which includes the credits, discounts, or other rate
724
differentials or reductions in deductibles by February 28, 2003.
725
By July 1, 2007, the office shall reevaluate the discounts,
726
credits, other rate differentials, and appropriate reductions in
727
deductibles for fixtures and construction techniques that meet
728
the minimum requirements of the Florida Building Code, based upon
729
actual experience or any other loss relativity studies available
730
to the office. The office shall determine the discounts, credits,
731
other rate differentials, and appropriate reductions in
732
deductibles that reflect the full actuarial value of such
733
revaluation, which may be used by insurers in rate filings.
734
(b) By February 1, 2009, the Office of Insurance
735
Regulation, in consultation with the Department of Financial
736
Services and the Department of Community Affairs, shall develop
737
and make publicly available a proposed method for insurers to
738
establish discounts, credits, or other rate differentials for
739
hurricane mitigation measures which directly correlate to the
740
numerical rating assigned to a structure pursuant to the uniform
741
home grading scale adopted by the Financial Services Commission
742
pursuant to s. 215.55865, including any proposed changes to the
743
uniform home grading scale. By October 1, 2009, the commission
744
shall adopt rules requiring insurers to make rate filings for
745
residential property insurance which revise insurers' discounts,
746
credits, or other rate differentials for hurricane mitigation
747
measures so that such rate differentials correlate directly to
748
the uniform home grading scale. The rules may include such
749
changes to the uniform home grading scale as the commission
750
determines are necessary, and may specify the minimum required
751
discounts, credits, or other rate differentials. Such rate
752
differentials must be consistent with generally accepted
753
actuarial principles and wind-loss mitigation studies.
754
Section 15. Paragraph (b) of subsection (2) and subsection
755
(6) of section 627.351, Florida Statutes, are amended to read:
756
627.351 Insurance risk apportionment plans.--
757
(2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
758
(b) The department shall require all insurers holding a
759
certificate of authority to transact property insurance on a
760
direct basis in this state, other than joint underwriting
761
associations and other entities formed pursuant to this section,
762
to provide windstorm coverage to applicants from areas determined
763
to be eligible pursuant to paragraph (c) who in good faith are
764
entitled to, but are unable to procure, such coverage through
765
ordinary means; or it shall adopt a reasonable plan or plans for
766
the equitable apportionment or sharing among such insurers of
767
windstorm coverage, which may include formation of an association
768
for this purpose. As used in this subsection, the term "property
769
insurance" means insurance on real or personal property, as
770
defined in s. 624.604, including insurance for fire, industrial
771
fire, allied lines, farmowners multiperil, homeowners'
772
multiperil, commercial multiperil, and mobile homes, and
773
including liability coverages on all such insurance, but
774
excluding inland marine as defined in s. 624.607(3) and excluding
775
vehicle insurance as defined in s. 624.605(1)(a) other than
776
insurance on mobile homes used as permanent dwellings. The
777
department shall adopt rules that provide a formula for the
778
recovery and repayment of any deferred assessments.
779
1. For the purpose of this section, properties eligible for
780
such windstorm coverage are defined as dwellings, buildings, and
781
other structures, including mobile homes which are used as
782
dwellings and which are tied down in compliance with mobile home
783
tie-down requirements prescribed by the Department of Highway
784
Safety and Motor Vehicles pursuant to s. 320.8325, and the
785
contents of all such properties. An applicant or policyholder is
786
eligible for coverage only if an offer of coverage cannot be
787
obtained by or for the applicant or policyholder from an admitted
788
insurer at approved rates.
789
2.a.(I) All insurers required to be members of such
790
association shall participate in its writings, expenses, and
791
losses. Surplus of the association shall be retained for the
792
payment of claims and shall not be distributed to the member
793
insurers. Such participation by member insurers shall be in the
794
proportion that the net direct premiums of each member insurer
795
written for property insurance in this state during the preceding
796
calendar year bear to the aggregate net direct premiums for
797
property insurance of all member insurers, as reduced by any
798
credits for voluntary writings, in this state during the
799
preceding calendar year. For the purposes of this subsection, the
800
term "net direct premiums" means direct written premiums for
801
property insurance, reduced by premium for liability coverage and
802
for the following if included in allied lines: rain and hail on
803
growing crops; livestock; association direct premiums booked;
804
National Flood Insurance Program direct premiums; and similar
805
deductions specifically authorized by the plan of operation and
806
approved by the department. A member's participation shall begin
807
on the first day of the calendar year following the year in which
808
it is issued a certificate of authority to transact property
809
insurance in the state and shall terminate 1 year after the end
810
of the calendar year during which it no longer holds a
811
certificate of authority to transact property insurance in the
812
state. The commissioner, after review of annual statements, other
813
reports, and any other statistics that the commissioner deems
814
necessary, shall certify to the association the aggregate direct
815
premiums written for property insurance in this state by all
816
member insurers.
817
(II) Effective July 1, 2002, the association shall operate
818
subject to the supervision and approval of a board of governors
819
who are the same individuals that have been appointed by the
820
Treasurer to serve on the board of governors of the Citizens
821
Property Insurance Corporation.
822
(III) The plan of operation shall provide a formula whereby
823
a company voluntarily providing windstorm coverage in affected
824
areas will be relieved wholly or partially from apportionment of
825
a regular assessment pursuant to sub-sub-subparagraph d.(I) or
826
sub-sub-subparagraph d.(II).
827
(IV) A company which is a member of a group of companies
828
under common management may elect to have its credits applied on
829
a group basis, and any company or group may elect to have its
830
credits applied to any other company or group.
831
(V) There shall be no credits or relief from apportionment
832
to a company for emergency assessments collected from its
833
policyholders under sub-sub-subparagraph d.(III).
834
(VI) The plan of operation may also provide for the award
835
of credits, for a period not to exceed 3 years, from a regular
836
assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
837
subparagraph d.(II) as an incentive for taking policies out of
838
the Residential Property and Casualty Joint Underwriting
839
Association. In order to qualify for the exemption under this
840
sub-sub-subparagraph, the take-out plan must provide that at
841
least 40 percent of the policies removed from the Residential
842
Property and Casualty Joint Underwriting Association cover risks
843
located in Dade, Broward, and Palm Beach Counties or at least 30
844
percent of the policies so removed cover risks located in Dade,
845
Broward, and Palm Beach Counties and an additional 50 percent of
846
the policies so removed cover risks located in other coastal
847
counties, and must also provide that no more than 15 percent of
848
the policies so removed may exclude windstorm coverage. With the
849
approval of the department, the association may waive these
850
geographic criteria for a take-out plan that removes at least the
851
lesser of 100,000 Residential Property and Casualty Joint
852
Underwriting Association policies or 15 percent of the total
853
number of Residential Property and Casualty Joint Underwriting
854
Association policies, provided the governing board of the
855
Residential Property and Casualty Joint Underwriting Association
856
certifies that the take-out plan will materially reduce the
857
Residential Property and Casualty Joint Underwriting
858
Association's 100-year probable maximum loss from hurricanes.
859
With the approval of the department, the board may extend such
860
credits for an additional year if the insurer guarantees an
861
additional year of renewability for all policies removed from the
862
Residential Property and Casualty Joint Underwriting Association,
863
or for 2 additional years if the insurer guarantees 2 additional
864
years of renewability for all policies removed from the
865
Residential Property and Casualty Joint Underwriting Association.
866
b. Assessments to pay deficits in the association under
867
this subparagraph shall be included as an appropriate factor in
868
the making of rates as provided in s. 627.3512.
869
c. The Legislature finds that the potential for unlimited
870
deficit assessments under this subparagraph may induce insurers
871
to attempt to reduce their writings in the voluntary market, and
872
that such actions would worsen the availability problems that the
873
association was created to remedy. It is the intent of the
874
Legislature that insurers remain fully responsible for paying
875
regular assessments and collecting emergency assessments for any
876
deficits of the association; however, it is also the intent of
877
the Legislature to provide a means by which assessment
878
liabilities may be amortized over a period of years.
879
d.(I) When the deficit incurred in a particular calendar
880
year is 10 percent or less of the aggregate statewide direct
881
written premium for property insurance for the prior calendar
882
year for all member insurers, the association shall levy an
883
assessment on member insurers in an amount equal to the deficit.
884
(II) When the deficit incurred in a particular calendar
885
year exceeds 10 percent of the aggregate statewide direct written
886
premium for property insurance for the prior calendar year for
887
all member insurers, the association shall levy an assessment on
888
member insurers in an amount equal to the greater of 10 percent
889
of the deficit or 10 percent of the aggregate statewide direct
890
written premium for property insurance for the prior calendar
891
year for member insurers. Any remaining deficit shall be
892
recovered through emergency assessments under sub-sub-
893
subparagraph (III).
894
(III) Upon a determination by the board of directors that a
895
deficit exceeds the amount that will be recovered through regular
896
assessments on member insurers, pursuant to sub-sub-subparagraph
897
(I) or sub-sub-subparagraph (II), the board shall levy, after
898
verification by the department, emergency assessments to be
899
collected by member insurers and by underwriting associations
900
created pursuant to this section which write property insurance,
901
upon issuance or renewal of property insurance policies other
902
than National Flood Insurance policies in the year or years
903
following levy of the regular assessments. The amount of the
904
emergency assessment collected in a particular year shall be a
905
uniform percentage of that year's direct written premium for
906
property insurance for all member insurers and underwriting
907
associations, excluding National Flood Insurance policy premiums,
908
as annually determined by the board and verified by the
909
department. The department shall verify the arithmetic
910
calculations involved in the board's determination within 30 days
911
after receipt of the information on which the determination was
912
based. Notwithstanding any other provision of law, each member
913
insurer and each underwriting association created pursuant to
914
this section shall collect emergency assessments from its
915
policyholders without such obligation being affected by any
916
credit, limitation, exemption, or deferment. The emergency
917
assessments so collected shall be transferred directly to the
918
association on a periodic basis as determined by the association.
919
The aggregate amount of emergency assessments levied under this
920
sub-sub-subparagraph in any calendar year may not exceed the
921
greater of 10 percent of the amount needed to cover the original
922
deficit, plus interest, fees, commissions, required reserves, and
923
other costs associated with financing of the original deficit, or
924
10 percent of the aggregate statewide direct written premium for
925
property insurance written by member insurers and underwriting
926
associations for the prior year, plus interest, fees,
927
commissions, required reserves, and other costs associated with
928
financing the original deficit. The board may pledge the proceeds
929
of the emergency assessments under this sub-sub-subparagraph as
930
the source of revenue for bonds, to retire any other debt
931
incurred as a result of the deficit or events giving rise to the
932
deficit, or in any other way that the board determines will
933
efficiently recover the deficit. The emergency assessments under
934
this sub-sub-subparagraph shall continue as long as any bonds
935
issued or other indebtedness incurred with respect to a deficit
936
for which the assessment was imposed remain outstanding, unless
937
adequate provision has been made for the payment of such bonds or
938
other indebtedness pursuant to the document governing such bonds
939
or other indebtedness. Emergency assessments collected under this
940
sub-sub-subparagraph are not part of an insurer's rates, are not
941
premium, and are not subject to premium tax, fees, or
942
commissions; however, failure to pay the emergency assessment
943
shall be treated as failure to pay premium.
944
(IV) Each member insurer's share of the total regular
945
assessments under sub-sub-subparagraph (I) or sub-sub-
946
subparagraph (II) shall be in the proportion that the insurer's
947
net direct premium for property insurance in this state, for the
948
year preceding the assessment bears to the aggregate statewide
949
net direct premium for property insurance of all member insurers,
950
as reduced by any credits for voluntary writings for that year.
951
(V) If regular deficit assessments are made under sub-sub-
952
subparagraph (I) or sub-sub-subparagraph (II), or by the
953
Residential Property and Casualty Joint Underwriting Association
954
under sub-subparagraph (6)(b)3.a. or sub-subparagraph (6)(b)3.b.,
955
the association shall levy upon the association's policyholders,
956
as part of its next rate filing, or by a separate rate filing
957
solely for this purpose, a market equalization surcharge in a
958
percentage equal to the total amount of such regular assessments
959
divided by the aggregate statewide direct written premium for
960
property insurance for member insurers for the prior calendar
961
year. Market equalization surcharges under this sub-sub-
962
subparagraph are not considered premium and are not subject to
963
commissions, fees, or premium taxes; however, failure to pay a
964
market equalization surcharge shall be treated as failure to pay
965
premium.
966
e. The governing body of any unit of local government, any
967
residents of which are insured under the plan, may issue bonds as
968
defined in s. 125.013 or s. 166.101 to fund an assistance
969
program, in conjunction with the association, for the purpose of
970
defraying deficits of the association. In order to avoid needless
971
and indiscriminate proliferation, duplication, and fragmentation
972
of such assistance programs, any unit of local government, any
973
residents of which are insured by the association, may provide
974
for the payment of losses, regardless of whether or not the
975
losses occurred within or outside of the territorial jurisdiction
976
of the local government. Revenue bonds may not be issued until
977
validated pursuant to chapter 75, unless a state of emergency is
978
declared by executive order or proclamation of the Governor
979
pursuant to s. 252.36 making such findings as are necessary to
980
determine that it is in the best interests of, and necessary for,
981
the protection of the public health, safety, and general welfare
982
of residents of this state and the protection and preservation of
983
the economic stability of insurers operating in this state, and
984
declaring it an essential public purpose to permit certain
985
municipalities or counties to issue bonds as will provide relief
986
to claimants and policyholders of the association and insurers
987
responsible for apportionment of plan losses. Any such unit of
988
local government may enter into such contracts with the
989
association and with any other entity created pursuant to this
990
subsection as are necessary to carry out this paragraph. Any
991
bonds issued under this sub-subparagraph shall be payable from
992
and secured by moneys received by the association from
993
assessments under this subparagraph, and assigned and pledged to
994
or on behalf of the unit of local government for the benefit of
995
the holders of such bonds. The funds, credit, property, and
996
taxing power of the state or of the unit of local government
997
shall not be pledged for the payment of such bonds. If any of the
998
bonds remain unsold 60 days after issuance, the department shall
999
require all insurers subject to assessment to purchase the bonds,
1000
which shall be treated as admitted assets; each insurer shall be
1001
required to purchase that percentage of the unsold portion of the
1002
bond issue that equals the insurer's relative share of assessment
1003
liability under this subsection. An insurer shall not be required
1004
to purchase the bonds to the extent that the department
1005
determines that the purchase would endanger or impair the
1006
solvency of the insurer. The authority granted by this sub-
1007
subparagraph is additional to any bonding authority granted by
1008
subparagraph 6.
1009
3. The plan shall also provide that any member with a
1010
surplus as to policyholders of $20 million or less writing 25
1011
percent or more of its total countrywide property insurance
1012
premiums in this state may petition the department, within the
1013
first 90 days of each calendar year, to qualify as a limited
1014
apportionment company. The apportionment of such a member company
1015
in any calendar year for which it is qualified shall not exceed
1016
its gross participation, which shall not be affected by the
1017
formula for voluntary writings. In no event shall a limited
1018
apportionment company be required to participate in any
1019
apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
1020
or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
1021
$50 million after payment of available plan funds in any calendar
1022
year. However, a limited apportionment company shall collect from
1023
its policyholders any emergency assessment imposed under sub-sub-
1024
subparagraph 2.d.(III). The plan shall provide that, if the
1025
department determines that any regular assessment will result in
1026
an impairment of the surplus of a limited apportionment company,
1027
the department may direct that all or part of such assessment be
1028
deferred. However, there shall be no limitation or deferment of
1029
an emergency assessment to be collected from policyholders under
1030
sub-sub-subparagraph 2.d.(III).
1031
4. The plan shall provide for the deferment, in whole or in
1032
part, of a regular assessment of a member insurer under sub-sub-
1033
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but not
1034
for an emergency assessment collected from policyholders under
1035
sub-sub-subparagraph 2.d.(III), if, in the opinion of the
1036
commissioner, payment of such regular assessment would endanger
1037
or impair the solvency of the member insurer. In the event a
1038
regular assessment against a member insurer is deferred in whole
1039
or in part, the amount by which such assessment is deferred may
1040
be assessed against the other member insurers in a manner
1041
consistent with the basis for assessments set forth in sub-sub-
1042
subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
1043
5.a. The plan of operation may include deductibles and
1044
rules for classification of risks and rate modifications
1045
consistent with the objective of providing and maintaining funds
1046
sufficient to pay catastrophe losses.
1047
b. The association may require arbitration of a rate filing
1048
under s. 627.062(6). It is the intent of the Legislature that the
1049
rates for coverage provided by the association be actuarially
1050
sound and not competitive with approved rates charged in the
1051
admitted voluntary market such that the association functions as
1052
a residual market mechanism to provide insurance only when the
1053
insurance cannot be procured in the voluntary market. The plan of
1054
operation shall provide a mechanism to assure that, beginning no
1055
later than January 1, 1999, the rates charged by the association
1056
for each line of business are reflective of approved rates in the
1057
voluntary market for hurricane coverage for each line of business
1058
in the various areas eligible for association coverage.
1059
c. The association shall provide for windstorm coverage on
1060
residential properties in limits up to $10 million for commercial
1061
lines residential risks and up to $1 million for personal lines
1062
residential risks. If coverage with the association is sought for
1063
a residential risk valued in excess of these limits, coverage
1064
shall be available to the risk up to the replacement cost or
1065
actual cash value of the property, at the option of the insured,
1066
if coverage for the risk cannot be located in the authorized
1067
market. The association must accept a commercial lines
1068
residential risk with limits above $10 million or a personal
1069
lines residential risk with limits above $1 million if coverage
1070
is not available in the authorized market. The association may
1071
write coverage above the limits specified in this subparagraph
1072
with or without facultative or other reinsurance coverage, as the
1073
association determines appropriate.
1074
d. The plan of operation must provide objective criteria
1075
and procedures, approved by the department, to be uniformly
1076
applied for all applicants in determining whether an individual
1077
risk is so hazardous as to be uninsurable. In making this
1078
determination and in establishing the criteria and procedures,
1079
the following shall be considered:
1080
(I) Whether the likelihood of a loss for the individual
1081
risk is substantially higher than for other risks of the same
1082
class; and
1083
(II) Whether the uncertainty associated with the individual
1084
risk is such that an appropriate premium cannot be determined.
1085
1086
The acceptance or rejection of a risk by the association pursuant
1087
to such criteria and procedures must be construed as the private
1088
placement of insurance, and the provisions of chapter 120 do not
1089
apply.
1090
e. If the risk accepts an offer of coverage through the
1091
market assistance program or through a mechanism established by
1092
the association, either before the policy is issued by the
1093
association or during the first 30 days of coverage by the
1094
association, and the producing agent who submitted the
1095
application to the association is not currently appointed by the
1096
insurer, the insurer shall:
1097
(I) Pay to the producing agent of record of the policy, for
1098
the first year, an amount that is the greater of the insurer's
1099
usual and customary commission for the type of policy written or
1100
a fee equal to the usual and customary commission of the
1101
association; or
1102
(II) Offer to allow the producing agent of record of the
1103
policy to continue servicing the policy for a period of not less
1104
than 1 year and offer to pay the agent the greater of the
1105
insurer's or the association's usual and customary commission for
1106
the type of policy written.
1107
1108
If the producing agent is unwilling or unable to accept
1109
appointment, the new insurer shall pay the agent in accordance
1110
with sub-sub-subparagraph (I). Subject to the provisions of s.
1111
627.3517, the policies issued by the association must provide
1112
that if the association obtains an offer from an authorized
1113
insurer to cover the risk at its approved rates under either a
1114
standard policy including wind coverage or, if consistent with
1115
the insurer's underwriting rules as filed with the department, a
1116
basic policy including wind coverage, the risk is no longer
1117
eligible for coverage through the association. Upon termination
1118
of eligibility, the association shall provide written notice to
1119
the policyholder and agent of record stating that the association
1120
policy must be canceled as of 60 days after the date of the
1121
notice because of the offer of coverage from an authorized
1122
insurer. Other provisions of the insurance code relating to
1123
cancellation and notice of cancellation do not apply to actions
1124
under this sub-subparagraph.
1125
f. When the association enters into a contractual agreement
1126
for a take-out plan, the producing agent of record of the
1127
association policy is entitled to retain any unearned commission
1128
on the policy, and the insurer shall:
1129
(I) Pay to the producing agent of record of the association
1130
policy, for the first year, an amount that is the greater of the
1131
insurer's usual and customary commission for the type of policy
1132
written or a fee equal to the usual and customary commission of
1133
the association; or
1134
(II) Offer to allow the producing agent of record of the
1135
association policy to continue servicing the policy for a period
1136
of not less than 1 year and offer to pay the agent the greater of
1137
the insurer's or the association's usual and customary commission
1138
for the type of policy written.
1139
1140
If the producing agent is unwilling or unable to accept
1141
appointment, the new insurer shall pay the agent in accordance
1142
with sub-sub-subparagraph (I).
1143
6.a. The plan of operation may authorize the formation of a
1144
private nonprofit corporation, a private nonprofit unincorporated
1145
association, a partnership, a trust, a limited liability company,
1146
or a nonprofit mutual company which may be empowered, among other
1147
things, to borrow money by issuing bonds or by incurring other
1148
indebtedness and to accumulate reserves or funds to be used for
1149
the payment of insured catastrophe losses. The plan may authorize
1150
all actions necessary to facilitate the issuance of bonds,
1151
including the pledging of assessments or other revenues.
1152
b. Any entity created under this subsection, or any entity
1153
formed for the purposes of this subsection, may sue and be sued,
1154
may borrow money; issue bonds, notes, or debt instruments; pledge
1155
or sell assessments, market equalization surcharges and other
1156
surcharges, rights, premiums, contractual rights, projected
1157
recoveries from the Florida Hurricane Catastrophe Fund, other
1158
reinsurance recoverables, and other assets as security for such
1159
bonds, notes, or debt instruments; enter into any contracts or
1160
agreements necessary or proper to accomplish such borrowings; and
1161
take other actions necessary to carry out the purposes of this
1162
subsection. The association may issue bonds or incur other
1163
indebtedness, or have bonds issued on its behalf by a unit of
1164
local government pursuant to subparagraph (6)(p)2., in the
1165
absence of a hurricane or other weather-related event, upon a
1166
determination by the association subject to approval by the
1167
department that such action would enable it to efficiently meet
1168
the financial obligations of the association and that such
1169
financings are reasonably necessary to effectuate the
1170
requirements of this subsection. Any such entity may accumulate
1171
reserves and retain surpluses as of the end of any association
1172
year to provide for the payment of losses incurred by the
1173
association during that year or any future year. The association
1174
shall incorporate and continue the plan of operation and articles
1175
of agreement in effect on the effective date of chapter 76-96,
1176
Laws of Florida, to the extent that it is not inconsistent with
1177
chapter 76-96, and as subsequently modified consistent with
1178
chapter 76-96. The board of directors and officers currently
1179
serving shall continue to serve until their successors are duly
1180
qualified as provided under the plan. The assets and obligations
1181
of the plan in effect immediately prior to the effective date of
1182
chapter 76-96 shall be construed to be the assets and obligations
1183
of the successor plan created herein.
1184
c. In recognition of s. 10, Art. I of the State
1185
Constitution, prohibiting the impairment of obligations of
1186
contracts, it is the intent of the Legislature that no action be
1187
taken whose purpose is to impair any bond indenture or financing
1188
agreement or any revenue source committed by contract to such
1189
bond or other indebtedness issued or incurred by the association
1190
or any other entity created under this subsection.
1191
7. On such coverage, an agent's remuneration shall be that
1192
amount of money payable to the agent by the terms of his or her
1193
contract with the company with which the business is placed.
1194
However, no commission will be paid on that portion of the
1195
premium which is in excess of the standard premium of that
1196
company.
1197
8. Subject to approval by the department, the association
1198
may establish different eligibility requirements and operational
1199
procedures for any line or type of coverage for any specified
1200
eligible area or portion of an eligible area if the board
1201
determines that such changes to the eligibility requirements and
1202
operational procedures are justified due to the voluntary market
1203
being sufficiently stable and competitive in such area or for
1204
such line or type of coverage and that consumers who, in good
1205
faith, are unable to obtain insurance through the voluntary
1206
market through ordinary methods would continue to have access to
1207
coverage from the association. When coverage is sought in
1208
connection with a real property transfer, such requirements and
1209
procedures shall not provide for an effective date of coverage
1210
later than the date of the closing of the transfer as established
1211
by the transferor, the transferee, and, if applicable, the
1212
lender.
1213
9. Notwithstanding any other provision of law:
1214
a. The pledge or sale of, the lien upon, and the security
1215
interest in any rights, revenues, or other assets of the
1216
association created or purported to be created pursuant to any
1217
financing documents to secure any bonds or other indebtedness of
1218
the association shall be and remain valid and enforceable,
1219
notwithstanding the commencement of and during the continuation
1220
of, and after, any rehabilitation, insolvency, liquidation,
1221
bankruptcy, receivership, conservatorship, reorganization, or
1222
similar proceeding against the association under the laws of this
1223
state or any other applicable laws.
1224
b. No such proceeding shall relieve the association of its
1225
obligation, or otherwise affect its ability to perform its
1226
obligation, to continue to collect, or levy and collect,
1227
assessments, market equalization or other surcharges, projected
1228
recoveries from the Florida Hurricane Catastrophe Fund,
1229
reinsurance recoverables, or any other rights, revenues, or other
1230
assets of the association pledged.
1231
c. Each such pledge or sale of, lien upon, and security
1232
interest in, including the priority of such pledge, lien, or
1233
security interest, any such assessments, emergency assessments,
1234
market equalization or renewal surcharges, projected recoveries
1235
from the Florida Hurricane Catastrophe Fund, reinsurance
1236
recoverables, or other rights, revenues, or other assets which
1237
are collected, or levied and collected, after the commencement of
1238
and during the pendency of or after any such proceeding shall
1239
continue unaffected by such proceeding.
1240
d. As used in this subsection, the term "financing
1241
documents" means any agreement, instrument, or other document now
1242
existing or hereafter created evidencing any bonds or other
1243
indebtedness of the association or pursuant to which any such
1244
bonds or other indebtedness has been or may be issued and
1245
pursuant to which any rights, revenues, or other assets of the
1246
association are pledged or sold to secure the repayment of such
1247
bonds or indebtedness, together with the payment of interest on
1248
such bonds or such indebtedness, or the payment of any other
1249
obligation of the association related to such bonds or
1250
indebtedness.
1251
e. Any such pledge or sale of assessments, revenues,
1252
contract rights or other rights or assets of the association
1253
shall constitute a lien and security interest, or sale, as the
1254
case may be, that is immediately effective and attaches to such
1255
assessments, revenues, contract, or other rights or assets,
1256
whether or not imposed or collected at the time the pledge or
1257
sale is made. Any such pledge or sale is effective, valid,
1258
binding, and enforceable against the association or other entity
1259
making such pledge or sale, and valid and binding against and
1260
superior to any competing claims or obligations owed to any other
1261
person or entity, including policyholders in this state,
1262
asserting rights in any such assessments, revenues, contract, or
1263
other rights or assets to the extent set forth in and in
1264
accordance with the terms of the pledge or sale contained in the
1265
applicable financing documents, whether or not any such person or
1266
entity has notice of such pledge or sale and without the need for
1267
any physical delivery, recordation, filing, or other action.
1268
f. There shall be no liability on the part of, and no cause
1269
of action of any nature shall arise against, any member insurer
1270
or its agents or employees, agents or employees of the
1271
association, members of the board of directors of the
1272
association, or the department or its representatives, for any
1273
action taken by them in the performance of their duties or
1274
responsibilities under this subsection. Such immunity does not
1275
apply to actions for breach of any contract or agreement
1276
pertaining to insurance, or any willful tort.
1277
(6) CITIZENS PROPERTY INSURANCE CORPORATION.--
1278
(a)1. It is the public purpose of this subsection to ensure
1279
the existence of an orderly market for property insurance for
1280
Floridians and Florida businesses. The Legislature finds that
1281
private insurers are unwilling or unable to provide affordable
1282
property insurance coverage in this state to the extent sought
1283
and needed. The absence of affordable property insurance
1284
threatens the public health, safety, and welfare and likewise
1285
threatens the economic health of the state. The state therefore
1286
has a compelling public interest and a public purpose to assist
1287
in assuring that property in the state is insured and that it is
1288
insured at affordable rates so as to facilitate the remediation,
1289
reconstruction, and replacement of damaged or destroyed property
1290
in order to reduce or avoid the negative effects otherwise
1291
resulting to the public health, safety, and welfare, to the
1292
economy of the state, and to the revenues of the state and local
1293
governments which are needed to provide for the public welfare.
1294
It is necessary, therefore, to provide affordable property
1295
insurance to applicants who are in good faith entitled to procure
1296
insurance through the voluntary market but are unable to do so.
1297
The Legislature intends by this subsection that affordable
1298
property insurance be provided and that it continue to be
1299
provided, as long as necessary, through Citizens Property
1300
Insurance Corporation, a government entity that is an integral
1301
part of the state, and that is not a private insurance company.
1302
To that end, Citizens Property Insurance Corporation shall strive
1303
to increase the availability of affordable property insurance in
1304
this state, while achieving efficiencies and economies, and while
1305
providing service to policyholders, applicants, and agents which
1306
is no less than the quality generally provided in the voluntary
1307
market, for the achievement of the foregoing public purposes.
1308
Because it is essential for this government entity to have the
1309
maximum financial resources to pay claims following a
1310
catastrophic hurricane, it is the intent of the Legislature that
1311
Citizens Property Insurance Corporation continue to be an
1312
integral part of the state and that the income of the corporation
1313
be exempt from federal income taxation and that interest on the
1314
debt obligations issued by the corporation be exempt from federal
1315
income taxation.
1316
2. The Residential Property and Casualty Joint Underwriting
1317
Association originally created by this statute shall be known, as
1318
of July 1, 2002, as the Citizens Property Insurance Corporation.
1319
The corporation shall provide insurance for residential and
1320
commercial property, for applicants who are in good faith
1321
entitled, but are unable, to procure insurance through the
1322
voluntary market. The corporation shall operate pursuant to a
1323
plan of operation approved by order of the Financial Services
1324
Commission. The plan is subject to continuous review by the
1325
commission. The commission may, by order, withdraw approval of
1326
all or part of a plan if the commission determines that
1327
conditions have changed since approval was granted and that the
1328
purposes of the plan require changes in the plan. The corporation
1329
shall continue to operate pursuant to the plan of operation
1330
approved by the Office of Insurance Regulation until October 1,
1331
2006. For the purposes of this subsection, residential coverage
1332
includes both personal lines residential coverage, which consists
1333
of the type of coverage provided by homeowner's, mobile home
1334
owner's, dwelling, tenant's, condominium unit owner's, and
1335
similar policies, and commercial lines residential coverage,
1336
which consists of the type of coverage provided by condominium
1337
association, apartment building, and similar policies.
1338
3. For the purposes of this subsection, the term "homestead
1339
property" means:
1340
a. Property that has been granted a homestead exemption
1341
under chapter 196;
1342
b. Property for which the owner has a current, written
1343
lease with a renter for a term of at least 7 months and for which
1344
the dwelling is insured by the corporation for $200,000 or less;
1345
c. An owner-occupied mobile home or manufactured home, as
1346
defined in s. 320.01, which is permanently affixed to real
1347
property, is owned by a Florida resident, and has been granted a
1348
homestead exemption under chapter 196 or, if the owner does not
1349
own the real property, the owner certifies that the mobile home
1350
or manufactured home is his or her principal place of residence;
1351
d. Tenant's coverage;
1352
e. Commercial lines residential property; or
1353
f. Any county, district, or municipal hospital; a hospital
1354
licensed by any not-for-profit corporation qualified under s.
1355
501(c)(3) of the United States Internal Revenue Code; or a
1356
continuing care retirement community that is certified under
1357
chapter 651 and that receives an exemption from ad valorem taxes
1358
under chapter 196.
1359
4. For the purposes of this subsection, the term
1360
"nonhomestead property" means property that is not homestead
1361
property.
1362
5. Effective January 1, 2009, a personal lines residential
1363
structure that has a dwelling replacement cost of $1 million or
1364
more, or a single condominium unit that has a combined dwelling
1365
and content replacement cost of $1 million or more is not
1366
eligible for coverage by the corporation. Such dwellings insured
1367
by the corporation on December 31, 2008, may continue to be
1368
covered by the corporation until the end of the policy term.
1369
However, such dwellings that are insured by the corporation and
1370
become ineligible for coverage due to the provisions of this
1371
subparagraph may reapply and obtain coverage in the high-risk
1372
account and be considered "nonhomestead property" if the property
1373
owner provides the corporation with a sworn affidavit from one or
1374
more insurance agents, on a form provided by the corporation,
1375
stating that the agents have made their best efforts to obtain
1376
coverage and that the property has been rejected for coverage by
1377
at least one authorized insurer and at least three surplus lines
1378
insurers. If such conditions are met, the dwelling may be insured
1379
by the corporation for up to 3 years, after which time the
1380
dwelling is ineligible for coverage. The office shall approve the
1381
method used by the corporation for valuing the dwelling
1382
replacement cost for the purposes of this subparagraph. If a
1383
policyholder is insured by the corporation prior to being
1384
determined to be ineligible pursuant to this subparagraph and
1385
such policyholder files a lawsuit challenging the determination,
1386
the policyholder may remain insured by the corporation until the
1387
conclusion of the litigation.
1388
3.6. For properties constructed on or after January 1,
1389
2009, the corporation may not insure any property located within
1390
2,500 feet landward of the coastal construction control line
1391
created pursuant to s. 161.053 unless the property meets the
1392
requirements of the code-plus building standards developed by the
1393
Florida Building Commission.
1394
4.7. It is the intent of the Legislature that
1395
policyholders, applicants, and agents of the corporation receive
1396
service and treatment of the highest possible level but never
1397
less than that generally provided in the voluntary market. It
1398
also is intended that the corporation be held to service
1399
standards no less than those applied to insurers in the voluntary
1400
market by the office with respect to responsiveness, timeliness,
1401
customer courtesy, and overall dealings with policyholders,
1402
applicants, or agents of the corporation.
1403
5.8. Effective January 1, 2009, a personal lines
1404
residential structure that is located in the "wind-borne debris
1405
region," as defined in s. 1609.2, International Building Code
1406
(2006), and that has an insured value on the structure of
1407
$750,000 or more is not eligible for coverage by the corporation
1408
unless the structure has opening protections as required under
1409
the Florida Building Code for a newly constructed residential
1410
structure in that area. A residential structure shall be deemed
1411
to comply with the requirements of this subparagraph if it has
1412
shutters or opening protections on all openings and if such
1413
opening protections complied with the Florida Building Code at
1414
the time they were installed. Effective January 1, 2011, the
1415
requirements of this subparagraph apply to a personal lines
1416
residential structure that is located in the wind-borne debris
1417
region and that has an insured value on the structure of $300,000
1418
or more.
1419
(b)1. All insurers authorized to write one or more subject
1420
lines of business in this state are subject to assessment by the
1421
corporation and, for the purposes of this subsection, are
1422
referred to collectively as "assessable insurers." Insurers
1423
writing one or more subject lines of business in this state
1424
pursuant to part VIII of chapter 626 are not assessable insurers,
1425
but insureds who procure one or more subject lines of business in
1426
this state pursuant to part VIII of chapter 626 are subject to
1427
assessment by the corporation and are referred to collectively as
1428
"assessable insureds." An authorized insurer's assessment
1429
liability shall begin on the first day of the calendar year
1430
following the year in which the insurer was issued a certificate
1431
of authority to transact insurance for subject lines of business
1432
in this state and shall terminate 1 year after the end of the
1433
first calendar year during which the insurer no longer holds a
1434
certificate of authority to transact insurance for subject lines
1435
of business in this state.
1436
2.a. All revenues, assets, liabilities, losses, and
1437
expenses of the corporation shall be divided into three separate
1438
accounts as follows:
1439
(I) A personal lines account for personal residential
1440
policies issued by the corporation or issued by the Residential
1441
Property and Casualty Joint Underwriting Association and renewed
1442
by the corporation that provide comprehensive, multiperil
1443
coverage on risks that are not located in areas eligible for
1444
coverage in the Florida Windstorm Underwriting Association as
1445
those areas were defined on January 1, 2002, and for such
1446
policies that do not provide coverage for the peril of wind on
1447
risks that are located in such areas;
1448
(II) A commercial lines account for commercial residential
1449
and commercial nonresidential policies issued by the corporation
1450
or issued by the Residential Property and Casualty Joint
1451
Underwriting Association and renewed by the corporation that
1452
provide coverage for basic property perils on risks that are not
1453
located in areas eligible for coverage in the Florida Windstorm
1454
Underwriting Association as those areas were defined on January
1455
1, 2002, and for such policies that do not provide coverage for
1456
the peril of wind on risks that are located in such areas; and
1457
(III) A high-risk account for personal residential policies
1458
and commercial residential and commercial nonresidential property
1459
policies issued by the corporation or transferred to the
1460
corporation that provide coverage for the peril of wind on risks
1461
that are located in areas eligible for coverage in the Florida
1462
Windstorm Underwriting Association as those areas were defined on
1463
January 1, 2002. Subject to the approval of a business plan by
1464
the Financial Services Commission and Legislative Budget
1465
Commission as provided in this sub-sub-subparagraph, but no
1466
earlier than March 31, 2007, The corporation shall may offer
1467
policies that provide multiperil coverage and the corporation
1468
shall continue to offer policies that provide coverage only for
1469
the peril of wind for risks located in areas eligible for
1470
coverage in the high-risk account. Beginning July 1, 2008, the
1471
corporation may not issue new policies that provide coverage only
1472
for the peril of wind, but may continue to renew such policies
1473
that were in force on that date. In issuing multiperil coverage,
1474
the corporation may use its approved policy forms and rates for
1475
the personal lines account. An applicant or insured who is
1476
eligible to purchase a multiperil policy from the corporation may
1477
purchase a multiperil policy from an authorized insurer without
1478
prejudice to the applicant's or insured's eligibility to
1479
prospectively purchase a policy that provides coverage only for
1480
the peril of wind from the corporation prior to July 1, 2008. An
1481
applicant or insured who is eligible for a corporation policy
1482
that provides coverage only for the peril of wind may elect to
1483
purchase or retain such policy and also purchase or retain
1484
coverage excluding wind from an authorized insurer without
1485
prejudice to the applicant's or insured's eligibility to
1486
prospectively purchase a policy that provides multiperil coverage
1487
from the corporation. It is the goal of the Legislature that
1488
there would be an overall average savings of 10 percent or more
1489
for a policyholder who currently has a wind-only policy with the
1490
corporation, and an ex-wind policy with a voluntary insurer or
1491
the corporation, and who then obtains a multiperil policy from
1492
the corporation. It is the intent of the Legislature that the
1493
offer of multiperil coverage in the high-risk account be made and
1494
implemented in a manner that does not adversely affect the tax-
1495
exempt status of the corporation or creditworthiness of or
1496
security for currently outstanding financing obligations or
1497
credit facilities of the high-risk account, the personal lines
1498
account, or the commercial lines account. By March 1, 2007, the
1499
corporation shall prepare and submit for approval by the
1500
Financial Services Commission and Legislative Budget Commission a
1501
report detailing the corporation's business plan for issuing
1502
multiperil coverage in the high-risk account. The business plan
1503
shall be approved or disapproved within 30 days after receipt, as
1504
submitted or modified and resubmitted by the corporation. The
1505
business plan must include: the impact of such multiperil
1506
coverage on the corporation's financial resources, the impact of
1507
such multiperil coverage on the corporation's tax-exempt status,
1508
the manner in which the corporation plans to implement the
1509
processing of applications and policy forms for new and existing
1510
policyholders, the impact of such multiperil coverage on the
1511
corporation's ability to deliver customer service at the high
1512
level required by this subsection, the ability of the corporation
1513
to process claims, the ability of the corporation to quote and
1514
issue policies, the impact of such multiperil coverage on the
1515
corporation's agents, the impact of such multiperil coverage on
1516
the corporation's existing policyholders, and the impact of such
1517
multiperil coverage on rates and premium. The high-risk account
1518
must also include quota share primary insurance under
1519
subparagraph (c)2. The area eligible for coverage under the high-
1520
risk account also includes the area within Port Canaveral, which
1521
is bordered on the south by the City of Cape Canaveral, bordered
1522
on the west by the Banana River, and bordered on the north by
1523
Federal Government property.
1524
b. The three separate accounts must be maintained as long
1525
as financing obligations entered into by the Florida Windstorm
1526
Underwriting Association or Residential Property and Casualty
1527
Joint Underwriting Association are outstanding, in accordance
1528
with the terms of the corresponding financing documents. When the
1529
financing obligations are no longer outstanding, in accordance
1530
with the terms of the corresponding financing documents, the
1531
corporation may use a single account for all revenues, assets,
1532
liabilities, losses, and expenses of the corporation. Consistent
1533
with the requirement of this subparagraph and prudent investment
1534
policies that minimize the cost of carrying debt, the board shall
1535
exercise its best efforts to retire existing debt or to obtain
1536
approval of necessary parties to amend the terms of existing
1537
debt, so as to structure the most efficient plan to consolidate
1538
the three separate accounts into a single account. By February 1,
1539
2007, the board shall submit a report to the Financial Services
1540
Commission, the President of the Senate, and the Speaker of the
1541
House of Representatives which includes an analysis of
1542
consolidating the accounts, the actions the board has taken to
1543
minimize the cost of carrying debt, and its recommendations for
1544
executing the most efficient plan.
1545
c. Creditors of the Residential Property and Casualty Joint
1546
Underwriting Association and of the accounts specified in sub-
1547
sub-subparagraphs a.(I) and (II) may have a claim against, and
1548
recourse to, the accounts referred to in sub-sub-subparagraphs
1549
a.(I) and (II) and shall have no claim against, or recourse to,
1550
the account referred to in sub-sub-subparagraph a.(III).
1551
Creditors of the Florida Windstorm Underwriting Association shall
1552
have a claim against, and recourse to, the account referred to in
1553
sub-sub-subparagraph a.(III) and shall have no claim against, or
1554
recourse to, the accounts referred to in sub-sub-subparagraphs
1555
a.(I) and (II).
1556
d. Revenues, assets, liabilities, losses, and expenses not
1557
attributable to particular accounts shall be prorated among the
1558
accounts.
1559
e. The Legislature finds that the revenues of the
1560
corporation are revenues that are necessary to meet the
1561
requirements set forth in documents authorizing the issuance of
1562
bonds under this subsection.
1563
f. No part of the income of the corporation may inure to
1564
the benefit of any private person.
1565
3. With respect to a deficit in an account:
1566
a. When the deficit incurred in a particular calendar year
1567
is not greater than 8 10 percent of the aggregate statewide
1568
direct written premium for the subject lines of business for the
1569
prior calendar year, the entire deficit shall be recovered
1570
through regular assessments of assessable insurers under
1571
paragraph (p) and assessable insureds.
1572
b. When the deficit incurred in a particular calendar year
1573
exceeds 8 10 percent of the aggregate statewide direct written
1574
premium for the subject lines of business for the prior calendar
1575
year, the corporation shall levy regular assessments on
1576
assessable insurers under paragraph (p) and on assessable
1577
insureds in an amount equal to the greater of 8 10 percent of the
1578
deficit or 8 10 percent of the aggregate statewide direct written
1579
premium for the subject lines of business for the prior calendar
1580
year. Any remaining deficit shall be recovered through emergency
1581
assessments under sub-subparagraph d.
1582
c. Each assessable insurer's share of the amount being
1583
assessed under sub-subparagraph a. or sub-subparagraph b. shall
1584
be in the proportion that the assessable insurer's direct written
1585
premium for the subject lines of business for the year preceding
1586
the assessment bears to the aggregate statewide direct written
1587
premium for the subject lines of business for that year. The
1588
assessment percentage applicable to each assessable insured is
1589
the ratio of the amount being assessed under sub-subparagraph a.
1590
or sub-subparagraph b. to the aggregate statewide direct written
1591
premium for the subject lines of business for the prior year.
1592
Assessments levied by the corporation on assessable insurers
1593
under sub-subparagraphs a. and b. shall be paid as required by
1594
the corporation's plan of operation and paragraph (p).
1595
notwithstanding any other provision of this subsection, the
1596
aggregate amount of a regular assessment for a deficit incurred
1597
in a particular calendar year shall be reduced by the estimated
1598
amount to be received by the corporation from the Citizens
1599
policyholder surcharge under subparagraph (c)10. and the amount
1600
collected or estimated to be collected from the assessment on
1601
Citizens policyholders pursuant to sub-subparagraph i.
1602
Assessments levied by the corporation on assessable insureds
1603
under sub-subparagraphs a. and b. shall be collected by the
1604
surplus lines agent at the time the surplus lines agent collects
1605
the surplus lines tax required by s. 626.932 and shall be paid to
1606
the Florida Surplus Lines Service Office at the time the surplus
1607
lines agent pays the surplus lines tax to the Florida Surplus
1608
Lines Service Office. Upon receipt of regular assessments from
1609
surplus lines agents, the Florida Surplus Lines Service Office
1610
shall transfer the assessments directly to the corporation as
1611
determined by the corporation.
1612
d. Upon a determination by the board of governors that a
1613
deficit in an account exceeds the amount that will be recovered
1614
through regular assessments under sub-subparagraph a. or sub-
1615
subparagraph b., plus the amount that is expected to be recovered
1616
through surcharges under sub-subparagraph i., as to the remaining
1617
projected deficit the board shall levy, after verification by the
1618
office, emergency assessments, for as many years as necessary to
1619
cover the deficits, to be collected by assessable insurers and
1620
the corporation and collected from assessable insureds upon
1621
issuance or renewal of policies for subject lines of business,
1622
excluding National Flood Insurance policies. The amount of the
1623
emergency assessment collected in a particular year shall be a
1624
uniform percentage of that year's direct written premium for
1625
subject lines of business and all accounts of the corporation,
1626
excluding National Flood Insurance Program policy premiums, as
1627
annually determined by the board and verified by the office. The
1628
office shall verify the arithmetic calculations involved in the
1629
board's determination within 30 days after receipt of the
1630
information on which the determination was based. Notwithstanding
1631
any other provision of law, the corporation and each assessable
1632
insurer that writes subject lines of business shall collect
1633
emergency assessments from its policyholders without such
1634
obligation being affected by any credit, limitation, exemption,
1635
or deferment. Emergency assessments levied by the corporation on
1636
assessable insureds shall be collected by the surplus lines agent
1637
at the time the surplus lines agent collects the surplus lines
1638
tax required by s. 626.932 and shall be paid to the Florida
1639
Surplus Lines Service Office at the time the surplus lines agent
1640
pays the surplus lines tax to the Florida Surplus Lines Service
1641
Office. The emergency assessments so collected shall be
1642
transferred directly to the corporation on a periodic basis as
1643
determined by the corporation and shall be held by the
1644
corporation solely in the applicable account. The aggregate
1645
amount of emergency assessments levied for an account under this
1646
sub-subparagraph in any calendar year may, at the discretion of
1647
the board of governors, be less than but may not exceed the
1648
greater of 10 percent of the amount needed to cover the original
1649
deficit, plus interest, fees, commissions, required reserves, and
1650
other costs associated with financing of the original deficit, or
1651
10 percent of the aggregate statewide direct written premium for
1652
subject lines of business and for all accounts of the corporation
1653
for the prior year, plus interest, fees, commissions, required
1654
reserves, and other costs associated with financing the original
1655
deficit.
1656
e. The corporation may pledge the proceeds of assessments,
1657
projected recoveries from the Florida Hurricane Catastrophe Fund,
1658
other insurance and reinsurance recoverables, policyholder
1659
surcharges and other surcharges, and other funds available to the
1660
corporation as the source of revenue for and to secure bonds
1661
issued under paragraph (p), bonds or other indebtedness issued
1662
under subparagraph (c)3., or lines of credit or other financing
1663
mechanisms issued or created under this subsection, or to retire
1664
any other debt incurred as a result of deficits or events giving
1665
rise to deficits, or in any other way that the board determines
1666
will efficiently recover such deficits. The purpose of the lines
1667
of credit or other financing mechanisms is to provide additional
1668
resources to assist the corporation in covering claims and
1669
expenses attributable to a catastrophe. As used in this
1670
subsection, the term "assessments" includes regular assessments
1671
under sub-subparagraph a., sub-subparagraph b., or subparagraph
1672
(p)1. and emergency assessments under sub-subparagraph d.
1673
Emergency assessments collected under sub-subparagraph d. are not
1674
part of an insurer's rates, are not premium, and are not subject
1675
to premium tax, fees, or commissions; however, failure to pay the
1676
emergency assessment shall be treated as failure to pay premium.
1677
The emergency assessments under sub-subparagraph d. shall
1678
continue as long as any bonds issued or other indebtedness
1679
incurred with respect to a deficit for which the assessment was
1680
imposed remain outstanding, unless adequate provision has been
1681
made for the payment of such bonds or other indebtedness pursuant
1682
to the documents governing such bonds or other indebtedness.
1683
f. As used in this subsection for purposes of any deficit
1684
incurred on or after January 25, 2007, the term "subject lines of
1685
business" means insurance written by assessable insurers or
1686
procured by assessable insureds for all property and casualty
1687
lines of business in this state, but not including workers'
1688
compensation or medical malpractice. As used in the sub-
1689
subparagraph, the term "property and casualty lines of business"
1690
includes all lines of business identified on Form 2, Exhibit of
1691
Premiums and Losses, in the annual statement required of
1692
authorized insurers by s. 624.424 and any rule adopted under this
1693
section, except for those lines identified as accident and health
1694
insurance and except for policies written under the National
1695
Flood Insurance Program or the Federal Crop Insurance Program.
1696
For purposes of this sub-subparagraph, the term "workers'
1697
compensation" includes both workers' compensation insurance and
1698
excess workers' compensation insurance.
1699
g. The Florida Surplus Lines Service Office shall determine
1700
annually the aggregate statewide written premium in subject lines
1701
of business procured by assessable insureds and shall report that
1702
information to the corporation in a form and at a time the
1703
corporation specifies to ensure that the corporation can meet the
1704
requirements of this subsection and the corporation's financing
1705
obligations.
1706
h. The Florida Surplus Lines Service Office shall verify
1707
the proper application by surplus lines agents of assessment
1708
percentages for regular assessments and emergency assessments
1709
levied under this subparagraph on assessable insureds and shall
1710
assist the corporation in ensuring the accurate, timely
1711
collection and payment of assessments by surplus lines agents as
1712
required by the corporation.
1713
i. If a deficit is incurred in any account in 2008 or
1714
thereafter, the board of governors shall levy a Citizens
1715
policyholder surcharge an immediate assessment against the
1716
premium of each nonhomestead property policyholder in all
1717
accounts of the corporation, as a uniform percentage of the
1718
premium of the policy of up to 10 percent of such premium, which
1719
funds shall be used to offset the deficit. If this assessment is
1720
insufficient to eliminate the deficit, the board of governors
1721
shall levy an additional assessment against all policyholders of
1722
the corporation for a 12-month period, which shall be collected
1723
at the time of issuance or renewal of a policy, as a uniform
1724
percentage of the premium for the policy of up to 10 percent of
1725
such premium, which funds shall be used to further offset the
1726
deficit and reduce the amount of the regular assessment as
1727
provided in sub-subparagraphs a. and b. Citizens policyholder
1728
surcharges under this sub-subparagraph are not considered premium
1729
and are not subject to commissions, fees, or premium taxes.
1730
However, failure to pay such surcharges shall be treated as
1731
failure to pay premium.
1732
j. If the amount of any assessments or surcharges collected
1733
from corporation policyholders, assessable insurers or their
1734
policyholders, or assessable insureds exceeds the amount of the
1735
deficits, such excess amounts shall be remitted to and retained
1736
by the corporation in a reserve to be used by the corporation, as
1737
determined by the board of governors and approved by the office,
1738
to pay claims or reduce any past, present, or future plan-year
1739
deficits or to reduce outstanding debt. The board of governors
1740
shall maintain separate accounting records that consolidate data
1741
for nonhomestead properties, including, but not limited to,
1742
number of policies, insured values, premiums written, and losses.
1743
The board of governors shall annually report to the office and
1744
the Legislature a summary of such data.
1745
(c) The plan of operation of the corporation:
1746
1. Must provide for adoption of residential property and
1747
casualty insurance policy forms and commercial residential and
1748
nonresidential property insurance forms, which forms must be
1749
approved by the office prior to use. The corporation shall adopt
1750
the following policy forms:
1751
a. Standard personal lines policy forms that are
1752
comprehensive multiperil policies providing full coverage of a
1753
residential property equivalent to the coverage provided in the
1754
private insurance market under an HO-3, HO-4, or HO-6 policy.
1755
b. Basic personal lines policy forms that are policies
1756
similar to an HO-8 policy or a dwelling fire policy that provide
1757
coverage meeting the requirements of the secondary mortgage
1758
market, but which coverage is more limited than the coverage
1759
under a standard policy.
1760
c. Commercial lines residential and nonresidential policy
1761
forms that are generally similar to the basic perils of full
1762
coverage obtainable for commercial residential structures and
1763
commercial nonresidential structures in the admitted voluntary
1764
market.
1765
d. Personal lines and commercial lines residential property
1766
insurance forms that cover the peril of wind only. The forms are
1767
applicable only to residential properties located in areas
1768
eligible for coverage under the high-risk account referred to in
1769
sub-subparagraph (b)2.a.
1770
e. Commercial lines nonresidential property insurance forms
1771
that cover the peril of wind only. The forms are applicable only
1772
to nonresidential properties located in areas eligible for
1773
coverage under the high-risk account referred to in sub-
1774
subparagraph (b)2.a.
1775
f. The corporation may adopt variations of the policy forms
1776
listed in sub-subparagraphs a.-e. that contain more restrictive
1777
coverage.
1778
2.a. Must provide that the corporation adopt a program in
1779
which the corporation and authorized insurers enter into quota
1780
share primary insurance agreements for hurricane coverage, as
1781
defined in s. 627.4025(2)(a), for eligible risks, and adopt
1782
property insurance forms for eligible risks which cover the peril
1783
of wind only. As used in this subsection, the term:
1784
(I) "Quota share primary insurance" means an arrangement in
1785
which the primary hurricane coverage of an eligible risk is
1786
provided in specified percentages by the corporation and an
1787
authorized insurer. The corporation and authorized insurer are
1788
each solely responsible for a specified percentage of hurricane
1789
coverage of an eligible risk as set forth in a quota share
1790
primary insurance agreement between the corporation and an
1791
authorized insurer and the insurance contract. The responsibility
1792
of the corporation or authorized insurer to pay its specified
1793
percentage of hurricane losses of an eligible risk, as set forth
1794
in the quota share primary insurance agreement, may not be
1795
altered by the inability of the other party to the agreement to
1796
pay its specified percentage of hurricane losses. Eligible risks
1797
that are provided hurricane coverage through a quota share
1798
primary insurance arrangement must be provided policy forms that
1799
set forth the obligations of the corporation and authorized
1800
insurer under the arrangement, clearly specify the percentages of
1801
quota share primary insurance provided by the corporation and
1802
authorized insurer, and conspicuously and clearly state that
1803
neither the authorized insurer nor the corporation may be held
1804
responsible beyond its specified percentage of coverage of
1805
hurricane losses.
1806
(II) "Eligible risks" means personal lines residential and
1807
commercial lines residential risks that meet the underwriting
1808
criteria of the corporation and are located in areas that were
1809
eligible for coverage by the Florida Windstorm Underwriting
1810
Association on January 1, 2002.
1811
b. The corporation may enter into quota share primary
1812
insurance agreements with authorized insurers at corporation
1813
coverage levels of 90 percent and 50 percent.
1814
c. If the corporation determines that additional coverage
1815
levels are necessary to maximize participation in quota share
1816
primary insurance agreements by authorized insurers, the
1817
corporation may establish additional coverage levels. However,
1818
the corporation's quota share primary insurance coverage level
1819
may not exceed 90 percent.
1820
d. Any quota share primary insurance agreement entered into
1821
between an authorized insurer and the corporation must provide
1822
for a uniform specified percentage of coverage of hurricane
1823
losses, by county or territory as set forth by the corporation
1824
board, for all eligible risks of the authorized insurer covered
1825
under the quota share primary insurance agreement.
1826
e. Any quota share primary insurance agreement entered into
1827
between an authorized insurer and the corporation is subject to
1828
review and approval by the office. However, such agreement shall
1829
be authorized only as to insurance contracts entered into between
1830
an authorized insurer and an insured who is already insured by
1831
the corporation for wind coverage.
1832
f. For all eligible risks covered under quota share primary
1833
insurance agreements, the exposure and coverage levels for both
1834
the corporation and authorized insurers shall be reported by the
1835
corporation to the Florida Hurricane Catastrophe Fund. For all
1836
policies of eligible risks covered under quota share primary
1837
insurance agreements, the corporation and the authorized insurer
1838
shall maintain complete and accurate records for the purpose of
1839
exposure and loss reimbursement audits as required by Florida
1840
Hurricane Catastrophe Fund rules. The corporation and the
1841
authorized insurer shall each maintain duplicate copies of policy
1842
declaration pages and supporting claims documents.
1843
g. The corporation board shall establish in its plan of
1844
operation standards for quota share agreements which ensure that
1845
there is no discriminatory application among insurers as to the
1846
terms of quota share agreements, pricing of quota share
1847
agreements, incentive provisions if any, and consideration paid
1848
for servicing policies or adjusting claims.
1849
h. The quota share primary insurance agreement between the
1850
corporation and an authorized insurer must set forth the specific
1851
terms under which coverage is provided, including, but not
1852
limited to, the sale and servicing of policies issued under the
1853
agreement by the insurance agent of the authorized insurer
1854
producing the business, the reporting of information concerning
1855
eligible risks, the payment of premium to the corporation, and
1856
arrangements for the adjustment and payment of hurricane claims
1857
incurred on eligible risks by the claims adjuster and personnel
1858
of the authorized insurer. Entering into a quota sharing
1859
insurance agreement between the corporation and an authorized
1860
insurer shall be voluntary and at the discretion of the
1861
authorized insurer.
1862
3. May provide that the corporation may employ or otherwise
1863
contract with individuals or other entities to provide
1864
administrative or professional services that may be appropriate
1865
to effectuate the plan. The corporation shall have the power to
1866
borrow funds, by issuing bonds or by incurring other
1867
indebtedness, and shall have other powers reasonably necessary to
1868
effectuate the requirements of this subsection, including,
1869
without limitation, the power to issue bonds and incur other
1870
indebtedness in order to refinance outstanding bonds or other
1871
indebtedness. The corporation may, but is not required to, seek
1872
judicial validation of its bonds or other indebtedness under
1873
chapter 75. The corporation may issue bonds or incur other
1874
indebtedness, or have bonds issued on its behalf by a unit of
1875
local government pursuant to subparagraph (p)2., in the absence
1876
of a hurricane or other weather-related event, upon a
1877
determination by the corporation, subject to approval by the
1878
office, that such action would enable it to efficiently meet the
1879
financial obligations of the corporation and that such financings
1880
are reasonably necessary to effectuate the requirements of this
1881
subsection. The corporation is authorized to take all actions
1882
needed to facilitate tax-free status for any such bonds or
1883
indebtedness, including formation of trusts or other affiliated
1884
entities. The corporation shall have the authority to pledge
1885
assessments, projected recoveries from the Florida Hurricane
1886
Catastrophe Fund, other reinsurance recoverables, market
1887
equalization and other surcharges, and other funds available to
1888
the corporation as security for bonds or other indebtedness. In
1889
recognition of s. 10, Art. I of the State Constitution,
1890
prohibiting the impairment of obligations of contracts, it is the
1891
intent of the Legislature that no action be taken whose purpose
1892
is to impair any bond indenture or financing agreement or any
1893
revenue source committed by contract to such bond or other
1894
indebtedness.
1895
4.a. Must require that the corporation operate subject to
1896
the supervision and approval of a board of governors consisting
1897
of eight individuals who are residents of this state, from
1898
different geographical areas of this state. The Governor, the
1899
Chief Financial Officer, the President of the Senate, and the
1900
Speaker of the House of Representatives shall each appoint two
1901
members of the board. At least one of the two members appointed
1902
by each appointing officer must have demonstrated expertise in
1903
insurance. The Chief Financial Officer shall designate one of the
1904
appointees as chair. All board members serve at the pleasure of
1905
the appointing officer. All members of the board of governors are
1906
subject to removal at will by the officers who appointed them.
1907
All board members, including the chair, must be appointed to
1908
serve for 3-year terms beginning annually on a date designated by
1909
the plan. Any board vacancy shall be filled for the unexpired
1910
term by the appointing officer. The Chief Financial Officer shall
1911
appoint a technical advisory group to provide information and
1912
advice to the board of governors in connection with the board's
1913
duties under this subsection. The executive director and senior
1914
managers of the corporation shall be engaged by the board and
1915
serve at the pleasure of the board. Any executive director
1916
appointed on or after July 1, 2006, is subject to confirmation by
1917
the Senate. The executive director is responsible for employing
1918
other staff as the corporation may require, subject to review and
1919
concurrence by the board.
1920
b. The board shall create a Market Accountability Advisory
1921
Committee to assist the corporation in developing awareness of
1922
its rates and its customer and agent service levels in
1923
relationship to the voluntary market insurers writing similar
1924
coverage. The members of the advisory committee shall consist of
1925
the following 11 persons, one of whom must be elected chair by
1926
the members of the committee: four representatives, one appointed
1927
by the Florida Association of Insurance Agents, one by the
1928
Florida Association of Insurance and Financial Advisors, one by
1929
the Professional Insurance Agents of Florida, and one by the
1930
Latin American Association of Insurance Agencies; three
1931
representatives appointed by the insurers with the three highest
1932
voluntary market share of residential property insurance business
1933
in the state; one representative from the Office of Insurance
1934
Regulation; one consumer appointed by the board who is insured by
1935
the corporation at the time of appointment to the committee; one
1936
representative appointed by the Florida Association of Realtors;
1937
and one representative appointed by the Florida Bankers
1938
Association. All members must serve for 3-year terms and may
1939
serve for consecutive terms. The committee shall report to the
1940
corporation at each board meeting on insurance market issues
1941
which may include rates and rate competition with the voluntary
1942
market; service, including policy issuance, claims processing,
1943
and general responsiveness to policyholders, applicants, and
1944
agents; and matters relating to depopulation.
1945
5. Must provide a procedure for determining the eligibility
1946
of a risk for coverage, as follows:
1947
a. Subject to the provisions of s. 627.3517, with respect
1948
to personal lines residential risks, if the risk is offered
1949
coverage from an authorized insurer at the insurer's approved
1950
rate under either a standard policy including wind coverage or,
1951
if consistent with the insurer's underwriting rules as filed with
1952
the office, a basic policy including wind coverage, for a new
1953
application to the corporation for coverage, the risk is not
1954
eligible for any policy issued by the corporation unless the
1955
premium for coverage from the authorized insurer is more than 15
1956
percent greater than the premium for comparable coverage from the
1957
corporation. If the risk is not able to obtain any such offer,
1958
the risk is eligible for either a standard policy including wind
1959
coverage or a basic policy including wind coverage issued by the
1960
corporation; however, if the risk could not be insured under a
1961
standard policy including wind coverage regardless of market
1962
conditions, the risk shall be eligible for a basic policy
1963
including wind coverage unless rejected under subparagraph 9.
1964
However, with regard to a policyholder of the corporation or a
1965
policyholder removed from the corporation through an assumption
1966
agreement until the end of the assumption period, the
1967
policyholder remains eligible for coverage from the corporation
1968
regardless of any offer of coverage from an authorized insurer or
1969
surplus lines insurer. The corporation shall determine the type
1970
of policy to be provided on the basis of objective standards
1971
specified in the underwriting manual and based on generally
1972
accepted underwriting practices.
1973
(I) If the risk accepts an offer of coverage through the
1974
market assistance plan or an offer of coverage through a
1975
mechanism established by the corporation before a policy is
1976
issued to the risk by the corporation or during the first 30 days
1977
of coverage by the corporation, and the producing agent who
1978
submitted the application to the plan or to the corporation is
1979
not currently appointed by the insurer, the insurer shall:
1980
(A) Pay to the producing agent of record of the policy, for
1981
the first year, an amount that is the greater of the insurer's
1982
usual and customary commission for the type of policy written or
1983
a fee equal to the usual and customary commission of the
1984
corporation; or
1985
(B) Offer to allow the producing agent of record of the
1986
policy to continue servicing the policy for a period of not less
1987
than 1 year and offer to pay the agent the greater of the
1988
insurer's or the corporation's usual and customary commission for
1989
the type of policy written.
1990
1991
If the producing agent is unwilling or unable to accept
1992
appointment, the new insurer shall pay the agent in accordance
1993
with sub-sub-sub-subparagraph (A).
1994
(II) When the corporation enters into a contractual
1995
agreement for a take-out plan, the producing agent of record of
1996
the corporation policy is entitled to retain any unearned
1997
commission on the policy, and the insurer shall:
1998
(A) Pay to the producing agent of record of the corporation
1999
policy, for the first year, an amount that is the greater of the
2000
insurer's usual and customary commission for the type of policy
2001
written or a fee equal to the usual and customary commission of
2002
the corporation; or
2003
(B) Offer to allow the producing agent of record of the
2004
corporation policy to continue servicing the policy for a period
2005
of not less than 1 year and offer to pay the agent the greater of
2006
the insurer's or the corporation's usual and customary commission
2007
for the type of policy written.
2008
2009
If the producing agent is unwilling or unable to accept
2010
appointment, the new insurer shall pay the agent in accordance
2011
with sub-sub-sub-subparagraph (A).
2012
b. With respect to commercial lines residential risks, for
2013
a new application to the corporation for coverage, if the risk is
2014
offered coverage under a policy including wind coverage from an
2015
authorized insurer at its approved rate, the risk is not eligible
2016
for any policy issued by the corporation unless the premium for
2017
coverage from the authorized insurer is more than 15 percent
2018
greater than the premium for comparable coverage from the
2019
corporation. If the risk is not able to obtain any such offer,
2020
the risk is eligible for a policy including wind coverage issued
2021
by the corporation. However, with regard to a policyholder of the
2022
corporation or a policyholder removed from the corporation
2023
through an assumption agreement until the end of the assumption
2024
period, the policyholder remains eligible for coverage from the
2025
corporation regardless of any offer of coverage from an
2026
authorized insurer or surplus lines insurer.
2027
(I) If the risk accepts an offer of coverage through the
2028
market assistance plan or an offer of coverage through a
2029
mechanism established by the corporation before a policy is
2030
issued to the risk by the corporation or during the first 30 days
2031
of coverage by the corporation, and the producing agent who
2032
submitted the application to the plan or the corporation is not
2033
currently appointed by the insurer, the insurer shall:
2034
(A) Pay to the producing agent of record of the policy, for
2035
the first year, an amount that is the greater of the insurer's
2036
usual and customary commission for the type of policy written or
2037
a fee equal to the usual and customary commission of the
2038
corporation; or
2039
(B) Offer to allow the producing agent of record of the
2040
policy to continue servicing the policy for a period of not less
2041
than 1 year and offer to pay the agent the greater of the
2042
insurer's or the corporation's usual and customary commission for
2043
the type of policy written.
2044
2045
If the producing agent is unwilling or unable to accept
2046
appointment, the new insurer shall pay the agent in accordance
2047
with sub-sub-sub-subparagraph (A).
2048
(II) When the corporation enters into a contractual
2049
agreement for a take-out plan, the producing agent of record of
2050
the corporation policy is entitled to retain any unearned
2051
commission on the policy, and the insurer shall:
2052
(A) Pay to the producing agent of record of the corporation
2053
policy, for the first year, an amount that is the greater of the
2054
insurer's usual and customary commission for the type of policy
2055
written or a fee equal to the usual and customary commission of
2056
the corporation; or
2057
(B) Offer to allow the producing agent of record of the
2058
corporation policy to continue servicing the policy for a period
2059
of not less than 1 year and offer to pay the agent the greater of
2060
the insurer's or the corporation's usual and customary commission
2061
for the type of policy written.
2062
2063
If the producing agent is unwilling or unable to accept
2064
appointment, the new insurer shall pay the agent in accordance
2065
with sub-sub-sub-subparagraph (A).
2066
c. For purposes of determining comparable coverage under
2067
sub-subparagraphs a. and b., the comparison shall be based on
2068
those forms and coverages that are reasonably comparable. The
2069
corporation may rely on a determination of comparable coverage
2070
and premium made by the producing agent who submits the
2071
application to the corporation, made in the agent's capacity as
2072
the corporation's agent. A comparison may be made solely of the
2073
premium with respect to the main building or structure only on
2074
the following basis: the same coverage A or other building
2075
limits; the same percentage hurricane deductible that applies on
2076
an annual basis or that applies to each hurricane for commercial
2077
residential property; the same percentage of ordinance and law
2078
coverage, if the same limit is offered by both the corporation
2079
and the authorized insurer; the same mitigation credits, to the
2080
extent the same types of credits are offered both by the
2081
corporation and the authorized insurer; the same method for loss
2082
payment, such as replacement cost or actual cash value, if the
2083
same method is offered both by the corporation and the authorized
2084
insurer in accordance with underwriting rules; and any other form
2085
or coverage that is reasonably comparable as determined by the
2086
board. If an application is submitted to the corporation for
2087
wind-only coverage in the high-risk account, the premium for the
2088
corporation's wind-only policy plus the premium for the ex-wind
2089
policy that is offered by an authorized insurer to the applicant
2090
shall be compared to the premium for multiperil coverage offered
2091
by an authorized insurer, subject to the standards for comparison
2092
specified in this subparagraph. If the corporation or the
2093
applicant requests from the authorized insurer a breakdown of the
2094
premium of the offer by types of coverage so that a comparison
2095
may be made by the corporation or its agent and the authorized
2096
insurer refuses or is unable to provide such information, the
2097
corporation may treat the offer as not being an offer of coverage
2098
from an authorized insurer at the insurer's approved rate.
2099
6. Must include rules for classifications of risks and
2100
rates therefor.
2101
7. Must provide that if premium and investment income for
2102
an account attributable to a particular calendar year are in
2103
excess of projected losses and expenses for the account
2104
attributable to that year, such excess shall be held in surplus
2105
in the account. Such surplus shall be available to defray
2106
deficits in that account as to future years and shall be used for
2107
that purpose prior to assessing assessable insurers and
2108
assessable insureds as to any calendar year.
2109
8. Must provide objective criteria and procedures to be
2110
uniformly applied for all applicants in determining whether an
2111
individual risk is so hazardous as to be uninsurable. In making
2112
this determination and in establishing the criteria and
2113
procedures, the following shall be considered:
2114
a. Whether the likelihood of a loss for the individual risk
2115
is substantially higher than for other risks of the same class;
2116
and
2117
b. Whether the uncertainty associated with the individual
2118
risk is such that an appropriate premium cannot be determined.
2119
2120
The acceptance or rejection of a risk by the corporation shall be
2121
construed as the private placement of insurance, and the
2122
provisions of chapter 120 shall not apply.
2123
9. Must provide that the corporation shall make its best
2124
efforts to procure catastrophe reinsurance at reasonable rates,
2125
to cover its projected 100-year probable maximum loss as
2126
determined by the board of governors.
2127
10. Must provide that in the event of regular deficit
2128
assessments under sub-subparagraph (b)3.a. or sub-subparagraph
2129
(b)3.b., in the personal lines account, the commercial lines
2130
residential account, or the high-risk account, the corporation
2131
shall levy upon corporation policyholders in its next rate
2132
filing, or by a separate rate filing solely for this purpose, a
2133
Citizens policyholder surcharge arising from a regular assessment
2134
in such account in a percentage equal to the total amount of such
2135
regular assessments divided by the aggregate statewide direct
2136
written premium for subject lines of business for the prior
2137
calendar year. For purposes of calculating the Citizens
2138
policyholder surcharge to be levied under this subparagraph, the
2139
total amount of the regular assessment to which this surcharge is
2140
related shall be determined as set forth in subparagraph (b)3.,
2141
without deducting the estimated Citizens policyholder surcharge.
2142
Citizens policyholder surcharges under this subparagraph are not
2143
considered premium and are not subject to commissions, fees, or
2144
premium taxes; however, failure to pay a market equalization
2145
surcharge shall be treated as failure to pay premium.
2146
10.11. The policies issued by the corporation must provide
2147
that, if the corporation or the market assistance plan obtains an
2148
offer from an authorized insurer to cover the risk at its
2149
approved rates, the risk is no longer eligible for renewal
2150
through the corporation, except as otherwise provided in this
2151
subsection.
2152
11.12. Corporation policies and applications must include a
2153
notice that the corporation policy could, under this section, be
2154
replaced with a policy issued by an authorized insurer that does
2155
not provide coverage identical to the coverage provided by the
2156
corporation. The notice shall also specify that acceptance of
2157
corporation coverage creates a conclusive presumption that the
2158
applicant or policyholder is aware of this potential.
2159
12.13. May establish, subject to approval by the office,
2160
different eligibility requirements and operational procedures for
2161
any line or type of coverage for any specified county or area if
2162
the board determines that such changes to the eligibility
2163
requirements and operational procedures are justified due to the
2164
voluntary market being sufficiently stable and competitive in
2165
such area or for such line or type of coverage and that consumers
2166
who, in good faith, are unable to obtain insurance through the
2167
voluntary market through ordinary methods would continue to have
2168
access to coverage from the corporation. When coverage is sought
2169
in connection with a real property transfer, such requirements
2170
and procedures shall not provide for an effective date of
2171
coverage later than the date of the closing of the transfer as
2172
established by the transferor, the transferee, and, if
2173
applicable, the lender.
2174
13.14. Must provide that, with respect to the high-risk
2175
account, any assessable insurer with a surplus as to
2176
policyholders of $25 million or less writing 25 percent or more
2177
of its total countrywide property insurance premiums in this
2178
state may petition the office, within the first 90 days of each
2179
calendar year, to qualify as a limited apportionment company. A
2180
regular assessment levied by the corporation on a limited
2181
apportionment company for a deficit incurred by the corporation
2182
for the high-risk account in 2006 or thereafter may be paid to
2183
the corporation on a monthly basis as the assessments are
2184
collected by the limited apportionment company from its insureds
2185
pursuant to s. 627.3512, but the regular assessment must be paid
2186
in full within 12 months after being levied by the corporation. A
2187
limited apportionment company shall collect from its
2188
policyholders any emergency assessment imposed under sub-
2189
subparagraph (b)3.d. The plan shall provide that, if the office
2190
determines that any regular assessment will result in an
2191
impairment of the surplus of a limited apportionment company, the
2192
office may direct that all or part of such assessment be deferred
2193
as provided in subparagraph (p)4. However, there shall be no
2194
limitation or deferment of an emergency assessment to be
2195
collected from policyholders under sub-subparagraph (b)3.d.
2196
14.15. Must provide that the corporation appoint as its
2197
licensed agents only those agents who also hold an appointment as
2198
defined in s. 626.015(3) with an insurer who at the time of the
2199
agent's initial appointment by the corporation is authorized to
2200
write and is actually writing personal lines residential property
2201
coverage, commercial residential property coverage, or commercial
2202
nonresidential property coverage within the state.
2203
15.16. Must provide, by July 1, 2007, a premium payment
2204
plan option to its policyholders which allows at a minimum for
2205
quarterly and semiannual payment of premiums. A monthly payment
2206
plan may, but is not required to, be offered.
2207
16.17. Must limit coverage on mobile homes or manufactured
2208
homes built prior to 1994 to actual cash value of the dwelling
2209
rather than replacement costs of the dwelling.
2210
17.18. May provide such limits of coverage as the board
2211
determines, consistent with the requirements of this subsection.
2212
18.19. May require commercial property to meet specified
2213
hurricane mitigation construction features as a condition of
2214
eligibility for coverage.
2215
(d)1. All prospective employees for senior management
2216
positions, as defined by the plan of operation, are subject to
2217
background checks as a prerequisite for employment. The office
2218
shall conduct background checks on such prospective employees
2219
pursuant to ss. 624.34, 624.404(3), and 628.261.
2220
2. On or before July 1 of each year, employees of the
2221
corporation are required to sign and submit a statement attesting
2222
that they do not have a conflict of interest, as defined in part
2223
III of chapter 112. As a condition of employment, all prospective
2224
employees are required to sign and submit to the corporation a
2225
conflict-of-interest statement.
2226
3. Senior managers and members of the board of governors
2227
are subject to the provisions of part III of chapter 112,
2228
including, but not limited to, the code of ethics and public
2229
disclosure and reporting of financial interests, pursuant to s.
2230
112.3145. Senior managers and board members are also required to
2231
file such disclosures with the Commission on Ethics and the
2232
Office of Insurance Regulation. The executive director of the
2233
corporation or his or her designee shall notify each newly
2234
appointed and existing appointed member of the board of governors
2235
and senior managers of their duty to comply with the reporting
2236
requirements of part III of chapter 112. At least quarterly, the
2237
executive director or his or her designee shall submit to the
2238
Commission on Ethics a list of names of the senior managers and
2239
members of the board of governors who are subject to the public
2240
disclosure requirements under s. 112.3145.
2241
4. Notwithstanding s. 112.3148 or s. 112.3149, or any other
2242
provision of law, an employee or board member may not knowingly
2243
accept, directly or indirectly, any gift or expenditure from a
2244
person or entity, or an employee or representative of such person
2245
or entity, that has a contractual relationship with the
2246
corporation or who is under consideration for a contract. An
2247
employee or board member who fails to comply with subparagraph 3.
2248
or this subparagraph is subject to penalties provided under ss.
2249
112.317 and 112.3173.
2250
5. Any senior manager of the corporation who is employed on
2251
or after January 1, 2007, regardless of the date of hire, who
2252
subsequently retires or terminates employment is prohibited from
2253
representing another person or entity before the corporation for
2254
2 years after retirement or termination of employment from the
2255
corporation.
2256
6. Any senior manager of the corporation who is employed on
2257
or after January 1, 2007, regardless of the date of hire, who
2258
subsequently retires or terminates employment is prohibited from
2259
having any employment or contractual relationship for 2 years
2260
with an insurer that has entered into a take-out bonus agreement
2261
with the corporation.
2262
(e) Purchases that equal or exceed $2,500, but are less
2263
than $25,000, shall be made by receipt of written quotes, written
2264
record of telephone quotes, or informal bids, whenever practical.
2265
The procurement of goods or services valued at or over $25,000
2266
shall be subject to competitive solicitation, except in
2267
situations where the goods or services are provided by a sole
2268
source or are deemed an emergency purchase; the services are
2269
exempted from competitive solicitation requirements under s.
2270
287.057(5)(f); or the procurement of services is subject to s.
2271
627.3513. Justification for the sole-sourcing or emergency
2272
procurement must be documented. Contracts for goods or services
2273
valued at or over $100,000 are subject to approval by the board.
2274
(f) The board shall determine whether it is more cost-
2275
effective and in the best interests of the corporation to use
2276
legal services provided by in-house attorneys employed by the
2277
corporation rather than contracting with outside counsel. In
2278
making such determination, the board shall document its findings
2279
and shall consider: the expertise needed; whether time
2280
commitments exceed in-house staff resources; whether local
2281
representation is needed; the travel, lodging and other costs
2282
associated with in-house representation; and such other factors
2283
that the board determines are relevant.
2284
(g) The corporation may not retain a lobbyist to represent
2285
it before the legislative branch or executive branch. However,
2286
full-time employees of the corporation may register as lobbyists
2287
and represent the corporation before the legislative branch or
2288
executive branch.
2289
(h)1. The Office of the Internal Auditor is established
2290
within the corporation to provide a central point for
2291
coordination of and responsibility for activities that promote
2292
accountability, integrity, and efficiency to the policyholders
2293
and to the taxpayers of this state. The internal auditor shall be
2294
appointed by the board of governors, shall report to and be under
2295
the general supervision of the board of governors, and is not
2296
subject to supervision by any employee of the corporation.
2297
Administrative staff and support shall be provided by the
2298
corporation. The internal auditor shall be appointed without
2299
regard to political affiliation. It is the duty and
2300
responsibility of the internal auditor to:
2301
a. Provide direction for, supervise, conduct, and
2302
coordinate audits, investigations, and management reviews
2303
relating to the programs and operations of the corporation.
2304
b. Conduct, supervise, or coordinate other activities
2305
carried out or financed by the corporation for the purpose of
2306
promoting efficiency in the administration of, or preventing and
2307
detecting fraud, abuse, and mismanagement in, its programs and
2308
operations.
2309
c. Submit final audit reports, reviews, or investigative
2310
reports to the board of governors, the executive director, the
2311
members of the Financial Services Commission, and the President
2312
of the Senate and the Speaker of the House of Representatives.
2313
d. Keep the board of governors informed concerning fraud,
2314
abuses, and internal control deficiencies relating to programs
2315
and operations administered or financed by the corporation,
2316
recommend corrective action, and report on the progress made in
2317
implementing corrective action.
2318
e. Report expeditiously to the Department of Law
2319
Enforcement or other law enforcement agencies, as appropriate,
2320
whenever the internal auditor has reasonable grounds to believe
2321
there has been a violation of criminal law.
2322
2. On or before February 15, the internal auditor shall
2323
prepare an annual report evaluating the effectiveness of the
2324
internal controls of the corporation and providing
2325
recommendations for corrective action, if necessary, and
2326
summarizing the audits, reviews, and investigations conducted by
2327
the office during the preceding fiscal year. The final report
2328
shall be furnished to the board of governors and the executive
2329
director, the President of the Senate, the Speaker of the House
2330
of Representatives, and the Financial Services Commission.
2331
(i) All records of the corporation, except as otherwise
2332
provided by law, are subject to the record retention requirements
2333
of s. 119.021.
2334
(j)1. The corporation shall establish and maintain a unit
2335
or division to investigate possible fraudulent claims by insureds
2336
or by persons making claims for services or repairs against
2337
policies held by insureds; or it may contract with others to
2338
investigate possible fraudulent claims for services or repairs
2339
against policies held by the corporation pursuant to s. 626.9891.
2340
The corporation must comply with reporting requirements of s.
2341
626.9891. An employee of the corporation shall notify the
2342
corporation's Office of the Internal Auditor and the Division of
2343
Insurance Fraud within 48 hours after having information that
2344
would lead a reasonable person to suspect that fraud may have
2345
been committed by any employee of the corporation.
2346
2. The corporation shall establish a unit or division
2347
responsible for receiving and responding to consumer complaints,
2348
which unit or division is the sole responsibility of a senior
2349
manager of the corporation.
2350
(k) The office shall conduct a comprehensive market conduct
2351
examination of the corporation every 2 years to determine
2352
compliance with its plan of operation and internal operations
2353
procedures. The first market conduct examination report shall be
2354
submitted to the President of the Senate and the Speaker of the
2355
House of Representatives no later than February 1, 2009.
2356
Subsequent reports shall be submitted on or before February 1
2357
every 2 years thereafter.
2358
(l) The Auditor General shall conduct an operational audit
2359
of the corporation every 3 years to evaluate management's
2360
performance in administering laws, policies, and procedures
2361
governing the operations of the corporation in an efficient and
2362
effective manner. The scope of the review shall include, but is
2363
not limited to, evaluating claims handling, customer service,
2364
take-out programs and bonuses, financing arrangements,
2365
procurement of goods and services, internal controls, and the
2366
internal audit function. The initial audit must be completed by
2367
February 1, 2009.
2368
(m)1. Rates for coverage provided by the corporation shall
2369
be actuarially sound and subject to the requirements of s.
2370
627.062, except as otherwise provided in this paragraph. The
2371
corporation shall file its recommended rates with the office at
2372
least annually. The corporation shall provide any additional
2373
information regarding the rates which the office requires. The
2374
office shall consider the recommendations of the board and issue
2375
a final order establishing the rates for the corporation within
2376
45 days after the recommended rates are filed. The corporation
2377
may not pursue an administrative challenge or judicial review of
2378
the final order of the office.
2379
2. In addition to the rates otherwise determined pursuant
2380
to this paragraph, the corporation shall impose and collect an
2381
amount equal to the premium tax provided for in s. 624.509 to
2382
augment the financial resources of the corporation.
2383
3. After the public hurricane loss-projection model under
2384
s. 627.06281 has been found to be accurate and reliable by the
2385
Florida Commission on Hurricane Loss Projection Methodology, that
2386
model shall serve as the minimum benchmark for determining the
2387
windstorm portion of the corporation's rates. This subparagraph
2388
does not require or allow the corporation to adopt rates lower
2389
than the rates otherwise required or allowed by this paragraph.
2390
4. The rate filings for the corporation which were approved
2391
by the office and which took effect January 1, 2007, are
2392
rescinded, except for those rates that were lowered. As soon as
2393
possible, the corporation shall begin using the lower rates that
2394
were in effect on December 31, 2006, and shall provide refunds to
2395
policyholders who have paid higher rates as a result of that rate
2396
filing. The rates in effect on December 31, 2006, shall remain in
2397
effect for the 2007, and 2008, and 2009 calendar years except for
2398
any rate change that results in a lower rate. The next rate
2399
change that may increase rates shall take effect no earlier than
2400
January 1, 2010 January 1, 2009, pursuant to a new rate filing
2401
recommended by the corporation and established by the office,
2402
subject to the requirements of this paragraph.
2403
5. The Legislature finds that it is in the public interest
2404
to ensure that increased rates for coverage by the corporation be
2405
implemented incrementally in order to provide rate stability and
2406
predictability to its policyholders.
2407
a. Beginning on or after January 1, 2010, the corporation
2408
must make an annual filing for each personal and commercial line
2409
of business it writes.
2410
b. For the years 2010 through 2012, rates established by
2411
the office for the corporation for its personal residential
2412
multiperil policies, its commercial residential multiperil
2413
policies, and its commercial nonresidential multiperil policies
2414
may not result in any year in an overall average statewide
2415
premium increase of more than 10 percent or an increase for any
2416
single policyholder or more than 10 percent, excluding coverage
2417
changes and surcharges.
2418
c. For the years 2010 through 2012, rates established by
2419
the office for the corporation for its personal residential wind-
2420
only policies, its commercial residential wind-only policies, and
2421
its commercial nonresidential wind-only policies may not result
2422
in any year in an overall average statewide premium increase of
2423
more than 15 percent or an increase for any single policyholder
2424
of more than 15 percent, excluding coverage changes and
2425
surcharges.
2426
(n) If coverage in an account is deactivated pursuant to
2427
paragraph (o), coverage through the corporation shall be
2428
reactivated by order of the office only under one of the
2429
following circumstances:
2430
1. If the market assistance plan receives a minimum of 100
2431
applications for coverage within a 3-month period, or 200
2432
applications for coverage within a 1-year period or less for
2433
residential coverage, unless the market assistance plan provides
2434
a quotation from admitted carriers at their filed rates for at
2435
least 90 percent of such applicants. Any market assistance plan
2436
application that is rejected because an individual risk is so
2437
hazardous as to be uninsurable using the criteria specified in
2438
subparagraph (c)9. shall not be included in the minimum
2439
percentage calculation provided herein. In the event that there
2440
is a legal or administrative challenge to a determination by the
2441
office that the conditions of this subparagraph have been met for
2442
eligibility for coverage in the corporation, any eligible risk
2443
may obtain coverage during the pendency of such challenge.
2444
2. In response to a state of emergency declared by the
2445
Governor under s. 252.36, the office may activate coverage by
2446
order for the period of the emergency upon a finding by the
2447
office that the emergency significantly affects the availability
2448
of residential property insurance.
2449
(o)1. The corporation shall file with the office quarterly
2450
statements of financial condition, an annual statement of
2451
financial condition, and audited financial statements in the
2452
manner prescribed by law. In addition, the corporation shall
2453
report to the office monthly on the types, premium, exposure, and
2454
distribution by county of its policies in force, and shall submit
2455
other reports as the office requires to carry out its oversight
2456
of the corporation.
2457
2. The activities of the corporation shall be reviewed at
2458
least annually by the office to determine whether coverage shall
2459
be deactivated in an account on the basis that the conditions
2460
giving rise to its activation no longer exist.
2461
(p)1. The corporation shall certify to the office its needs
2462
for annual assessments as to a particular calendar year, and for
2463
any interim assessments that it deems to be necessary to sustain
2464
operations as to a particular year pending the receipt of annual
2465
assessments. Upon verification, the office shall approve such
2466
certification, and the corporation shall levy such annual or
2467
interim assessments. Such assessments shall be prorated as
2468
provided in paragraph (b). The corporation shall take all
2469
reasonable and prudent steps necessary to collect the amount of
2470
assessment due from each assessable insurer, including, if
2471
prudent, filing suit to collect such assessment. If the
2472
corporation is unable to collect an assessment from any
2473
assessable insurer, the uncollected assessments shall be levied
2474
as an additional assessment against the assessable insurers and
2475
any assessable insurer required to pay an additional assessment
2476
as a result of such failure to pay shall have a cause of action
2477
against such nonpaying assessable insurer. Assessments shall be
2478
included as an appropriate factor in the making of rates. The
2479
failure of a surplus lines agent to collect and remit any regular
2480
or emergency assessment levied by the corporation is considered
2481
to be a violation of s. 626.936 and subjects the surplus lines
2482
agent to the penalties provided in that section.
2483
2. The governing body of any unit of local government, any
2484
residents of which are insured by the corporation, may issue
2485
bonds as defined in s. 125.013 or s. 166.101 from time to time to
2486
fund an assistance program, in conjunction with the corporation,
2487
for the purpose of defraying deficits of the corporation. In
2488
order to avoid needless and indiscriminate proliferation,
2489
duplication, and fragmentation of such assistance programs, any
2490
unit of local government, any residents of which are insured by
2491
the corporation, may provide for the payment of losses,
2492
regardless of whether or not the losses occurred within or
2493
outside of the territorial jurisdiction of the local government.
2494
Revenue bonds under this subparagraph may not be issued until
2495
validated pursuant to chapter 75, unless a state of emergency is
2496
declared by executive order or proclamation of the Governor
2497
pursuant to s. 252.36 making such findings as are necessary to
2498
determine that it is in the best interests of, and necessary for,
2499
the protection of the public health, safety, and general welfare
2500
of residents of this state and declaring it an essential public
2501
purpose to permit certain municipalities or counties to issue
2502
such bonds as will permit relief to claimants and policyholders
2503
of the corporation. Any such unit of local government may enter
2504
into such contracts with the corporation and with any other
2505
entity created pursuant to this subsection as are necessary to
2506
carry out this paragraph. Any bonds issued under this
2507
subparagraph shall be payable from and secured by moneys received
2508
by the corporation from emergency assessments under sub-
2509
subparagraph (b)3.d., and assigned and pledged to or on behalf of
2510
the unit of local government for the benefit of the holders of
2511
such bonds. The funds, credit, property, and taxing power of the
2512
state or of the unit of local government shall not be pledged for
2513
the payment of such bonds. If any of the bonds remain unsold 60
2514
days after issuance, the office shall require all insurers
2515
subject to assessment to purchase the bonds, which shall be
2516
treated as admitted assets; each insurer shall be required to
2517
purchase that percentage of the unsold portion of the bond issue
2518
that equals the insurer's relative share of assessment liability
2519
under this subsection. An insurer shall not be required to
2520
purchase the bonds to the extent that the office determines that
2521
the purchase would endanger or impair the solvency of the
2522
insurer.
2523
3.a. The corporation shall adopt one or more programs
2524
subject to approval by the office for the reduction of both new
2525
and renewal writings in the corporation. Beginning January 1,
2526
2008, any program the corporation adopts for the payment of
2527
bonuses to an insurer for each risk the insurer removes from the
2528
corporation shall comply with s. 627.3511(2) and may not exceed
2529
the amount referenced in s. 627.3511(2) for each risk removed.
2530
The corporation may consider any prudent and not unfairly
2531
discriminatory approach to reducing corporation writings, and may
2532
adopt a credit against assessment liability or other liability
2533
that provides an incentive for insurers to take risks out of the
2534
corporation and to keep risks out of the corporation by
2535
maintaining or increasing voluntary writings in counties or areas
2536
in which corporation risks are highly concentrated and a program
2537
to provide a formula under which an insurer voluntarily taking
2538
risks out of the corporation by maintaining or increasing
2539
voluntary writings will be relieved wholly or partially from
2540
assessments under sub-subparagraphs (b)3.a. and b. However, any
2541
"take-out bonus" or payment to an insurer must be conditioned on
2542
the property being insured for at least 5 years by the insurer,
2543
unless canceled or nonrenewed by the policyholder. If the policy
2544
is canceled or nonrenewed by the policyholder before the end of
2545
the 5-year period, the amount of the take-out bonus must be
2546
prorated for the time period the policy was insured. When the
2547
corporation enters into a contractual agreement for a take-out
2548
plan, the producing agent of record of the corporation policy is
2549
entitled to retain any unearned commission on such policy, and
2550
the insurer shall either:
2551
(I) Pay to the producing agent of record of the policy, for
2552
the first year, an amount which is the greater of the insurer's
2553
usual and customary commission for the type of policy written or
2554
a policy fee equal to the usual and customary commission of the
2555
corporation; or
2556
(II) Offer to allow the producing agent of record of the
2557
policy to continue servicing the policy for a period of not less
2558
than 1 year and offer to pay the agent the insurer's usual and
2559
customary commission for the type of policy written. If the
2560
producing agent is unwilling or unable to accept appointment by
2561
the new insurer, the new insurer shall pay the agent in
2562
accordance with sub-sub-subparagraph (I).
2563
b. Any credit or exemption from regular assessments adopted
2564
under this subparagraph shall last no longer than the 3 years
2565
following the cancellation or expiration of the policy by the
2566
corporation. With the approval of the office, the board may
2567
extend such credits for an additional year if the insurer
2568
guarantees an additional year of renewability for all policies
2569
removed from the corporation, or for 2 additional years if the
2570
insurer guarantees 2 additional years of renewability for all
2571
policies so removed.
2572
c. There shall be no credit, limitation, exemption, or
2573
deferment from emergency assessments to be collected from
2574
policyholders pursuant to sub-subparagraph (b)3.d.
2575
d. Subject to the execution of the confidentiality
2576
agreement required by paragraph (w), the corporation shall make
2577
its database of policies available to prospective take-out
2578
insurers considering underwriting a risk insured by the
2579
corporation, without categorically eliminating policies from
2580
eligibility for removal. The corporation may not instruct or
2581
encourage prospective take-out insurers to avoid the selection of
2582
policies for which the agent has disapproved policy removals. The
2583
corporation must require agents to accept or decline appointment
2584
for any policy selected and, in the case of a declination, must
2585
notify the policyholder that an insurer, identified by name,
2586
selected his or her policy for a take-out offer, but that the
2587
policyholder's agent refused to be appointed by the insurer. The
2588
notice must also provide the policyholder with the take-out
2589
insurer's contact information so that the policyholder may
2590
contact the company directly and make his or her own
2591
determination of whether to seek coverage from the take-out
2592
insurer.
2593
4. The plan shall provide for the deferment, in whole or in
2594
part, of the assessment of an assessable insurer, other than an
2595
emergency assessment collected from policyholders pursuant to
2596
sub-subparagraph (b)3.d., if the office finds that payment of the
2597
assessment would endanger or impair the solvency of the insurer.
2598
In the event an assessment against an assessable insurer is
2599
deferred in whole or in part, the amount by which such assessment
2600
is deferred may be assessed against the other assessable insurers
2601
in a manner consistent with the basis for assessments set forth
2602
in paragraph (b).
2603
5. Effective July 1, 2007, in order to evaluate the costs
2604
and benefits of approved take-out plans, if the corporation pays
2605
a bonus or other payment to an insurer for an approved take-out
2606
plan, it shall maintain a record of the address or such other
2607
identifying information on the property or risk removed in order
2608
to track if and when the property or risk is later insured by the
2609
corporation.
2610
6. Any policy taken out, assumed, or removed from the
2611
corporation is, as of the effective date of the take-out,
2612
assumption, or removal, direct insurance issued by the insurer
2613
and not by the corporation, even if the corporation continues to
2614
service the policies. This subparagraph applies to policies of
2615
the corporation and not policies taken out, assumed, or removed
2616
from any other entity.
2617
(q) Nothing in this subsection shall be construed to
2618
preclude the issuance of residential property insurance coverage
2619
pursuant to part VIII of chapter 626.
2620
(r)1. There shall be no liability on the part of, and no
2621
cause of action of any nature shall arise against, any assessable
2622
insurer or its agents or employees, the corporation or its agents
2623
or employees, members of the board of governors or their
2624
respective designees at a board meeting, corporation committee
2625
members, or the office or its representatives, for any action
2626
taken by them in the performance of their duties or
2627
responsibilities under this subsection. Such immunity does not
2628
apply to:
2629
a. Any of the foregoing persons or entities for any willful
2630
tort;
2631
b. The corporation or its producing agents for breach of
2632
any contract or agreement pertaining to insurance coverage;
2633
c. The corporation with respect to issuance or payment of
2634
debt;
2635
d. Any assessable insurer with respect to any action to
2636
enforce an assessable insurer's obligations to the corporation
2637
under this subsection; or
2638
e. The corporation in any pending or future action for
2639
breach of contract or for benefits under a policy issued by the
2640
corporation; in any such action, the corporation shall be liable
2641
to the policyholders and beneficiaries for attorney's fees under
2642
s. 627.428.
2643
2. The corporation shall manage its claim employees,
2644
independent adjusters, and others who handle claims to ensure
2645
they carry out the corporation's duty to its policyholders to
2646
handle claims carefully, timely, diligently, and in good faith,
2647
balanced against the corporation's duty to the state to manage
2648
its assets responsibly to minimize its assessment potential.
2649
(s) For the purposes of s. 199.183(1), the corporation
2650
shall be considered a political subdivision of the state and
2651
shall be exempt from the corporate income tax. The premiums,
2652
assessments, investment income, and other revenue of the
2653
corporation are funds received for providing property insurance
2654
coverage as required by this subsection, paying claims for
2655
Florida citizens insured by the corporation, securing and
2656
repaying debt obligations issued by the corporation, and
2657
conducting all other activities of the corporation, and shall not
2658
be considered taxes, fees, licenses, or charges for services
2659
imposed by the Legislature on individuals, businesses, or
2660
agencies outside state government. Bonds and other debt
2661
obligations issued by or on behalf of the corporation are not to
2662
be considered "state bonds" within the meaning of s. 215.58(8).
2663
The corporation is not subject to the procurement provisions of
2664
chapter 287, and policies and decisions of the corporation
2665
relating to incurring debt, levying of assessments and the sale,
2666
issuance, continuation, terms and claims under corporation
2667
policies, and all services relating thereto, are not subject to
2668
the provisions of chapter 120. The corporation is not required to
2669
obtain or to hold a certificate of authority issued by the
2670
office, nor is it required to participate as a member insurer of
2671
the Florida Insurance Guaranty Association. However, the
2672
corporation is required to pay, in the same manner as an
2673
authorized insurer, assessments levied by the Florida Insurance
2674
Guaranty Association. It is the intent of the Legislature that
2675
the tax exemptions provided in this paragraph will augment the
2676
financial resources of the corporation to better enable the
2677
corporation to fulfill its public purposes. Any debt obligations
2678
issued by the corporation, their transfer, and the income
2679
therefrom, including any profit made on the sale thereof, shall
2680
at all times be free from taxation of every kind by the state and
2681
any political subdivision or local unit or other instrumentality
2682
thereof; however, this exemption does not apply to any tax
2683
imposed by chapter 220 on interest, income, or profits on debt
2684
obligations owned by corporations other than the corporation.
2685
(t) Upon a determination by the office that the conditions
2686
giving rise to the establishment and activation of the
2687
corporation no longer exist, the corporation is dissolved. Upon
2688
dissolution, the assets of the corporation shall be applied first
2689
to pay all debts, liabilities, and obligations of the
2690
corporation, including the establishment of reasonable reserves
2691
for any contingent liabilities or obligations, and all remaining
2692
assets of the corporation shall become property of the state and
2693
shall be deposited in the Florida Hurricane Catastrophe Fund.
2694
However, no dissolution shall take effect as long as the
2695
corporation has bonds or other financial obligations outstanding
2696
unless adequate provision has been made for the payment of the
2697
bonds or other financial obligations pursuant to the documents
2698
authorizing the issuance of the bonds or other financial
2699
obligations.
2700
(u)1. Effective July 1, 2002, policies of the Residential
2701
Property and Casualty Joint Underwriting Association shall become
2702
policies of the corporation. All obligations, rights, assets and
2703
liabilities of the Residential Property and Casualty Joint
2704
Underwriting Association, including bonds, note and debt
2705
obligations, and the financing documents pertaining to them
2706
become those of the corporation as of July 1, 2002. The
2707
corporation is not required to issue endorsements or certificates
2708
of assumption to insureds during the remaining term of in-force
2709
transferred policies.
2710
2. Effective July 1, 2002, policies of the Florida
2711
Windstorm Underwriting Association are transferred to the
2712
corporation and shall become policies of the corporation. All
2713
obligations, rights, assets, and liabilities of the Florida
2714
Windstorm Underwriting Association, including bonds, note and
2715
debt obligations, and the financing documents pertaining to them
2716
are transferred to and assumed by the corporation on July 1,
2717
2002. The corporation is not required to issue endorsements or
2718
certificates of assumption to insureds during the remaining term
2719
of in-force transferred policies.
2720
3. The Florida Windstorm Underwriting Association and the
2721
Residential Property and Casualty Joint Underwriting Association
2722
shall take all actions as may be proper to further evidence the
2723
transfers and shall provide the documents and instruments of
2724
further assurance as may reasonably be requested by the
2725
corporation for that purpose. The corporation shall execute
2726
assumptions and instruments as the trustees or other parties to
2727
the financing documents of the Florida Windstorm Underwriting
2728
Association or the Residential Property and Casualty Joint
2729
Underwriting Association may reasonably request to further
2730
evidence the transfers and assumptions, which transfers and
2731
assumptions, however, are effective on the date provided under
2732
this paragraph whether or not, and regardless of the date on
2733
which, the assumptions or instruments are executed by the
2734
corporation. Subject to the relevant financing documents
2735
pertaining to their outstanding bonds, notes, indebtedness, or
2736
other financing obligations, the moneys, investments,
2737
receivables, choses in action, and other intangibles of the
2738
Florida Windstorm Underwriting Association shall be credited to
2739
the high-risk account of the corporation, and those of the
2740
personal lines residential coverage account and the commercial
2741
lines residential coverage account of the Residential Property
2742
and Casualty Joint Underwriting Association shall be credited to
2743
the personal lines account and the commercial lines account,
2744
respectively, of the corporation.
2745
4. Effective July 1, 2002, a new applicant for property
2746
insurance coverage who would otherwise have been eligible for
2747
coverage in the Florida Windstorm Underwriting Association is
2748
eligible for coverage from the corporation as provided in this
2749
subsection.
2750
5. The transfer of all policies, obligations, rights,
2751
assets, and liabilities from the Florida Windstorm Underwriting
2752
Association to the corporation and the renaming of the
2753
Residential Property and Casualty Joint Underwriting Association
2754
as the corporation shall in no way affect the coverage with
2755
respect to covered policies as defined in s. 215.555(2)(c)
2756
provided to these entities by the Florida Hurricane Catastrophe
2757
Fund. The coverage provided by the Florida Hurricane Catastrophe
2758
Fund to the Florida Windstorm Underwriting Association based on
2759
its exposures as of June 30, 2002, and each June 30 thereafter
2760
shall be redesignated as coverage for the high-risk account of
2761
the corporation. Notwithstanding any other provision of law, the
2762
coverage provided by the Florida Hurricane Catastrophe Fund to
2763
the Residential Property and Casualty Joint Underwriting
2764
Association based on its exposures as of June 30, 2002, and each
2765
June 30 thereafter shall be transferred to the personal lines
2766
account and the commercial lines account of the corporation.
2767
Notwithstanding any other provision of law, the high-risk account
2768
shall be treated, for all Florida Hurricane Catastrophe Fund
2769
purposes, as if it were a separate participating insurer with its
2770
own exposures, reimbursement premium, and loss reimbursement.
2771
Likewise, the personal lines and commercial lines accounts shall
2772
be viewed together, for all Florida Hurricane Catastrophe Fund
2773
purposes, as if the two accounts were one and represent a single,
2774
separate participating insurer with its own exposures,
2775
reimbursement premium, and loss reimbursement. The coverage
2776
provided by the Florida Hurricane Catastrophe Fund to the
2777
corporation shall constitute and operate as a full transfer of
2778
coverage from the Florida Windstorm Underwriting Association and
2779
Residential Property and Casualty Joint Underwriting to the
2780
corporation.
2781
(v) Notwithstanding any other provision of law:
2782
1. The pledge or sale of, the lien upon, and the security
2783
interest in any rights, revenues, or other assets of the
2784
corporation created or purported to be created pursuant to any
2785
financing documents to secure any bonds or other indebtedness of
2786
the corporation shall be and remain valid and enforceable,
2787
notwithstanding the commencement of and during the continuation
2788
of, and after, any rehabilitation, insolvency, liquidation,
2789
bankruptcy, receivership, conservatorship, reorganization, or
2790
similar proceeding against the corporation under the laws of this
2791
state.
2792
2. No such proceeding shall relieve the corporation of its
2793
obligation, or otherwise affect its ability to perform its
2794
obligation, to continue to collect, or levy and collect,
2795
assessments, market equalization or other surcharges under
2796
subparagraph (c)11., or any other rights, revenues, or other
2797
assets of the corporation pledged pursuant to any financing
2798
documents.
2799
3. Each such pledge or sale of, lien upon, and security
2800
interest in, including the priority of such pledge, lien, or
2801
security interest, any such assessments, market equalization or
2802
other surcharges, or other rights, revenues, or other assets
2803
which are collected, or levied and collected, after the
2804
commencement of and during the pendency of, or after, any such
2805
proceeding shall continue unaffected by such proceeding. As used
2806
in this subsection, the term "financing documents" means any
2807
agreement or agreements, instrument or instruments, or other
2808
document or documents now existing or hereafter created
2809
evidencing any bonds or other indebtedness of the corporation or
2810
pursuant to which any such bonds or other indebtedness has been
2811
or may be issued and pursuant to which any rights, revenues, or
2812
other assets of the corporation are pledged or sold to secure the
2813
repayment of such bonds or indebtedness, together with the
2814
payment of interest on such bonds or such indebtedness, or the
2815
payment of any other obligation or financial product, as defined
2816
in the plan of operation of the corporation related to such bonds
2817
or indebtedness.
2818
4. Any such pledge or sale of assessments, revenues,
2819
contract rights, or other rights or assets of the corporation
2820
shall constitute a lien and security interest, or sale, as the
2821
case may be, that is immediately effective and attaches to such
2822
assessments, revenues, or contract rights or other rights or
2823
assets, whether or not imposed or collected at the time the
2824
pledge or sale is made. Any such pledge or sale is effective,
2825
valid, binding, and enforceable against the corporation or other
2826
entity making such pledge or sale, and valid and binding against
2827
and superior to any competing claims or obligations owed to any
2828
other person or entity, including policyholders in this state,
2829
asserting rights in any such assessments, revenues, or contract
2830
rights or other rights or assets to the extent set forth in and
2831
in accordance with the terms of the pledge or sale contained in
2832
the applicable financing documents, whether or not any such
2833
person or entity has notice of such pledge or sale and without
2834
the need for any physical delivery, recordation, filing, or other
2835
action.
2836
5. As long as the corporation has any bonds outstanding,
2837
the corporation may not file a voluntary petition under chapter 9
2838
of the federal Bankruptcy Code or such corresponding chapter or
2839
sections as may be in effect, from time to time, and a public
2840
officer or any organization, entity, or other person may not
2841
authorize the corporation to be or become a debtor under chapter
2842
9 of the federal Bankruptcy Code or such corresponding chapter or
2843
sections as may be in effect, from time to time, during any such
2844
period.
2845
6. If ordered by a court of competent jurisdiction, the
2846
corporation may assume policies or otherwise provide coverage for
2847
policyholders of an insurer placed in liquidation under chapter
2848
631, under such forms, rates, terms, and conditions as the
2849
corporation deems appropriate, subject to approval by the office.
2850
(w)1. The following records of the corporation are
2851
confidential and exempt from the provisions of s. 119.07(1) and
2852
s. 24(a), Art. I of the State Constitution:
2853
a. Underwriting files, except that a policyholder or an
2854
applicant shall have access to his or her own underwriting files.
2855
b. Claims files, until termination of all litigation and
2856
settlement of all claims arising out of the same incident,
2857
although portions of the claims files may remain exempt, as
2858
otherwise provided by law. Confidential and exempt claims file
2859
records may be released to other governmental agencies upon
2860
written request and demonstration of need; such records held by
2861
the receiving agency remain confidential and exempt as provided
2862
for herein.
2863
c. Records obtained or generated by an internal auditor
2864
pursuant to a routine audit, until the audit is completed, or if
2865
the audit is conducted as part of an investigation, until the
2866
investigation is closed or ceases to be active. An investigation
2867
is considered "active" while the investigation is being conducted
2868
with a reasonable, good faith belief that it could lead to the
2869
filing of administrative, civil, or criminal proceedings.
2870
d. Matters reasonably encompassed in privileged attorney-
2871
client communications.
2872
e. Proprietary information licensed to the corporation
2873
under contract and the contract provides for the confidentiality
2874
of such proprietary information.
2875
f. All information relating to the medical condition or
2876
medical status of a corporation employee which is not relevant to
2877
the employee's capacity to perform his or her duties, except as
2878
otherwise provided in this paragraph. Information which is exempt
2879
shall include, but is not limited to, information relating to
2880
workers' compensation, insurance benefits, and retirement or
2881
disability benefits.
2882
g. Upon an employee's entrance into the employee assistance
2883
program, a program to assist any employee who has a behavioral or
2884
medical disorder, substance abuse problem, or emotional
2885
difficulty which affects the employee's job performance, all
2886
records relative to that participation shall be confidential and
2887
exempt from the provisions of s. 119.07(1) and s. 24(a), Art. I
2888
of the State Constitution, except as otherwise provided in s.
2889
112.0455(11).
2890
h. Information relating to negotiations for financing,
2891
reinsurance, depopulation, or contractual services, until the
2892
conclusion of the negotiations.
2893
i. Minutes of closed meetings regarding underwriting files,
2894
and minutes of closed meetings regarding an open claims file
2895
until termination of all litigation and settlement of all claims
2896
with regard to that claim, except that information otherwise
2897
confidential or exempt by law will be redacted.
2898
2899
When an authorized insurer is considering underwriting a risk
2900
insured by the corporation, relevant underwriting files and
2901
confidential claims files may be released to the insurer provided
2902
the insurer agrees in writing, notarized and under oath, to
2903
maintain the confidentiality of such files. When a file is
2904
transferred to an insurer that file is no longer a public record
2905
because it is not held by an agency subject to the provisions of
2906
the public records law. Underwriting files and confidential
2907
claims files may also be released to staff of and the board of
2908
governors of the market assistance plan established pursuant to
2909
s. 627.3515, who must retain the confidentiality of such files,
2910
except such files may be released to authorized insurers that are
2911
considering assuming the risks to which the files apply, provided
2912
the insurer agrees in writing, notarized and under oath, to
2913
maintain the confidentiality of such files. Finally, the
2914
corporation or the board or staff of the market assistance plan
2915
may make the following information obtained from underwriting
2916
files and confidential claims files available to licensed general
2917
lines insurance agents: name, address, and telephone number of
2918
the residential property owner or insured; location of the risk;
2919
rating information; loss history; and policy type. The receiving
2920
licensed general lines insurance agent must retain the
2921
confidentiality of the information received.
2922
2. Portions of meetings of the corporation are exempt from
2923
the provisions of s. 286.011 and s. 24(b), Art. I of the State
2924
Constitution wherein confidential underwriting files or
2925
confidential open claims files are discussed. All portions of
2926
corporation meetings which are closed to the public shall be
2927
recorded by a court reporter. The court reporter shall record the
2928
times of commencement and termination of the meeting, all
2929
discussion and proceedings, the names of all persons present at
2930
any time, and the names of all persons speaking. No portion of
2931
any closed meeting shall be off the record. Subject to the
2932
provisions hereof and s. 119.07(1)(e)-(g), the court reporter's
2933
notes of any closed meeting shall be retained by the corporation
2934
for a minimum of 5 years. A copy of the transcript, less any
2935
exempt matters, of any closed meeting wherein claims are
2936
discussed shall become public as to individual claims after
2937
settlement of the claim.
2938
(x) It is the intent of the Legislature that the amendments
2939
to this subsection enacted in 2002 should, over time, reduce the
2940
probable maximum windstorm losses in the residual markets and
2941
should reduce the potential assessments to be levied on property
2942
insurers and policyholders statewide. In furtherance of this
2943
intent:
2944
1. The board shall, on or before February 1 of each year,
2945
provide a report to the President of the Senate and the Speaker
2946
of the House of Representatives showing the reduction or increase
2947
in the 100-year probable maximum loss attributable to wind-only
2948
coverages and the quota share program under this subsection
2949
combined, as compared to the benchmark 100-year probable maximum
2950
loss of the Florida Windstorm Underwriting Association. For
2951
purposes of this paragraph, the benchmark 100-year probable
2952
maximum loss of the Florida Windstorm Underwriting Association
2953
shall be the calculation dated February 2001 and based on
2954
November 30, 2000, exposures. In order to ensure comparability of
2955
data, the board shall use the same methods for calculating its
2956
probable maximum loss as were used to calculate the benchmark
2957
probable maximum loss.
2958
2. Beginning February 1, 2010, if the report under
2959
subparagraph 1. for any year indicates that the 100-year probable
2960
maximum loss attributable to wind-only coverages and the quota
2961
share program combined does not reflect a reduction of at least
2962
25 percent from the benchmark, the board shall reduce the
2963
boundaries of the high-risk area eligible for wind-only coverages
2964
under this subsection in a manner calculated to reduce such
2965
probable maximum loss to an amount at least 25 percent below the
2966
benchmark.
2967
3. Beginning February 1, 2015, if the report under
2968
subparagraph 1. for any year indicates that the 100-year probable
2969
maximum loss attributable to wind-only coverages and the quota
2970
share program combined does not reflect a reduction of at least
2971
50 percent from the benchmark, the boundaries of the high-risk
2972
area eligible for wind-only coverages under this subsection shall
2973
be reduced by the elimination of any area that is not seaward of
2974
a line 1,000 feet inland from the Intracoastal Waterway.
2975
(y) In enacting the provisions of this section, the
2976
Legislature recognizes that both the Florida Windstorm
2977
Underwriting Association and the Residential Property and
2978
Casualty Joint Underwriting Association have entered into
2979
financing arrangements that obligate each entity to service its
2980
debts and maintain the capacity to repay funds secured under
2981
these financing arrangements. It is the intent of the Legislature
2982
that nothing in this section be construed to compromise,
2983
diminish, or interfere with the rights of creditors under such
2984
financing arrangements. It is further the intent of the
2985
Legislature to preserve the obligations of the Florida Windstorm
2986
Underwriting Association and Residential Property and Casualty
2987
Joint Underwriting Association with regard to outstanding
2988
financing arrangements, with such obligations passing entirely
2989
and unchanged to the corporation and, specifically, to the
2990
applicable account of the corporation. So long as any bonds,
2991
notes, indebtedness, or other financing obligations of the
2992
Florida Windstorm Underwriting Association or the Residential
2993
Property and Casualty Joint Underwriting Association are
2994
outstanding, under the terms of the financing documents
2995
pertaining to them, the governing board of the corporation shall
2996
have and shall exercise the authority to levy, charge, collect,
2997
and receive all premiums, assessments, surcharges, charges,
2998
revenues, and receipts that the associations had authority to
2999
levy, charge, collect, or receive under the provisions of
3000
subsection (2) and this subsection, respectively, as they existed
3001
on January 1, 2002, to provide moneys, without exercise of the
3002
authority provided by this subsection, in at least the amounts,
3003
and by the times, as would be provided under those former
3004
provisions of subsection (2) or this subsection, respectively, so
3005
that the value, amount, and collectability of any assets,
3006
revenues, or revenue source pledged or committed to, or any lien
3007
thereon securing such outstanding bonds, notes, indebtedness, or
3008
other financing obligations will not be diminished, impaired, or
3009
adversely affected by the amendments made by this act and to
3010
permit compliance with all provisions of financing documents
3011
pertaining to such bonds, notes, indebtedness, or other financing
3012
obligations, or the security or credit enhancement for them, and
3013
any reference in this subsection to bonds, notes, indebtedness,
3014
financing obligations, or similar obligations, of the corporation
3015
shall include like instruments or contracts of the Florida
3016
Windstorm Underwriting Association and the Residential Property
3017
and Casualty Joint Underwriting Association to the extent not
3018
inconsistent with the provisions of the financing documents
3019
pertaining to them.
3020
(z) The corporation shall not require the securing of flood
3021
insurance as a condition of coverage if the insured or applicant
3022
executes a form approved by the office affirming that flood
3023
insurance is not provided by the corporation and that if flood
3024
insurance is not secured by the applicant or insured in addition
3025
to coverage by the corporation, the risk will not be covered for
3026
flood damage. A corporation policyholder electing not to secure
3027
flood insurance and executing a form as provided herein making a
3028
claim for water damage against the corporation shall have the
3029
burden of proving the damage was not caused by flooding.
3030
Notwithstanding other provisions of this subsection, the
3031
corporation may deny coverage to an applicant or insured who
3032
refuses to execute the form described herein.
3033
(aa) A salaried employee of the corporation who performs
3034
policy administration services subsequent to the effectuation of
3035
a corporation policy is not required to be licensed as an agent
3036
under the provisions of s. 626.112.
3037
(bb) By February 1, 2007, the corporation shall submit a
3038
report to the President of the Senate, the Speaker of the House
3039
of Representatives, the minority party leaders of the Senate and
3040
the House of Representatives, and the chairs of the standing
3041
committees of the Senate and the House of Representatives having
3042
jurisdiction over matters relating to property and casualty
3043
insurance. In preparing the report, the corporation shall consult
3044
with the Office of Insurance Regulation, the Department of
3045
Financial Services, and any other party the corporation
3046
determines appropriate. The report must include all findings and
3047
recommendations on the feasibility of requiring authorized
3048
insurers that issue and service personal and commercial
3049
residential policies and commercial nonresidential policies that
3050
provide coverage for basic property perils except for the peril
3051
of wind to issue and service for a fee personal and commercial
3052
residential policies and commercial nonresidential policies
3053
providing coverage for the peril of wind issued by the
3054
corporation. The report must include:
3055
1. The expense savings to the corporation of issuing and
3056
servicing such policies as determined by a cost-benefit analysis.
3057
2. The expenses and liability to authorized insurers
3058
associated with issuing and servicing such policies.
3059
3. The effect on service to policyholders of the
3060
corporation relating to issuing and servicing such policies.
3061
4. The effect on the producing agent of the corporation of
3062
issuing and servicing such policies.
3063
5. Recommendations as to the amount of the fee which should
3064
be paid to authorized insurers for issuing and servicing such
3065
policies.
3066
6. The effect that issuing and servicing such policies will
3067
have on the corporation's number of policies, total insured
3068
value, and probable maximum loss.
3069
(cc) There shall be no liability on the part of, and no
3070
cause of action of any nature shall arise against, producing
3071
agents of record of the corporation or employees of such agents
3072
for insolvency of any take-out insurer.
3073
(dd)1. For policies subject to nonrenewal as a result of
3074
the risk being no longer eligible for coverage due to being
3075
valued at $1 million or more, the corporation shall, directly or
3076
through the market assistance plan, make information from
3077
confidential underwriting and claims files of policyholders
3078
available only to licensed general lines agents who register with
3079
the corporation to receive such information according to the
3080
following procedures:
3081
2. By August 1, 2006, the corporation shall provide such
3082
policyholders who are not eligible for renewal the opportunity to
3083
request in writing, within 30 days after the notification is
3084
sent, that information from their confidential underwriting and
3085
claims files not be released to licensed general lines agents
3086
registered pursuant to this paragraph.
3087
3. By August 1, 2006, the corporation shall make available
3088
to licensed general lines agents the registration procedures to
3089
be used to obtain confidential information from underwriting and
3090
claims files for such policies not eligible for renewal. As a
3091
condition of registration, the corporation shall require the
3092
licensed general lines agent to attest that the agent has the
3093
experience and relationships with authorized or surplus lines
3094
carriers to attempt to offer replacement coverage for such
3095
policies.
3096
4. By September 1, 2006, the corporation shall make
3097
available through a secured website to licensed general lines
3098
agents registered pursuant to this paragraph application, rating,
3099
loss history, mitigation, and policy type information relating to
3100
such policies not eligible for renewal and for which the
3101
policyholder has not requested the corporation withhold such
3102
information. The registered licensed general lines agent may use
3103
such information to contact and assist the policyholder in
3104
securing replacement policies, and the agent may disclose to the
3105
policyholder that such information was obtained from the
3106
corporation.
3107
(dd)(ee) The assets of the corporation may be invested and
3108
managed by the State Board of Administration.
3109
(ee)(ff) The office may establish a pilot program to offer
3110
optional sinkhole coverage in one or more counties or other
3111
territories of the corporation for the purpose of implementing s.
3112
627.706, as amended by s. 30, chapter 2007-1, Laws of Florida.
3113
Under the pilot program, the corporation is not required to issue
3114
a notice of nonrenewal to exclude sinkhole coverage upon the
3115
renewal of existing policies, but may exclude such coverage using
3116
a notice of coverage change.
3117
Section 16. Effective October 1, 2008, and applicable to
3118
policies issued or renewed on or after that date, section
3119
627.714, Florida Statutes, is created to read:
3120
627.714 Guaranteed renewability for mitigated homes.--A
3121
personal lines residential insurance policy shall be guaranteed
3122
renewable for at least 3 years if the dwelling has been built or
3123
retrofitted to meet the wind-borne-debris protection requirements
3124
of Florida Building Code which apply to the wind-borne-debris
3125
region as defined in the Florida Building Code.
3126
Section 17. Effective January 1, 2009, section 689.262,
3127
Florida Statutes, is created to read:
3128
689.262 Sale of residential property; disclosure of
3129
windstorm mitigation rating.--A purchaser of residential property
3130
must be informed of the windstorm mitigation rating of the
3131
structure, based on the uniform home grading scale adopted
3132
pursuant to s. 215.55865. The rating must be included in the
3133
contract for sale or as a separate document attached to the
3134
contract for sale. The Financial Services Commission may adopt
3135
rules, consistent with other state laws, to administer this
3136
section, including the form of the disclosure and the
3137
requirements for the windstorm mitigation inspection or report
3138
that is required for purposes of determining the rating.
3139
Section 18. Effective October 1, 2008, section 817.2341,
3140
Florida Statutes, is amended to read:
3141
817.2341 False or misleading statements or supporting
3142
documents; corrupt obstruction of the lawful regulation of
3143
insurance; penalty.--
3144
(1) Any person who willfully files with the department or
3145
office, or who willfully signs for filing with the department or
3146
office, a materially false or materially misleading financial
3147
statement or document in support of such statement required by
3148
law or rule, or a materially false or materially misleading rate
3149
filing, with intent to deceive and with knowledge that the
3150
statement or document is materially false or materially
3151
misleading, commits a felony of the third degree, punishable as
3152
provided in s. 775.082, s. 775.083, or s. 775.084.
3153
(2)(a) Any person who makes a false entry of a material
3154
fact in any book, report, or statement relating to a transaction
3155
of an insurer or entity organized pursuant to chapter 624 or
3156
chapter 641, intending to deceive any person about the financial
3157
condition or solvency of the insurer or entity, commits a felony
3158
of the third degree, punishable as provided in s. 775.082, s.
3159
775.083, or s. 775.084.
3160
(b) If the false entry of a material fact is made with the
3161
intent to deceive any person as to the impairment of capital, as
3162
defined in s. 631.011(12), of the insurer or entity or is the
3163
significant cause of the insurer or entity being placed in
3164
conservation, rehabilitation, or liquidation by a court, the
3165
person commits a felony of the first degree, punishable as
3166
provided in s. 775.082, s. 775.083, or s. 775.084.
3167
(3)(a) Any person who knowingly makes a material false
3168
statement or report to the department or office or any agent of
3169
the department or office, or knowingly and materially overvalues
3170
any property in any document or report prepared to be presented
3171
to the department or office or any agent of the department or
3172
office, commits a felony of the third degree, punishable as
3173
provided in s. 775.082, s. 775.083, or s. 775.084.
3174
(b) If the material false statement or report or the
3175
material overvaluation is made with the intent to deceive any
3176
person as to the impairment of capital, as defined in s.
3177
631.011(12), of an insurer or entity organized pursuant to
3178
chapter 624 or chapter 641, or is the significant cause of the
3179
insurer or entity being placed in receivership by a court, the
3180
person commits a felony of the first degree, punishable as
3181
provided in s. 775.082, s. 775.083, or s. 775.084.
3182
(4) Any person who attempts to corruptly influence,
3183
obstruct, or impede the lawful regulation of the business of
3184
insurance by the department or office, or by any agent or
3185
examiner appointed by the department or office, commits a felony
3186
of the third degree, punishable as provided in s. 775.082, s.
3187
775.083, or s. 775.084.
3188
Section 19. Except as otherwise expressly provided in this
3189
act, this act shall take effect upon becoming a law.
3190
3191
================ T I T L E A M E N D M E N T ================
3192
And the title is amended as follows:
3193
Delete everything before the enacting clause
3194
and insert:
3195
A bill to be entitled
3196
An act relating to insurance; amending s. 215.5595, F.S.;
3197
revising legislative findings with respect to the
3198
Insurance Capital Build-Up Incentive Program and the
3199
appropriation of state funds for surplus notes issued by
3200
residential property insurers; revising the conditions and
3201
requirements for providing funds to insurers under the
3202
program; requiring a commitment by the insurer to meet
3203
minimum premium-to-surplus writing ratios for residential
3204
property insurance and for taking policies out of Citizens
3205
Property Insurance Corporation; allowing the State Board
3206
of Administration to charge a late fee for payment of
3207
remittances; providing that amendments made by the act do
3208
not affect the terms of surplus notes approved prior to a
3209
specified date, but authorizing the board and an insurer
3210
to renegotiate such terms consistent with such amendments;
3211
amending s. 542.20, F.S.; subjecting the business of
3212
insurance to the Florida Antitrust Act; providing
3213
exceptions; amending s. 624.3161, F.S.; authorizing the
3214
Office of Insurance Regulation to require an insurer to
3215
file its claims handling practices and procedures as a
3216
public record based on findings of a market conduct
3217
examination; amending s. 624.418, F.S.; authorizing the
3218
Office of Insurance Regulation to immediately suspend the
3219
certificate of authority of an insurer that fails to
3220
provide information subpoenaed by the office; amending s.
3221
624.4211, F.S.; increasing the maximum amounts of
3222
administrative fines that may be imposed upon an insurer
3223
by the Office of Insurance Regulation for nonwillful and
3224
willful violations of an order or rule of the office or
3225
any provision of the Florida Insurance Code; authorizing
3226
the office to impose a fine for each day of noncompliance
3227
up to a maximum amount; providing factors to consider when
3228
determining the amount of the fine; creating s. 624.4213,
3229
F.S.; specifying requirements for submission of a document
3230
or information to the Office of Insurance Regulation or
3231
the Department of Financial Services in order for a person
3232
to claim that the document is a trade secret; requiring
3233
each page or portion to be labeled as a trade secret and
3234
be separated from non-trade secret material; requiring the
3235
submitting party to include an affidavit certifying
3236
certain information about the documents claimed to be
3237
trade secrets; requiring an award of attorney's fees
3238
against a person who certified a document as trade secret
3239
if a court or administrative tribunal finds that the
3240
document is not a trade secret; providing for
3241
administrative penalties under certain conditions;
3242
creating s. 624.4305, F.S.; requiring an insurer planning
3243
to nonrenew more than a specified number of residential
3244
property insurance polices to notify the Office of
3245
Insurance Regulation and obtain approval; specifying
3246
procedures; prohibiting the office from approving the plan
3247
unless it determines that the insurer has met certain
3248
conditions; amending s. 626.9521, F.S.; increasing the
3249
maximum fines that may be imposed by the office for
3250
nonwillful and willful violations of state law regarding
3251
unfair methods of competition and unfair or deceptive acts
3252
or practices related to insurance; amending s. 626.9541,
3253
F.S.; prohibiting an insurer from failing to promptly
3254
provide to the insured estimates of damage and a good
3255
faith explanation of the insurer's evaluation; prohibiting
3256
an insurer from considering certain factors when
3257
evaluating or adjusting a property insurance claim;
3258
prohibiting an insurer from failing to pay undisputed
3259
amounts of benefits owed under a property insurance policy
3260
within a certain period; amending s. 627.062, F.S.;
3261
requiring that an insurer seeking a rate for property
3262
insurance that is greater than the rate most recently
3263
approved by the Office of Insurance Regulation make a
3264
"file and use" filing for all such rate filings made after
3265
a specified date; revising the factors the office must
3266
consider in reviewing a rate filing; providing that the
3267
cost of reinsurance shall be presumed excessive under
3268
certain conditions and, for reinsurance purchased from
3269
affiliated reinsurers, may not include broker fees;
3270
providing that projected hurricane losses are to be
3271
considered as provided in s. 627.0628, F.S., relating to
3272
hurricane loss models or methods found to be accurate or
3273
reliable by the Florida Commission on Hurricane Loss
3274
Projection Methodology; allowing the office to disapprove
3275
a rate as excessive within 1 year after the rate has been
3276
approved under certain conditions related to nonrenewal of
3277
policies by the insurer; requiring certain officers and
3278
the chief actuary of a property insurer to certify certain
3279
information as part of a rate filing, subject to the
3280
penalty of perjury; requiring that a rate filing contain
3281
all information that supports the filing; providing that
3282
after the office issues a notice of intent to disapprove
3283
the filing, no additional information is admissible in any
3284
subsequent administrative or judicial proceeding;
3285
repealing s. 627.062(6), F.S., relating to the submission
3286
of a disputed rate filing, other than a rate filing for
3287
medical malpractice insurance, to an arbitration panel in
3288
lieu of an administrative hearing if the rate is filed
3289
before a specified date; amending s. 627.0613, F.S.;
3290
deleting cross-references to conform to changes made by
3291
the act; amending s. 627.0628, F.S.; requiring that with
3292
respect to rate filings, insurers must use actuarial
3293
methods or models found to be accurate or reliable by the
3294
Florida Commission on Hurricane Loss Projection
3295
Methodology; deleting cross-references to conform to
3296
changes made by the act; amending s. 627.0629, F.S.;
3297
requiring that the Office of Insurance Regulation develop
3298
and make publicly available before a specified deadline a
3299
proposed method for insurers to establish windstorm
3300
mitigation premium discounts that correlate to the uniform
3301
home rating scale; requiring that the Financial Services
3302
Commission adopt rules before a specified deadline;
3303
requiring insurers to make rate filings pursuant to such
3304
method; authorizing the commission to make changes by rule
3305
to the uniform home grading scale and specify by rule the
3306
minimum required discounts, credits, or other rate
3307
differentials; requiring that such rate differentials be
3308
consistent with generally accepted actuarial principles
3309
and wind loss mitigation studies; amending s. 627.351,
3310
F.S., relating to Citizens Property Insurance Corporation;
3311
deleting a provision to conform to changes made in the
3312
act; deleting provisions defining the terms "homestead
3313
property" and "nonhomestead property"; deleting a
3314
provision providing for the classification of certain
3315
dwellings as "nonhomestead property"; deleting provisions
3316
making dwellings and condominium units that have a
3317
replacement cost above a specified value ineligible for
3318
coverage after a specified date; requiring certain
3319
structures to have opening protections as a condition of
3320
eligibility for coverage after a specified date; requiring
3321
that the corporation cease issuance of new wind-only
3322
coverage beginning on a specified date; deleting outdated
3323
provisions requiring the corporation to submit a report
3324
for approval of offering multiperil coverage; revising
3325
threshold amounts of deficits incurred in a calendar year
3326
on which the decision to levy assessments and the types of
3327
such assessments are based; revising the formula used to
3328
calculate shares of assessments owed by certain assessable
3329
insureds; requiring that the board of governors make
3330
certain determinations before levying emergency
3331
assessments; providing the board of governors with
3332
discretion to set the amount of an emergency assessment
3333
within specified limits; requiring the board of governors
3334
to levy a Citizens policyholder surcharge under certain
3335
conditions; deleting a provision requiring the levy of an
3336
immediate assessment against certain policyholders under
3337
such conditions; requiring that funds collected from the
3338
levy of such surcharges be used for certain purposes;
3339
providing that such surcharges are not considered premium
3340
and are not subject to commissions, fees, or premium
3341
taxes; requiring that the failure to pay such surcharges
3342
be treated as failure to pay premium; requiring that the
3343
amount of any assessment or surcharge which exceeds the
3344
amount of deficits be remitted to and used by the
3345
corporation for specified purposes; deleting provisions
3346
requiring that the plan of operation of the corporation
3347
provide for the levy of a Citizens policyholder surcharge
3348
if regular deficit assessments are levied as a result of
3349
deficits in certain accounts; deleting provisions related
3350
to the calculation, classification, and nonpayment of such
3351
surcharge; providing legislative findings; requiring that
3352
the corporation make an annual filing for each personal or
3353
commercial line of business it writes, beginning on a
3354
specified date; limiting the overall average statewide
3355
premium increase and the increase for an individual
3356
policyholder to a specified amount for rates established
3357
for certain policies during a specified period; deleting a
3358
provision requiring an insurer to purchase bonds that
3359
remain unsold; requiring the corporation to make its
3360
database of policies available to prospective take-out
3361
insurers under certain conditions; requiring the
3362
corporation to require agents to accept or decline
3363
appointment for any policy selected; requiring the
3364
corporation to notify the policyholder of certain
3365
information if an insurer selected his or her policy for a
3366
take-out offer but the policyholder's agent refused to be
3367
appointed; deleting provisions requiring the corporation
3368
to make certain confidential underwriting and claims files
3369
available to agents to conform to changes made by the act
3370
relating to ineligibility of certain dwellings; creating
3371
s. 627.714, F.S.; requiring that personal lines
3372
residential policies be guaranteed renewable for a
3373
specified period if the dwelling meets certain wind-borne-
3374
debris protection requirements; providing for
3375
applicability; creating s. 689.262, F.S.; requiring a
3376
purchaser of residential property to be presented with the
3377
windstorm mitigation rating of the structure; authorizing
3378
the Financial Services Commission to adopt rules; amending
3379
s. 817.2341, F.S.; providing criminal penalties for any
3380
person who willfully files a materially false or
3381
misleading rate filing, under certain conditions, and for
3382
any person who attempts to corruptly influence or obstruct
3383
the lawful regulation of the business of insurance;
3384
providing effective dates.
3/23/2008 12:46:00 PM 597-05571-08
CODING: Words stricken are deletions; words underlined are additions.