HB 1243

1	A bill to be entitled
2	An act relating to the Citizens Property Insurance
3	Corporation; amending s. 627.351, F.S.; revising
4	legislative intent; providing that certain residential
5	structures are not eligible for coverage by the
6	corporation after a certain date; requiring policies
7	issued by the corporation to include a provision that
8	prohibits policyholders from engaging the services of a
9	public adjuster; specifying the percentage amount of
10	emergency assessments; revising provisions relating to
11	policyholder surcharges; prohibiting the corporation from
12	levying certain assessments with respect to a year's
13	deficit until the corporation has first levied a specified
14	surcharge; deleting obsolete provisions relating to the
15	corporation's plan of operation; requiring the corporation
16	to commission a consultant to prepare a report on
17	outsourcing various functions and submit such report to
18	the Financial Services Commission by a certain date;
19	revising provisions relating to wind coverage; prohibiting
20	the corporation from accepting applications for commercial
21	nonresidential risks; requiring the policyholders to sign
22	a statement acknowledging that they may be assessed
23	surcharges to cover corporate deficits; providing that
24	policies do not include coverage for screen enclosures and
25	limiting coverage for damage from sinkholes after a
26	certain date; requiring members of the board of governors
27	to abstain from voting on issues on which they have a
28	personal interest; requiring such members to disclose the
29	nature of their interest as a public record; providing
30	that the corporation operates as a residual market
31	mechanism; revising provisions relating to corporation
32	rates; clarifying that the corporation is immune from
33	certain liabilities; deleting a requirement for an annual
34	report to the Legislature on losses attributable to wind-
35	only coverages; requiring owners of properties in Special
36	Flood Hazard Areas to maintain a separate flood insurance
37	policy after a certain date; providing exceptions;
38	amending ss. 627.3511 and 627.712, F.S.; conforming cross-
39	references; providing an effective date.
40
41	Be It Enacted by the Legislature of the State of Florida:
42
43	Section 1.  Paragraphs (a), (b), (c), (d), (n), (o), (s),
44	(w), (y), (aa), and (ee) of subsection (6) of section 627.351,
45	Florida Statutes, are amended to read:
46	627.351  Insurance risk apportionment plans.-
47	(6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
48	(a)1.  It is The public purpose of this subsection is to
49	ensure that there is the existence of an orderly market for
50	property insurance for residents Floridians and Florida
51	businesses of this state.
52	1.  The Legislature finds that actual and threatened
53	catastrophic losses to property from hurricanes in this state
54	have caused insurers to be unwilling or unable to provide
55	property insurance coverage to the extent sought and needed. The
56	Legislature declares that it is in the public interest and
57	serves a public purpose that property in this state be
58	adequately insured in order to facilitate the remediation,
59	reconstruction, and replacement of damaged or destroyed
60	property. Such efforts are necessary in order to avoid or reduce
61	negative effects to the public health, safety, and welfare; the
62	economy of the state; and the revenues of state and local
63	governments. It is necessary, therefore, to provide property
64	insurance to applicants who are entitled to procure insurance
65	through the voluntary market but who, in good faith, are unable
66	to do so. The Legislature finds that private insurers are
67	unwilling or unable to provide affordable property insurance
68	coverage in this state to the extent sought and needed. The
69	absence of affordable property insurance threatens the public
70	health, safety, and welfare and likewise threatens the economic
71	health of the state. The state therefore has a compelling public
72	interest and a public purpose to assist in assuring that
73	property in the state is insured and that it is insured at
74	affordable rates so as to facilitate the remediation,
75	reconstruction, and replacement of damaged or destroyed property
76	in order to reduce or avoid the negative effects otherwise
77	resulting to the public health, safety, and welfare, to the
78	economy of the state, and to the revenues of the state and local
79	governments which are needed to provide for the public welfare.
80	It is necessary, therefore, to provide affordable property
81	insurance to applicants who are in good faith entitled to
82	procure insurance through the voluntary market but are unable to
83	do so. The Legislature intends, therefore, by this subsection
84	that affordable property insurance be provided and that it
85	continue to be provided, as long as necessary, through Citizens
86	Property Insurance Corporation, a government entity that is an
87	integral part of the state, and that is not a private insurance
88	company. To that end, Citizens Property Insurance Corporation
89	shall strive to increase the availability of affordable property
90	insurance in this state, while achieving efficiencies and
91	economies, and while providing service to policyholders,
92	applicants, and agents which is no less than the quality
93	generally provided in the voluntary market, for the achievement
94	of the foregoing public purposes. Because it is essential for
95	this government entity to have the maximum financial resources
96	to pay claims following a catastrophic hurricane, it is the
97	intent of the Legislature that Citizens Property Insurance
98	Corporation continue to be an integral part of the state and
99	that the income of the corporation be exempt from federal income
100	taxation and that interest on the debt obligations issued by the
101	corporation be exempt from federal income taxation.
102	a.  It is also the intent of the Legislature that
103	policyholders, applicants, and agents of the corporation receive
104	service and treatment of the highest possible level and never
105	less than that generally provided in the voluntary market. The
106	corporation must be held to service standards no less than those
107	applied to insurers in the voluntary market by the office with
108	respect to responsiveness, timeliness, customer courtesy, and
109	overall dealings with policyholders, applicants, or agents of
110	the corporation. It is also the intent of the Legislature that
111	the corporation operate efficiently and economically.
112	b.  Because it is essential that the corporation have the
113	maximum financial resources necessary to pay claims following a
114	catastrophic hurricane, the Legislature also intends that the
115	income of the corporation and interest on the debt obligations
116	issued by the corporation be exempt from federal income
117	taxation.
118	2.  The Residential Property and Casualty Joint
119	Underwriting Association originally created by this statute
120	shall be known, as of July 1, 2002, as the Citizens Property
121	Insurance Corporation. The corporation shall provide insurance
122	for residential and commercial property, for applicants who are
123	in good faith entitled, but, in good faith, are unable, to
124	procure insurance through the voluntary market. The corporation
125	shall operate pursuant to a plan of operation approved by order
126	of the Financial Services Commission. The plan is subject to
127	continuous review by the commission. The commission may, by
128	order, withdraw approval of all or part of a plan if the
129	commission determines that conditions have changed since
130	approval was granted and that the purposes of the plan require
131	changes in the plan. The corporation shall continue to operate
132	pursuant to the plan of operation approved by the Office of
133	Insurance Regulation until October 1, 2006. For the purposes of
134	this subsection, residential coverage includes both personal
135	lines residential coverage, which consists of the type of
136	coverage provided by homeowner's, mobile home owner's, dwelling,
137	tenant's, condominium unit owner's, and similar policies;, and
138	commercial lines residential coverage, which consists of the
139	type of coverage provided by condominium association, apartment
140	building, and similar policies.
141	3.  With respect to coverage for personal lines residential
142	structures:
143	a.  Effective January 1, 2009, a personal lines residential
144	structure that has a dwelling replacement cost of $2 million or
145	more, or a single condominium unit that has a combined dwelling
146	and contents content replacement cost of $2 million or more is
147	not eligible for coverage by the corporation. Such dwellings
148	insured by the corporation on December 31, 2008, may continue to
149	be covered by the corporation until the end of the policy term.
150	However, such dwellings that are insured by the corporation and
151	become ineligible for coverage due to the provisions of this
152	subparagraph may reapply and obtain coverage if the property
153	owner provides the corporation with a sworn affidavit from one
154	or more insurance agents, on a form provided by the corporation,
155	stating that the agents have made their best efforts to obtain
156	coverage and that the property has been rejected for coverage by
157	at least one authorized insurer and at least three surplus lines
158	insurers. If such conditions are met, the dwelling may be
159	insured by the corporation for up to 3 years, after which time
160	the dwelling is ineligible for coverage. The office shall
161	approve the method used by the corporation for valuing the
162	dwelling replacement cost for the purposes of this subparagraph.
163	If a policyholder is insured by the corporation prior to being
164	determined to be ineligible pursuant to this subparagraph and
165	such policyholder files a lawsuit challenging the determination,
166	the policyholder may remain insured by the corporation until the
167	conclusion of the litigation.
168	b.  Effective January 1, 2012, a structure that has a
169	dwelling replacement cost of $1 million or more, or a single
170	condominium unit that has a combined dwelling and contents
171	replacement cost of $1 million or more is not eligible for
172	coverage by the corporation. Such dwellings insured by the
173	corporation on December 31, 2011, may continue to be covered by
174	the corporation only until the end of the policy term.
175	c.  Effective January 1, 2014, a structure insured in the
176	personal lines account of the corporation that has a dwelling
177	replacement cost of $750,000 or more, or a single condominium
178	unit that has a combined dwelling and contents replacement cost
179	of $750,000 or more is not eligible for coverage by the
180	corporation. Such dwellings insured by the corporation on
181	December 31, 2013, may continue to be covered by the corporation
182	until the end of the policy term.
183	d.  Effective January 1, 2016, a structure insured in the
184	personal lines account of the corporation that has a dwelling
185	replacement cost of $500,000 or more, or a single condominium
186	unit that has a combined dwelling and contents replacement cost
187	of $500,000 or more is not eligible for coverage by the
188	corporation. Such dwellings insured by the corporation on
189	December 31, 2015, may continue to be covered by the corporation
190	until the end of the policy term.
191	4.  It is the intent of the Legislature that policyholders,
192	applicants, and agents of the corporation receive service and
193	treatment of the highest possible level but never less than that
194	generally provided in the voluntary market. It also is intended
195	that the corporation be held to service standards no less than
196	those applied to insurers in the voluntary market by the office
197	with respect to responsiveness, timeliness, customer courtesy,
198	and overall dealings with policyholders, applicants, or agents
199	of the corporation.
200	4.5.  Effective January 1, 2009, a personal lines
201	residential structure that is located in the "wind-borne debris
202	region," as defined in s. 1609.2, International Building Code
203	(2006), and that has an insured value on the structure of
204	$750,000 or more is not eligible for coverage by the corporation
205	unless the structure has opening protections as required under
206	the Florida Building Code for a newly constructed residential
207	structure in that area. A residential structure shall be deemed
208	to comply with the requirements of this subparagraph if it has
209	shutters or opening protections on all openings and if such
210	opening protections complied with the Florida Building Code at
211	the time they were installed.
212	5.  In recognition of the corporation's status as a
213	government entity, policies issued by the corporation must
214	include a provision stating that as a condition of coverage with
215	the corporation, policyholders may not engage the services of a
216	public adjuster to represent the policyholder with respect to
217	any claim incurred under a policy issued by the corporation.
218	(b)1.  All insurers authorized to write one or more subject
219	lines of business in this state are subject to assessment by the
220	corporation and, for the purposes of this subsection, are
221	referred to collectively as "assessable insurers." Insurers
222	writing one or more subject lines of business in this state
223	pursuant to part VIII of chapter 626 are not assessable
224	insurers, but insureds who procure one or more subject lines of
225	business in this state pursuant to part VIII of chapter 626 are
226	subject to assessment by the corporation and are referred to
227	collectively as "assessable insureds." An authorized insurer's
228	assessment liability begins shall begin on the first day of the
229	calendar year following the year in which the insurer was issued
230	a certificate of authority to transact insurance for subject
231	lines of business in this state and terminates shall terminate 1
232	year after the end of the first calendar year during which the
233	insurer no longer holds a certificate of authority to transact
234	insurance for subject lines of business in this state.
235	2.a.  All revenues, assets, liabilities, losses, and
236	expenses of the corporation shall be divided into three separate
237	accounts as follows:
238	(I)  A personal lines account for personal residential
239	policies issued by the corporation, or issued by the Residential
240	Property and Casualty Joint Underwriting Association and renewed
241	by the corporation, which provides basic that provide
242	comprehensive, multiperil coverage on risks that are not located
243	in areas eligible for coverage by in the Florida Windstorm
244	Underwriting Association as those areas were defined on January
245	1, 2002, and for such policies that do not provide coverage for
246	the peril of wind on risks that are located in such areas;
247	(II)  A commercial lines account for commercial residential
248	and commercial nonresidential policies issued by the
249	corporation, or issued by the Residential Property and Casualty
250	Joint Underwriting Association and renewed by the corporation,
251	which provides that provide coverage for basic property perils
252	on risks that are not located in areas eligible for coverage by
253	in the Florida Windstorm Underwriting Association as those areas
254	were defined on January 1, 2002, and for such policies that do
255	not provide coverage for the peril of wind on risks that are
256	located in such areas; and
257	(III)  A high-risk account for personal residential
258	policies and commercial residential and commercial
259	nonresidential property policies issued by the corporation or
260	transferred to the corporation, which provides that provide
261	coverage for the peril of wind on risks that are located in
262	areas eligible for coverage by in the Florida Windstorm
263	Underwriting Association as those areas were defined on January
264	1, 2002. The corporation may offer policies that provide
265	multiperil coverage and the corporation shall continue to offer
266	policies that provide coverage only for the peril of wind for
267	risks located in areas eligible for coverage in the high-risk
268	account. In issuing multiperil coverage, the corporation may use
269	its approved policy forms and rates for the personal lines
270	account. An applicant or insured who is eligible to purchase a
271	multiperil policy from the corporation may purchase a multiperil
272	policy from an authorized insurer without prejudice to the
273	applicant's or insured's eligibility to prospectively purchase a
274	policy that provides coverage only for the peril of wind from
275	the corporation. An applicant or insured who is eligible for a
276	corporation policy that provides coverage only for the peril of
277	wind may elect to purchase or retain such policy and also
278	purchase or retain coverage excluding wind from an authorized
279	insurer without prejudice to the applicant's or insured's
280	eligibility to prospectively purchase a policy that provides
281	multiperil coverage from the corporation. It is the goal of the
282	Legislature that there would be an overall average savings of 10
283	percent or more for a policyholder who currently has a wind-only
284	policy with the corporation, and an ex-wind policy with a
285	voluntary insurer or the corporation, and who then obtains a
286	multiperil policy from the corporation. It is the intent of the
287	Legislature that the offer of multiperil coverage in the high-
288	risk account be made and implemented in a manner that does not
289	adversely affect the tax-exempt status of the corporation or
290	creditworthiness of or security for currently outstanding
291	financing obligations or credit facilities of the high-risk
292	account, the personal lines account, or the commercial lines
293	account. The high-risk account must also include quota share
294	primary insurance under subparagraph (c)2. The area eligible for
295	coverage under the high-risk account also includes the area
296	within Port Canaveral, which is bordered on the south by the
297	City of Cape Canaveral, bordered on the west by the Banana
298	River, and bordered on the north by Federal Government property.
299	b.  The three separate accounts must be maintained as long
300	as financing obligations entered into by the Florida Windstorm
301	Underwriting Association or Residential Property and Casualty
302	Joint Underwriting Association are outstanding, in accordance
303	with the terms of the corresponding financing documents. If When
304	the financing obligations are no longer outstanding, in
305	accordance with the terms of the corresponding financing
306	documents, the corporation may use a single account for all
307	revenues, assets, liabilities, losses, and expenses of the
308	corporation. Consistent with the requirement of this
309	subparagraph and prudent investment policies that minimize the
310	cost of carrying debt, the board shall exercise its best efforts
311	to retire existing debt or to obtain the approval of necessary
312	parties to amend the terms of existing debt, so as to structure
313	the most efficient plan to consolidate the three separate
314	accounts into a single account.
315	c.  Creditors of the Residential Property and Casualty
316	Joint Underwriting Association and of the accounts specified in
317	sub-sub-subparagraphs a.(I) and (II) may have a claim against,
318	and recourse to, those the accounts referred to in sub-sub-
319	subparagraphs a.(I) and (II) and shall have no claim against, or
320	recourse to, the account referred to in sub-sub-subparagraph
321	a.(III). Creditors of the Florida Windstorm Underwriting
322	Association shall have a claim against, and recourse to, the
323	account referred to in sub-sub-subparagraph a.(III) and shall
324	have no claim against, or recourse to, the accounts referred to
325	in sub-sub-subparagraphs a.(I) and (II).
326	d.  Revenues, assets, liabilities, losses, and expenses not
327	attributable to particular accounts shall be prorated among the
328	accounts.
329	e.  The Legislature finds that the revenues of the
330	corporation are revenues that are necessary to meet the
331	requirements set forth in documents authorizing the issuance of
332	bonds under this subsection.
333	f.  No part of the income of the corporation may inure to
334	the benefit of any private person.
335	3.  With respect to a deficit in an account:
336	a.  After accounting for the Citizens policyholder
337	surcharge imposed under sub-subparagraph i., if when the
338	remaining projected deficit incurred in a particular calendar
339	year is not greater than 6 percent of the aggregate statewide
340	direct written premium for the subject lines of business for the
341	prior calendar year, the entire deficit shall be recovered
342	through regular assessments of assessable insurers under
343	paragraph (q) and assessable insureds.
344	b.  After accounting for the Citizens policyholder
345	surcharge imposed under sub-subparagraph i., when the remaining
346	projected deficit incurred in a particular calendar year exceeds
347	6 percent of the aggregate statewide direct written premium for
348	the subject lines of business for the prior calendar year, the
349	corporation shall levy regular assessments on assessable
350	insurers under paragraph (q) and on assessable insureds in an
351	amount equal to the greater of 6 percent of the deficit or 6
352	percent of the aggregate statewide direct written premium for
353	the subject lines of business for the prior calendar year. Any
354	remaining deficit shall be recovered through emergency
355	assessments under sub-subparagraph d.
356	c.  Each assessable insurer's share of the amount being
357	assessed under sub-subparagraph a. or sub-subparagraph b. must
358	shall be in the proportion that the assessable insurer's direct
359	written premium for the subject lines of business for the year
360	preceding the assessment bears to the aggregate statewide direct
361	written premium for the subject lines of business for that year.
362	The applicable assessment percentage applicable to each
363	assessable insured is the ratio of the amount being assessed
364	under sub-subparagraph a. or sub-subparagraph b. to the
365	aggregate statewide direct written premium for the subject lines
366	of business for the prior year. Assessments levied by the
367	corporation on assessable insurers under sub-subparagraphs a.
368	and b. must shall be paid as required by the corporation's plan
369	of operation and paragraph (q),. Assessments levied by the
370	corporation on assessable insureds under sub-subparagraphs a.
371	and b. shall be collected by the surplus lines agent at the time
372	the surplus lines agent collects the surplus lines tax required
373	by s. 626.932, and shall be paid to the Florida Surplus Lines
374	Service Office at the time the surplus lines agent pays the
375	surplus lines tax to that the Florida Surplus Lines Service
376	office. Upon receipt of regular assessments from surplus lines
377	agents, the Florida Surplus Lines Service Office shall transfer
378	the assessments directly to the corporation as determined by the
379	corporation.
380	d.  Upon a determination by the board of governors that a
381	deficit in an account exceeds the amount that will be recovered
382	through regular assessments under sub-subparagraph a. or sub-
383	subparagraph b., plus the amount that is expected to be
384	recovered through surcharges under sub-subparagraph i., as to
385	the remaining projected deficit the board shall levy, after
386	verification by the office, shall levy emergency assessments,
387	for as many years as necessary to cover the deficits, to be
388	collected by assessable insurers and the corporation and
389	collected from assessable insureds upon issuance or renewal of
390	policies for subject lines of business, excluding National Flood
391	Insurance policies. The amount of the emergency assessment
392	collected in a particular year must shall be a uniform
393	percentage of that year's direct written premium for subject
394	lines of business and all accounts of the corporation, excluding
395	National Flood Insurance Program policy premiums, as annually
396	determined by the board and verified by the office. For all
397	accounts of the corporation, the amount of the emergency
398	assessment levied in a particular year must be a uniform
399	percentage equal to 1 1/2 times the uniform percentage emergency
400	assessment levied on subject lines of business. The office shall
401	verify the arithmetic calculations involved in the board's
402	determination within 30 days after receipt of the information on
403	which the determination was based. Notwithstanding any other
404	provision of law, the corporation and each assessable insurer
405	that writes subject lines of business shall collect emergency
406	assessments from its policyholders without such obligation being
407	affected by any credit, limitation, exemption, or deferment.
408	Emergency assessments levied by the corporation on assessable
409	insureds shall be collected by the surplus lines agent at the
410	time the surplus lines agent collects the surplus lines tax
411	required by s. 626.932 and shall be paid to the Florida Surplus
412	Lines Service Office at the time the surplus lines agent pays
413	the surplus lines tax to that the Florida Surplus Lines Service
414	office. The emergency assessments so collected shall be
415	transferred directly to the corporation on a periodic basis as
416	determined by the corporation and shall be held by the
417	corporation solely in the applicable account. The aggregate
418	amount of emergency assessments levied for an account under this
419	sub-subparagraph in any calendar year may, at the discretion of
420	the board of governors, be less than but may not exceed the
421	greater of 10 percent of the amount needed to cover the deficit,
422	plus interest, fees, commissions, required reserves, and other
423	costs associated with financing of the original deficit, or 10
424	percent of the aggregate statewide direct written premium for
425	subject lines of business and for all accounts of the
426	corporation for the prior year, plus interest, fees,
427	commissions, required reserves, and other costs associated with
428	financing the deficit.
429	e.  The corporation may pledge the proceeds of assessments,
430	projected recoveries from the Florida Hurricane Catastrophe
431	Fund, other insurance and reinsurance recoverables, policyholder
432	surcharges and other surcharges, and other funds available to
433	the corporation as the source of revenue for and to secure bonds
434	issued under paragraph (q), bonds or other indebtedness issued
435	under subparagraph (c)2.3., or lines of credit or other
436	financing mechanisms issued or created under this subsection, or
437	to retire any other debt incurred as a result of deficits or
438	events giving rise to deficits, or in any other way that the
439	board determines will efficiently recover such deficits. The
440	purpose of the lines of credit or other financing mechanisms is
441	to provide additional resources to assist the corporation in
442	covering claims and expenses attributable to a catastrophe. As
443	used in this subsection, the term "assessments" includes regular
444	assessments under sub-subparagraph a., sub-subparagraph b., or
445	subparagraph (q)1. and emergency assessments under sub-
446	subparagraph d. Emergency assessments collected under sub-
447	subparagraph d. are not part of an insurer's rates, are not
448	premium, and are not subject to premium tax, fees, or
449	commissions; however, failure to pay the emergency assessment
450	shall be treated as failure to pay premium. The emergency
451	assessments under sub-subparagraph d. shall continue as long as
452	any bonds issued or other indebtedness incurred with respect to
453	a deficit for which the assessment was imposed remain
454	outstanding, unless adequate provision has been made for the
455	payment of such bonds or other indebtedness pursuant to the
456	documents governing such bonds or other indebtedness.
457	f.  As used in this subsection for purposes of any deficit
458	incurred on or after January 25, 2007, the term "subject lines
459	of business" means insurance written by assessable insurers or
460	procured by assessable insureds for all property and casualty
461	lines of business in this state, but not including workers'
462	compensation or medical malpractice. As used in this the sub-
463	subparagraph, the term "property and casualty lines of business"
464	includes all lines of business identified on Form 2, Exhibit of
465	Premiums and Losses, in the annual statement required of
466	authorized insurers under by s. 624.424 and any rule adopted
467	under this section, except for those lines identified as
468	accident and health insurance and except for policies written
469	under the National Flood Insurance Program or the Federal Crop
470	Insurance Program. For purposes of this sub-subparagraph, the
471	term "workers' compensation" includes both workers' compensation
472	insurance and excess workers' compensation insurance.
473	g.  The Florida Surplus Lines Service Office shall
474	determine annually the aggregate statewide written premium in
475	subject lines of business procured by assessable insureds and
476	shall report that information to the corporation in a form and
477	at a time the corporation specifies to ensure that the
478	corporation can meet the requirements of this subsection and the
479	corporation's financing obligations.
480	h.  The Florida Surplus Lines Service Office shall verify
481	the proper application by surplus lines agents of assessment
482	percentages for regular assessments and emergency assessments
483	levied under this subparagraph on assessable insureds and shall
484	assist the corporation in ensuring the accurate, timely
485	collection and payment of assessments by surplus lines agents as
486	required by the corporation.
487	i.  If a deficit is incurred in any account in 2011 2008 or
488	thereafter, the board of governors shall levy a Citizens
489	policyholder surcharge against all policyholders of the
490	corporation. for a 12-month period, which
491	(I)  The surcharge shall be levied collected at the time of
492	issuance or renewal of a policy, as a uniform percentage of the
493	premium for the policy of up to 15 percent of such premium,
494	which funds shall be used to offset the deficit.
495	(II)  It is the intent of the Legislature that the
496	policyholder's liability for the surcharge attach on the date of
497	the order levying the surcharge. The surcharge is payable upon
498	cancellation or termination of the policy, upon renewal of the
499	policy, or upon issuance of a new policy by the corporation
500	within the first 12 months after the date of the levy or the
501	period of time necessary to fully collect the surcharge amount.
502	(III)  The corporation may not levy any regular assessments
503	under paragraph (q) pursuant to sub-subparagraph a. or sub-
504	subparagraph b. with respect to a particular year's deficit
505	until the corporation has first levied a surcharge under this
506	sub-subparagraph in the full amount authorized by this sub-
507	subparagraph.
508	(IV)  The surcharge is Citizens policyholder surcharges
509	under this sub-subparagraph are not considered premium and is
510	are not subject to commissions, fees, or premium taxes. However,
511	failure to pay the surcharge such surcharges shall be treated as
512	failure to pay premium.
513	j.  If the amount of any assessments or surcharges
514	collected from corporation policyholders, assessable insurers or
515	their policyholders, or assessable insureds exceeds the amount
516	of the deficits, such excess amounts shall be remitted to and
517	retained by the corporation in a reserve to be used by the
518	corporation, as determined by the board of governors and
519	approved by the office, to pay claims or reduce any past,
520	present, or future plan-year deficits or to reduce outstanding
521	debt.
522	(c)  The plan of operation of the corporation:
523	1.  Must provide for adoption of residential property and
524	casualty insurance policy forms and commercial residential and
525	nonresidential property insurance forms, which forms must be
526	approved by the office before prior to use. The corporation
527	shall adopt and offer only the following policy forms:
528	a.  Standard personal lines policy forms that are similar
529	comprehensive multiperil policies providing full coverage of a
530	residential property equivalent to the coverage provided in the
531	private insurance market under an HO-3, HO-4, or HO-6 policy.
532	The corporation shall cease to offer or renew HO-3 policy forms
533	on December 31, 2012.
534	b.  Basic personal lines policy forms that are policies
535	similar to an HO-8 policy or a dwelling fire policy that provide
536	coverage meeting the requirements of the secondary mortgage
537	market, but which coverage is more limited than the coverage
538	under a standard policy.
539	c.  Commercial lines residential and nonresidential policy
540	forms that are generally similar to the basic perils of full
541	coverage obtainable for commercial residential structures and
542	commercial nonresidential structures in the admitted voluntary
543	market.
544	d.  Personal lines and commercial lines residential
545	property insurance forms that cover the peril of wind only. The
546	forms are applicable only to residential properties located in
547	areas eligible for coverage under the high-risk account referred
548	to in sub-subparagraph (b)2.a.
549	e.  Commercial lines nonresidential property insurance
550	forms that cover the peril of wind only. The forms are
551	applicable only to nonresidential properties located in areas
552	eligible for coverage under the high-risk account referred to in
553	sub-subparagraph (b)2.a.
554	f.  The corporation may adopt variations of the policy
555	forms listed in sub-subparagraphs a.-e. which that contain more
556	restrictive coverage.
557	2.a.  Must provide that the corporation adopt a program in
558	which the corporation and authorized insurers enter into quota
559	share primary insurance agreements for hurricane coverage, as
560	defined in s. 627.4025(2)(a), for eligible risks, and adopt
561	property insurance forms for eligible risks which cover the
562	peril of wind only. As used in this subsection, the term:
563	(I)  "Quota share primary insurance" means an arrangement
564	in which the primary hurricane coverage of an eligible risk is
565	provided in specified percentages by the corporation and an
566	authorized insurer. The corporation and authorized insurer are
567	each solely responsible for a specified percentage of hurricane
568	coverage of an eligible risk as set forth in a quota share
569	primary insurance agreement between the corporation and an
570	authorized insurer and the insurance contract. The
571	responsibility of the corporation or authorized insurer to pay
572	its specified percentage of hurricane losses of an eligible
573	risk, as set forth in the quota share primary insurance
574	agreement, may not be altered by the inability of the other
575	party to the agreement to pay its specified percentage of
576	hurricane losses. Eligible risks that are provided hurricane
577	coverage through a quota share primary insurance arrangement
578	must be provided policy forms that set forth the obligations of
579	the corporation and authorized insurer under the arrangement,
580	clearly specify the percentages of quota share primary insurance
581	provided by the corporation and authorized insurer, and
582	conspicuously and clearly state that neither the authorized
583	insurer nor the corporation may be held responsible beyond its
584	specified percentage of coverage of hurricane losses.
585	(II)  "Eligible risks" means personal lines residential and
586	commercial lines residential risks that meet the underwriting
587	criteria of the corporation and are located in areas that were
588	eligible for coverage by the Florida Windstorm Underwriting
589	Association on January 1, 2002.
590	b.  The corporation may enter into quota share primary
591	insurance agreements with authorized insurers at corporation
592	coverage levels of 90 percent and 50 percent.
593	c.  If the corporation determines that additional coverage
594	levels are necessary to maximize participation in quota share
595	primary insurance agreements by authorized insurers, the
596	corporation may establish additional coverage levels. However,
597	the corporation's quota share primary insurance coverage level
598	may not exceed 90 percent.
599	d.  Any quota share primary insurance agreement entered
600	into between an authorized insurer and the corporation must
601	provide for a uniform specified percentage of coverage of
602	hurricane losses, by county or territory as set forth by the
603	corporation board, for all eligible risks of the authorized
604	insurer covered under the quota share primary insurance
605	agreement.
606	e.  Any quota share primary insurance agreement entered
607	into between an authorized insurer and the corporation is
608	subject to review and approval by the office. However, such
609	agreement shall be authorized only as to insurance contracts
610	entered into between an authorized insurer and an insured who is
611	already insured by the corporation for wind coverage.
612	f.  For all eligible risks covered under quota share
613	primary insurance agreements, the exposure and coverage levels
614	for both the corporation and authorized insurers shall be
615	reported by the corporation to the Florida Hurricane Catastrophe
616	Fund. For all policies of eligible risks covered under quota
617	share primary insurance agreements, the corporation and the
618	authorized insurer shall maintain complete and accurate records
619	for the purpose of exposure and loss reimbursement audits as
620	required by Florida Hurricane Catastrophe Fund rules. The
621	corporation and the authorized insurer shall each maintain
622	duplicate copies of policy declaration pages and supporting
623	claims documents.
624	g.  The corporation board shall establish in its plan of
625	operation standards for quota share agreements which ensure that
626	there is no discriminatory application among insurers as to the
627	terms of quota share agreements, pricing of quota share
628	agreements, incentive provisions if any, and consideration paid
629	for servicing policies or adjusting claims.
630	h.  The quota share primary insurance agreement between the
631	corporation and an authorized insurer must set forth the
632	specific terms under which coverage is provided, including, but
633	not limited to, the sale and servicing of policies issued under
634	the agreement by the insurance agent of the authorized insurer
635	producing the business, the reporting of information concerning
636	eligible risks, the payment of premium to the corporation, and
637	arrangements for the adjustment and payment of hurricane claims
638	incurred on eligible risks by the claims adjuster and personnel
639	of the authorized insurer. Entering into a quota sharing
640	insurance agreement between the corporation and an authorized
641	insurer shall be voluntary and at the discretion of the
642	authorized insurer.
643	2.3.  May provide that the corporation may employ or
644	otherwise contract with individuals or other entities to provide
645	administrative or professional services that may be appropriate
646	to effectuate the plan.
647	a.  The corporation may shall have the power to borrow
648	funds, by issuing bonds or by incurring other indebtedness, and
649	shall have other powers reasonably necessary to effectuate the
650	requirements of this subsection, including, without limitation,
651	the power to issue bonds and incur other indebtedness in order
652	to refinance outstanding bonds or other indebtedness. The
653	corporation may, but is not required to, seek judicial
654	validation of its bonds or other indebtedness under chapter 75.
655	The corporation may issue bonds or incur other indebtedness, or
656	have bonds issued on its behalf by a unit of local government
657	pursuant to subparagraph (q)2., in the absence of a hurricane or
658	other weather-related event, upon a determination by the
659	corporation, subject to approval by the office, that such action
660	would enable it to efficiently meet the financial obligations of
661	the corporation and that such financings are reasonably
662	necessary to effectuate the requirements of this subsection. The
663	corporation may is authorized to take all actions needed to
664	facilitate tax-free status for any such bonds or indebtedness,
665	including formation of trusts or other affiliated entities. The
666	corporation may shall have the authority to pledge assessments,
667	projected recoveries from the Florida Hurricane Catastrophe
668	Fund, other reinsurance recoverables, market equalization and
669	other surcharges, and other funds available to the corporation
670	as security for bonds or other indebtedness. In recognition of
671	s. 10, Art. I of the State Constitution, prohibiting the
672	impairment of obligations of contracts, it is the intent of the
673	Legislature that no action be taken whose purpose is to impair
674	any bond indenture or financing agreement or any revenue source
675	committed by contract to such bond or other indebtedness.
676	b.  To ensure that the corporation is operating in an
677	efficient and economic manner while providing quality service to
678	policyholders, applicants, and agents, the board shall
679	commission an independent third-party consultant having
680	expertise in insurance company management or insurance company
681	management consulting to prepare a report and make
682	recommendations on the relative costs and benefits of
683	outsourcing various policy issuance and service functions to
684	private servicing carriers or entities performing similar
685	functions in the private market for a fee, rather than
686	performing such functions in-house. In making such
687	recommendations, the consultant shall consider how other
688	residual markets, both in this state and around the country,
689	outsource appropriate functions or use servicing carriers to
690	better match expenses with revenues that fluctuate based on a
691	widely varying policy count. The report must be completed by
692	February 1, 2012. Upon receiving the report, the board shall
693	develop a plan to implement the report and submit the plan to
694	the Financial Services Commission. The commission has 30 days
695	after receiving the plan to review and make additions or
696	corrections, if any. Upon the commission's approval of the plan,
697	the board shall begin implementing the plan by January 1, 2013.
698	3.4.a.  Must require that the corporation operate subject
699	to the supervision and approval of a board of governors
700	consisting of eight individuals who are residents of this state,
701	from different geographical areas of this state.
702	a.  The Governor, the Chief Financial Officer, the
703	President of the Senate, and the Speaker of the House of
704	Representatives shall each appoint two members of the board. At
705	least one of the two members appointed by each appointing
706	officer must have demonstrated expertise in insurance, and be
707	within the scope of the exemption provided in s. 112.313(7)(b).
708	The Chief Financial Officer shall designate one of the
709	appointees as chair. All board members serve at the pleasure of
710	the appointing officer. All members of the board of governors
711	are subject to removal at will by the officers who appointed
712	them. All board members, including the chair, must be appointed
713	to serve for 3-year terms beginning annually on a date
714	designated by the plan. However, for the first term beginning on
715	or after July 1, 2009, each appointing officer shall appoint one
716	member of the board for a 2-year term and one member for a 3-
717	year term. A Any board vacancy shall be filled for the unexpired
718	term by the appointing officer. The Chief Financial Officer
719	shall appoint a technical advisory group to provide information
720	and advice to the board of governors in connection with the
721	board's duties under this subsection. The executive director and
722	senior managers of the corporation shall be engaged by the board
723	and serve at the pleasure of the board. Any executive director
724	appointed on or after July 1, 2006, is subject to confirmation
725	by the Senate. The executive director is responsible for
726	employing other staff as the corporation may require, subject to
727	review and concurrence by the board.
728	b.  The board shall create a Market Accountability Advisory
729	Committee to assist the corporation in developing awareness of
730	its rates and its customer and agent service levels in
731	relationship to the voluntary market insurers writing similar
732	coverage, and to provide advice on issues regarding agent
733	appointments and compensation.
734	(I)  The members of the advisory committee shall consist of
735	the following 11 persons, one of whom must be elected chair by
736	the members of the committee: four representatives, one
737	appointed by the Florida Association of Insurance Agents, one by
738	the National Florida Association of Insurance and Financial
739	Advisors-Florida Advisors, one by the Professional Insurance
740	Agents of Florida, and one by the Latin American Association of
741	Insurance Agencies; three representatives appointed by the
742	insurers with the three highest voluntary market share of
743	residential property insurance business in the state; one
744	representative from the Office of Insurance Regulation; one
745	consumer appointed by the board who is insured by the
746	corporation at the time of appointment to the committee; one
747	representative appointed by the Florida Association of Realtors;
748	and one representative appointed by the Florida Bankers
749	Association. All members shall be appointed to must serve for 3-
750	year terms and may serve for consecutive terms.
751	(II)  The committee shall report to the corporation at each
752	board meeting on insurance market issues which may include rates
753	and rate competition with the voluntary market; service,
754	including policy issuance, claims processing, and general
755	responsiveness to policyholders, applicants, and agents; and
756	matters relating to depopulation, producer compensation, or
757	agency agreements.
758	4.5.  Must provide a procedure for determining the
759	eligibility of a risk for coverage, as follows:
760	a.  Subject to the provisions of s. 627.3517, with respect
761	to personal lines residential risks, if the risk is offered
762	coverage from an authorized insurer at the insurer's approved
763	rate under either a standard policy including wind coverage or,
764	if consistent with the insurer's underwriting rules as filed
765	with the office, a basic policy including wind coverage, for a
766	new application to the corporation for coverage, the risk is not
767	eligible for any policy issued by the corporation unless the
768	premium for coverage from the authorized insurer is more than 15
769	percent greater than the premium for comparable coverage from
770	the corporation. If the risk is not able to obtain any such
771	offer, the risk is eligible for either a standard policy
772	including wind coverage or a basic policy including wind
773	coverage issued by the corporation; however, if the risk could
774	not be insured under a standard policy including wind coverage
775	regardless of market conditions, the risk is shall be eligible
776	for a basic policy including wind coverage unless rejected under
777	subparagraph 9. 8. Notwithstanding these limitations, an
778	application for coverage having an effective date before January
779	1, 2015, is eligible for coverage by the corporation if the
780	premium for coverage from an authorized insurer exceeds the
781	premium from the corporation by more than 25 percent. However,
782	with regard to a policyholder of the corporation or a
783	policyholder removed from the corporation through an assumption
784	agreement until the end of the assumption period, the
785	policyholder remains eligible for coverage from the corporation
786	regardless of any offer of coverage from an authorized insurer
787	or surplus lines insurer. The corporation shall determine the
788	type of policy to be provided on the basis of objective
789	standards specified in the underwriting manual and based on
790	generally accepted underwriting practices.
791	(I)  If the risk accepts an offer of coverage through the
792	market assistance plan or an offer of coverage through a
793	mechanism established by the corporation before a policy is
794	issued to the risk by the corporation or during the first 30
795	days of coverage by the corporation, and the producing agent who
796	submitted the application to the plan or to the corporation is
797	not currently appointed by the insurer, the insurer shall:
798	(A)  Pay to the producing agent of record of the policy,
799	for the first year, an amount that is the greater of the
800	insurer's usual and customary commission for the type of policy
801	written or a fee equal to the usual and customary commission of
802	the corporation; or
803	(B)  Offer to allow the producing agent of record of the
804	policy to continue servicing the policy for at least a period of
805	not less than 1 year and offer to pay the agent the greater of
806	the insurer's or the corporation's usual and customary
807	commission for the type of policy written.
808
809	If the producing agent is unwilling or unable to accept
810	appointment, the new insurer shall pay the agent in accordance
811	with sub-sub-sub-subparagraph (A).
812	(II)  If When the corporation enters into a contractual
813	agreement for a take-out plan, the producing agent of record of
814	the corporation policy is entitled to retain any unearned
815	commission on the policy, and the insurer shall:
816	(A)  Pay to the producing agent of record of the
817	corporation policy, for the first year, an amount that is the
818	greater of the insurer's usual and customary commission for the
819	type of policy written or a fee equal to the usual and customary
820	commission of the corporation; or
821	(B)  Offer to allow the producing agent of record of the
822	corporation policy to continue servicing the policy for at least
823	a period of not less than 1 year and offer to pay the agent the
824	greater of the insurer's or the corporation's usual and
825	customary commission for the type of policy written.
826
827	If the producing agent is unwilling or unable to accept
828	appointment, the new insurer shall pay the agent in accordance
829	with sub-sub-sub-subparagraph (A).
830	b.  Subject to s. 627.3517, with respect to commercial
831	lines residential risks, for a new application to the
832	corporation for coverage, if the risk is offered coverage under
833	a policy including wind coverage from an authorized insurer at
834	its approved rate, the risk is not eligible for a any policy
835	issued by the corporation unless the premium for coverage from
836	the authorized insurer is more than 15 percent greater than the
837	premium for comparable coverage from the corporation. If the
838	risk is not able to obtain any such offer, the risk is eligible
839	for a policy including wind coverage issued by the corporation.
840	Notwithstanding these limitations, an application for coverage
841	having an effective date before January 1, 2015, is eligible for
842	coverage by the corporation if the premium for coverage from an
843	authorized insurer exceeds the premium from the corporation by
844	more than 25 percent. However, with regard to a policyholder of
845	the corporation or a policyholder removed from the corporation
846	through an assumption agreement until the end of the assumption
847	period, the policyholder remains eligible for coverage from the
848	corporation regardless of any offer of coverage from an
849	authorized insurer or surplus lines insurer.
850	(I)  If the risk accepts an offer of coverage through the
851	market assistance plan or an offer of coverage through a
852	mechanism established by the corporation before a policy is
853	issued to the risk by the corporation or during the first 30
854	days of coverage by the corporation, and the producing agent who
855	submitted the application to the plan or the corporation is not
856	currently appointed by the insurer, the insurer shall:
857	(A)  Pay to the producing agent of record of the policy,
858	for the first year, an amount that is the greater of the
859	insurer's usual and customary commission for the type of policy
860	written or a fee equal to the usual and customary commission of
861	the corporation; or
862	(B)  Offer to allow the producing agent of record of the
863	policy to continue servicing the policy for at least a period of
864	not less than 1 year and offer to pay the agent the greater of
865	the insurer's or the corporation's usual and customary
866	commission for the type of policy written.
867
868	If the producing agent is unwilling or unable to accept
869	appointment, the new insurer shall pay the agent in accordance
870	with sub-sub-sub-subparagraph (A).
871	(II)  If When the corporation enters into a contractual
872	agreement for a take-out plan, the producing agent of record of
873	the corporation policy is entitled to retain any unearned
874	commission on the policy, and the insurer shall:
875	(A)  Pay to the producing agent of record of the
876	corporation policy, for the first year, an amount that is the
877	greater of the insurer's usual and customary commission for the
878	type of policy written or a fee equal to the usual and customary
879	commission of the corporation; or
880	(B)  Offer to allow the producing agent of record of the
881	corporation policy to continue servicing the policy for at least
882	a period of not less than 1 year and offer to pay the agent the
883	greater of the insurer's or the corporation's usual and
884	customary commission for the type of policy written.
885
886	If the producing agent is unwilling or unable to accept
887	appointment, the new insurer shall pay the agent in accordance
888	with sub-sub-sub-subparagraph (A).
889	c.  Effective upon this act becoming a law, the corporation
890	shall cease to accept applications for or issue new policies
891	covering commercial nonresidential risks. For purposes of
892	determining comparable coverage under sub-subparagraphs a. and
893	b., the comparison shall be based on those forms and coverages
894	that are reasonably comparable. The corporation may rely on a
895	determination of comparable coverage and premium made by the
896	producing agent who submits the application to the corporation,
897	made in the agent's capacity as the corporation's agent. A
898	comparison may be made solely of the premium with respect to the
899	main building or structure only on the following basis: the same
900	coverage A or other building limits; the same percentage
901	hurricane deductible that applies on an annual basis or that
902	applies to each hurricane for commercial residential property;
903	the same percentage of ordinance and law coverage, if the same
904	limit is offered by both the corporation and the authorized
905	insurer; the same mitigation credits, to the extent the same
906	types of credits are offered both by the corporation and the
907	authorized insurer; the same method for loss payment, such as
908	replacement cost or actual cash value, if the same method is
909	offered both by the corporation and the authorized insurer in
910	accordance with underwriting rules; and any other form or
911	coverage that is reasonably comparable as determined by the
912	board. If an application is submitted to the corporation for
913	wind-only coverage in the high-risk account, the premium for the
914	corporation's wind-only policy plus the premium for the ex-wind
915	policy that is offered by an authorized insurer to the applicant
916	shall be compared to the premium for multiperil coverage offered
917	by an authorized insurer, subject to the standards for
918	comparison specified in this subparagraph. If the corporation or
919	the applicant requests from the authorized insurer a breakdown
920	of the premium of the offer by types of coverage so that a
921	comparison may be made by the corporation or its agent and the
922	authorized insurer refuses or is unable to provide such
923	information, the corporation may treat the offer as not being an
924	offer of coverage from an authorized insurer at the insurer's
925	approved rate.
926	5.6.  Must include rules for classifications of risks and
927	rates therefor.
928	6.7.  Must provide that if premium and investment income
929	for an account attributable to a particular calendar year are in
930	excess of projected losses and expenses for the account
931	attributable to that year, such excess shall be held in surplus
932	in the account. Such surplus must shall be available to defray
933	deficits in that account as to future years and shall be used
934	for that purpose before prior to assessing assessable insurers
935	and assessable insureds as to any calendar year.
936	7.8.   Must provide objective criteria and procedures to be
937	uniformly applied to for all applicants in determining whether
938	an individual risk is so hazardous as to be uninsurable. In
939	making this determination and in establishing the criteria and
940	procedures, the following must shall be considered:
941	a.  Whether the likelihood of a loss for the individual
942	risk is substantially higher than for other risks of the same
943	class; and
944	b.  Whether the uncertainty associated with the individual
945	risk is such that an appropriate premium cannot be determined.
946
947	The acceptance or rejection of a risk by the corporation shall
948	be construed as the private placement of insurance, and the
949	provisions of chapter 120 do shall not apply.
950	8.9.  Must provide that the corporation Shall make its best
951	efforts to procure catastrophe reinsurance at reasonable rates,
952	to cover its projected 100-year probable maximum loss as
953	determined by the board of governors.
954	9.10.  Must issue The policies that issued by the
955	corporation must provide that, if the corporation or the market
956	assistance plan obtains an offer from an authorized insurer to
957	cover the risk at its approved rates, the risk is no longer
958	eligible for renewal through the corporation, except as
959	otherwise provided in this subsection.
960	10.11.  Must Corporation Policies and applications must
961	include a notice in the corporation policies and applications
962	that the corporation policy could, under this section, be
963	replaced with a policy issued by an authorized insurer which
964	that does not provide coverage identical to the coverage
965	provided by the corporation. The notice must shall also specify
966	that acceptance of corporation coverage creates a conclusive
967	presumption that the applicant or policyholder is aware of this
968	potential.
969	11.12.  May establish, subject to approval by the office,
970	different eligibility requirements and operational procedures
971	for any line or type of coverage for any specified county or
972	area if the board determines that such changes to the
973	eligibility requirements and operational procedures are
974	justified due to the voluntary market being sufficiently stable
975	and competitive in such area or for such line or type of
976	coverage and that consumers who, in good faith, are unable to
977	obtain insurance through the voluntary market through ordinary
978	methods would continue to have access to coverage from the
979	corporation. If When coverage is sought in connection with a
980	real property transfer, the such requirements and procedures may
981	shall not provide for an effective date of coverage later than
982	the date of the closing of the transfer as established by the
983	transferor, the transferee, and, if applicable, the lender.
984	12.13.  Must provide that, with respect to the high-risk
985	account, any assessable insurer with a surplus as to
986	policyholders of $25 million or less writing 25 percent or more
987	of its total countrywide property insurance premiums in this
988	state may petition the office, within the first 90 days of each
989	calendar year, to qualify as a limited apportionment company. A
990	regular assessment levied by the corporation on a limited
991	apportionment company for a deficit incurred by the corporation
992	for the high-risk account in 2006 or thereafter may be paid to
993	the corporation on a monthly basis as the assessments are
994	collected by the limited apportionment company from its insureds
995	pursuant to s. 627.3512, but the regular assessment must be paid
996	in full within 12 months after being levied by the corporation.
997	A limited apportionment company shall collect from its
998	policyholders any emergency assessment imposed under sub-
999	subparagraph (b)3.d. The plan shall provide that, If the office
1000	determines that any regular assessment will result in an
1001	impairment of the surplus of a limited apportionment company,
1002	the office may direct that all or part of such assessment be
1003	deferred as provided in subparagraph (q)4. However, there shall
1004	be no limitation or deferment of an emergency assessment to be
1005	collected from policyholders under sub-subparagraph (b)3.d. may
1006	not be limited or deferred.
1007	13.14.  Effective January 1, 2012, must provide that the
1008	corporation appoint as its licensed agents only those agents who
1009	also hold an appointment as defined in s. 626.015(3) with an
1010	insurer who at the time of the agent's initial appointment by
1011	the corporation is authorized to write and is actually writing
1012	personal lines residential property coverage, commercial
1013	residential property coverage, or commercial nonresidential
1014	property coverage within the state.
1015	14.15.  Must provide, by July 1, 2007, a premium payment
1016	plan option to its policyholders which, allows at a minimum,
1017	allows for quarterly and semiannual payment of premiums. A
1018	monthly payment plan may, but is not required to, be offered.
1019	15.16.  Must limit coverage on mobile homes or manufactured
1020	homes built before prior to 1994 to actual cash value of the
1021	dwelling rather than replacement costs of the dwelling.
1022	16.17.  May provide such limits of coverage as the board
1023	determines, consistent with the requirements of this subsection.
1024	17.18.  May require commercial property to meet specified
1025	hurricane mitigation construction features as a condition of
1026	eligibility for coverage.
1027	18.  As of January 1, 2012, must require that the agent
1028	obtain from an applicant for coverage from the corporation an
1029	acknowledgement signed by the applicant, which includes, at a
1030	minimum, the following statement:
1031
1032	ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT LIABILITY:
1033
1034	1.  AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
1035	CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
1036	DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
1037	MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
1038	PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
1039	POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
1040	OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
1041	LEGISLATURE.
1042	2.  I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
1043	ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
1044	INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
1045	FLORIDA LEGISLATURE.
1046	3.  I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
1047	CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
1048	STATE OF FLORIDA.
1049
1050	a.  The corporation shall maintain, in electronic format or
1051	otherwise, a copy of the applicant's signed acknowledgement and
1052	provide a copy of the statement to the policyholder as part of
1053	the first renewal after the effective date of this sub-
1054	subparagraph.
1055	b.  The signed acknowledgement form creates a conclusive
1056	presumption that the policyholder understood and accepted his or
1057	her potential surcharge and assessment liability as a
1058	policyholder of the corporation.
1059	19.  Upon notice and determination by the Department of
1060	Financial Services that an agent appointed by the corporation
1061	has violated s. 626.9541(1)(h), immediately terminate the
1062	agent's appointment to represent the corporation.
1063	20.  Must provide that new or renewal policies issued by
1064	the corporation on or after January 1, 2012, do not include
1065	coverage for attached or detached screen enclosures. The
1066	corporation is not required to issue a notice of nonrenewal to
1067	exclude this coverage upon the renewal of current policies, but
1068	shall exclude such coverage using a notice of coverage change.
1069	21. Must provide that new or renewal policies issued by the
1070	corporation on or after January 1, 2012, which cover the peril
1071	of sinkhole do not include coverage for any loss to appurtenant
1072	structures, driveways, sidewalks, decks, or patios which is
1073	caused directly or indirectly by sinkhole activity. The
1074	corporation is not required to issue a notice of nonrenewal to
1075	exclude this coverage upon the renewal of current policies, but
1076	shall exclude such coverage using a notice of coverage change
1077	which may be included with the policy renewal.
1078	(d)1.  All prospective employees for senior management
1079	positions, as defined by the plan of operation, are subject to
1080	background checks as a prerequisite for employment. The office
1081	shall conduct the background checks on such prospective
1082	employees pursuant to ss. 624.34, 624.404(3), and 628.261.
1083	2.  On or before July 1 of each year, employees of the
1084	corporation must are required to sign and submit a statement
1085	attesting that they do not have a conflict of interest, as
1086	defined in part III of chapter 112. As a condition of
1087	employment, all prospective employees must are required to sign
1088	and submit to the corporation a conflict-of-interest statement.
1089	3.  Senior managers and members of the board of governors
1090	are subject to the provisions of part III of chapter 112,
1091	including, but not limited to, the code of ethics and public
1092	disclosure and reporting of financial interests, pursuant to s.
1093	112.3145.
1094	a.  Senior managers and board members are also required to
1095	file such disclosures with the Commission on Ethics and the
1096	Office of Insurance Regulation. The executive director of the
1097	corporation or his or her designee shall notify each existing
1098	and newly appointed and existing appointed member of the board
1099	of governors and senior managers of their duty to comply with
1100	the reporting requirements of part III of chapter 112. At least
1101	quarterly, the executive director or his or her designee shall
1102	submit to the Commission on Ethics a list of names of the senior
1103	managers and members of the board of governors who are subject
1104	to the public disclosure requirements under s. 112.3145.
1105	b.  Notwithstanding s. 112.3143(2), a board member may not
1106	vote on any measure that would inure to his or her special
1107	private gain or loss; that he or she knows would inure to the
1108	special private gain or loss of any principal by whom he or she
1109	is retained or to the parent organization or subsidiary of a
1110	corporate principal by which he or she is retained, other than
1111	an agency as defined in s. 112.312; or that he or she knows
1112	would inure to the special private gain or loss of a relative or
1113	business associate of the public officer. Before the vote is
1114	taken, such member must publicly state to the assembly the
1115	nature of his or her interest in the matter from which he or she
1116	is abstaining and, within 15 days after the vote occurs,
1117	disclose the nature of his or her interest as a public record in
1118	a memorandum filed with the person responsible for recording the
1119	minutes of the meeting, who shall incorporate the memorandum in
1120	the minutes.
1121	4.  Notwithstanding s. 112.3148 or s. 112.3149, or any
1122	other provision of law, an employee or board member may not
1123	knowingly accept, directly or indirectly, any gift or
1124	expenditure from a person or entity, or an employee or
1125	representative of such person or entity, which that has a
1126	contractual relationship with the corporation or who is under
1127	consideration for a contract. An employee or board member who
1128	fails to comply with subparagraph 3. or this subparagraph is
1129	subject to penalties provided under ss. 112.317 and 112.3173.
1130	5.  Any senior manager of the corporation who is employed
1131	on or after January 1, 2007, regardless of the date of hire, who
1132	subsequently retires or terminates employment is prohibited from
1133	representing another person or entity before the corporation for
1134	2 years after retirement or termination of employment from the
1135	corporation.
1136	6.  Any senior manager of the corporation who is employed
1137	on or after January 1, 2007, regardless of the date of hire, who
1138	subsequently retires or terminates employment is prohibited from
1139	having any employment or contractual relationship for 2 years
1140	with an insurer that has entered into a take-out bonus agreement
1141	with the corporation.
1142	(n)1.  It is the intent of the Legislature that the rates
1143	for coverage provided by the corporation be actuarially
1144	determined and not be competitive with rates charged in the
1145	admitted voluntary market such that the corporation functions as
1146	a residual market mechanism that provides insurance only if such
1147	insurance cannot be procured in the voluntary market. To achieve
1148	this goal, for any rate filing made by the corporation on or
1149	after July 1, 2011: Rates for coverage provided by the
1150	corporation shall be actuarially sound and subject to the
1151	requirements of s. 627.062, except as otherwise provided in this
1152	paragraph. The corporation shall file its recommended rates with
1153	the office at least annually. The corporation shall provide any
1154	additional information regarding the rates which the office
1155	requires. The office shall consider the recommendations of the
1156	board and issue a final order establishing the rates for the
1157	corporation within 45 days after the recommended rates are
1158	filed. The corporation may not pursue an administrative
1159	challenge or judicial review of the final order of the office.
1160	1.  The corporation shall file its recommended rates with
1161	the office at least annually. The office shall consider the
1162	recommended rates and issue a final order establishing the rates
1163	within 45 days after the recommended rates are filed. The
1164	corporation may not pursue an administrative challenge or
1165	judicial review of the office's final order.
1166	2.  In developing its rates, the corporation shall use an
1167	appropriate industry expense equalization factor to ensure that
1168	its rates include standard industry ratemaking expense
1169	provisions. The industry expense equalization factor must
1170	include a catastrophe risk load, a provision for taxes, a market
1171	provision for reinsurance costs, and an industry expense
1172	provision for general expenses, acquisition expenses, and
1173	commissions.
1174	3.  The corporation shall implement a rate increase each
1175	year for each residential line of business it writes, which may
1176	not exceed 20 percent by territory and 25 percent for any single
1177	policy, excluding coverage changes and surcharges. This
1178	subparagraph expires January 1, 2015, and does not apply to
1179	rates for sinkhole coverage or costs for the purchase of private
1180	reinsurance, if any.
1181	4.2.  In addition to the rates otherwise determined
1182	pursuant to this paragraph, the corporation shall impose and
1183	collect an amount equal to the premium tax provided for in s.
1184	624.509 to augment the financial resources of the corporation.
1185	3.  After the public hurricane loss-projection model under
1186	s. 627.06281 has been found to be accurate and reliable by the
1187	Florida Commission on Hurricane Loss Projection Methodology,
1188	that model shall serve as the minimum benchmark for determining
1189	the windstorm portion of the corporation's rates. This
1190	subparagraph does not require or allow the corporation to adopt
1191	rates lower than the rates otherwise required or allowed by this
1192	paragraph.
1193	4.  The rate filings for the corporation which were
1194	approved by the office and which took effect January 1, 2007,
1195	are rescinded, except for those rates that were lowered. As soon
1196	as possible, the corporation shall begin using the lower rates
1197	that were in effect on December 31, 2006, and shall provide
1198	refunds to policyholders who have paid higher rates as a result
1199	of that rate filing. The rates in effect on December 31, 2006,
1200	shall remain in effect for the 2007 and 2008 calendar years
1201	except for any rate change that results in a lower rate. The
1202	next rate change that may increase rates shall take effect
1203	pursuant to a new rate filing recommended by the corporation and
1204	established by the office, subject to the requirements of this
1205	paragraph.
1206	5.  Beginning on July 15, 2009, and each year thereafter,
1207	the corporation must make a recommended actuarially sound rate
1208	filing for each personal and commercial line of business it
1209	writes, to be effective no earlier than January 1, 2010.
1210	6.  Beginning on or after January 1, 2010, and
1211	notwithstanding the board's recommended rates and the office's
1212	final order regarding the corporation's filed rates under
1213	subparagraph 1., the corporation shall implement a rate increase
1214	each year which does not exceed 10 percent for any single policy
1215	issued by the corporation, excluding coverage changes and
1216	surcharges.
1217	5.7.  The corporation may also implement an increase to
1218	reflect the effect on the corporation of the cash buildup factor
1219	pursuant to s. 215.555(5)(b).
1220	6.  This paragraph does not require or allow the
1221	corporation to reduce rates.
1222	8.  The corporation's implementation of rates as prescribed
1223	in subparagraph 6. shall cease for any line of business written
1224	by the corporation upon the corporation's implementation of
1225	actuarially sound rates. Thereafter, the corporation shall
1226	annually make a recommended actuarially sound rate filing for
1227	each commercial and personal line of business the corporation
1228	writes.
1229	(o)  If coverage in an account is deactivated pursuant to
1230	paragraph (p), coverage through the corporation shall be
1231	reactivated by order of the office only under one of the
1232	following circumstances:
1233	1.  If the market assistance plan receives a minimum of 100
1234	applications for coverage within a 3-month period, or 200
1235	applications for coverage within a 1-year period or less for
1236	residential coverage, unless the market assistance plan provides
1237	a quotation from admitted carriers at their filed rates for at
1238	least 90 percent of such applicants. A Any market assistance
1239	plan application that is rejected because an individual risk is
1240	so hazardous as to be uninsurable using the criteria specified
1241	in subparagraph (c)7. may (c)8. shall not be included in the
1242	minimum percentage calculation provided herein. If In the event
1243	that there is a legal or administrative challenge to a
1244	determination by the office that the conditions of this
1245	subparagraph have been met for eligibility for coverage by in
1246	the corporation, an any eligible risk may obtain coverage during
1247	the pendency of such challenge.
1248	2.  In response to a state of emergency declared by the
1249	Governor under s. 252.36, the office may activate coverage by
1250	order during for the period of the emergency upon a finding by
1251	the office that the emergency significantly affects the
1252	availability of residential property insurance.
1253	(s)1.  There is shall be no liability on the part of, and
1254	no cause of action of any nature shall arise against, any
1255	assessable insurer or its agents or employees, the corporation
1256	or its agents or employees, members of the board of governors or
1257	their respective designees at a board meeting, corporation
1258	committee members, or the office or its representatives, for any
1259	action taken by them in the performance of their duties or
1260	responsibilities under this subsection.
1261	a.  As part of the immunity, the corporation, as a
1262	governmental entity serving a public purpose, is not liable for
1263	any claim for bad faith whether or not brought pursuant to s.
1264	624.155, and this subsection or any other provision of law does
1265	not create liability or a cause of action for bad faith or a
1266	claim for extracontractual damages.
1267	b.  Such immunity does not apply to:
1268	(I)a.  Any of the foregoing persons or entities for any
1269	willful tort;
1270	(II)b.  The corporation or its producing agents for breach
1271	of any contract or agreement pertaining to insurance coverage;
1272	(III)c.  The corporation with respect to issuance or
1273	payment of debt;
1274	(IV)d.  An Any assessable insurer with respect to any
1275	action to enforce an assessable insurer's obligations to the
1276	corporation under this subsection; or
1277	(V)e.  The corporation in any pending or future action for
1278	breach of contract or for benefits under a policy issued by the
1279	corporation.; In any such action, the corporation is shall be
1280	liable to the policyholders and beneficiaries for attorney's
1281	fees under s. 627.428.
1282	2.  The corporation shall manage its claim employees,
1283	independent adjusters, and others who handle claims to ensure
1284	they carry out the corporation's duty to its policyholders to
1285	handle claims carefully, timely, diligently, and in good faith,
1286	balanced against the corporation's duty to the state to manage
1287	its assets responsibly in order to minimize its assessment
1288	potential.
1289	(w)  Notwithstanding any other provision of law:
1290	1.  The pledge or sale of, the lien upon, and the security
1291	interest in any rights, revenues, or other assets of the
1292	corporation created or purported to be created pursuant to any
1293	financing documents to secure any bonds or other indebtedness of
1294	the corporation shall be and remain valid and enforceable,
1295	notwithstanding the commencement of and during the continuation
1296	of, and after, any rehabilitation, insolvency, liquidation,
1297	bankruptcy, receivership, conservatorship, reorganization, or
1298	similar proceeding against the corporation under the laws of
1299	this state.
1300	2.  No Such proceeding does not shall relieve the
1301	corporation of its obligation, or otherwise affect its ability
1302	to perform its obligation, to continue to collect, or levy and
1303	collect, assessments, market equalization or other surcharges
1304	under subparagraph (c)10., or any other rights, revenues, or
1305	other assets of the corporation pledged pursuant to any
1306	financing documents.
1307	3.  Each such pledge or sale of, lien upon, and security
1308	interest in, including the priority of such pledge, lien, or
1309	security interest, any such assessments, market equalization or
1310	other surcharges, or other rights, revenues, or other assets
1311	which are collected, or levied and collected, after the
1312	commencement of and during the pendency of, or after, any such
1313	proceeding continues shall continue unaffected by such
1314	proceeding. As used in this subsection, the term "financing
1315	documents" means any agreement or agreements, instrument or
1316	instruments, or other document or documents now existing or
1317	hereafter created evidencing any bonds or other indebtedness of
1318	the corporation or pursuant to which any such bonds or other
1319	indebtedness has been or may be issued and pursuant to which any
1320	rights, revenues, or other assets of the corporation are pledged
1321	or sold to secure the repayment of such bonds or indebtedness,
1322	together with the payment of interest on such bonds or such
1323	indebtedness, or the payment of any other obligation or
1324	financial product, as defined in the plan of operation of the
1325	corporation related to such bonds or indebtedness.
1326	4.  Any such pledge or sale of assessments, revenues,
1327	contract rights, or other rights or assets of the corporation
1328	constitutes shall constitute a lien and security interest, or
1329	sale, as the case may be, that is immediately effective and
1330	attaches to such assessments, revenues, or contract rights or
1331	other rights or assets, whether or not imposed or collected at
1332	the time the pledge or sale is made. Any Such pledge or sale is
1333	effective, valid, binding, and enforceable against the
1334	corporation or other entity making such pledge or sale, and
1335	valid and binding against and superior to any competing claims
1336	or obligations owed to any other person or entity, including
1337	policyholders in this state, asserting rights in any such
1338	assessments, revenues, or contract rights or other rights or
1339	assets to the extent set forth in and in accordance with the
1340	terms of the pledge or sale contained in the applicable
1341	financing documents, whether or not any such person or entity
1342	has notice of such pledge or sale and without the need for any
1343	physical delivery, recordation, filing, or other action.
1344	5.  If As long as the corporation has any bonds
1345	outstanding, the corporation may not file a voluntary petition
1346	under chapter 9 of the federal Bankruptcy Code or such
1347	corresponding chapter or sections as may be in effect, from time
1348	to time, and a public officer or any organization, entity, or
1349	other person may not authorize the corporation to be or become a
1350	debtor under chapter 9 of the federal Bankruptcy Code or such
1351	corresponding chapter or sections as may be in effect, from time
1352	to time, during any such period.
1353	6.  If ordered by a court of competent jurisdiction, the
1354	corporation may assume policies or otherwise provide coverage
1355	for policyholders of an insurer placed in liquidation under
1356	chapter 631, under such forms, rates, terms, and conditions as
1357	the corporation deems appropriate, subject to approval by the
1358	office.
1359	(y)  It is the intent of the Legislature that the
1360	amendments to this subsection enacted in 2002 should, over time,
1361	reduce the probable maximum windstorm losses in the residual
1362	markets and should reduce the potential assessments to be levied
1363	on property insurers and policyholders statewide. In furtherance
1364	of this intent:
1365	1.  The board shall, on or before February 1 of each year,
1366	provide a report to the President of the Senate and the Speaker
1367	of the House of Representatives showing the reduction or
1368	increase in the 100-year probable maximum loss attributable to
1369	wind-only coverages and the quota share program under this
1370	subsection combined, as compared to the benchmark 100-year
1371	probable maximum loss of the Florida Windstorm Underwriting
1372	Association. For purposes of this paragraph, the benchmark 100-
1373	year probable maximum loss of the Florida Windstorm Underwriting
1374	Association shall be the calculation dated February 2001 and
1375	based on November 30, 2000, exposures. In order to ensure
1376	comparability of data, the board shall use the same methods for
1377	calculating its probable maximum loss as were used to calculate
1378	the benchmark probable maximum loss.
1379	2.  Beginning December 1, 2010, if the report under
1380	subparagraph 1. for any year indicates that the 100-year
1381	probable maximum loss attributable to wind-only coverages and
1382	the quota share program combined does not reflect a reduction of
1383	at least 25 percent from the benchmark, the board shall reduce
1384	the boundaries of the high-risk area eligible for wind-only
1385	coverages under this subsection in a manner calculated to reduce
1386	such probable maximum loss to an amount at least 25 percent
1387	below the benchmark.
1388	3.  Beginning February 1, 2015, if the report under
1389	subparagraph 1. for any year indicates that the 100-year
1390	probable maximum loss attributable to wind-only coverages and
1391	the quota share program combined does not reflect a reduction of
1392	at least 50 percent from the benchmark, the boundaries of the
1393	high-risk area eligible for wind-only coverages under this
1394	subsection shall be reduced by the elimination of any area that
1395	is not seaward of a line 1,000 feet inland from the Intracoastal
1396	Waterway.
1397	(aa)  As a condition of eligibility for coverage by the
1398	corporation, an applicant or insured of a property located in
1399	Special Flood Hazard Area, as defined by the National Flood
1400	Insurance Program, must maintain in effect a separate flood
1401	insurance policy having coverage limits for building and
1402	contents at least equal to those provided under the
1403	corporation's policy, subject to the maximum limits available
1404	under the National Flood Insurance Program policy. This
1405	requirement does not apply to an insured who is a tenant or a
1406	condominium unit owner above the ground floor; a policy issued
1407	by the corporation which excludes wind and hail coverage; a risk
1408	that is not eligible for flood coverage under the National Flood
1409	Insurance Program; or a mobile home that is located more than 2
1410	miles from open water, including the ocean, the gulf, a bay, a
1411	river, or the intracoastal waterway. This paragraph applies to
1412	new policies issued by the corporation on or after January 1,
1413	2012, and to policies renewed by the corporation on or after
1414	January 1, 2013. The corporation shall not require the securing
1415	of flood insurance as a condition of coverage if the insured or
1416	applicant executes a form approved by the office affirming that
1417	flood insurance is not provided by the corporation and that if
1418	flood insurance is not secured by the applicant or insured in
1419	addition to coverage by the corporation, the risk will not be
1420	covered for flood damage. A corporation policyholder electing
1421	not to secure flood insurance and executing a form as provided
1422	herein making a claim for water damage against the corporation
1423	shall have the burden of proving the damage was not caused by
1424	flooding. Notwithstanding other provisions of this subsection,
1425	the corporation may deny coverage to an applicant or insured who
1426	refuses to execute the form described herein.
1427	(ee)  The office may establish a pilot program to offer
1428	optional sinkhole coverage in one or more counties or other
1429	territories of the corporation for the purpose of implementing
1430	s. 627.706, as amended by s. 30, chapter 2007-1, Laws of
1431	Florida. Under the pilot program, the corporation is not
1432	required to issue a notice of nonrenewal to exclude sinkhole
1433	coverage upon the renewal of existing policies, but may exclude
1434	such coverage using a notice of coverage change.
1435	Section 2.  Subsection (4) of section 627.3511, Florida
1436	Statutes, is amended to read:
1437	627.3511  Depopulation of Citizens Property Insurance
1438	Corporation.-
1439	(4)  AGENT BONUS.-If When the corporation enters into a
1440	contractual agreement for a take-out plan that provides a bonus
1441	to the insurer, the producing agent of record of the corporation
1442	policy is entitled to retain any unearned commission on such
1443	policy, and the insurer shall either:
1444	(a)  Pay to the producing agent of record of the
1445	association policy, for the first year, an amount that is the
1446	greater of the insurer's usual and customary commission for the
1447	type of policy written or a fee equal to the usual and customary
1448	commission of the corporation; or
1449	(b)  Offer to allow the producing agent of record of the
1450	corporation policy to continue servicing the policy for at least
1451	a period of not less than 1 year and offer to pay the agent the
1452	greater of the insurer's or the corporation's usual and
1453	customary commission for the type of policy written.
1454
1455	If the producing agent is unwilling or unable to accept
1456	appointment, the new insurer shall pay the agent in accordance
1457	with paragraph (a). The requirement of this subsection that the
1458	producing agent of record is entitled to retain the unearned
1459	commission on an association policy does not apply to a policy
1460	for which coverage has been provided in the association for 30
1461	days or less or for which a cancellation notice has been issued
1462	pursuant to s. 627.351(6)(c)10. during the first 30 days of
1463	coverage.
1464	Section 3.  Subsection (1) of section 627.712, Florida
1465	Statutes, is amended to read:
1466	627.712  Residential windstorm coverage required;
1467	availability of exclusions for windstorm or contents.-
1468	(1)  An insurer issuing a residential property insurance
1469	policy must provide windstorm coverage. Except as provided in
1470	paragraph (2)(c), this section does not apply with respect to
1471	risks that are eligible for wind-only coverage from Citizens
1472	Property Insurance Corporation under s. 627.351(6), and with
1473	respect to risks that are not eligible for coverage from
1474	Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
1475	or 4. 5. A risk ineligible for Citizens coverage under s.
1476	627.351(6)(a)3. or 4. 5. is exempt from the requirements of this
1477	section only if the risk is located within the boundaries of the
1478	high-risk account of the corporation.
1479	Section 4.  This act shall take effect upon becoming a law.

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