HB 447

1	A bill to be entitled
2	An act relating to residential property insurance;
3	amending s. 627.062, F.S.; authorizing certain insurers to
4	use a rate different from otherwise applicable filed
5	rates; prohibiting the consideration of certain policies
6	when making a specified calculation; preserving the
7	authority of the Office of Insurance Regulation to
8	disapprove rates as inadequate or disapprove a rate filing
9	for using certain rating factors; authorizing the office
10	to direct an insurer to make a specified type of rate
11	filing under certain circumstances; amending s. 627.351,
12	F.S.; providing requirements for attachment and payment of
13	the Citizens policyholder surcharge; prohibiting the
14	corporation from levying certain regular assessments until
15	after levying the full amount of a Citizens policyholder
16	surcharge; requiring the corporation's plan of operation
17	to require agents to obtain an acknowledgement of
18	potential surcharge and assessment liability from
19	applicants and policyholders; requiring the corporation to
20	permanently retain a copy of such acknowledgments;
21	specifying that the acknowledgement creates a conclusive
22	presumption of understanding and acceptance by the
23	policyholder; creating s. 627.7031, F.S.; authorizing
24	certain insurers to offer or renew policies at rates
25	established under certain circumstances; prohibiting
26	certain insurers from purchasing TICL option coverage from
27	the Florida Hurricane Catastrophe Fund under certain
28	circumstances; requiring that certain policies contain a
29	specified rate notice; requiring insurers to offer
30	applicants or insureds an estimate of the premium for a
31	policy from Citizens Property Insurance Corporation
32	reflecting similar coverage, limits, and deductibles;
33	requiring applicants or insureds to provide a signed
34	premium comparison acknowledgement; specifying criteria
35	for insurer compliance with certain requirements;
36	specifying acknowledgement contents; requiring insurers
37	and agents to retain a copy of the acknowledgement for a
38	specified time; specifying a presumption created by a
39	signed acknowledgement; specifying types of residential
40	property insurance policies that are not eligible for
41	certain rates or subject to other requirements; requiring
42	written notice of certain nonrenewals; preserving insurer
43	authority to cancel policies; specifying a criterion for
44	what constitutes an offer to renew a policy; providing an
45	effective date.
46
47	Be It Enacted by the Legislature of the State of Florida:
48
49	Section 1.  Paragraph (l) is added to subsection (2) of
50	section 627.062, Florida Statutes, to read:
51	627.062  Rate standards.-
52	(2)  As to all such classes of insurance:
53	(l)1.  An insurer complying with the requirements of s.
54	627.7031 may use a rate for residential property insurance, as
55	defined in s. 627.4025, different from the otherwise applicable
56	filed rate as provided in this paragraph.
57	2.  Policies subject to this paragraph may not be counted
58	in the calculation under s. 627.171(2).
59	3.  Such rates shall be filed with the office as a separate
60	filing.
61	4.  This paragraph does not affect the authority of the
62	office to disapprove a rate as inadequate or to disapprove a
63	rate filing for charging any insured or applicant a higher
64	premium solely because of the insured's or applicant's race,
65	color, creed, marital status, sex, or national origin. Upon
66	finding that an insurer has used any such factor in charging an
67	insured or applicant a higher premium, the office may direct the
68	insurer to make a new filing for a new rate that does not use
69	such factor.
70
71	The provisions of this subsection shall not apply to workers'
72	compensation and employer's liability insurance and to motor
73	vehicle insurance.
74	Section 2.  Paragraphs (g) through (ff) of subsection (6)
75	of section 627.351, Florida Statutes, are redesignated as
76	paragraphs (f) through (ee), respectively, present paragraph (f)
77	of that subsection is redesignated as paragraph (ff), and
78	paragraphs (b) and (c) of subsection (6) of section 627.351,
79	Florida Statutes, are amended to read:
80	627.351  Insurance risk apportionment plans.-
81	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
82	(b)1.  All insurers authorized to write one or more subject
83	lines of business in this state are subject to assessment by the
84	corporation and, for the purposes of this subsection, are
85	referred to collectively as "assessable insurers." Insurers
86	writing one or more subject lines of business in this state
87	pursuant to part VIII of chapter 626 are not assessable
88	insurers, but insureds who procure one or more subject lines of
89	business in this state pursuant to part VIII of chapter 626 are
90	subject to assessment by the corporation and are referred to
91	collectively as "assessable insureds." An authorized insurer's
92	assessment liability shall begin on the first day of the
93	calendar year following the year in which the insurer was issued
94	a certificate of authority to transact insurance for subject
95	lines of business in this state and shall terminate 1 year after
96	the end of the first calendar year during which the insurer no
97	longer holds a certificate of authority to transact insurance
98	for subject lines of business in this state.
99	2.a.  All revenues, assets, liabilities, losses, and
100	expenses of the corporation shall be divided into three separate
101	accounts as follows:
102	(I)  A personal lines account for personal residential
103	policies issued by the corporation or issued by the Residential
104	Property and Casualty Joint Underwriting Association and renewed
105	by the corporation that provide comprehensive, multiperil
106	coverage on risks that are not located in areas eligible for
107	coverage in the Florida Windstorm Underwriting Association as
108	those areas were defined on January 1, 2002, and for such
109	policies that do not provide coverage for the peril of wind on
110	risks that are located in such areas;
111	(II)  A commercial lines account for commercial residential
112	and commercial nonresidential policies issued by the corporation
113	or issued by the Residential Property and Casualty Joint
114	Underwriting Association and renewed by the corporation that
115	provide coverage for basic property perils on risks that are not
116	located in areas eligible for coverage in the Florida Windstorm
117	Underwriting Association as those areas were defined on January
118	1, 2002, and for such policies that do not provide coverage for
119	the peril of wind on risks that are located in such areas; and
120	(III)  A high-risk account for personal residential
121	policies and commercial residential and commercial
122	nonresidential property policies issued by the corporation or
123	transferred to the corporation that provide coverage for the
124	peril of wind on risks that are located in areas eligible for
125	coverage in the Florida Windstorm Underwriting Association as
126	those areas were defined on January 1, 2002. The corporation may
127	offer policies that provide multiperil coverage and the
128	corporation shall continue to offer policies that provide
129	coverage only for the peril of wind for risks located in areas
130	eligible for coverage in the high-risk account. In issuing
131	multiperil coverage, the corporation may use its approved policy
132	forms and rates for the personal lines account. An applicant or
133	insured who is eligible to purchase a multiperil policy from the
134	corporation may purchase a multiperil policy from an authorized
135	insurer without prejudice to the applicant's or insured's
136	eligibility to prospectively purchase a policy that provides
137	coverage only for the peril of wind from the corporation. An
138	applicant or insured who is eligible for a corporation policy
139	that provides coverage only for the peril of wind may elect to
140	purchase or retain such policy and also purchase or retain
141	coverage excluding wind from an authorized insurer without
142	prejudice to the applicant's or insured's eligibility to
143	prospectively purchase a policy that provides multiperil
144	coverage from the corporation. It is the goal of the Legislature
145	that there would be an overall average savings of 10 percent or
146	more for a policyholder who currently has a wind-only policy
147	with the corporation, and an ex-wind policy with a voluntary
148	insurer or the corporation, and who then obtains a multiperil
149	policy from the corporation. It is the intent of the Legislature
150	that the offer of multiperil coverage in the high-risk account
151	be made and implemented in a manner that does not adversely
152	affect the tax-exempt status of the corporation or
153	creditworthiness of or security for currently outstanding
154	financing obligations or credit facilities of the high-risk
155	account, the personal lines account, or the commercial lines
156	account. The high-risk account must also include quota share
157	primary insurance under subparagraph (c)2. The area eligible for
158	coverage under the high-risk account also includes the area
159	within Port Canaveral, which is bordered on the south by the
160	City of Cape Canaveral, bordered on the west by the Banana
161	River, and bordered on the north by Federal Government property.
162	b.  The three separate accounts must be maintained as long
163	as financing obligations entered into by the Florida Windstorm
164	Underwriting Association or Residential Property and Casualty
165	Joint Underwriting Association are outstanding, in accordance
166	with the terms of the corresponding financing documents. When
167	the financing obligations are no longer outstanding, in
168	accordance with the terms of the corresponding financing
169	documents, the corporation may use a single account for all
170	revenues, assets, liabilities, losses, and expenses of the
171	corporation. Consistent with the requirement of this
172	subparagraph and prudent investment policies that minimize the
173	cost of carrying debt, the board shall exercise its best efforts
174	to retire existing debt or to obtain approval of necessary
175	parties to amend the terms of existing debt, so as to structure
176	the most efficient plan to consolidate the three separate
177	accounts into a single account. By February 1, 2007, the board
178	shall submit a report to the Financial Services Commission, the
179	President of the Senate, and the Speaker of the House of
180	Representatives which includes an analysis of consolidating the
181	accounts, the actions the board has taken to minimize the cost
182	of carrying debt, and its recommendations for executing the most
183	efficient plan.
184	c.  Creditors of the Residential Property and Casualty
185	Joint Underwriting Association and of the accounts specified in
186	sub-sub-subparagraphs a.(I) and (II) may have a claim against,
187	and recourse to, the accounts referred to in sub-sub-
188	subparagraphs a.(I) and (II) and shall have no claim against, or
189	recourse to, the account referred to in sub-sub-subparagraph
190	a.(III). Creditors of the Florida Windstorm Underwriting
191	Association shall have a claim against, and recourse to, the
192	account referred to in sub-sub-subparagraph a.(III) and shall
193	have no claim against, or recourse to, the accounts referred to
194	in sub-sub-subparagraphs a.(I) and (II).
195	d.  Revenues, assets, liabilities, losses, and expenses not
196	attributable to particular accounts shall be prorated among the
197	accounts.
198	e.  The Legislature finds that the revenues of the
199	corporation are revenues that are necessary to meet the
200	requirements set forth in documents authorizing the issuance of
201	bonds under this subsection.
202	f.  No part of the income of the corporation may inure to
203	the benefit of any private person.
204	3.  With respect to a deficit in an account:
205	a.  After accounting for the Citizens policyholder
206	surcharge imposed under sub-subparagraph i., when the remaining
207	projected deficit incurred in a particular calendar year is not
208	greater than 6 percent of the aggregate statewide direct written
209	premium for the subject lines of business for the prior calendar
210	year, the entire deficit shall be recovered through regular
211	assessments of assessable insurers under paragraph (p) and
212	assessable insureds.
213	b.  After accounting for the Citizens policyholder
214	surcharge imposed under sub-subparagraph i., when the remaining
215	projected deficit incurred in a particular calendar year exceeds
216	6 percent of the aggregate statewide direct written premium for
217	the subject lines of business for the prior calendar year, the
218	corporation shall levy regular assessments on assessable
219	insurers under paragraph (p) and on assessable insureds in an
220	amount equal to the greater of 6 percent of the deficit or 6
221	percent of the aggregate statewide direct written premium for
222	the subject lines of business for the prior calendar year. Any
223	remaining deficit shall be recovered through emergency
224	assessments under sub-subparagraph d.
225	c.  Each assessable insurer's share of the amount being
226	assessed under sub-subparagraph a. or sub-subparagraph b. shall
227	be in the proportion that the assessable insurer's direct
228	written premium for the subject lines of business for the year
229	preceding the assessment bears to the aggregate statewide direct
230	written premium for the subject lines of business for that year.
231	The assessment percentage applicable to each assessable insured
232	is the ratio of the amount being assessed under sub-subparagraph
233	a. or sub-subparagraph b. to the aggregate statewide direct
234	written premium for the subject lines of business for the prior
235	year. Assessments levied by the corporation on assessable
236	insurers under sub-subparagraphs a. and b. shall be paid as
237	required by the corporation's plan of operation and paragraph
238	(p). Assessments levied by the corporation on assessable
239	insureds under sub-subparagraphs a. and b. shall be collected by
240	the surplus lines agent at the time the surplus lines agent
241	collects the surplus lines tax required by s. 626.932 and shall
242	be paid to the Florida Surplus Lines Service Office at the time
243	the surplus lines agent pays the surplus lines tax to the
244	Florida Surplus Lines Service Office. Upon receipt of regular
245	assessments from surplus lines agents, the Florida Surplus Lines
246	Service Office shall transfer the assessments directly to the
247	corporation as determined by the corporation.
248	d.  Upon a determination by the board of governors that a
249	deficit in an account exceeds the amount that will be recovered
250	through regular assessments under sub-subparagraph a. or sub-
251	subparagraph b., plus the amount that is expected to be
252	recovered through surcharges under sub-subparagraph i., as to
253	the remaining projected deficit the board shall levy, after
254	verification by the office, emergency assessments, for as many
255	years as necessary to cover the deficits, to be collected by
256	assessable insurers and the corporation and collected from
257	assessable insureds upon issuance or renewal of policies for
258	subject lines of business, excluding National Flood Insurance
259	policies. The amount of the emergency assessment collected in a
260	particular year shall be a uniform percentage of that year's
261	direct written premium for subject lines of business and all
262	accounts of the corporation, excluding National Flood Insurance
263	Program policy premiums, as annually determined by the board and
264	verified by the office. The office shall verify the arithmetic
265	calculations involved in the board's determination within 30
266	days after receipt of the information on which the determination
267	was based. Notwithstanding any other provision of law, the
268	corporation and each assessable insurer that writes subject
269	lines of business shall collect emergency assessments from its
270	policyholders without such obligation being affected by any
271	credit, limitation, exemption, or deferment. Emergency
272	assessments levied by the corporation on assessable insureds
273	shall be collected by the surplus lines agent at the time the
274	surplus lines agent collects the surplus lines tax required by
275	s. 626.932 and shall be paid to the Florida Surplus Lines
276	Service Office at the time the surplus lines agent pays the
277	surplus lines tax to the Florida Surplus Lines Service Office.
278	The emergency assessments so collected shall be transferred
279	directly to the corporation on a periodic basis as determined by
280	the corporation and shall be held by the corporation solely in
281	the applicable account. The aggregate amount of emergency
282	assessments levied for an account under this sub-subparagraph in
283	any calendar year may, at the discretion of the board of
284	governors, be less than but may not exceed the greater of 10
285	percent of the amount needed to cover the deficit, plus
286	interest, fees, commissions, required reserves, and other costs
287	associated with financing of the original deficit, or 10 percent
288	of the aggregate statewide direct written premium for subject
289	lines of business and for all accounts of the corporation for
290	the prior year, plus interest, fees, commissions, required
291	reserves, and other costs associated with financing the deficit.
292	e.  The corporation may pledge the proceeds of assessments,
293	projected recoveries from the Florida Hurricane Catastrophe
294	Fund, other insurance and reinsurance recoverables, policyholder
295	surcharges and other surcharges, and other funds available to
296	the corporation as the source of revenue for and to secure bonds
297	issued under paragraph (p), bonds or other indebtedness issued
298	under subparagraph (c)3., or lines of credit or other financing
299	mechanisms issued or created under this subsection, or to retire
300	any other debt incurred as a result of deficits or events giving
301	rise to deficits, or in any other way that the board determines
302	will efficiently recover such deficits. The purpose of the lines
303	of credit or other financing mechanisms is to provide additional
304	resources to assist the corporation in covering claims and
305	expenses attributable to a catastrophe. As used in this
306	subsection, the term "assessments" includes regular assessments
307	under sub-subparagraph a., sub-subparagraph b., or subparagraph
308	(p)1. and emergency assessments under sub-subparagraph d.
309	Emergency assessments collected under sub-subparagraph d. are
310	not part of an insurer's rates, are not premium, and are not
311	subject to premium tax, fees, or commissions; however, failure
312	to pay the emergency assessment shall be treated as failure to
313	pay premium. The emergency assessments under sub-subparagraph d.
314	shall continue as long as any bonds issued or other indebtedness
315	incurred with respect to a deficit for which the assessment was
316	imposed remain outstanding, unless adequate provision has been
317	made for the payment of such bonds or other indebtedness
318	pursuant to the documents governing such bonds or other
319	indebtedness.
320	f.  As used in this subsection for purposes of any deficit
321	incurred on or after January 25, 2007, the term "subject lines
322	of business" means insurance written by assessable insurers or
323	procured by assessable insureds for all property and casualty
324	lines of business in this state, but not including workers'
325	compensation or medical malpractice. As used in the sub-
326	subparagraph, the term "property and casualty lines of business"
327	includes all lines of business identified on Form 2, Exhibit of
328	Premiums and Losses, in the annual statement required of
329	authorized insurers by s. 624.424 and any rule adopted under
330	this section, except for those lines identified as accident and
331	health insurance and except for policies written under the
332	National Flood Insurance Program or the Federal Crop Insurance
333	Program. For purposes of this sub-subparagraph, the term
334	"workers' compensation" includes both workers' compensation
335	insurance and excess workers' compensation insurance.
336	g.  The Florida Surplus Lines Service Office shall
337	determine annually the aggregate statewide written premium in
338	subject lines of business procured by assessable insureds and
339	shall report that information to the corporation in a form and
340	at a time the corporation specifies to ensure that the
341	corporation can meet the requirements of this subsection and the
342	corporation's financing obligations.
343	h.  The Florida Surplus Lines Service Office shall verify
344	the proper application by surplus lines agents of assessment
345	percentages for regular assessments and emergency assessments
346	levied under this subparagraph on assessable insureds and shall
347	assist the corporation in ensuring the accurate, timely
348	collection and payment of assessments by surplus lines agents as
349	required by the corporation.
350	i.(I)  If a deficit is incurred in any account in 2008 or
351	thereafter, the board of governors shall levy a Citizens
352	policyholder surcharge against all policyholders of the
353	corporation.
354	(II)  The policyholder's liability for the Citizens
355	policyholder surcharge attaches on the date of the order levying
356	the surcharge or upon the initial issuance of a policy within
357	the first 12 months after the date of the order. The Citizens
358	policyholder surcharge is payable upon cancellation or
359	termination of the policy, upon renewal of the policy, or upon
360	issuance of a new policy within the first 12 months after the
361	date of the levy.
362	(III)  The Citizens policyholder surcharge for a 12-month
363	period, which shall be levied collected at the time of issuance
364	or renewal of a policy, as a uniform percentage of the premium
365	for the policy of up to 15 percent of such premium, which funds
366	shall be used to offset the deficit.
367	(IV)  The corporation may not levy any regular assessments
368	under paragraph (q) pursuant to sub-subparagraph a. or sub-
369	subparagraph b. with respect to a particular year's deficit
370	until the corporation has first levied a Citizens policyholder
371	surcharge under this sub-subparagraph in the full amount
372	authorized by this sub-subparagraph.
373	(V)  Citizens policyholder surcharges under this sub-
374	subparagraph are not considered premium and are not subject to
375	commissions, fees, or premium taxes. However, failure to pay
376	such surcharges shall be treated as failure to pay premium.
377	j.  If the amount of any assessments or surcharges
378	collected from corporation policyholders, assessable insurers or
379	their policyholders, or assessable insureds exceeds the amount
380	of the deficits, such excess amounts shall be remitted to and
381	retained by the corporation in a reserve to be used by the
382	corporation, as determined by the board of governors and
383	approved by the office, to pay claims or reduce any past,
384	present, or future plan-year deficits or to reduce outstanding
385	debt.
386	(c)  The plan of operation of the corporation:
387	1.  Must provide for adoption of residential property and
388	casualty insurance policy forms and commercial residential and
389	nonresidential property insurance forms, which forms must be
390	approved by the office prior to use. The corporation shall adopt
391	the following policy forms:
392	a.  Standard personal lines policy forms that are
393	comprehensive multiperil policies providing full coverage of a
394	residential property equivalent to the coverage provided in the
395	private insurance market under an HO-3, HO-4, or HO-6 policy.
396	b.  Basic personal lines policy forms that are policies
397	similar to an HO-8 policy or a dwelling fire policy that provide
398	coverage meeting the requirements of the secondary mortgage
399	market, but which coverage is more limited than the coverage
400	under a standard policy.
401	c.  Commercial lines residential and nonresidential policy
402	forms that are generally similar to the basic perils of full
403	coverage obtainable for commercial residential structures and
404	commercial nonresidential structures in the admitted voluntary
405	market.
406	d.  Personal lines and commercial lines residential
407	property insurance forms that cover the peril of wind only. The
408	forms are applicable only to residential properties located in
409	areas eligible for coverage under the high-risk account referred
410	to in sub-subparagraph (b)2.a.
411	e.  Commercial lines nonresidential property insurance
412	forms that cover the peril of wind only. The forms are
413	applicable only to nonresidential properties located in areas
414	eligible for coverage under the high-risk account referred to in
415	sub-subparagraph (b)2.a.
416	f.  The corporation may adopt variations of the policy
417	forms listed in sub-subparagraphs a.-e. that contain more
418	restrictive coverage.
419	2.a.  Must provide that the corporation adopt a program in
420	which the corporation and authorized insurers enter into quota
421	share primary insurance agreements for hurricane coverage, as
422	defined in s. 627.4025(2)(a), for eligible risks, and adopt
423	property insurance forms for eligible risks which cover the
424	peril of wind only. As used in this subsection, the term:
425	(I)  "Quota share primary insurance" means an arrangement
426	in which the primary hurricane coverage of an eligible risk is
427	provided in specified percentages by the corporation and an
428	authorized insurer. The corporation and authorized insurer are
429	each solely responsible for a specified percentage of hurricane
430	coverage of an eligible risk as set forth in a quota share
431	primary insurance agreement between the corporation and an
432	authorized insurer and the insurance contract. The
433	responsibility of the corporation or authorized insurer to pay
434	its specified percentage of hurricane losses of an eligible
435	risk, as set forth in the quota share primary insurance
436	agreement, may not be altered by the inability of the other
437	party to the agreement to pay its specified percentage of
438	hurricane losses. Eligible risks that are provided hurricane
439	coverage through a quota share primary insurance arrangement
440	must be provided policy forms that set forth the obligations of
441	the corporation and authorized insurer under the arrangement,
442	clearly specify the percentages of quota share primary insurance
443	provided by the corporation and authorized insurer, and
444	conspicuously and clearly state that neither the authorized
445	insurer nor the corporation may be held responsible beyond its
446	specified percentage of coverage of hurricane losses.
447	(II)  "Eligible risks" means personal lines residential and
448	commercial lines residential risks that meet the underwriting
449	criteria of the corporation and are located in areas that were
450	eligible for coverage by the Florida Windstorm Underwriting
451	Association on January 1, 2002.
452	b.  The corporation may enter into quota share primary
453	insurance agreements with authorized insurers at corporation
454	coverage levels of 90 percent and 50 percent.
455	c.  If the corporation determines that additional coverage
456	levels are necessary to maximize participation in quota share
457	primary insurance agreements by authorized insurers, the
458	corporation may establish additional coverage levels. However,
459	the corporation's quota share primary insurance coverage level
460	may not exceed 90 percent.
461	d.  Any quota share primary insurance agreement entered
462	into between an authorized insurer and the corporation must
463	provide for a uniform specified percentage of coverage of
464	hurricane losses, by county or territory as set forth by the
465	corporation board, for all eligible risks of the authorized
466	insurer covered under the quota share primary insurance
467	agreement.
468	e.  Any quota share primary insurance agreement entered
469	into between an authorized insurer and the corporation is
470	subject to review and approval by the office. However, such
471	agreement shall be authorized only as to insurance contracts
472	entered into between an authorized insurer and an insured who is
473	already insured by the corporation for wind coverage.
474	f.  For all eligible risks covered under quota share
475	primary insurance agreements, the exposure and coverage levels
476	for both the corporation and authorized insurers shall be
477	reported by the corporation to the Florida Hurricane Catastrophe
478	Fund. For all policies of eligible risks covered under quota
479	share primary insurance agreements, the corporation and the
480	authorized insurer shall maintain complete and accurate records
481	for the purpose of exposure and loss reimbursement audits as
482	required by Florida Hurricane Catastrophe Fund rules. The
483	corporation and the authorized insurer shall each maintain
484	duplicate copies of policy declaration pages and supporting
485	claims documents.
486	g.  The corporation board shall establish in its plan of
487	operation standards for quota share agreements which ensure that
488	there is no discriminatory application among insurers as to the
489	terms of quota share agreements, pricing of quota share
490	agreements, incentive provisions if any, and consideration paid
491	for servicing policies or adjusting claims.
492	h.  The quota share primary insurance agreement between the
493	corporation and an authorized insurer must set forth the
494	specific terms under which coverage is provided, including, but
495	not limited to, the sale and servicing of policies issued under
496	the agreement by the insurance agent of the authorized insurer
497	producing the business, the reporting of information concerning
498	eligible risks, the payment of premium to the corporation, and
499	arrangements for the adjustment and payment of hurricane claims
500	incurred on eligible risks by the claims adjuster and personnel
501	of the authorized insurer. Entering into a quota sharing
502	insurance agreement between the corporation and an authorized
503	insurer shall be voluntary and at the discretion of the
504	authorized insurer.
505	3.  May provide that the corporation may employ or
506	otherwise contract with individuals or other entities to provide
507	administrative or professional services that may be appropriate
508	to effectuate the plan. The corporation shall have the power to
509	borrow funds, by issuing bonds or by incurring other
510	indebtedness, and shall have other powers reasonably necessary
511	to effectuate the requirements of this subsection, including,
512	without limitation, the power to issue bonds and incur other
513	indebtedness in order to refinance outstanding bonds or other
514	indebtedness. The corporation may, but is not required to, seek
515	judicial validation of its bonds or other indebtedness under
516	chapter 75. The corporation may issue bonds or incur other
517	indebtedness, or have bonds issued on its behalf by a unit of
518	local government pursuant to subparagraph (p)2., in the absence
519	of a hurricane or other weather-related event, upon a
520	determination by the corporation, subject to approval by the
521	office, that such action would enable it to efficiently meet the
522	financial obligations of the corporation and that such
523	financings are reasonably necessary to effectuate the
524	requirements of this subsection. The corporation is authorized
525	to take all actions needed to facilitate tax-free status for any
526	such bonds or indebtedness, including formation of trusts or
527	other affiliated entities. The corporation shall have the
528	authority to pledge assessments, projected recoveries from the
529	Florida Hurricane Catastrophe Fund, other reinsurance
530	recoverables, market equalization and other surcharges, and
531	other funds available to the corporation as security for bonds
532	or other indebtedness. In recognition of s. 10, Art. I of the
533	State Constitution, prohibiting the impairment of obligations of
534	contracts, it is the intent of the Legislature that no action be
535	taken whose purpose is to impair any bond indenture or financing
536	agreement or any revenue source committed by contract to such
537	bond or other indebtedness.
538	4.a.  Must require that the corporation operate subject to
539	the supervision and approval of a board of governors consisting
540	of eight individuals who are residents of this state, from
541	different geographical areas of this state. The Governor, the
542	Chief Financial Officer, the President of the Senate, and the
543	Speaker of the House of Representatives shall each appoint two
544	members of the board. At least one of the two members appointed
545	by each appointing officer must have demonstrated expertise in
546	insurance. The Chief Financial Officer shall designate one of
547	the appointees as chair. All board members serve at the pleasure
548	of the appointing officer. All members of the board of governors
549	are subject to removal at will by the officers who appointed
550	them. All board members, including the chair, must be appointed
551	to serve for 3-year terms beginning annually on a date
552	designated by the plan. However, for the first term beginning on
553	or after July 1, 2009, each appointing officer shall appoint one
554	member of the board for a 2-year term and one member for a 3-
555	year term. Any board vacancy shall be filled for the unexpired
556	term by the appointing officer. The Chief Financial Officer
557	shall appoint a technical advisory group to provide information
558	and advice to the board of governors in connection with the
559	board's duties under this subsection. The executive director and
560	senior managers of the corporation shall be engaged by the board
561	and serve at the pleasure of the board. Any executive director
562	appointed on or after July 1, 2006, is subject to confirmation
563	by the Senate. The executive director is responsible for
564	employing other staff as the corporation may require, subject to
565	review and concurrence by the board.
566	b.  The board shall create a Market Accountability Advisory
567	Committee to assist the corporation in developing awareness of
568	its rates and its customer and agent service levels in
569	relationship to the voluntary market insurers writing similar
570	coverage. The members of the advisory committee shall consist of
571	the following 11 persons, one of whom must be elected chair by
572	the members of the committee: four representatives, one
573	appointed by the Florida Association of Insurance Agents, one by
574	the Florida Association of Insurance and Financial Advisors, one
575	by the Professional Insurance Agents of Florida, and one by the
576	Latin American Association of Insurance Agencies; three
577	representatives appointed by the insurers with the three highest
578	voluntary market share of residential property insurance
579	business in the state; one representative from the Office of
580	Insurance Regulation; one consumer appointed by the board who is
581	insured by the corporation at the time of appointment to the
582	committee; one representative appointed by the Florida
583	Association of Realtors; and one representative appointed by the
584	Florida Bankers Association. All members must serve for 3-year
585	terms and may serve for consecutive terms. The committee shall
586	report to the corporation at each board meeting on insurance
587	market issues which may include rates and rate competition with
588	the voluntary market; service, including policy issuance, claims
589	processing, and general responsiveness to policyholders,
590	applicants, and agents; and matters relating to depopulation.
591	5.  Must provide a procedure for determining the
592	eligibility of a risk for coverage, as follows:
593	a.  Subject to the provisions of s. 627.3517, with respect
594	to personal lines residential risks, if the risk is offered
595	coverage from an authorized insurer at the insurer's approved
596	rate under either a standard policy including wind coverage or,
597	if consistent with the insurer's underwriting rules as filed
598	with the office, a basic policy including wind coverage, for a
599	new application to the corporation for coverage, the risk is not
600	eligible for any policy issued by the corporation unless the
601	premium for coverage from the authorized insurer is more than 15
602	percent greater than the premium for comparable coverage from
603	the corporation. If the risk is not able to obtain any such
604	offer, the risk is eligible for either a standard policy
605	including wind coverage or a basic policy including wind
606	coverage issued by the corporation; however, if the risk could
607	not be insured under a standard policy including wind coverage
608	regardless of market conditions, the risk shall be eligible for
609	a basic policy including wind coverage unless rejected under
610	subparagraph 8. However, with regard to a policyholder of the
611	corporation or a policyholder removed from the corporation
612	through an assumption agreement until the end of the assumption
613	period, the policyholder remains eligible for coverage from the
614	corporation regardless of any offer of coverage from an
615	authorized insurer or surplus lines insurer. The corporation
616	shall determine the type of policy to be provided on the basis
617	of objective standards specified in the underwriting manual and
618	based on generally accepted underwriting practices.
619	(I)  If the risk accepts an offer of coverage through the
620	market assistance plan or an offer of coverage through a
621	mechanism established by the corporation before a policy is
622	issued to the risk by the corporation or during the first 30
623	days of coverage by the corporation, and the producing agent who
624	submitted the application to the plan or to the corporation is
625	not currently appointed by the insurer, the insurer shall:
626	(A)  Pay to the producing agent of record of the policy,
627	for the first year, an amount that is the greater of the
628	insurer's usual and customary commission for the type of policy
629	written or a fee equal to the usual and customary commission of
630	the corporation; or
631	(B)  Offer to allow the producing agent of record of the
632	policy to continue servicing the policy for a period of not less
633	than 1 year and offer to pay the agent the greater of the
634	insurer's or the corporation's usual and customary commission
635	for the type of policy written.
636
637	If the producing agent is unwilling or unable to accept
638	appointment, the new insurer shall pay the agent in accordance
639	with sub-sub-sub-subparagraph (A).
640	(II)  When the corporation enters into a contractual
641	agreement for a take-out plan, the producing agent of record of
642	the corporation policy is entitled to retain any unearned
643	commission on the policy, and the insurer shall:
644	(A)  Pay to the producing agent of record of the
645	corporation policy, for the first year, an amount that is the
646	greater of the insurer's usual and customary commission for the
647	type of policy written or a fee equal to the usual and customary
648	commission of the corporation; or
649	(B)  Offer to allow the producing agent of record of the
650	corporation policy to continue servicing the policy for a period
651	of not less than 1 year and offer to pay the agent the greater
652	of the insurer's or the corporation's usual and customary
653	commission for the type of policy written.
654
655	If the producing agent is unwilling or unable to accept
656	appointment, the new insurer shall pay the agent in accordance
657	with sub-sub-sub-subparagraph (A).
658	b.  With respect to commercial lines residential risks, for
659	a new application to the corporation for coverage, if the risk
660	is offered coverage under a policy including wind coverage from
661	an authorized insurer at its approved rate, the risk is not
662	eligible for any policy issued by the corporation unless the
663	premium for coverage from the authorized insurer is more than 15
664	percent greater than the premium for comparable coverage from
665	the corporation. If the risk is not able to obtain any such
666	offer, the risk is eligible for a policy including wind coverage
667	issued by the corporation. However, with regard to a
668	policyholder of the corporation or a policyholder removed from
669	the corporation through an assumption agreement until the end of
670	the assumption period, the policyholder remains eligible for
671	coverage from the corporation regardless of any offer of
672	coverage from an authorized insurer or surplus lines insurer.
673	(I)  If the risk accepts an offer of coverage through the
674	market assistance plan or an offer of coverage through a
675	mechanism established by the corporation before a policy is
676	issued to the risk by the corporation or during the first 30
677	days of coverage by the corporation, and the producing agent who
678	submitted the application to the plan or the corporation is not
679	currently appointed by the insurer, the insurer shall:
680	(A)  Pay to the producing agent of record of the policy,
681	for the first year, an amount that is the greater of the
682	insurer's usual and customary commission for the type of policy
683	written or a fee equal to the usual and customary commission of
684	the corporation; or
685	(B)  Offer to allow the producing agent of record of the
686	policy to continue servicing the policy for a period of not less
687	than 1 year and offer to pay the agent the greater of the
688	insurer's or the corporation's usual and customary commission
689	for the type of policy written.
690
691	If the producing agent is unwilling or unable to accept
692	appointment, the new insurer shall pay the agent in accordance
693	with sub-sub-sub-subparagraph (A).
694	(II)  When the corporation enters into a contractual
695	agreement for a take-out plan, the producing agent of record of
696	the corporation policy is entitled to retain any unearned
697	commission on the policy, and the insurer shall:
698	(A)  Pay to the producing agent of record of the
699	corporation policy, for the first year, an amount that is the
700	greater of the insurer's usual and customary commission for the
701	type of policy written or a fee equal to the usual and customary
702	commission of the corporation; or
703	(B)  Offer to allow the producing agent of record of the
704	corporation policy to continue servicing the policy for a period
705	of not less than 1 year and offer to pay the agent the greater
706	of the insurer's or the corporation's usual and customary
707	commission for the type of policy written.
708
709	If the producing agent is unwilling or unable to accept
710	appointment, the new insurer shall pay the agent in accordance
711	with sub-sub-sub-subparagraph (A).
712	c.  For purposes of determining comparable coverage under
713	sub-subparagraphs a. and b., the comparison shall be based on
714	those forms and coverages that are reasonably comparable. The
715	corporation may rely on a determination of comparable coverage
716	and premium made by the producing agent who submits the
717	application to the corporation, made in the agent's capacity as
718	the corporation's agent. A comparison may be made solely of the
719	premium with respect to the main building or structure only on
720	the following basis: the same coverage A or other building
721	limits; the same percentage hurricane deductible that applies on
722	an annual basis or that applies to each hurricane for commercial
723	residential property; the same percentage of ordinance and law
724	coverage, if the same limit is offered by both the corporation
725	and the authorized insurer; the same mitigation credits, to the
726	extent the same types of credits are offered both by the
727	corporation and the authorized insurer; the same method for loss
728	payment, such as replacement cost or actual cash value, if the
729	same method is offered both by the corporation and the
730	authorized insurer in accordance with underwriting rules; and
731	any other form or coverage that is reasonably comparable as
732	determined by the board. If an application is submitted to the
733	corporation for wind-only coverage in the high-risk account, the
734	premium for the corporation's wind-only policy plus the premium
735	for the ex-wind policy that is offered by an authorized insurer
736	to the applicant shall be compared to the premium for multiperil
737	coverage offered by an authorized insurer, subject to the
738	standards for comparison specified in this subparagraph. If the
739	corporation or the applicant requests from the authorized
740	insurer a breakdown of the premium of the offer by types of
741	coverage so that a comparison may be made by the corporation or
742	its agent and the authorized insurer refuses or is unable to
743	provide such information, the corporation may treat the offer as
744	not being an offer of coverage from an authorized insurer at the
745	insurer's approved rate.
746	6.  Must include rules for classifications of risks and
747	rates therefor.
748	7.  Must provide that if premium and investment income for
749	an account attributable to a particular calendar year are in
750	excess of projected losses and expenses for the account
751	attributable to that year, such excess shall be held in surplus
752	in the account. Such surplus shall be available to defray
753	deficits in that account as to future years and shall be used
754	for that purpose prior to assessing assessable insurers and
755	assessable insureds as to any calendar year.
756	8.  Must provide objective criteria and procedures to be
757	uniformly applied for all applicants in determining whether an
758	individual risk is so hazardous as to be uninsurable. In making
759	this determination and in establishing the criteria and
760	procedures, the following shall be considered:
761	a.  Whether the likelihood of a loss for the individual
762	risk is substantially higher than for other risks of the same
763	class; and
764	b.  Whether the uncertainty associated with the individual
765	risk is such that an appropriate premium cannot be determined.
766
767	The acceptance or rejection of a risk by the corporation shall
768	be construed as the private placement of insurance, and the
769	provisions of chapter 120 shall not apply.
770	9.  Must provide that the corporation shall make its best
771	efforts to procure catastrophe reinsurance at reasonable rates,
772	to cover its projected 100-year probable maximum loss as
773	determined by the board of governors.
774	10.  The policies issued by the corporation must provide
775	that, if the corporation or the market assistance plan obtains
776	an offer from an authorized insurer to cover the risk at its
777	approved rates, the risk is no longer eligible for renewal
778	through the corporation, except as otherwise provided in this
779	subsection.
780	11.  Corporation policies and applications must include a
781	notice that the corporation policy could, under this section, be
782	replaced with a policy issued by an authorized insurer that does
783	not provide coverage identical to the coverage provided by the
784	corporation. The notice shall also specify that acceptance of
785	corporation coverage creates a conclusive presumption that the
786	applicant or policyholder is aware of this potential.
787	12.  May establish, subject to approval by the office,
788	different eligibility requirements and operational procedures
789	for any line or type of coverage for any specified county or
790	area if the board determines that such changes to the
791	eligibility requirements and operational procedures are
792	justified due to the voluntary market being sufficiently stable
793	and competitive in such area or for such line or type of
794	coverage and that consumers who, in good faith, are unable to
795	obtain insurance through the voluntary market through ordinary
796	methods would continue to have access to coverage from the
797	corporation. When coverage is sought in connection with a real
798	property transfer, such requirements and procedures shall not
799	provide for an effective date of coverage later than the date of
800	the closing of the transfer as established by the transferor,
801	the transferee, and, if applicable, the lender.
802	13.  Must provide that, with respect to the high-risk
803	account, any assessable insurer with a surplus as to
804	policyholders of $25 million or less writing 25 percent or more
805	of its total countrywide property insurance premiums in this
806	state may petition the office, within the first 90 days of each
807	calendar year, to qualify as a limited apportionment company. A
808	regular assessment levied by the corporation on a limited
809	apportionment company for a deficit incurred by the corporation
810	for the high-risk account in 2006 or thereafter may be paid to
811	the corporation on a monthly basis as the assessments are
812	collected by the limited apportionment company from its insureds
813	pursuant to s. 627.3512, but the regular assessment must be paid
814	in full within 12 months after being levied by the corporation.
815	A limited apportionment company shall collect from its
816	policyholders any emergency assessment imposed under sub-
817	subparagraph (b)3.d. The plan shall provide that, if the office
818	determines that any regular assessment will result in an
819	impairment of the surplus of a limited apportionment company,
820	the office may direct that all or part of such assessment be
821	deferred as provided in subparagraph (p)4. However, there shall
822	be no limitation or deferment of an emergency assessment to be
823	collected from policyholders under sub-subparagraph (b)3.d.
824	14.  Must provide that the corporation appoint as its
825	licensed agents only those agents who also hold an appointment
826	as defined in s. 626.015(3) with an insurer who at the time of
827	the agent's initial appointment by the corporation is authorized
828	to write and is actually writing personal lines residential
829	property coverage, commercial residential property coverage, or
830	commercial nonresidential property coverage within the state.
831	15.  Must provide, by July 1, 2007, a premium payment plan
832	option to its policyholders which allows at a minimum for
833	quarterly and semiannual payment of premiums. A monthly payment
834	plan may, but is not required to, be offered.
835	16.  Must limit coverage on mobile homes or manufactured
836	homes built prior to 1994 to actual cash value of the dwelling
837	rather than replacement costs of the dwelling.
838	17.  May provide such limits of coverage as the board
839	determines, consistent with the requirements of this subsection.
840	18.  May require commercial property to meet specified
841	hurricane mitigation construction features as a condition of
842	eligibility for coverage.
843	19.a.  Shall require the agent to obtain from any applicant
844	for coverage the following acknowledgement, signed by the
845	applicant, and shall require the agent of record to obtain the
846	following acknowledgment from each corporation policyholder,
847	signed by the policyholder, prior to the policy's first renewal
848	after the effective date of this act:
849
850	ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT
851	LIABILITY:
852	1.  I UNDERSTAND, AS A CITIZENS PROPERTY
853	INSURANCE CORPORATION POLICYHOLDER, THAT IF THE
854	CORPORATION SUSTAINS A DEFICIT AS A RESULT OF
855	HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY
856	COULD BE SUBJECT TO CITIZENS POLICYHOLDER SURCHARGES,
857	WHICH WOULD BE DUE AND PAYABLE UPON RENEWAL,
858	CANCELLATION, OR TERMINATION OF THE POLICY, AND THAT
859	THE SURCHARGES COULD BE AS HIGH AS 15 PERCENT OF MY
860	PREMIUM FOR DEFICITS IN EACH OF THREE CITIZENS
861	ACCOUNTS, OR A DIFFERENT AMOUNT AS ESTABLISHED BY THE
862	FLORIDA LEGISLATURE.
863	2.  I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO
864	EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS
865	POLICYHOLDERS OF OTHER INSURANCE COMPANIES.
866
867	b.  The corporation shall permanently maintain a signed
868	copy of the signed acknowledgement required by this
869	subparagraph, and the agent may also retain a copy.
870	c.  The signed acknowledgement form creates a conclusive
871	presumption that the policyholder understood and accepted his or
872	her potential surcharge and assessment liability as a Citizens
873	policyholder.
874	Section 3.  Section 627.7031, Florida Statutes, is created
875	to read:
876	627.7031  Residential property insurance option.-
877	(1)  An insurer holding a certificate of authority to write
878	property insurance in this state may offer or renew policies at
879	rates established in accordance with s. 627.062(2)(l), subject
880	to all of the requirements and prohibitions of this section.
881	(2)  An insurer offering or renewing policies at rates
882	established in accordance with s. 627.062(2)(l) may not purchase
883	coverage from the Florida Hurricane Catastrophe Fund under the
884	temporary increase in coverage limit option under s.
885	215.555(17).
886	(3)(a)  Before the effective date of a newly issued or
887	renewal policy at rates established in accordance with s.
888	627.062(2)(l), the applicant or insured must be given the
889	following notice, printed in at least 12-point boldfaced type:
890
891	THE RATE FOR THIS POLICY IS NOT SUBJECT TO FULL RATE
892	REGULATION BY THE FLORIDA OFFICE OF INSURANCE REGULATION AND MAY
893	BE HIGHER THAN RATES APPROVED BY THAT OFFICE. A RESIDENTIAL
894	PROPERTY POLICY SUBJECT TO FULL RATE REGULATION REQUIREMENTS MAY
895	BE AVAILABLE FROM THIS INSURER, ANOTHER INSURER, OR CITIZENS
896	PROPERTY INSURANCE CORPORATION. PLEASE DISCUSS YOUR POLICY
897	OPTIONS WITH AN INSURANCE AGENT WHO CAN PROVIDE A CITIZENS
898	QUOTE. YOU MAY WISH TO VIEW THE OFFICE OF INSURANCE REGULATION'S
899	WEBSITE AT WWW.SHOPANDCOMPARERATES.COM FOR MORE INFORMATION
900	ABOUT CHOICES AVAILABLE TO YOU.
901
902	(b)  For policies renewed at a rate established in
903	accordance with s. 627.062(2)(l), the notice described in
904	paragraph (a) must be provided in writing at the same time as
905	the renewal notice on a document separate from the renewal
906	notice, but may be contained within the same mailing as the
907	renewal notice.
908	(4)  Before the effective date of a newly issued policy at
909	rates established in accordance with s. 627.062(2)(l), or before
910	the effective date of the first renewal at rates established in
911	accordance with s. 627.062(2)(l) of a policy originally issued
912	before the effective date of this section, the applicant or
913	insured must:
914	(a)  Be provided or offered, for comparison purposes, an
915	estimate of the premium for a policy from Citizens Property
916	Insurance Corporation reflecting substantially similar
917	coverages, limits, and deductibles to the extent available.
918	(b)  Provide the insurer or agent with a signed copy of the
919	following acknowledgement form, which must be retained by the
920	insurer or agent for at least 3 years. If the acknowledgement
921	form is signed by the insured or if the insured remits payment
922	in the amount of the rate established in accordance with s.
923	627.062(2)(l) after being mailed or otherwise provided the
924	acknowledgement form specified in this paragraph, and after
925	being mailed, otherwise provided, or offered the comparison
926	specified in paragraph (a), an insurer renewing a policy at such
927	rate shall be deemed to comply with this section, and it is
928	presumed that the insured has been informed and understands the
929	information contained in the comparison and acknowledgement
930	forms:
931
932	ACKNOWLEDGEMENT
933	1.  I HAVE REVIEWED THE REQUIRED DISCLOSURES AND THE
934	REQUIRED PREMIUM COMPARISON.
935	2.  I UNDERSTAND THAT THE RATE FOR THIS RESIDENTIAL
936	PROPERTY INSURANCE POLICY IS NOT SUBJECT TO FULL RATE REGULATION
937	BY THE FLORIDA OFFICE OF INSURANCE REGULATION AND MAY BE HIGHER
938	THAN RATES APPROVED BY THAT OFFICE.
939	3.  I UNDERSTAND THAT A RESIDENTIAL PROPERTY INSURANCE
940	POLICY SUBJECT TO FULL RATE REGULATION REQUIREMENTS MAY BE
941	AVAILABLE FROM CITIZENS PROPERTY INSURANCE CORPORATION.
942	4.  I UNDERSTAND THAT THE FLORIDA OFFICE OF INSURANCE
943	REGULATION'S WEBSITE WWW.SHOPANDCOMPARERATES.COM CONTAINS
944	RESIDENTIAL PROPERTY INSURANCE RATE COMPARISON INFORMATION.
945	5.  I UNDERSTAND THAT IF CITIZENS PROPERTY INSURANCE
946	CORPORATION INCURS A DEFICIT BECAUSE OF HURRICANE LOSSES OR
947	OTHER LOSSES, I MAY BE REQUIRED TO PAY AN ASSESSMENT BASED UPON
948	THE PREMIUM FOR THIS POLICY AND THAT A POLICYHOLDER OF CITIZENS
949	PROPERTY INSURANCE CORPORATION MAY BE REQUIRED TO PAY A
950	DIFFERENT ASSESSMENT.
951
952	(5)  The following types of residential property insurance
953	policies are not eligible for rates established in accordance
954	with s. 627.062(2)(l) and are not subject to the other
955	provisions of this section:
956	(a)  Residential property insurance policies that exclude
957	coverage for the perils of windstorm or hurricane.
958	(b)  Residential property insurance policies that are
959	subject to a consent decree, agreement, understanding, or other
960	arrangement between the insurer and the office relating to rates
961	or premiums for policies removed from Citizens Property
962	Insurance Corporation.
963	(6)  Notwithstanding s. 627.4133, an insurer that has
964	issued a policy under this section shall provide the named
965	insured written notice of nonrenewal at least 180 days before
966	the effective date of the nonrenewal as to subsequent
967	nonrenewals. However, this subsection does not prohibit an
968	insurer from cancelling a policy as permitted under s. 627.4133.
969	The offer of a policy at rates authorized by this section
970	constitutes an offer to renew the policy at the rates specified
971	in the offer and does not constitute a nonrenewal.
972	Section 4.  This act shall take effect January 1, 2011.

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