CS/CS/HB 1243

1
A bill to be entitled
2An act relating to Citizens Property Insurance
3Corporation; amending s. 627.351, F.S.; revising
4legislative intent; providing that certain residential
5structures are not eligible for coverage by the
6corporation after a certain date; specifying the
7percentage amount of emergency assessments; revising
8provisions relating to policyholder surcharges;
9prohibiting the corporation from levying certain
10assessments with respect to a year's deficit until the
11corporation has first levied a specified surcharge;
12deleting obsolete provisions relating to the corporation's
13plan of operation; requiring the corporation to commission
14a consultant to prepare a report on outsourcing various
15functions and to submit such report to the Financial
16Services Commission by a certain date; revising provisions
17relating to wind coverage; specifying that the
18corporation's insurance policies must provide that a
19surplus lines insurer's offer to cover risks at approved
20rates makes the policy ineligible for renewal through the
21corporation under certain circumstances; requiring the
22policyholders to sign a statement acknowledging that they
23may be assessed surcharges to cover corporate deficits;
24providing for termination of an agent for violation of
25provisions relating to unlawful rebates; providing that
26policies do not include coverage for screen enclosures and
27limiting coverage for damage from sinkholes after a
28certain date; requiring members of the board of governors
29to abstain from voting on issues on which they have a
30personal interest; requiring such members to disclose the
31nature of their interest as a public record; providing
32that the corporation operates as a residual market
33mechanism; revising provisions relating to corporation
34rates; providing that surplus lines insurers may
35participate in depopulation, take-out, or keep-out
36programs relating to the corporation under certain
37circumstances; providing requirements that a surplus lines
38insurer must meet in order to participate in such
39programs; clarifying that the corporation is immune from
40certain liabilities; authorizing the release of
41confidential claims files to an insurer who removes a risk
42from the corporation under certain circumstances; deleting
43a requirement for an annual report to the Legislature on
44losses attributable to wind-only coverages; requiring
45owners of properties in Special Flood Hazard Areas to
46maintain a separate flood insurance policy after a certain
47date; providing exceptions; deleting a provision relating
48to a pilot program for optional sinkhole coverage;
49amending s. 627.712, F.S.; conforming cross-references;
50providing an effective date.
51
52Be It Enacted by the Legislature of the State of Florida:
53
54     Section 1.  Paragraphs (a), (b), (c), (d), (n), (o), (q),
55(s), (w), (x), (y), (aa), and (ee) of subsection (6) of section
56627.351, Florida Statutes, are amended to read:
57     627.351  Insurance risk apportionment plans.-
58     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
59     (a)1.  It is The public purpose of this subsection is to
60ensure that there is the existence of an orderly market for
61property insurance for residents Floridians and Florida
62businesses of this state.
63     1.  The Legislature finds that actual and threatened
64catastrophic losses to property from hurricanes in this state
65have caused insurers to be unwilling or unable to provide
66property insurance coverage to the extent sought and needed. The
67Legislature declares that it is in the public interest and
68serves a public purpose that property in this state be
69adequately insured in order to facilitate the remediation,
70reconstruction, and replacement of damaged or destroyed
71property. Such efforts are necessary in order to avoid or reduce
72negative effects to the public health, safety, and welfare; the
73economy of the state; and the revenues of state and local
74governments. It is necessary, therefore, to provide property
75insurance to applicants who are entitled to procure insurance
76through the voluntary market but who, in good faith, are unable
77to do so. The Legislature finds that private insurers are
78unwilling or unable to provide affordable property insurance
79coverage in this state to the extent sought and needed. The
80absence of affordable property insurance threatens the public
81health, safety, and welfare and likewise threatens the economic
82health of the state. The state therefore has a compelling public
83interest and a public purpose to assist in assuring that
84property in the state is insured and that it is insured at
85affordable rates so as to facilitate the remediation,
86reconstruction, and replacement of damaged or destroyed property
87in order to reduce or avoid the negative effects otherwise
88resulting to the public health, safety, and welfare, to the
89economy of the state, and to the revenues of the state and local
90governments which are needed to provide for the public welfare.
91It is necessary, therefore, to provide affordable property
92insurance to applicants who are in good faith entitled to
93procure insurance through the voluntary market but are unable to
94do so. The Legislature intends, therefore, by this subsection
95that affordable property insurance be provided and that it
96continue to be provided, as long as necessary, through Citizens
97Property Insurance Corporation, a government entity that is an
98integral part of the state, and that is not a private insurance
99company. To that end, Citizens Property Insurance Corporation
100shall strive to increase the availability of affordable property
101insurance in this state, while achieving efficiencies and
102economies, and while providing service to policyholders,
103applicants, and agents which is no less than the quality
104generally provided in the voluntary market, for the achievement
105of the foregoing public purposes. Because it is essential for
106this government entity to have the maximum financial resources
107to pay claims following a catastrophic hurricane, it is the
108intent of the Legislature that Citizens Property Insurance
109Corporation continue to be an integral part of the state and
110that the income of the corporation be exempt from federal income
111taxation and that interest on the debt obligations issued by the
112corporation be exempt from federal income taxation.
113     a.  It is also the intent of the Legislature that
114policyholders, applicants, and agents of the corporation receive
115service and treatment of the highest possible level and never
116less than that generally provided in the voluntary market. The
117corporation must be held to service standards no less than those
118applied to insurers in the voluntary market by the office with
119respect to responsiveness, timeliness, customer courtesy, and
120overall dealings with policyholders, applicants, or agents of
121the corporation. It is also the intent of the Legislature that
122the corporation operate efficiently and economically.
123     b.  Because it is essential that the corporation have the
124maximum financial resources necessary to pay claims following a
125catastrophic hurricane, the Legislature also intends that the
126income of the corporation and interest on the debt obligations
127issued by the corporation be exempt from federal income
128taxation.
129     2.  The Residential Property and Casualty Joint
130Underwriting Association originally created by this statute
131shall be known, as of July 1, 2002, as the Citizens Property
132Insurance Corporation. The corporation shall provide insurance
133for residential and commercial property, for applicants who are
134in good faith entitled, but, in good faith, are unable, to
135procure insurance through the voluntary market. The corporation
136shall operate pursuant to a plan of operation approved by order
137of the Financial Services Commission. The plan is subject to
138continuous review by the commission. The commission may, by
139order, withdraw approval of all or part of a plan if the
140commission determines that conditions have changed since
141approval was granted and that the purposes of the plan require
142changes in the plan. The corporation shall continue to operate
143pursuant to the plan of operation approved by the Office of
144Insurance Regulation until October 1, 2006. For the purposes of
145this subsection, residential coverage includes both personal
146lines residential coverage, which consists of the type of
147coverage provided by homeowner's, mobile home owner's, dwelling,
148tenant's, condominium unit owner's, and similar policies;, and
149commercial lines residential coverage, which consists of the
150type of coverage provided by condominium association, apartment
151building, and similar policies.
152     3.  With respect to coverage for personal lines residential
153structures:
154     a.  Effective January 1, 2009, a personal lines residential
155structure that has a dwelling replacement cost of $2 million or
156more, or a single condominium unit that has a combined dwelling
157and contents content replacement cost of $2 million or more is
158not eligible for coverage by the corporation. Such dwellings
159insured by the corporation on December 31, 2008, may continue to
160be covered by the corporation until the end of the policy term.
161However, such dwellings that are insured by the corporation and
162become ineligible for coverage due to the provisions of this
163subparagraph may reapply and obtain coverage if the property
164owner provides the corporation with a sworn affidavit from one
165or more insurance agents, on a form provided by the corporation,
166stating that the agents have made their best efforts to obtain
167coverage and that the property has been rejected for coverage by
168at least one authorized insurer and at least three surplus lines
169insurers. If such conditions are met, the dwelling may be
170insured by the corporation for up to 3 years, after which time
171the dwelling is ineligible for coverage. The office shall
172approve the method used by the corporation for valuing the
173dwelling replacement cost for the purposes of this subparagraph.
174If a policyholder is insured by the corporation prior to being
175determined to be ineligible pursuant to this subparagraph and
176such policyholder files a lawsuit challenging the determination,
177the policyholder may remain insured by the corporation until the
178conclusion of the litigation.
179     b.  Effective January 1, 2012, a structure that has a
180dwelling replacement cost of $1 million or more, or a single
181condominium unit that has a combined dwelling and contents
182replacement cost of $1 million or more, is not eligible for
183coverage by the corporation. Such dwellings insured by the
184corporation on December 31, 2011, may continue to be covered by
185the corporation only until the end of the policy term.
186     c.  Effective January 1, 2014, a structure that has a
187dwelling replacement cost of $750,000 or more, or a single
188condominium unit that has a combined dwelling and contents
189replacement cost of $750,000 or more, is not eligible for
190coverage by the corporation. Such dwellings insured by the
191corporation on December 31, 2013, may continue to be covered by
192the corporation until the end of the policy term.
193     d.  Effective January 1, 2016, a structure that has a
194dwelling replacement cost of $500,000 or more, or a single
195condominium unit that has a combined dwelling and contents
196replacement cost of $500,000 or more, is not eligible for
197coverage by the corporation. Such dwellings insured by the
198corporation on December 31, 2015, may continue to be covered by
199the corporation until the end of the policy term.
200     4.  It is the intent of the Legislature that policyholders,
201applicants, and agents of the corporation receive service and
202treatment of the highest possible level but never less than that
203generally provided in the voluntary market. It also is intended
204that the corporation be held to service standards no less than
205those applied to insurers in the voluntary market by the office
206with respect to responsiveness, timeliness, customer courtesy,
207and overall dealings with policyholders, applicants, or agents
208of the corporation.
209     4.5.  Effective January 1, 2009, a personal lines
210residential structure that is located in the "wind-borne debris
211region," as defined in s. 1609.2, International Building Code
212(2006), and that has an insured value on the structure of
213$750,000 or more is not eligible for coverage by the corporation
214unless the structure has opening protections as required under
215the Florida Building Code for a newly constructed residential
216structure in that area. A residential structure shall be deemed
217to comply with the requirements of this subparagraph if it has
218shutters or opening protections on all openings and if such
219opening protections complied with the Florida Building Code at
220the time they were installed.
221     (b)1.  All insurers authorized to write one or more subject
222lines of business in this state are subject to assessment by the
223corporation and, for the purposes of this subsection, are
224referred to collectively as "assessable insurers." Insurers
225writing one or more subject lines of business in this state
226pursuant to part VIII of chapter 626 are not assessable
227insurers, but insureds who procure one or more subject lines of
228business in this state pursuant to part VIII of chapter 626 are
229subject to assessment by the corporation and are referred to
230collectively as "assessable insureds." An authorized insurer's
231assessment liability begins shall begin on the first day of the
232calendar year following the year in which the insurer was issued
233a certificate of authority to transact insurance for subject
234lines of business in this state and terminates shall terminate 1
235year after the end of the first calendar year during which the
236insurer no longer holds a certificate of authority to transact
237insurance for subject lines of business in this state.
238     2.a.  All revenues, assets, liabilities, losses, and
239expenses of the corporation shall be divided into three separate
240accounts as follows:
241     (I)  A personal lines account for personal residential
242policies issued by the corporation, or issued by the Residential
243Property and Casualty Joint Underwriting Association and renewed
244by the corporation, which provides that provide comprehensive,
245multiperil coverage on risks that are not located in areas
246eligible for coverage by in the Florida Windstorm Underwriting
247Association as those areas were defined on January 1, 2002, and
248for such policies that do not provide coverage for the peril of
249wind on risks that are located in such areas;
250     (II)  A commercial lines account for commercial residential
251and commercial nonresidential policies issued by the
252corporation, or issued by the Residential Property and Casualty
253Joint Underwriting Association and renewed by the corporation,
254which provides that provide coverage for basic property perils
255on risks that are not located in areas eligible for coverage by
256in the Florida Windstorm Underwriting Association as those areas
257were defined on January 1, 2002, and for such policies that do
258not provide coverage for the peril of wind on risks that are
259located in such areas; and
260     (III)  A high-risk account for personal residential
261policies and commercial residential and commercial
262nonresidential property policies issued by the corporation, or
263transferred to the corporation, which provides that provide
264coverage for the peril of wind on risks that are located in
265areas eligible for coverage by in the Florida Windstorm
266Underwriting Association as those areas were defined on January
2671, 2002. The corporation may offer policies that provide
268multiperil coverage and the corporation shall continue to offer
269policies that provide coverage only for the peril of wind for
270risks located in areas eligible for coverage in the high-risk
271account. In issuing multiperil coverage, the corporation may use
272its approved policy forms and rates for the personal lines
273account. An applicant or insured who is eligible to purchase a
274multiperil policy from the corporation may purchase a multiperil
275policy from an authorized insurer without prejudice to the
276applicant's or insured's eligibility to prospectively purchase a
277policy that provides coverage only for the peril of wind from
278the corporation. An applicant or insured who is eligible for a
279corporation policy that provides coverage only for the peril of
280wind may elect to purchase or retain such policy and also
281purchase or retain coverage excluding wind from an authorized
282insurer without prejudice to the applicant's or insured's
283eligibility to prospectively purchase a policy that provides
284multiperil coverage from the corporation. It is the goal of the
285Legislature that there would be an overall average savings of 10
286percent or more for a policyholder who currently has a wind-only
287policy with the corporation, and an ex-wind policy with a
288voluntary insurer or the corporation, and who then obtains a
289multiperil policy from the corporation. It is the intent of the
290Legislature that the offer of multiperil coverage in the high-
291risk account be made and implemented in a manner that does not
292adversely affect the tax-exempt status of the corporation or
293creditworthiness of or security for currently outstanding
294financing obligations or credit facilities of the high-risk
295account, the personal lines account, or the commercial lines
296account. The high-risk account must also include quota share
297primary insurance under subparagraph (c)2. The area eligible for
298coverage under the high-risk account also includes the area
299within Port Canaveral, which is bordered on the south by the
300City of Cape Canaveral, bordered on the west by the Banana
301River, and bordered on the north by Federal Government property.
302     b.  The three separate accounts must be maintained as long
303as financing obligations entered into by the Florida Windstorm
304Underwriting Association or Residential Property and Casualty
305Joint Underwriting Association are outstanding, in accordance
306with the terms of the corresponding financing documents. If When
307the financing obligations are no longer outstanding, in
308accordance with the terms of the corresponding financing
309documents, the corporation may use a single account for all
310revenues, assets, liabilities, losses, and expenses of the
311corporation. Consistent with the requirement of this
312subparagraph and prudent investment policies that minimize the
313cost of carrying debt, the board shall exercise its best efforts
314to retire existing debt or to obtain the approval of necessary
315parties to amend the terms of existing debt, so as to structure
316the most efficient plan to consolidate the three separate
317accounts into a single account.
318     c.  Creditors of the Residential Property and Casualty
319Joint Underwriting Association and of the accounts specified in
320sub-sub-subparagraphs a.(I) and (II) may have a claim against,
321and recourse to, those the accounts referred to in sub-sub-
322subparagraphs a.(I) and (II) and shall have no claim against, or
323recourse to, the account referred to in sub-sub-subparagraph
324a.(III). Creditors of the Florida Windstorm Underwriting
325Association shall have a claim against, and recourse to, the
326account referred to in sub-sub-subparagraph a.(III) and shall
327have no claim against, or recourse to, the accounts referred to
328in sub-sub-subparagraphs a.(I) and (II).
329     d.  Revenues, assets, liabilities, losses, and expenses not
330attributable to particular accounts shall be prorated among the
331accounts.
332     e.  The Legislature finds that the revenues of the
333corporation are revenues that are necessary to meet the
334requirements set forth in documents authorizing the issuance of
335bonds under this subsection.
336     f.  No part of the income of the corporation may inure to
337the benefit of any private person.
338     3.  With respect to a deficit in an account:
339     a.  After accounting for the Citizens policyholder
340surcharge imposed under sub-subparagraph i., if when the
341remaining projected deficit incurred in a particular calendar
342year is not greater than 6 percent of the aggregate statewide
343direct written premium for the subject lines of business for the
344prior calendar year, the entire deficit shall be recovered
345through regular assessments of assessable insurers under
346paragraph (q) and assessable insureds.
347     b.  After accounting for the Citizens policyholder
348surcharge imposed under sub-subparagraph i., when the remaining
349projected deficit incurred in a particular calendar year exceeds
3506 percent of the aggregate statewide direct written premium for
351the subject lines of business for the prior calendar year, the
352corporation shall levy regular assessments on assessable
353insurers under paragraph (q) and on assessable insureds in an
354amount equal to the greater of 6 percent of the deficit or 6
355percent of the aggregate statewide direct written premium for
356the subject lines of business for the prior calendar year. Any
357remaining deficit shall be recovered through emergency
358assessments under sub-subparagraph d.
359     c.  Each assessable insurer's share of the amount being
360assessed under sub-subparagraph a. or sub-subparagraph b. must
361shall be in the proportion that the assessable insurer's direct
362written premium for the subject lines of business for the year
363preceding the assessment bears to the aggregate statewide direct
364written premium for the subject lines of business for that year.
365The applicable assessment percentage applicable to each
366assessable insured is the ratio of the amount being assessed
367under sub-subparagraph a. or sub-subparagraph b. to the
368aggregate statewide direct written premium for the subject lines
369of business for the prior year. Assessments levied by the
370corporation on assessable insurers under sub-subparagraphs a.
371and b. must shall be paid as required by the corporation's plan
372of operation and paragraph (q). Assessments levied by the
373corporation on assessable insureds under sub-subparagraphs a.
374and b. shall be collected by the surplus lines agent at the time
375the surplus lines agent collects the surplus lines tax required
376by s. 626.932 and shall be paid to the Florida Surplus Lines
377Service Office at the time the surplus lines agent pays the
378surplus lines tax to that the Florida Surplus Lines Service
379office. Upon receipt of regular assessments from surplus lines
380agents, the Florida Surplus Lines Service Office shall transfer
381the assessments directly to the corporation as determined by the
382corporation.
383     d.  Upon a determination by the board of governors that a
384deficit in an account exceeds the amount that will be recovered
385through regular assessments under sub-subparagraph a. or sub-
386subparagraph b., plus the amount that is expected to be
387recovered through surcharges under sub-subparagraph i., as to
388the remaining projected deficit the board shall levy, after
389verification by the office, shall levy emergency assessments,
390for as many years as necessary to cover the deficits, to be
391collected by assessable insurers and the corporation and
392collected from assessable insureds upon issuance or renewal of
393policies for subject lines of business, excluding National Flood
394Insurance policies. The amount of the emergency assessment
395collected in a particular year must shall be a uniform
396percentage of that year's direct written premium for subject
397lines of business and all accounts of the corporation, excluding
398National Flood Insurance Program policy premiums, as annually
399determined by the board and verified by the office. For all
400accounts of the corporation, the amount of the emergency
401assessment levied in a particular year must be a uniform
402percentage equal to 1 1/2 times the uniform percentage emergency
403assessment levied on subject lines of business. The office shall
404verify the arithmetic calculations involved in the board's
405determination within 30 days after receipt of the information on
406which the determination was based. Notwithstanding any other
407provision of law, the corporation and each assessable insurer
408that writes subject lines of business shall collect emergency
409assessments from its policyholders without such obligation being
410affected by any credit, limitation, exemption, or deferment.
411Emergency assessments levied by the corporation on assessable
412insureds shall be collected by the surplus lines agent at the
413time the surplus lines agent collects the surplus lines tax
414required by s. 626.932 and shall be paid to the Florida Surplus
415Lines Service Office at the time the surplus lines agent pays
416the surplus lines tax to that the Florida Surplus Lines Service
417office. The emergency assessments so collected shall be
418transferred directly to the corporation on a periodic basis as
419determined by the corporation and shall be held by the
420corporation solely in the applicable account. The aggregate
421amount of emergency assessments levied for an account under this
422sub-subparagraph in any calendar year may, at the discretion of
423the board of governors, be less than but may not exceed the
424greater of 10 percent of the amount needed to cover the deficit,
425plus interest, fees, commissions, required reserves, and other
426costs associated with financing of the original deficit, or 10
427percent of the aggregate statewide direct written premium for
428subject lines of business and 15 percent for all accounts of the
429corporation for the prior year, plus interest, fees,
430commissions, required reserves, and other costs associated with
431financing the deficit.
432     e.  The corporation may pledge the proceeds of assessments,
433projected recoveries from the Florida Hurricane Catastrophe
434Fund, other insurance and reinsurance recoverables, policyholder
435surcharges and other surcharges, and other funds available to
436the corporation as the source of revenue for and to secure bonds
437issued under paragraph (q), bonds or other indebtedness issued
438under subparagraph (c)2.3., or lines of credit or other
439financing mechanisms issued or created under this subsection, or
440to retire any other debt incurred as a result of deficits or
441events giving rise to deficits, or in any other way that the
442board determines will efficiently recover such deficits. The
443purpose of the lines of credit or other financing mechanisms is
444to provide additional resources to assist the corporation in
445covering claims and expenses attributable to a catastrophe. As
446used in this subsection, the term "assessments" includes regular
447assessments under sub-subparagraph a., sub-subparagraph b., or
448subparagraph (q)1. and emergency assessments under sub-
449subparagraph d. Emergency assessments collected under sub-
450subparagraph d. are not part of an insurer's rates, are not
451premium, and are not subject to premium tax, fees, or
452commissions; however, failure to pay the emergency assessment
453shall be treated as failure to pay premium. The emergency
454assessments under sub-subparagraph d. shall continue as long as
455any bonds issued or other indebtedness incurred with respect to
456a deficit for which the assessment was imposed remain
457outstanding, unless adequate provision has been made for the
458payment of such bonds or other indebtedness pursuant to the
459documents governing such bonds or other indebtedness.
460     f.  As used in this subsection for purposes of any deficit
461incurred on or after January 25, 2007, the term "subject lines
462of business" means insurance written by assessable insurers or
463procured by assessable insureds for all property and casualty
464lines of business in this state, but not including workers'
465compensation or medical malpractice. As used in this the sub-
466subparagraph, the term "property and casualty lines of business"
467includes all lines of business identified on Form 2, Exhibit of
468Premiums and Losses, in the annual statement required of
469authorized insurers under by s. 624.424 and any rule adopted
470under this section, except for those lines identified as
471accident and health insurance and except for policies written
472under the National Flood Insurance Program or the Federal Crop
473Insurance Program. For purposes of this sub-subparagraph, the
474term "workers' compensation" includes both workers' compensation
475insurance and excess workers' compensation insurance.
476     g.  The Florida Surplus Lines Service Office shall
477determine annually the aggregate statewide written premium in
478subject lines of business procured by assessable insureds and
479shall report that information to the corporation in a form and
480at a time the corporation specifies to ensure that the
481corporation can meet the requirements of this subsection and the
482corporation's financing obligations.
483     h.  The Florida Surplus Lines Service Office shall verify
484the proper application by surplus lines agents of assessment
485percentages for regular assessments and emergency assessments
486levied under this subparagraph on assessable insureds and shall
487assist the corporation in ensuring the accurate, timely
488collection and payment of assessments by surplus lines agents as
489required by the corporation.
490     i.  If a deficit is incurred in any account in 2011 2008 or
491thereafter, the board of governors shall levy a Citizens
492policyholder surcharge against all policyholders of the
493corporation.
494     (I)  The surcharge for a 12-month period, which shall be
495levied collected at the time of issuance or renewal of a policy,
496as a uniform percentage of the premium for the policy of up to
49715 percent of such premium, which funds shall be used to offset
498the deficit.
499     (II)  It is the intent of the Legislature that the
500policyholder's liability for the surcharge attach on the date of
501the order levying the surcharge. The surcharge is payable upon
502cancellation or termination of the policy, upon renewal of the
503policy, or upon issuance of a new policy by the corporation
504within the first 12 months after the date of the levy or the
505period of time necessary to fully collect the surcharge amount.
506     (III)  The corporation may not levy any regular assessments
507under paragraph (q) pursuant to sub-subparagraph a. or sub-
508subparagraph b. with respect to a particular year's deficit
509until the corporation has first levied a surcharge under this
510sub-subparagraph in the full amount authorized by this sub-
511subparagraph.
512     (IV)  The Citizens policyholder surcharge is surcharges
513under this sub-subparagraph are not considered premium and is
514are not subject to commissions, fees, or premium taxes. However,
515failure to pay the surcharge such surcharges shall be treated as
516failure to pay premium.
517     j.  If the amount of any assessments or surcharges
518collected from corporation policyholders, assessable insurers or
519their policyholders, or assessable insureds exceeds the amount
520of the deficits, such excess amounts shall be remitted to and
521retained by the corporation in a reserve to be used by the
522corporation, as determined by the board of governors and
523approved by the office, to pay claims or reduce any past,
524present, or future plan-year deficits or to reduce outstanding
525debt.
526     (c)  The plan of operation of the corporation:
527     1.  Must provide for adoption of residential property and
528casualty insurance policy forms and commercial residential and
529nonresidential property insurance forms, which forms must be
530approved by the office before prior to use. The corporation
531shall adopt the following policy forms:
532     a.  Standard personal lines policy forms that are
533comprehensive multiperil policies providing full coverage of a
534residential property equivalent to the coverage provided in the
535private insurance market under an HO-3, HO-4, or HO-6 policy.
536     b.  Basic personal lines policy forms that are policies
537similar to an HO-8 policy or a dwelling fire policy that provide
538coverage meeting the requirements of the secondary mortgage
539market, but which coverage is more limited than the coverage
540under a standard policy.
541     c.  Commercial lines residential and nonresidential policy
542forms that are generally similar to the basic perils of full
543coverage obtainable for commercial residential structures and
544commercial nonresidential structures in the admitted voluntary
545market.
546     d.  Personal lines and commercial lines residential
547property insurance forms that cover the peril of wind only. The
548forms are applicable only to residential properties located in
549areas eligible for coverage under the high-risk account referred
550to in sub-subparagraph (b)2.a.
551     e.  Commercial lines nonresidential property insurance
552forms that cover the peril of wind only. The forms are
553applicable only to nonresidential properties located in areas
554eligible for coverage under the high-risk account referred to in
555sub-subparagraph (b)2.a.
556     f.  The corporation may adopt variations of the policy
557forms listed in sub-subparagraphs a.-e. which that contain more
558restrictive coverage.
559     2.a.  Must provide that the corporation adopt a program in
560which the corporation and authorized insurers enter into quota
561share primary insurance agreements for hurricane coverage, as
562defined in s. 627.4025(2)(a), for eligible risks, and adopt
563property insurance forms for eligible risks which cover the
564peril of wind only. As used in this subsection, the term:
565     (I)  "Quota share primary insurance" means an arrangement
566in which the primary hurricane coverage of an eligible risk is
567provided in specified percentages by the corporation and an
568authorized insurer. The corporation and authorized insurer are
569each solely responsible for a specified percentage of hurricane
570coverage of an eligible risk as set forth in a quota share
571primary insurance agreement between the corporation and an
572authorized insurer and the insurance contract. The
573responsibility of the corporation or authorized insurer to pay
574its specified percentage of hurricane losses of an eligible
575risk, as set forth in the quota share primary insurance
576agreement, may not be altered by the inability of the other
577party to the agreement to pay its specified percentage of
578hurricane losses. Eligible risks that are provided hurricane
579coverage through a quota share primary insurance arrangement
580must be provided policy forms that set forth the obligations of
581the corporation and authorized insurer under the arrangement,
582clearly specify the percentages of quota share primary insurance
583provided by the corporation and authorized insurer, and
584conspicuously and clearly state that neither the authorized
585insurer nor the corporation may be held responsible beyond its
586specified percentage of coverage of hurricane losses.
587     (II)  "Eligible risks" means personal lines residential and
588commercial lines residential risks that meet the underwriting
589criteria of the corporation and are located in areas that were
590eligible for coverage by the Florida Windstorm Underwriting
591Association on January 1, 2002.
592     b.  The corporation may enter into quota share primary
593insurance agreements with authorized insurers at corporation
594coverage levels of 90 percent and 50 percent.
595     c.  If the corporation determines that additional coverage
596levels are necessary to maximize participation in quota share
597primary insurance agreements by authorized insurers, the
598corporation may establish additional coverage levels. However,
599the corporation's quota share primary insurance coverage level
600may not exceed 90 percent.
601     d.  Any quota share primary insurance agreement entered
602into between an authorized insurer and the corporation must
603provide for a uniform specified percentage of coverage of
604hurricane losses, by county or territory as set forth by the
605corporation board, for all eligible risks of the authorized
606insurer covered under the quota share primary insurance
607agreement.
608     e.  Any quota share primary insurance agreement entered
609into between an authorized insurer and the corporation is
610subject to review and approval by the office. However, such
611agreement shall be authorized only as to insurance contracts
612entered into between an authorized insurer and an insured who is
613already insured by the corporation for wind coverage.
614     f.  For all eligible risks covered under quota share
615primary insurance agreements, the exposure and coverage levels
616for both the corporation and authorized insurers shall be
617reported by the corporation to the Florida Hurricane Catastrophe
618Fund. For all policies of eligible risks covered under quota
619share primary insurance agreements, the corporation and the
620authorized insurer shall maintain complete and accurate records
621for the purpose of exposure and loss reimbursement audits as
622required by Florida Hurricane Catastrophe Fund rules. The
623corporation and the authorized insurer shall each maintain
624duplicate copies of policy declaration pages and supporting
625claims documents.
626     g.  The corporation board shall establish in its plan of
627operation standards for quota share agreements which ensure that
628there is no discriminatory application among insurers as to the
629terms of quota share agreements, pricing of quota share
630agreements, incentive provisions if any, and consideration paid
631for servicing policies or adjusting claims.
632     h.  The quota share primary insurance agreement between the
633corporation and an authorized insurer must set forth the
634specific terms under which coverage is provided, including, but
635not limited to, the sale and servicing of policies issued under
636the agreement by the insurance agent of the authorized insurer
637producing the business, the reporting of information concerning
638eligible risks, the payment of premium to the corporation, and
639arrangements for the adjustment and payment of hurricane claims
640incurred on eligible risks by the claims adjuster and personnel
641of the authorized insurer. Entering into a quota sharing
642insurance agreement between the corporation and an authorized
643insurer shall be voluntary and at the discretion of the
644authorized insurer.
645     2.3.  May provide that the corporation may employ or
646otherwise contract with individuals or other entities to provide
647administrative or professional services that may be appropriate
648to effectuate the plan.
649     a.  The corporation may shall have the power to borrow
650funds, by issuing bonds or by incurring other indebtedness, and
651shall have other powers reasonably necessary to effectuate the
652requirements of this subsection, including, without limitation,
653the power to issue bonds and incur other indebtedness in order
654to refinance outstanding bonds or other indebtedness. The
655corporation may, but is not required to, seek judicial
656validation of its bonds or other indebtedness under chapter 75.
657The corporation may issue bonds or incur other indebtedness, or
658have bonds issued on its behalf by a unit of local government
659pursuant to subparagraph (q)2., in the absence of a hurricane or
660other weather-related event, upon a determination by the
661corporation, subject to approval by the office, that such action
662would enable it to efficiently meet the financial obligations of
663the corporation and that such financings are reasonably
664necessary to effectuate the requirements of this subsection. The
665corporation may is authorized to take all actions needed to
666facilitate tax-free status for any such bonds or indebtedness,
667including formation of trusts or other affiliated entities. The
668corporation may shall have the authority to pledge assessments,
669projected recoveries from the Florida Hurricane Catastrophe
670Fund, other reinsurance recoverables, market equalization and
671other surcharges, and other funds available to the corporation
672as security for bonds or other indebtedness. In recognition of
673s. 10, Art. I of the State Constitution, prohibiting the
674impairment of obligations of contracts, it is the intent of the
675Legislature that no action be taken whose purpose is to impair
676any bond indenture or financing agreement or any revenue source
677committed by contract to such bond or other indebtedness.
678     b.  To ensure that the corporation is operating in an
679efficient and economic manner while providing quality service to
680policyholders, applicants, and agents, the board shall
681commission an independent third-party consultant having
682expertise in insurance company management or insurance company
683management consulting to prepare a report and make
684recommendations on the relative costs and benefits of
685outsourcing various policy issuance and service functions to
686private servicing carriers or entities performing similar
687functions in the private market for a fee, rather than
688performing such functions in house. In making such
689recommendations, the consultant shall consider how other
690residual markets, both in this state and around the country,
691outsource appropriate functions or use servicing carriers to
692better match expenses with revenues that fluctuate based on a
693widely varying policy count. The report must be completed by
694July 1, 2012. Upon receiving the report, the board shall develop
695a plan to implement the report and submit the plan for review,
696modification, and approval to the Financial Services Commission.
697Upon the commission's approval of the plan, the board shall
698begin implementing the plan by January 1, 2013.
699     3.4.a.  Must require that the corporation operate subject
700to the supervision and approval of a board of governors
701consisting of eight individuals who are residents of this state,
702from different geographical areas of this state.
703     a.  The Governor, the Chief Financial Officer, the
704President of the Senate, and the Speaker of the House of
705Representatives shall each appoint two members of the board. At
706least one of the two members appointed by each appointing
707officer must have demonstrated expertise in insurance and be
708within the scope of the exemption provided in s. 112.313(7)(b).
709The Chief Financial Officer shall designate one of the
710appointees as chair. All board members serve at the pleasure of
711the appointing officer. All members of the board of governors
712are subject to removal at will by the officers who appointed
713them. All board members, including the chair, must be appointed
714to serve for 3-year terms beginning annually on a date
715designated by the plan. However, for the first term beginning on
716or after July 1, 2009, each appointing officer shall appoint one
717member of the board for a 2-year term and one member for a 3-
718year term. A Any board vacancy shall be filled for the unexpired
719term by the appointing officer. The Chief Financial Officer
720shall appoint a technical advisory group to provide information
721and advice to the board of governors in connection with the
722board's duties under this subsection. The executive director and
723senior managers of the corporation shall be engaged by the board
724and serve at the pleasure of the board. Any executive director
725appointed on or after July 1, 2006, is subject to confirmation
726by the Senate. The executive director is responsible for
727employing other staff as the corporation may require, subject to
728review and concurrence by the board.
729     b.  The board shall create a Market Accountability Advisory
730Committee to assist the corporation in developing awareness of
731its rates and its customer and agent service levels in
732relationship to the voluntary market insurers writing similar
733coverage and to provide advice on issues regarding agent
734appointments and compensation.
735     (I)  The members of the advisory committee shall consist of
736the following 11 persons, one of whom must be elected chair by
737the members of the committee: four representatives, one
738appointed by the Florida Association of Insurance Agents, one by
739the National Florida Association of Insurance and Financial
740Advisors-Florida Advisors, one by the Professional Insurance
741Agents of Florida, and one by the Latin American Association of
742Insurance Agencies; three representatives appointed by the
743insurers with the three highest voluntary market share of
744residential property insurance business in the state; one
745representative from the Office of Insurance Regulation; one
746consumer appointed by the board who is insured by the
747corporation at the time of appointment to the committee; one
748representative appointed by the Florida Association of Realtors;
749and one representative appointed by the Florida Bankers
750Association. All members shall be appointed to must serve for 3-
751year terms and may serve for consecutive terms.
752     (II)  The committee shall report to the corporation at each
753board meeting on insurance market issues which may include rates
754and rate competition with the voluntary market; service,
755including policy issuance, claims processing, and general
756responsiveness to policyholders, applicants, and agents; and
757matters relating to depopulation, producer compensation, or
758agency agreements.
759     4.5.  Must provide a procedure for determining the
760eligibility of a risk for coverage, as follows:
761     a.  Subject to the provisions of s. 627.3517, with respect
762to personal lines residential risks, if the risk is offered
763coverage from an authorized insurer at the insurer's approved
764rate under either a standard policy including wind coverage or,
765if consistent with the insurer's underwriting rules as filed
766with the office, a basic policy including wind coverage, for a
767new application to the corporation for coverage, the risk is not
768eligible for any policy issued by the corporation unless the
769premium for coverage from the authorized insurer is more than 15
770percent greater than the premium for comparable coverage from
771the corporation. If the risk is not able to obtain any such
772offer, the risk is eligible for either a standard policy
773including wind coverage or a basic policy including wind
774coverage issued by the corporation; however, if the risk could
775not be insured under a standard policy including wind coverage
776regardless of market conditions, the risk is shall be eligible
777for a basic policy including wind coverage unless rejected under
778subparagraph 7. 8. Notwithstanding these limitations, an
779application for coverage having an effective date before January
7801, 2015, is eligible for coverage by the corporation if the
781premium for coverage from an authorized insurer exceeds the
782premium for comparable coverage from the corporation by more
783than 25 percent. However, with regard to a policyholder of the
784corporation or a policyholder removed from the corporation
785through an assumption agreement until the end of the assumption
786period, the policyholder remains eligible for coverage from the
787corporation regardless of any offer of coverage from an
788authorized insurer or surplus lines insurer. The corporation
789shall determine the type of policy to be provided on the basis
790of objective standards specified in the underwriting manual and
791based on generally accepted underwriting practices.
792     (I)  If the risk accepts an offer of coverage through the
793market assistance plan or an offer of coverage through a
794mechanism established by the corporation before a policy is
795issued to the risk by the corporation or during the first 30
796days of coverage by the corporation, and the producing agent who
797submitted the application to the plan or to the corporation is
798not currently appointed by the insurer, the insurer shall:
799     (A)  Pay to the producing agent of record of the policy,
800for the first year, an amount that is the greater of the
801insurer's usual and customary commission for the type of policy
802written or a fee equal to the usual and customary commission of
803the corporation; or
804     (B)  Offer to allow the producing agent of record of the
805policy to continue servicing the policy for at least a period of
806not less than 1 year and offer to pay the agent the greater of
807the insurer's or the corporation's usual and customary
808commission for the type of policy written.
809
810If the producing agent is unwilling or unable to accept
811appointment, the new insurer shall pay the agent in accordance
812with sub-sub-sub-subparagraph (A).
813     (II)  If When the corporation enters into a contractual
814agreement for a take-out plan, the producing agent of record of
815the corporation policy is entitled to retain any unearned
816commission on the policy, and the insurer shall:
817     (A)  Pay to the producing agent of record of the
818corporation policy, for the first year, an amount that is the
819greater of the insurer's usual and customary commission for the
820type of policy written or a fee equal to the usual and customary
821commission of the corporation; or
822     (B)  Offer to allow the producing agent of record of the
823corporation policy to continue servicing the policy for at least
824a period of not less than 1 year and offer to pay the agent the
825greater of the insurer's or the corporation's usual and
826customary commission for the type of policy written.
827
828If the producing agent is unwilling or unable to accept
829appointment, the new insurer shall pay the agent in accordance
830with sub-sub-sub-subparagraph (A).
831     b.  Subject to s. 627.3517, with respect to commercial
832lines residential risks, for a new application to the
833corporation for coverage, if the risk is offered coverage under
834a policy including wind coverage from an authorized insurer at
835its approved rate, the risk is not eligible for a any policy
836issued by the corporation unless the premium for coverage from
837the authorized insurer is more than 15 percent greater than the
838premium for comparable coverage from the corporation. If the
839risk is not able to obtain any such offer, the risk is eligible
840for a policy including wind coverage issued by the corporation.
841Notwithstanding these limitations, an application for coverage
842having an effective date before January 1, 2015, is eligible for
843coverage by the corporation if the premium for coverage from an
844authorized insurer exceeds the premium for comparable coverage
845from the corporation by more than 25 percent. However, with
846regard to a policyholder of the corporation or a policyholder
847removed from the corporation through an assumption agreement
848until the end of the assumption period, the policyholder remains
849eligible for coverage from the corporation regardless of any
850offer of coverage from an authorized insurer or surplus lines
851insurer.
852     (I)  If the risk accepts an offer of coverage through the
853market assistance plan or an offer of coverage through a
854mechanism established by the corporation before a policy is
855issued to the risk by the corporation or during the first 30
856days of coverage by the corporation, and the producing agent who
857submitted the application to the plan or the corporation is not
858currently appointed by the insurer, the insurer shall:
859     (A)  Pay to the producing agent of record of the policy,
860for the first year, an amount that is the greater of the
861insurer's usual and customary commission for the type of policy
862written or a fee equal to the usual and customary commission of
863the corporation; or
864     (B)  Offer to allow the producing agent of record of the
865policy to continue servicing the policy for at least a period of
866not less than 1 year and offer to pay the agent the greater of
867the insurer's or the corporation's usual and customary
868commission for the type of policy written.
869
870If the producing agent is unwilling or unable to accept
871appointment, the new insurer shall pay the agent in accordance
872with sub-sub-sub-subparagraph (A).
873     (II)  If When the corporation enters into a contractual
874agreement for a take-out plan, the producing agent of record of
875the corporation policy is entitled to retain any unearned
876commission on the policy, and the insurer shall:
877     (A)  Pay to the producing agent of record of the
878corporation policy, for the first year, an amount that is the
879greater of the insurer's usual and customary commission for the
880type of policy written or a fee equal to the usual and customary
881commission of the corporation; or
882     (B)  Offer to allow the producing agent of record of the
883corporation policy to continue servicing the policy for at least
884a period of not less than 1 year and offer to pay the agent the
885greater of the insurer's or the corporation's usual and
886customary commission for the type of policy written.
887
888If the producing agent is unwilling or unable to accept
889appointment, the new insurer shall pay the agent in accordance
890with sub-sub-sub-subparagraph (A).
891     c.  For purposes of determining comparable coverage under
892sub-subparagraphs a. and b., the comparison shall be based on
893those forms and coverages that are reasonably comparable. The
894corporation may rely on a determination of comparable coverage
895and premium made by the producing agent who submits the
896application to the corporation, made in the agent's capacity as
897the corporation's agent. A comparison may be made solely of the
898premium with respect to the main building or structure only on
899the following basis: the same coverage A or other building
900limits; the same percentage hurricane deductible that applies on
901an annual basis or that applies to each hurricane for commercial
902residential property; the same percentage of ordinance and law
903coverage, if the same limit is offered by both the corporation
904and the authorized insurer; the same mitigation credits, to the
905extent the same types of credits are offered both by the
906corporation and the authorized insurer; the same method for loss
907payment, such as replacement cost or actual cash value, if the
908same method is offered both by the corporation and the
909authorized insurer in accordance with underwriting rules; and
910any other form or coverage that is reasonably comparable as
911determined by the board. If an application is submitted to the
912corporation for wind-only coverage in the high-risk account, the
913premium for the corporation's wind-only policy plus the premium
914for the ex-wind policy that is offered by an authorized insurer
915to the applicant shall be compared to the premium for multiperil
916coverage offered by an authorized insurer, subject to the
917standards for comparison specified in this subparagraph. If the
918corporation or the applicant requests from the authorized
919insurer a breakdown of the premium of the offer by types of
920coverage so that a comparison may be made by the corporation or
921its agent and the authorized insurer refuses or is unable to
922provide such information, the corporation may treat the offer as
923not being an offer of coverage from an authorized insurer at the
924insurer's approved rate.
925     5.6.  Must include rules for classifications of risks and
926rates therefor.
927     6.7.  Must provide that if premium and investment income
928for an account attributable to a particular calendar year are in
929excess of projected losses and expenses for the account
930attributable to that year, such excess shall be held in surplus
931in the account. Such surplus must shall be available to defray
932deficits in that account as to future years and shall be used
933for that purpose before prior to assessing assessable insurers
934and assessable insureds as to any calendar year.
935     7.8.  Must provide objective criteria and procedures to be
936uniformly applied to for all applicants in determining whether
937an individual risk is so hazardous as to be uninsurable. In
938making this determination and in establishing the criteria and
939procedures, the following must shall be considered:
940     a.  Whether the likelihood of a loss for the individual
941risk is substantially higher than for other risks of the same
942class; and
943     b.  Whether the uncertainty associated with the individual
944risk is such that an appropriate premium cannot be determined.
945
946The acceptance or rejection of a risk by the corporation shall
947be construed as the private placement of insurance, and the
948provisions of chapter 120 do shall not apply.
949     8.9.  Must provide that the corporation Shall make its best
950efforts to procure catastrophe reinsurance at reasonable rates,
951to cover its projected 100-year probable maximum loss as
952determined by the board of governors.
953     9.10.  Must issue The policies that issued by the
954corporation must provide that, if the corporation or the market
955assistance plan obtains an offer from an authorized insurer to
956cover the risk at its approved rates or from a surplus lines
957insurer, the risk is no longer eligible for renewal through the
958corporation, except as otherwise provided in this subsection.
959     10.11.  Must Corporation Policies and applications must
960include a notice in the corporation policies and applications
961that the corporation policy could, under this section, be
962replaced with a policy issued by an authorized insurer which
963that does not provide coverage identical to the coverage
964provided by the corporation. The notice must shall also specify
965that acceptance of corporation coverage creates a conclusive
966presumption that the applicant or policyholder is aware of this
967potential.
968     11.12.  May establish, subject to approval by the office,
969different eligibility requirements and operational procedures
970for any line or type of coverage for any specified county or
971area if the board determines that such changes to the
972eligibility requirements and operational procedures are
973justified due to the voluntary market being sufficiently stable
974and competitive in such area or for such line or type of
975coverage and that consumers who, in good faith, are unable to
976obtain insurance through the voluntary market through ordinary
977methods would continue to have access to coverage from the
978corporation. If When coverage is sought in connection with a
979real property transfer, the such requirements and procedures may
980shall not provide for an effective date of coverage later than
981the date of the closing of the transfer as established by the
982transferor, the transferee, and, if applicable, the lender.
983     12.13.  Must provide that, with respect to the high-risk
984account, any assessable insurer with a surplus as to
985policyholders of $25 million or less writing 25 percent or more
986of its total countrywide property insurance premiums in this
987state may petition the office, within the first 90 days of each
988calendar year, to qualify as a limited apportionment company. A
989regular assessment levied by the corporation on a limited
990apportionment company for a deficit incurred by the corporation
991for the high-risk account in 2006 or thereafter may be paid to
992the corporation on a monthly basis as the assessments are
993collected by the limited apportionment company from its insureds
994pursuant to s. 627.3512, but the regular assessment must be paid
995in full within 12 months after being levied by the corporation.
996A limited apportionment company shall collect from its
997policyholders any emergency assessment imposed under sub-
998subparagraph (b)3.d. The plan shall provide that, If the office
999determines that any regular assessment will result in an
1000impairment of the surplus of a limited apportionment company,
1001the office may direct that all or part of such assessment be
1002deferred as provided in subparagraph (q)4. However, there shall
1003be no limitation or deferment of an emergency assessment to be
1004collected from policyholders under sub-subparagraph (b)3.d. may
1005not be limited or deferred.
1006     13.14.  Effective January 1, 2012, must provide that the
1007corporation appoint as its licensed agents only those agents who
1008also hold an appointment as defined in s. 626.015(3) with an
1009insurer who at the time of the agent's initial appointment by
1010the corporation is authorized to write and is actually writing
1011personal lines residential property coverage, commercial
1012residential property coverage, or commercial nonresidential
1013property coverage within the state.
1014     14.15.  Must provide, by July 1, 2007, a premium payment
1015plan option to its policyholders which, allows at a minimum,
1016allows for quarterly and semiannual payment of premiums. A
1017monthly payment plan may, but is not required to, be offered.
1018     15.16.  Must limit coverage on mobile homes or manufactured
1019homes built before prior to 1994 to actual cash value of the
1020dwelling rather than replacement costs of the dwelling.
1021     16.17.  May provide such limits of coverage as the board
1022determines, consistent with the requirements of this subsection.
1023     17.18.  May require commercial property to meet specified
1024hurricane mitigation construction features as a condition of
1025eligibility for coverage.
1026     18.  As of January 1, 2012, must require that the agent
1027obtain from an applicant for coverage from the corporation an
1028acknowledgement signed by the applicant, which includes, at a
1029minimum, the following statement:
1030
1031ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT LIABILITY:
1032
1033     1.  AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
1034CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
1035DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
1036MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
1037PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
1038POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
1039OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
1040LEGISLATURE.
1041     2.  I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
1042ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
1043INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
1044FLORIDA LEGISLATURE.
1045     3.  I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
1046CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
1047STATE OF FLORIDA.
1048
1049     a.  The corporation shall maintain, in electronic format or
1050otherwise, a copy of the applicant's signed acknowledgement and
1051provide a copy of the statement to the policyholder as part of
1052the first renewal after the effective date of this subparagraph.
1053     b.  The signed acknowledgement form creates a conclusive
1054presumption that the policyholder understood and accepted his or
1055her potential surcharge and assessment liability as a
1056policyholder of the corporation.
1057     19.  Upon notice and determination by the department that
1058an agent appointed by the corporation has violated s.
1059626.9541(1)(h), must immediately terminate the agent's
1060appointment to represent the corporation.
1061     20.  Must provide that new or renewal policies issued by
1062the corporation on or after January 1, 2012, do not include
1063coverage for attached or detached screen enclosures. The
1064corporation is not required to issue a notice of nonrenewal to
1065exclude this coverage upon the renewal of current policies, but
1066shall exclude such coverage using a notice of coverage change.
1067     21.  Must provide that new or renewal policies issued by
1068the corporation on or after January 1, 2012, which cover
1069sinkhole loss do not include coverage for any loss to
1070appurtenant structures, driveways, sidewalks, decks, or patios
1071which is caused directly or indirectly by sinkhole activity. The
1072corporation is not required to issue a notice of nonrenewal to
1073exclude this coverage upon the renewal of current policies, but
1074shall exclude such coverage using a notice of coverage change
1075which may be included with the policy renewal.
1076     (d)1.  All prospective employees for senior management
1077positions, as defined by the plan of operation, are subject to
1078background checks as a prerequisite for employment. The office
1079shall conduct the background checks on such prospective
1080employees pursuant to ss. 624.34, 624.404(3), and 628.261.
1081     2.  On or before July 1 of each year, employees of the
1082corporation must are required to sign and submit a statement
1083attesting that they do not have a conflict of interest, as
1084defined in part III of chapter 112. As a condition of
1085employment, all prospective employees must are required to sign
1086and submit to the corporation a conflict-of-interest statement.
1087     3.  Senior managers and members of the board of governors
1088are subject to the provisions of part III of chapter 112,
1089including, but not limited to, the code of ethics and public
1090disclosure and reporting of financial interests, pursuant to s.
1091112.3145.
1092     a.  Senior managers and board members are also required to
1093file such disclosures with the Commission on Ethics and the
1094Office of Insurance Regulation. The executive director of the
1095corporation or his or her designee shall notify each existing
1096and newly appointed and existing appointed member of the board
1097of governors and senior managers of their duty to comply with
1098the reporting requirements of part III of chapter 112. At least
1099quarterly, the executive director or his or her designee shall
1100submit to the Commission on Ethics a list of names of the senior
1101managers and members of the board of governors who are subject
1102to the public disclosure requirements under s. 112.3145.
1103     b.  Notwithstanding s. 112.3143(2), a board member may not
1104vote on any measure that would inure to his or her special
1105private gain or loss; that he or she knows would inure to the
1106special private gain or loss of any principal by whom he or she
1107is retained or to the parent organization or subsidiary of a
1108corporate principal by which he or she is retained, other than
1109an agency as defined in s. 112.312; or that he or she knows
1110would inure to the special private gain or loss of a relative or
1111business associate of the public officer. Before the vote is
1112taken, such member must publicly state to the assembly the
1113nature of his or her interest in the matter from which he or she
1114is abstaining and, within 15 days after the vote occurs,
1115disclose the nature of his or her interest as a public record in
1116a memorandum filed with the person responsible for recording the
1117minutes of the meeting, who shall incorporate the memorandum in
1118the minutes.
1119     4.  Notwithstanding s. 112.3148 or s. 112.3149, or any
1120other provision of law, an employee or board member may not
1121knowingly accept, directly or indirectly, any gift or
1122expenditure from a person or entity, or an employee or
1123representative of such person or entity, which that has a
1124contractual relationship with the corporation or who is under
1125consideration for a contract. An employee or board member who
1126fails to comply with subparagraph 3. or this subparagraph is
1127subject to penalties provided under ss. 112.317 and 112.3173.
1128     5.  Any senior manager of the corporation who is employed
1129on or after January 1, 2007, regardless of the date of hire, who
1130subsequently retires or terminates employment is prohibited from
1131representing another person or entity before the corporation for
11322 years after retirement or termination of employment from the
1133corporation.
1134     6.  Any senior manager of the corporation who is employed
1135on or after January 1, 2007, regardless of the date of hire, who
1136subsequently retires or terminates employment is prohibited from
1137having any employment or contractual relationship for 2 years
1138with an insurer that has entered into a take-out bonus agreement
1139with the corporation.
1140     (n)1.  It is the intent of the Legislature that the rates
1141for coverage provided by the corporation be actuarially
1142determined and not be competitive with rates charged in the
1143admitted voluntary market such that the corporation functions as
1144a residual market mechanism that provides insurance only if such
1145insurance cannot be procured in the voluntary market. To achieve
1146this goal, for any rate filing made by the corporation on or
1147after July 1, 2011:
1148     1.  Rates for coverage provided by the corporation shall be
1149actuarially sound and subject to the requirements of s. 627.062,
1150except as otherwise provided in this paragraph. The corporation
1151shall file its recommended rates with the office at least
1152annually. The office shall consider the recommended rates and
1153issue a final order establishing the rates within 45 days after
1154the recommended rates are filed. The corporation shall provide
1155any additional information regarding the rates which the office
1156requires. The office shall consider the recommendations of the
1157board and issue a final order establishing the rates for the
1158corporation within 45 days after the recommended rates are
1159filed. The corporation may not pursue an administrative
1160challenge or judicial review of the final order of the office.
1161     2.  In developing its rates, the corporation shall use an
1162appropriate industry expense equalization factor to ensure that
1163its rates include standard industry ratemaking expense
1164provisions. The industry expense equalization factor must
1165include a catastrophe risk load, a provision for taxes, a market
1166provision for reinsurance costs, and an industry expense
1167provision for general expenses, acquisition expenses, and
1168commissions.
1169     3.  The corporation shall implement a rate increase each
1170year, which may not exceed 15 percent for any single policy,
1171excluding coverage changes and surcharges. This subparagraph
1172expires January 1, 2015, and does not apply to rates for
1173sinkhole coverage or costs for the purchase of private
1174reinsurance, if any.
1175     4.2.  In addition to the rates otherwise determined
1176pursuant to this paragraph, the corporation shall impose and
1177collect an amount equal to the premium tax provided for in s.
1178624.509 to augment the financial resources of the corporation.
1179     3.  After the public hurricane loss-projection model under
1180s. 627.06281 has been found to be accurate and reliable by the
1181Florida Commission on Hurricane Loss Projection Methodology,
1182that model shall serve as the minimum benchmark for determining
1183the windstorm portion of the corporation's rates. This
1184subparagraph does not require or allow the corporation to adopt
1185rates lower than the rates otherwise required or allowed by this
1186paragraph.
1187     4.  The rate filings for the corporation which were
1188approved by the office and which took effect January 1, 2007,
1189are rescinded, except for those rates that were lowered. As soon
1190as possible, the corporation shall begin using the lower rates
1191that were in effect on December 31, 2006, and shall provide
1192refunds to policyholders who have paid higher rates as a result
1193of that rate filing. The rates in effect on December 31, 2006,
1194shall remain in effect for the 2007 and 2008 calendar years
1195except for any rate change that results in a lower rate. The
1196next rate change that may increase rates shall take effect
1197pursuant to a new rate filing recommended by the corporation and
1198established by the office, subject to the requirements of this
1199paragraph.
1200     5.  Beginning on July 15, 2009, and each year thereafter,
1201the corporation must make a recommended actuarially sound rate
1202filing for each personal and commercial line of business it
1203writes, to be effective no earlier than January 1, 2010.
1204     6.  Beginning on or after January 1, 2010, and
1205notwithstanding the board's recommended rates and the office's
1206final order regarding the corporation's filed rates under
1207subparagraph 1., the corporation shall implement a rate increase
1208each year which does not exceed 10 percent for any single policy
1209issued by the corporation, excluding coverage changes and
1210surcharges.
1211     5.7.  The corporation may also implement an increase to
1212reflect the effect on the corporation of the cash buildup factor
1213pursuant to s. 215.555(5)(b).
1214     8.  The corporation's implementation of rates as prescribed
1215in subparagraph 6. shall cease for any line of business written
1216by the corporation upon the corporation's implementation of
1217actuarially sound rates. Thereafter, the corporation shall
1218annually make a recommended actuarially sound rate filing for
1219each commercial and personal line of business the corporation
1220writes.
1221     (o)  If coverage in an account is deactivated pursuant to
1222paragraph (p), coverage through the corporation shall be
1223reactivated by order of the office only under one of the
1224following circumstances:
1225     1.  If the market assistance plan receives a minimum of 100
1226applications for coverage within a 3-month period, or 200
1227applications for coverage within a 1-year period or less for
1228residential coverage, unless the market assistance plan provides
1229a quotation from admitted carriers at their filed rates for at
1230least 90 percent of such applicants. A Any market assistance
1231plan application that is rejected because an individual risk is
1232so hazardous as to be uninsurable using the criteria specified
1233in subparagraph (c)7. may (c)8. shall not be included in the
1234minimum percentage calculation provided herein. If In the event
1235that there is a legal or administrative challenge to a
1236determination by the office that the conditions of this
1237subparagraph have been met for eligibility for coverage by in
1238the corporation, an any eligible risk may obtain coverage during
1239the pendency of such challenge.
1240     2.  In response to a state of emergency declared by the
1241Governor under s. 252.36, the office may activate coverage by
1242order during for the period of the emergency upon a finding by
1243the office that the emergency significantly affects the
1244availability of residential property insurance.
1245     (q)1.  The corporation shall certify to the office its
1246needs for annual assessments as to a particular calendar year,
1247and for any interim assessments that it deems to be necessary to
1248sustain operations as to a particular year pending the receipt
1249of annual assessments. Upon verification, the office shall
1250approve such certification, and the corporation shall levy such
1251annual or interim assessments. Such assessments shall be
1252prorated as provided in paragraph (b). The corporation shall
1253take all reasonable and prudent steps necessary to collect the
1254amount of assessment due from each assessable insurer,
1255including, if prudent, filing suit to collect such assessment.
1256If the corporation is unable to collect an assessment from any
1257assessable insurer, the uncollected assessments shall be levied
1258as an additional assessment against the assessable insurers and
1259any assessable insurer required to pay an additional assessment
1260as a result of such failure to pay shall have a cause of action
1261against such nonpaying assessable insurer. Assessments shall be
1262included as an appropriate factor in the making of rates. The
1263failure of a surplus lines agent to collect and remit any
1264regular or emergency assessment levied by the corporation is
1265considered to be a violation of s. 626.936 and subjects the
1266surplus lines agent to the penalties provided in that section.
1267     2.  The governing body of any unit of local government, any
1268residents of which are insured by the corporation, may issue
1269bonds as defined in s. 125.013 or s. 166.101 from time to time
1270to fund an assistance program, in conjunction with the
1271corporation, for the purpose of defraying deficits of the
1272corporation. In order to avoid needless and indiscriminate
1273proliferation, duplication, and fragmentation of such assistance
1274programs, any unit of local government, any residents of which
1275are insured by the corporation, may provide for the payment of
1276losses, regardless of whether or not the losses occurred within
1277or outside of the territorial jurisdiction of the local
1278government. Revenue bonds under this subparagraph may not be
1279issued until validated pursuant to chapter 75, unless a state of
1280emergency is declared by executive order or proclamation of the
1281Governor pursuant to s. 252.36 making such findings as are
1282necessary to determine that it is in the best interests of, and
1283necessary for, the protection of the public health, safety, and
1284general welfare of residents of this state and declaring it an
1285essential public purpose to permit certain municipalities or
1286counties to issue such bonds as will permit relief to claimants
1287and policyholders of the corporation. Any such unit of local
1288government may enter into such contracts with the corporation
1289and with any other entity created pursuant to this subsection as
1290are necessary to carry out this paragraph. Any bonds issued
1291under this subparagraph shall be payable from and secured by
1292moneys received by the corporation from emergency assessments
1293under sub-subparagraph (b)3.d., and assigned and pledged to or
1294on behalf of the unit of local government for the benefit of the
1295holders of such bonds. The funds, credit, property, and taxing
1296power of the state or of the unit of local government shall not
1297be pledged for the payment of such bonds.
1298     3.a.  The corporation shall adopt one or more programs
1299subject to approval by the office for the reduction of both new
1300and renewal writings in the corporation. Beginning January 1,
13012008, any program the corporation adopts for the payment of
1302bonuses to an insurer for each risk the insurer removes from the
1303corporation shall comply with s. 627.3511(2) and may not exceed
1304the amount referenced in s. 627.3511(2) for each risk removed.
1305The corporation may consider any prudent and not unfairly
1306discriminatory approach to reducing corporation writings, and
1307may adopt a credit against assessment liability or other
1308liability that provides an incentive for insurers to take risks
1309out of the corporation and to keep risks out of the corporation
1310by maintaining or increasing voluntary writings in counties or
1311areas in which corporation risks are highly concentrated and a
1312program to provide a formula under which an insurer voluntarily
1313taking risks out of the corporation by maintaining or increasing
1314voluntary writings will be relieved wholly or partially from
1315assessments under sub-subparagraphs (b)3.a. and b. However, any
1316"take-out bonus" or payment to an insurer must be conditioned on
1317the property being insured for at least 5 years by the insurer,
1318unless canceled or nonrenewed by the policyholder. If the policy
1319is canceled or nonrenewed by the policyholder before the end of
1320the 5-year period, the amount of the take-out bonus must be
1321prorated for the time period the policy was insured. When the
1322corporation enters into a contractual agreement for a take-out
1323plan, the producing agent of record of the corporation policy is
1324entitled to retain any unearned commission on such policy, and
1325the insurer shall either:
1326     (I)  Pay to the producing agent of record of the policy,
1327for the first year, an amount which is the greater of the
1328insurer's usual and customary commission for the type of policy
1329written or a policy fee equal to the usual and customary
1330commission of the corporation; or
1331     (II)  Offer to allow the producing agent of record of the
1332policy to continue servicing the policy for a period of not less
1333than 1 year and offer to pay the agent the insurer's usual and
1334customary commission for the type of policy written. If the
1335producing agent is unwilling or unable to accept appointment by
1336the new insurer, the new insurer shall pay the agent in
1337accordance with sub-sub-subparagraph (I).
1338     b.  Any credit or exemption from regular assessments
1339adopted under this subparagraph shall last no longer than the 3
1340years following the cancellation or expiration of the policy by
1341the corporation. With the approval of the office, the board may
1342extend such credits for an additional year if the insurer
1343guarantees an additional year of renewability for all policies
1344removed from the corporation, or for 2 additional years if the
1345insurer guarantees 2 additional years of renewability for all
1346policies so removed.
1347     c.  There shall be no credit, limitation, exemption, or
1348deferment from emergency assessments to be collected from
1349policyholders pursuant to sub-subparagraph (b)3.d.
1350     d.  Notwithstanding any other provision of law, for
1351purposes of a depopulation, take-out, or keep-out program
1352adopted by the corporation, including an initial or renewal
1353offer of coverage made to a policyholder removed from the
1354corporation pursuant to a depopulation, take-out, or keep-out
1355program, an eligible surplus lines insurer may participate in a
1356depopulation, take-out, or keep-out program in the same manner
1357and on the same terms as an authorized insurer, except as
1358provided under this sub-subparagraph. To qualify to participate
1359in a depopulation, take-out, or keep-out program, an eligible
1360surplus lines insurer must first obtain approval from the office
1361for a depopulation, take-out, or keep-out plan and must then
1362comply with all of the corporation's requirements for the
1363depopulation, take-out, or keep-out plan applicable to admitted
1364insurers and with all statutory provisions applicable to the
1365removal of policies from the corporation. With regard to a
1366policyholder removed from the corporation through an assumption
1367agreement, until the end of the assumption period, the
1368policyholder remains eligible for coverage from the corporation
1369regardless of any offer of coverage from a surplus lines
1370insurer. In considering a surplus lines insurer's request for
1371approval for a depopulation, take-out, or keep-out plan, the
1372office must determine that the surplus lines insurer meets the
1373following requirements:
1374     (I)  The surplus lines insurer maintains a surplus to
1375policyholders of at least $50 million on a company or pooled
1376basis;
1377     (II)  The surplus lines insurer maintains an A.M. Best
1378Financial Strength Rating of A minus or better;
1379     (III)  The surplus lines insurer maintains reserves,
1380surplus, reinsurance, and reinsurance equivalents sufficient to
1381cover the insurer's 100-year probable maximum hurricane loss at
1382least twice in a single hurricane season. In addition, the
1383surplus lines insurer must submit such reinsurance to the office
1384to review for purposes of the takeout;
1385     (IV)  The surplus lines insurer provides prominent notice
1386to the policyholder before the assumption of the policy that
1387surplus lines policies are not provided coverage by the Florida
1388Insurance Guaranty Association and an outline of any substantial
1389differences in coverage between the existing policy and the
1390policy being offered to the insured; and
1391     (V)  The surplus lines insurer provides similar policy
1392coverage.
1393
1394This sub-subparagraph does not subject any surplus lines insurer
1395to requirements in addition to the requirements contained in
1396part VIII of chapter 626. A surplus lines broker who makes an
1397offer of coverage under this sub-subparagraph is not required to
1398comply with s. 626.916(1)(a), (b), (c), and (e).
1399     4.  The plan shall provide for the deferment, in whole or
1400in part, of the assessment of an assessable insurer, other than
1401an emergency assessment collected from policyholders pursuant to
1402sub-subparagraph (b)3.d., if the office finds that payment of
1403the assessment would endanger or impair the solvency of the
1404insurer. In the event an assessment against an assessable
1405insurer is deferred in whole or in part, the amount by which
1406such assessment is deferred may be assessed against the other
1407assessable insurers in a manner consistent with the basis for
1408assessments set forth in paragraph (b).
1409     5.  Effective July 1, 2007, in order to evaluate the costs
1410and benefits of approved take-out plans, if the corporation pays
1411a bonus or other payment to an insurer for an approved take-out
1412plan, it shall maintain a record of the address or such other
1413identifying information on the property or risk removed in order
1414to track if and when the property or risk is later insured by
1415the corporation.
1416     6.  Any policy taken out, assumed, or removed from the
1417corporation is, as of the effective date of the take-out,
1418assumption, or removal, direct insurance issued by the insurer
1419and not by the corporation, even if the corporation continues to
1420service the policies. This subparagraph applies to policies of
1421the corporation and not policies taken out, assumed, or removed
1422from any other entity.
1423     (s)1.  There is shall be no liability on the part of, and
1424no cause of action of any nature shall arise against, any
1425assessable insurer or its agents or employees, the corporation
1426or its agents or employees, members of the board of governors or
1427their respective designees at a board meeting, corporation
1428committee members, or the office or its representatives, for any
1429action taken by them in the performance of their duties or
1430responsibilities under this subsection.
1431     a.  As part of the immunity, the corporation, as a
1432governmental entity serving a public purpose, is not liable for
1433any claim for bad faith whether or not brought pursuant to s.
1434624.155, and this subsection or any other provision of law does
1435not create liability or a cause of action for bad faith or a
1436claim for extracontractual damages.
1437     b.  Such immunity does not apply to:
1438     (I)a.  Any of the foregoing persons or entities for any
1439willful tort;
1440     (II)b.  The corporation or its producing agents for breach
1441of any contract or agreement pertaining to insurance coverage;
1442     (III)c.  The corporation with respect to issuance or
1443payment of debt;
1444     (IV)d.  An Any assessable insurer with respect to any
1445action to enforce an assessable insurer's obligations to the
1446corporation under this subsection; or
1447     (V)e.  The corporation in any pending or future action for
1448breach of contract or for benefits under a policy issued by the
1449corporation.; In any such action, the corporation is shall be
1450liable to the policyholders and beneficiaries for attorney's
1451fees under s. 627.428.
1452     2.  The corporation shall manage its claim employees,
1453independent adjusters, and others who handle claims to ensure
1454they carry out the corporation's duty to its policyholders to
1455handle claims carefully, timely, diligently, and in good faith,
1456balanced against the corporation's duty to the state to manage
1457its assets responsibly in order to minimize its assessment
1458potential.
1459     (w)  Notwithstanding any other provision of law:
1460     1.  The pledge or sale of, the lien upon, and the security
1461interest in any rights, revenues, or other assets of the
1462corporation created or purported to be created pursuant to any
1463financing documents to secure any bonds or other indebtedness of
1464the corporation shall be and remain valid and enforceable,
1465notwithstanding the commencement of and during the continuation
1466of, and after, any rehabilitation, insolvency, liquidation,
1467bankruptcy, receivership, conservatorship, reorganization, or
1468similar proceeding against the corporation under the laws of
1469this state.
1470     2.  No Such proceeding does not shall relieve the
1471corporation of its obligation, or otherwise affect its ability
1472to perform its obligation, to continue to collect, or levy and
1473collect, assessments, market equalization or other surcharges
1474under subparagraph (c)10., or any other rights, revenues, or
1475other assets of the corporation pledged pursuant to any
1476financing documents.
1477     3.  Each such pledge or sale of, lien upon, and security
1478interest in, including the priority of such pledge, lien, or
1479security interest, any such assessments, market equalization or
1480other surcharges, or other rights, revenues, or other assets
1481which are collected, or levied and collected, after the
1482commencement of and during the pendency of, or after, any such
1483proceeding continues shall continue unaffected by such
1484proceeding. As used in this subsection, the term "financing
1485documents" means any agreement or agreements, instrument or
1486instruments, or other document or documents now existing or
1487hereafter created evidencing any bonds or other indebtedness of
1488the corporation or pursuant to which any such bonds or other
1489indebtedness has been or may be issued and pursuant to which any
1490rights, revenues, or other assets of the corporation are pledged
1491or sold to secure the repayment of such bonds or indebtedness,
1492together with the payment of interest on such bonds or such
1493indebtedness, or the payment of any other obligation or
1494financial product, as defined in the plan of operation of the
1495corporation related to such bonds or indebtedness.
1496     4.  Any such pledge or sale of assessments, revenues,
1497contract rights, or other rights or assets of the corporation
1498constitutes shall constitute a lien and security interest, or
1499sale, as the case may be, that is immediately effective and
1500attaches to such assessments, revenues, or contract rights or
1501other rights or assets, whether or not imposed or collected at
1502the time the pledge or sale is made. Any Such pledge or sale is
1503effective, valid, binding, and enforceable against the
1504corporation or other entity making such pledge or sale, and
1505valid and binding against and superior to any competing claims
1506or obligations owed to any other person or entity, including
1507policyholders in this state, asserting rights in any such
1508assessments, revenues, or contract rights or other rights or
1509assets to the extent set forth in and in accordance with the
1510terms of the pledge or sale contained in the applicable
1511financing documents, whether or not any such person or entity
1512has notice of such pledge or sale and without the need for any
1513physical delivery, recordation, filing, or other action.
1514     5.  If As long as the corporation has any bonds
1515outstanding, the corporation may not file a voluntary petition
1516under chapter 9 of the federal Bankruptcy Code or such
1517corresponding chapter or sections as may be in effect, from time
1518to time, and a public officer or any organization, entity, or
1519other person may not authorize the corporation to be or become a
1520debtor under chapter 9 of the federal Bankruptcy Code or such
1521corresponding chapter or sections as may be in effect, from time
1522to time, during any such period.
1523     6.  If ordered by a court of competent jurisdiction, the
1524corporation may assume policies or otherwise provide coverage
1525for policyholders of an insurer placed in liquidation under
1526chapter 631, under such forms, rates, terms, and conditions as
1527the corporation deems appropriate, subject to approval by the
1528office.
1529     (x)1.  The following records of the corporation are
1530confidential and exempt from the provisions of s. 119.07(1) and
1531s. 24(a), Art. I of the State Constitution:
1532     a.  Underwriting files, except that a policyholder or an
1533applicant shall have access to his or her own underwriting
1534files. Confidential and exempt underwriting file records may
1535also be released to other governmental agencies upon written
1536request and demonstration of need; such records held by the
1537receiving agency remain confidential and exempt as provided
1538herein.
1539     b.  Claims files, until termination of all litigation and
1540settlement of all claims arising out of the same incident,
1541although portions of the claims files may remain exempt, as
1542otherwise provided by law. Confidential and exempt claims file
1543records may be released to other governmental agencies upon
1544written request and demonstration of need; such records held by
1545the receiving agency remain confidential and exempt as provided
1546herein.
1547     c.  Records obtained or generated by an internal auditor
1548pursuant to a routine audit, until the audit is completed, or if
1549the audit is conducted as part of an investigation, until the
1550investigation is closed or ceases to be active. An investigation
1551is considered "active" while the investigation is being
1552conducted with a reasonable, good faith belief that it could
1553lead to the filing of administrative, civil, or criminal
1554proceedings.
1555     d.  Matters reasonably encompassed in privileged attorney-
1556client communications.
1557     e.  Proprietary information licensed to the corporation
1558under contract and the contract provides for the confidentiality
1559of such proprietary information.
1560     f.  All information relating to the medical condition or
1561medical status of a corporation employee which is not relevant
1562to the employee's capacity to perform his or her duties, except
1563as otherwise provided in this paragraph. Information that is
1564exempt shall include, but is not limited to, information
1565relating to workers' compensation, insurance benefits, and
1566retirement or disability benefits.
1567     g.  Upon an employee's entrance into the employee
1568assistance program, a program to assist any employee who has a
1569behavioral or medical disorder, substance abuse problem, or
1570emotional difficulty which affects the employee's job
1571performance, all records relative to that participation shall be
1572confidential and exempt from the provisions of s. 119.07(1) and
1573s. 24(a), Art. I of the State Constitution, except as otherwise
1574provided in s. 112.0455(11).
1575     h.  Information relating to negotiations for financing,
1576reinsurance, depopulation, or contractual services, until the
1577conclusion of the negotiations.
1578     i.  Minutes of closed meetings regarding underwriting
1579files, and minutes of closed meetings regarding an open claims
1580file until termination of all litigation and settlement of all
1581claims with regard to that claim, except that information
1582otherwise confidential or exempt by law shall be redacted.
1583     2.  If an authorized insurer is considering underwriting a
1584risk insured by the corporation or has removed a risk from the
1585corporation, relevant underwriting files and confidential claims
1586files may be released to the insurer provided the insurer agrees
1587in writing, notarized and under oath, to maintain the
1588confidentiality of such files. If a file is transferred to an
1589insurer, that file is no longer a public record because it is
1590not held by an agency subject to the provisions of the public
1591records law. Underwriting files and confidential claims files
1592may also be released to staff and the board of governors of the
1593market assistance plan established pursuant to s. 627.3515, who
1594must retain the confidentiality of such files, except such files
1595may be released to authorized insurers that are considering
1596assuming the risks to which the files apply, provided the
1597insurer agrees in writing, notarized and under oath, to maintain
1598the confidentiality of such files. Finally, the corporation or
1599the board or staff of the market assistance plan may make the
1600following information obtained from underwriting files and
1601confidential claims files available to licensed general lines
1602insurance agents: name, address, and telephone number of the
1603residential property owner or insured; location of the risk;
1604rating information; loss history; and policy type. The receiving
1605licensed general lines insurance agent must retain the
1606confidentiality of the information received.
1607     3.  A policyholder who has filed suit against the
1608corporation has the right to discover the contents of his or her
1609own claims file to the same extent that discovery of such
1610contents would be available from a private insurer in litigation
1611as provided by the Florida Rules of Civil Procedure, the Florida
1612Evidence Code, and other applicable law. Pursuant to subpoena, a
1613third party has the right to discover the contents of an
1614insured's or applicant's underwriting or claims file to the same
1615extent that discovery of such contents would be available from a
1616private insurer by subpoena as provided by the Florida Rules of
1617Civil Procedure, the Florida Evidence Code, and other applicable
1618law, and subject to any confidentiality protections requested by
1619the corporation and agreed to by the seeking party or ordered by
1620the court. The corporation may release confidential underwriting
1621and claims file contents and information as it deems necessary
1622and appropriate to underwrite or service insurance policies and
1623claims, subject to any confidentiality protections deemed
1624necessary and appropriate by the corporation.
1625     4.  Portions of meetings of the corporation are exempt from
1626the provisions of s. 286.011 and s. 24(b), Art. I of the State
1627Constitution wherein confidential underwriting files or
1628confidential open claims files are discussed. All portions of
1629corporation meetings which are closed to the public shall be
1630recorded by a court reporter. The court reporter shall record
1631the times of commencement and termination of the meeting, all
1632discussion and proceedings, the names of all persons present at
1633any time, and the names of all persons speaking. No portion of
1634any closed meeting shall be off the record. Subject to the
1635provisions hereof and s. 119.07(1)(d)-(f), the court reporter's
1636notes of any closed meeting shall be retained by the corporation
1637for a minimum of 5 years. A copy of the transcript, less any
1638exempt matters, of any closed meeting wherein claims are
1639discussed shall become public as to individual claims after
1640settlement of the claim.
1641     (y)  It is the intent of the Legislature that the
1642amendments to this subsection enacted in 2002 should, over time,
1643reduce the probable maximum windstorm losses in the residual
1644markets and should reduce the potential assessments to be levied
1645on property insurers and policyholders statewide. In furtherance
1646of this intent:
1647     1.  The board shall, on or before February 1 of each year,
1648provide a report to the President of the Senate and the Speaker
1649of the House of Representatives showing the reduction or
1650increase in the 100-year probable maximum loss attributable to
1651wind-only coverages and the quota share program under this
1652subsection combined, as compared to the benchmark 100-year
1653probable maximum loss of the Florida Windstorm Underwriting
1654Association. For purposes of this paragraph, the benchmark 100-
1655year probable maximum loss of the Florida Windstorm Underwriting
1656Association shall be the calculation dated February 2001 and
1657based on November 30, 2000, exposures. In order to ensure
1658comparability of data, the board shall use the same methods for
1659calculating its probable maximum loss as were used to calculate
1660the benchmark probable maximum loss.
1661     2.  Beginning December 1, 2010, if the report under
1662subparagraph 1. for any year indicates that the 100-year
1663probable maximum loss attributable to wind-only coverages and
1664the quota share program combined does not reflect a reduction of
1665at least 25 percent from the benchmark, the board shall reduce
1666the boundaries of the high-risk area eligible for wind-only
1667coverages under this subsection in a manner calculated to reduce
1668such probable maximum loss to an amount at least 25 percent
1669below the benchmark.
1670     3.  Beginning February 1, 2015, if the report under
1671subparagraph 1. for any year indicates that the 100-year
1672probable maximum loss attributable to wind-only coverages and
1673the quota share program combined does not reflect a reduction of
1674at least 50 percent from the benchmark, the boundaries of the
1675high-risk area eligible for wind-only coverages under this
1676subsection shall be reduced by the elimination of any area that
1677is not seaward of a line 1,000 feet inland from the Intracoastal
1678Waterway.
1679     (aa)  As a condition of eligibility for coverage by the
1680corporation, an applicant or insured of a property located in a
1681Special Flood Hazard Area, as defined by the National Flood
1682Insurance Program, must maintain in effect a separate flood
1683insurance policy having coverage limits for building and
1684contents at least equal to those provided under the
1685corporation's policy, subject to the maximum limits available
1686under the National Flood Insurance Program policy. This
1687requirement does not apply to an insured who is a tenant or a
1688condominium unit owner above the ground floor; a policy issued
1689by the corporation which excludes wind and hail coverage; a risk
1690that is not eligible for flood coverage under the National Flood
1691Insurance Program; or a mobile home that is located more than 2
1692miles from open water, including the ocean, the gulf, a bay, a
1693river, or the intracoastal waterway. This paragraph applies to
1694new policies issued by the corporation on or after January 1,
16952012, and to policies renewed by the corporation on or after
1696January 1, 2013. The corporation shall not require the securing
1697of flood insurance as a condition of coverage if the insured or
1698applicant executes a form approved by the office affirming that
1699flood insurance is not provided by the corporation and that if
1700flood insurance is not secured by the applicant or insured in
1701addition to coverage by the corporation, the risk will not be
1702covered for flood damage. A corporation policyholder electing
1703not to secure flood insurance and executing a form as provided
1704herein making a claim for water damage against the corporation
1705shall have the burden of proving the damage was not caused by
1706flooding. Notwithstanding other provisions of this subsection,
1707the corporation may deny coverage to an applicant or insured who
1708refuses to execute the form described herein.
1709     (ee)  The office may establish a pilot program to offer
1710optional sinkhole coverage in one or more counties or other
1711territories of the corporation for the purpose of implementing
1712s. 627.706, as amended by s. 30, chapter 2007-1, Laws of
1713Florida. Under the pilot program, the corporation is not
1714required to issue a notice of nonrenewal to exclude sinkhole
1715coverage upon the renewal of existing policies, but may exclude
1716such coverage using a notice of coverage change.
1717     Section 2.  Subsection (1) of section 627.712, Florida
1718Statutes, is amended to read:
1719     627.712  Residential windstorm coverage required;
1720availability of exclusions for windstorm or contents.-
1721     (1)  An insurer issuing a residential property insurance
1722policy must provide windstorm coverage. Except as provided in
1723paragraph (2)(c), this section does not apply with respect to
1724risks that are eligible for wind-only coverage from Citizens
1725Property Insurance Corporation under s. 627.351(6), and with
1726respect to risks that are not eligible for coverage from
1727Citizens Property Insurance Corporation under s. 627.351(6)(a)3.
1728or 4. 5. A risk ineligible for Citizens coverage under s.
1729627.351(6)(a)3. or 4. 5. is exempt from the requirements of this
1730section only if the risk is located within the boundaries of the
1731high-risk account of the corporation.
1732     Section 3.  This act shall take effect upon becoming a law.


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