Florida Senate - 2011                        COMMITTEE AMENDMENT
       Bill No. SB 1330
       
       
       
       
       
       
                                Barcode 466740                          
       
                              LEGISLATIVE ACTION                        
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       The Committee on Budget (Hays) recommended the following:
       
    1         Senate Amendment (with title amendment)
    2  
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraph (k) of subsection (2) of section
    6  627.062, Florida Statutes, is amended, and paragraph (l) is
    7  added to that subsection, to read:
    8         627.062 Rate standards.—
    9         (2) As to all such classes of insurance:
   10         (k)1. A residential property An insurer may make a separate
   11  filing limited solely to an adjustment of its rates for
   12  reinsurance, the cost of financing products used as a
   13  replacement for reinsurance, or financing costs incurred in the
   14  purchase of reinsurance, or financing products to replace or
   15  finance the payment of the amount covered by the Temporary
   16  Increase in Coverage Limits (TICL) portion of the Florida
   17  Hurricane Catastrophe Fund including replacement reinsurance for
   18  the TICL reductions made pursuant to s. 215.555(17)(e); the
   19  actual cost paid due to the application of the TICL premium
   20  factor pursuant to s. 215.555(17)(f); and the actual cost paid
   21  due to the application of the cash build-up factor pursuant to
   22  s. 215.555(5)(b) if the insurer:
   23         a. Elects to purchase financing products such as a
   24  liquidity instrument or line of credit, in which case the cost
   25  included in the filing for the liquidity instrument or line of
   26  credit may not result in a premium increase exceeding 3 percent
   27  for any individual policyholder. All costs contained in the
   28  filing may not result in an overall premium increase of more
   29  than 15 10 percent for any individual policyholder.
   30         b. Includes in the filing a copy of all of its reinsurance,
   31  liquidity instrument, or line of credit contracts; proof of the
   32  billing or payment for the contracts; and the calculation upon
   33  which the proposed rate change is based demonstrating
   34  demonstrates that the costs meet the criteria of this section
   35  and are not loaded for expenses or profit for the insurer making
   36  the filing.
   37         c. Includes no other changes to its rates in the filing.
   38         d. Has not implemented a rate increase within the 6 months
   39  immediately preceding the filing.
   40         e. Does not file for a rate increase under any other
   41  paragraph within 6 months after making a filing under this
   42  paragraph.
   43         c.f. That purchases reinsurance or financing products from
   44  an affiliated company in compliance with this paragraph does so
   45  only if the costs for such reinsurance or financing products are
   46  charged at or below charges made for comparable coverage by
   47  nonaffiliated reinsurers or financial entities making such
   48  coverage or financing products available in this state. For the
   49  purposes of this subparagraph, the term “affiliated company”
   50  means an entity that owns, or whose ultimate parent company
   51  owns, directly or indirectly, more than 50 percent of the
   52  outstanding voting securities of the residential property
   53  insurer.
   54         2. An insurer may only make only one filing per in any 12
   55  month period under this paragraph.
   56         3. An insurer that elects to implement a rate change under
   57  this paragraph must file its rate filing with the office at
   58  least 45 days before the effective date of the rate change.
   59  After an insurer submits a complete filing that meets all of the
   60  requirements of this paragraph, the office has 45 days after the
   61  date of the filing to review the rate filing and determine if
   62  the rate is excessive, inadequate, or unfairly discriminatory.
   63         (l)1. On or after January 1, 2012, an insurer complying
   64  with s. 627.7031 may use a rate for residential property
   65  insurance when providing residential coverage, as described in
   66  s. 627.4025, different from the otherwise applicable filed rate
   67  as provided in this paragraph.
   68         2. Policies subject to this paragraph may not be counted in
   69  the calculation under s. 627.171(2).
   70         3. Such rates shall be filed with the office as a separate
   71  filing. The initial rates used by an insurer under this
   72  paragraph may not provide for rates that represent more than a
   73  15 percent statewide average rate increase over the most
   74  recently filed and approved rate. A rate filing under this
   75  paragraph submitted in any year after the implementation of such
   76  initial rates may not provide for rates that represent more than
   77  a 15 percent statewide average rate increase in a year over the
   78  rates in effect under this paragraph at the time of the filing.
   79  A rate filing under this paragraph may not provide for a
   80  percentage rate increase as to any individual policyholder that
   81  exceeds two times the statewide average rate increase provided
   82  for in the filing.
   83         4. This paragraph does not affect the authority of the
   84  office to disapprove a rate as inadequate or to disapprove a
   85  rate filing for charging any insured or applicant a higher
   86  premium solely because of the insured’s or applicant’s race,
   87  religion, marital status, sex, or national origin. Upon finding
   88  that an insurer has used any such factor in charging an insured
   89  or applicant a higher premium, the office may direct the insurer
   90  to make a new filing for a new rate that does not use such
   91  factor.
   92  
   93  The provisions of this subsection shall not apply to workers’
   94  compensation and employer’s liability insurance and to motor
   95  vehicle insurance.
   96         Section 2. Effective January 1, 2015, paragraph (l) of
   97  subsection (2) of section 627.062, Florida Statutes, as created
   98  by this act, is amended to read:
   99         627.062 Rate standards.—
  100         (2) As to all such classes of insurance:
  101         (l)1. On or after January 1, 2012, an insurer complying
  102  with the requirements of s. 627.7031 may use a rate for
  103  residential property insurance when providing residential
  104  coverage, as described in s. 627.4025, different from the
  105  otherwise applicable filed rate as provided in this paragraph.
  106         2. Policies subject to this paragraph may not be counted in
  107  the calculation under s. 627.171(2).
  108         3. Such rates shall be filed with the office as a separate
  109  filing. The initial rates used by an insurer under this
  110  paragraph may not provide for rates that represent more than a
  111  15 percent statewide average rate increase over the most
  112  recently filed and approved rate. A rate filing under this
  113  paragraph submitted in any year after the implementation of such
  114  initial rates may not provide for rates that represent more than
  115  a 15 percent statewide average rate increase in a year over the
  116  rates in effect under this paragraph at the time of the filing.
  117  A rate filing under this paragraph may not provide for a
  118  percentage rate increase as to any individual policyholder that
  119  exceeds two times the statewide average rate increase provided
  120  for in the filing.
  121         4.a. A filing under this paragraph must include a statement
  122  that the insurer has in place, or intends to have in place as of
  123  the effective date of the rates, a combination of surplus,
  124  Florida Hurricane Catastrophe Fund coverage, reinsurance, and
  125  reinsurance equivalents sufficient to cover the insurer’s 100
  126  year probable maximum loss as described in s. 627.7031.
  127         b. No later than the last day of July of the year in which
  128  the rates are in effect, the insurer must provide its
  129  certification to the office demonstrating that it has in fact in
  130  place a combination of surplus, Florida Hurricane Catastrophe
  131  Fund coverage, reinsurance, and reinsurance equivalents
  132  sufficient to cover the insurer’s 100-year probable maximum loss
  133  as described in s. 627.7031.
  134         c. If the insurer fails to maintain the required
  135  combination of surplus, Florida Hurricane Catastrophe Fund
  136  coverage, reinsurance, and reinsurance equivalents, the subject
  137  rate filing under this paragraph is void and shall be replaced
  138  by the insurer’s rates in effect under this paragraph at the
  139  time of the filing, retroactive to the effective date of the
  140  subject rate filing under this paragraph. In such circumstances,
  141  the office shall order the insurer to return to each insured the
  142  difference between the premium calculated according to the rate
  143  filing under this paragraph and the premium under the rates in
  144  effect under this paragraph at the time of the subject filing,
  145  which may, in the discretion of the insurer, be in the form of a
  146  refund or a credit. This sub-subparagraph does not preclude the
  147  insurer from making another filing under this paragraph, but
  148  such filing may not take effect before June 1 of the following
  149  year.
  150         5.4. This paragraph does not affect the authority of the
  151  office to disapprove a rate as inadequate or to disapprove a
  152  rate filing for charging any insured or applicant a higher
  153  premium solely because of the insured’s or applicant’s race,
  154  color, creed, marital status, sex, or national origin. Upon
  155  finding that an insurer has used any such factor in charging an
  156  insured or applicant a higher premium, the office may direct the
  157  insurer to make a new filing for a new rate that does not use
  158  such factor.
  159  
  160  The provisions of this subsection shall not apply to workers’
  161  compensation and employer’s liability insurance and to motor
  162  vehicle insurance.
  163         Section 3. Paragraph (c) of subsection (6) of section
  164  627.351, Florida Statutes, is amended to read:
  165         627.351 Insurance risk apportionment plans.—
  166         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  167         (c) The plan of operation of the corporation:
  168         1. Must provide for adoption of residential property and
  169  casualty insurance policy forms and commercial residential and
  170  nonresidential property insurance forms, which forms must be
  171  approved by the office prior to use. The corporation shall adopt
  172  the following policy forms:
  173         a. Standard personal lines policy forms that are
  174  comprehensive multiperil policies providing full coverage of a
  175  residential property equivalent to the coverage provided in the
  176  private insurance market under an HO-3, HO-4, or HO-6 policy.
  177         b. Basic personal lines policy forms that are policies
  178  similar to an HO-8 policy or a dwelling fire policy that provide
  179  coverage meeting the requirements of the secondary mortgage
  180  market, but which coverage is more limited than the coverage
  181  under a standard policy.
  182         c. Commercial lines residential and nonresidential policy
  183  forms that are generally similar to the basic perils of full
  184  coverage obtainable for commercial residential structures and
  185  commercial nonresidential structures in the admitted voluntary
  186  market.
  187         d. Personal lines and commercial lines residential property
  188  insurance forms that cover the peril of wind only. The forms are
  189  applicable only to residential properties located in areas
  190  eligible for coverage under the high-risk account referred to in
  191  sub-subparagraph (b)2.a.
  192         e. Commercial lines nonresidential property insurance forms
  193  that cover the peril of wind only. The forms are applicable only
  194  to nonresidential properties located in areas eligible for
  195  coverage under the high-risk account referred to in sub
  196  subparagraph (b)2.a.
  197         f. The corporation may adopt variations of the policy forms
  198  listed in sub-subparagraphs a.-e. that contain more restrictive
  199  coverage.
  200         2.a. Must provide that the corporation adopt a program in
  201  which the corporation and authorized insurers enter into quota
  202  share primary insurance agreements for hurricane coverage, as
  203  defined in s. 627.4025(2)(a), for eligible risks, and adopt
  204  property insurance forms for eligible risks which cover the
  205  peril of wind only. As used in this subsection, the term:
  206         (I) “Quota share primary insurance” means an arrangement in
  207  which the primary hurricane coverage of an eligible risk is
  208  provided in specified percentages by the corporation and an
  209  authorized insurer. The corporation and authorized insurer are
  210  each solely responsible for a specified percentage of hurricane
  211  coverage of an eligible risk as set forth in a quota share
  212  primary insurance agreement between the corporation and an
  213  authorized insurer and the insurance contract. The
  214  responsibility of the corporation or authorized insurer to pay
  215  its specified percentage of hurricane losses of an eligible
  216  risk, as set forth in the quota share primary insurance
  217  agreement, may not be altered by the inability of the other
  218  party to the agreement to pay its specified percentage of
  219  hurricane losses. Eligible risks that are provided hurricane
  220  coverage through a quota share primary insurance arrangement
  221  must be provided policy forms that set forth the obligations of
  222  the corporation and authorized insurer under the arrangement,
  223  clearly specify the percentages of quota share primary insurance
  224  provided by the corporation and authorized insurer, and
  225  conspicuously and clearly state that neither the authorized
  226  insurer nor the corporation may be held responsible beyond its
  227  specified percentage of coverage of hurricane losses.
  228         (II) “Eligible risks” means personal lines residential and
  229  commercial lines residential risks that meet the underwriting
  230  criteria of the corporation and are located in areas that were
  231  eligible for coverage by the Florida Windstorm Underwriting
  232  Association on January 1, 2002.
  233         b. The corporation may enter into quota share primary
  234  insurance agreements with authorized insurers at corporation
  235  coverage levels of 90 percent and 50 percent.
  236         c. If the corporation determines that additional coverage
  237  levels are necessary to maximize participation in quota share
  238  primary insurance agreements by authorized insurers, the
  239  corporation may establish additional coverage levels. However,
  240  the corporation’s quota share primary insurance coverage level
  241  may not exceed 90 percent.
  242         d. Any quota share primary insurance agreement entered into
  243  between an authorized insurer and the corporation must provide
  244  for a uniform specified percentage of coverage of hurricane
  245  losses, by county or territory as set forth by the corporation
  246  board, for all eligible risks of the authorized insurer covered
  247  under the quota share primary insurance agreement.
  248         e. Any quota share primary insurance agreement entered into
  249  between an authorized insurer and the corporation is subject to
  250  review and approval by the office. However, such agreement shall
  251  be authorized only as to insurance contracts entered into
  252  between an authorized insurer and an insured who is already
  253  insured by the corporation for wind coverage.
  254         f. For all eligible risks covered under quota share primary
  255  insurance agreements, the exposure and coverage levels for both
  256  the corporation and authorized insurers shall be reported by the
  257  corporation to the Florida Hurricane Catastrophe Fund. For all
  258  policies of eligible risks covered under quota share primary
  259  insurance agreements, the corporation and the authorized insurer
  260  shall maintain complete and accurate records for the purpose of
  261  exposure and loss reimbursement audits as required by Florida
  262  Hurricane Catastrophe Fund rules. The corporation and the
  263  authorized insurer shall each maintain duplicate copies of
  264  policy declaration pages and supporting claims documents.
  265         g. The corporation board shall establish in its plan of
  266  operation standards for quota share agreements which ensure that
  267  there is no discriminatory application among insurers as to the
  268  terms of quota share agreements, pricing of quota share
  269  agreements, incentive provisions if any, and consideration paid
  270  for servicing policies or adjusting claims.
  271         h. The quota share primary insurance agreement between the
  272  corporation and an authorized insurer must set forth the
  273  specific terms under which coverage is provided, including, but
  274  not limited to, the sale and servicing of policies issued under
  275  the agreement by the insurance agent of the authorized insurer
  276  producing the business, the reporting of information concerning
  277  eligible risks, the payment of premium to the corporation, and
  278  arrangements for the adjustment and payment of hurricane claims
  279  incurred on eligible risks by the claims adjuster and personnel
  280  of the authorized insurer. Entering into a quota sharing
  281  insurance agreement between the corporation and an authorized
  282  insurer shall be voluntary and at the discretion of the
  283  authorized insurer.
  284         3. May provide that the corporation may employ or otherwise
  285  contract with individuals or other entities to provide
  286  administrative or professional services that may be appropriate
  287  to effectuate the plan. The corporation shall have the power to
  288  borrow funds, by issuing bonds or by incurring other
  289  indebtedness, and shall have other powers reasonably necessary
  290  to effectuate the requirements of this subsection, including,
  291  without limitation, the power to issue bonds and incur other
  292  indebtedness in order to refinance outstanding bonds or other
  293  indebtedness. The corporation may, but is not required to, seek
  294  judicial validation of its bonds or other indebtedness under
  295  chapter 75. The corporation may issue bonds or incur other
  296  indebtedness, or have bonds issued on its behalf by a unit of
  297  local government pursuant to subparagraph (q)2., in the absence
  298  of a hurricane or other weather-related event, upon a
  299  determination by the corporation, subject to approval by the
  300  office, that such action would enable it to efficiently meet the
  301  financial obligations of the corporation and that such
  302  financings are reasonably necessary to effectuate the
  303  requirements of this subsection. The corporation is authorized
  304  to take all actions needed to facilitate tax-free status for any
  305  such bonds or indebtedness, including formation of trusts or
  306  other affiliated entities. The corporation shall have the
  307  authority to pledge assessments, projected recoveries from the
  308  Florida Hurricane Catastrophe Fund, other reinsurance
  309  recoverables, market equalization and other surcharges, and
  310  other funds available to the corporation as security for bonds
  311  or other indebtedness. In recognition of s. 10, Art. I of the
  312  State Constitution, prohibiting the impairment of obligations of
  313  contracts, it is the intent of the Legislature that no action be
  314  taken whose purpose is to impair any bond indenture or financing
  315  agreement or any revenue source committed by contract to such
  316  bond or other indebtedness.
  317         4.a. Must require that the corporation operate subject to
  318  the supervision and approval of a board of governors consisting
  319  of eight individuals who are residents of this state, from
  320  different geographical areas of this state. The Governor, the
  321  Chief Financial Officer, the President of the Senate, and the
  322  Speaker of the House of Representatives shall each appoint two
  323  members of the board. At least one of the two members appointed
  324  by each appointing officer must have demonstrated expertise in
  325  insurance. The Chief Financial Officer shall designate one of
  326  the appointees as chair. All board members serve at the pleasure
  327  of the appointing officer. All members of the board of governors
  328  are subject to removal at will by the officers who appointed
  329  them. All board members, including the chair, must be appointed
  330  to serve for 3-year terms beginning annually on a date
  331  designated by the plan. However, for the first term beginning on
  332  or after July 1, 2009, each appointing officer shall appoint one
  333  member of the board for a 2-year term and one member for a 3
  334  year term. Any board vacancy shall be filled for the unexpired
  335  term by the appointing officer. The Chief Financial Officer
  336  shall appoint a technical advisory group to provide information
  337  and advice to the board of governors in connection with the
  338  board’s duties under this subsection. The executive director and
  339  senior managers of the corporation shall be engaged by the board
  340  and serve at the pleasure of the board. Any executive director
  341  appointed on or after July 1, 2006, is subject to confirmation
  342  by the Senate. The executive director is responsible for
  343  employing other staff as the corporation may require, subject to
  344  review and concurrence by the board.
  345         b. The board shall create a Market Accountability Advisory
  346  Committee to assist the corporation in developing awareness of
  347  its rates and its customer and agent service levels in
  348  relationship to the voluntary market insurers writing similar
  349  coverage. The members of the advisory committee shall consist of
  350  the following 11 persons, one of whom must be elected chair by
  351  the members of the committee: four representatives, one
  352  appointed by the Florida Association of Insurance Agents, one by
  353  the Florida Association of Insurance and Financial Advisors, one
  354  by the Professional Insurance Agents of Florida, and one by the
  355  Latin American Association of Insurance Agencies; three
  356  representatives appointed by the insurers with the three highest
  357  voluntary market share of residential property insurance
  358  business in the state; one representative from the Office of
  359  Insurance Regulation; one consumer appointed by the board who is
  360  insured by the corporation at the time of appointment to the
  361  committee; one representative appointed by the Florida
  362  Association of Realtors; and one representative appointed by the
  363  Florida Bankers Association. All members must serve for 3-year
  364  terms and may serve for consecutive terms. The committee shall
  365  report to the corporation at each board meeting on insurance
  366  market issues which may include rates and rate competition with
  367  the voluntary market; service, including policy issuance, claims
  368  processing, and general responsiveness to policyholders,
  369  applicants, and agents; and matters relating to depopulation.
  370         5. Must provide a procedure for determining the eligibility
  371  of a risk for coverage, as follows:
  372         a. Subject to the provisions of s. 627.3517, with respect
  373  to personal lines residential risks, if the risk is offered
  374  coverage from an authorized insurer at the insurer’s approved
  375  rate under either a standard policy including wind coverage or,
  376  if consistent with the insurer’s underwriting rules as filed
  377  with the office, a basic policy including wind coverage, for a
  378  new application to the corporation for coverage, the risk is not
  379  eligible for any policy issued by the corporation unless the
  380  premium for coverage from the authorized insurer is more than 15
  381  percent greater than the premium for comparable coverage from
  382  the corporation. If the risk is not able to obtain any such
  383  offer, the risk is eligible for either a standard policy
  384  including wind coverage or a basic policy including wind
  385  coverage issued by the corporation; however, if the risk could
  386  not be insured under a standard policy including wind coverage
  387  regardless of market conditions, the risk shall be eligible for
  388  a basic policy including wind coverage unless rejected under
  389  subparagraph 8. However, with regard to a policyholder of the
  390  corporation or a policyholder removed from the corporation
  391  through an assumption agreement until the end of the assumption
  392  period, the policyholder remains eligible for coverage from the
  393  corporation regardless of any offer of coverage from an
  394  authorized insurer or surplus lines insurer. The corporation
  395  shall determine the type of policy to be provided on the basis
  396  of objective standards specified in the underwriting manual and
  397  based on generally accepted underwriting practices.
  398         (I) If the risk accepts an offer of coverage through the
  399  market assistance plan or an offer of coverage through a
  400  mechanism established by the corporation before a policy is
  401  issued to the risk by the corporation or during the first 30
  402  days of coverage by the corporation, and the producing agent who
  403  submitted the application to the plan or to the corporation is
  404  not currently appointed by the insurer, the insurer shall:
  405         (A) Pay to the producing agent of record of the policy, for
  406  the first year, an amount that is the greater of the insurer’s
  407  usual and customary commission for the type of policy written or
  408  a fee equal to the usual and customary commission of the
  409  corporation; or
  410         (B) Offer to allow the producing agent of record of the
  411  policy to continue servicing the policy for a period of not less
  412  than 1 year and offer to pay the agent the greater of the
  413  insurer’s or the corporation’s usual and customary commission
  414  for the type of policy written.
  415  
  416  If the producing agent is unwilling or unable to accept
  417  appointment, the new insurer shall pay the agent in accordance
  418  with sub-sub-sub-subparagraph (A).
  419         (II) When the corporation enters into a contractual
  420  agreement for a take-out plan, the producing agent of record of
  421  the corporation policy is entitled to retain any unearned
  422  commission on the policy, and the insurer shall:
  423         (A) Pay to the producing agent of record of the corporation
  424  policy, for the first year, an amount that is the greater of the
  425  insurer’s usual and customary commission for the type of policy
  426  written or a fee equal to the usual and customary commission of
  427  the corporation; or
  428         (B) Offer to allow the producing agent of record of the
  429  corporation policy to continue servicing the policy for a period
  430  of not less than 1 year and offer to pay the agent the greater
  431  of the insurer’s or the corporation’s usual and customary
  432  commission for the type of policy written.
  433  
  434  If the producing agent is unwilling or unable to accept
  435  appointment, the new insurer shall pay the agent in accordance
  436  with sub-sub-sub-subparagraph (A).
  437         b. With respect to commercial lines residential risks, for
  438  a new application to the corporation for coverage, if the risk
  439  is offered coverage under a policy including wind coverage from
  440  an authorized insurer at its approved rate, the risk is not
  441  eligible for any policy issued by the corporation unless the
  442  premium for coverage from the authorized insurer is more than 15
  443  percent greater than the premium for comparable coverage from
  444  the corporation. If the risk is not able to obtain any such
  445  offer, the risk is eligible for a policy including wind coverage
  446  issued by the corporation. However, with regard to a
  447  policyholder of the corporation or a policyholder removed from
  448  the corporation through an assumption agreement until the end of
  449  the assumption period, the policyholder remains eligible for
  450  coverage from the corporation regardless of any offer of
  451  coverage from an authorized insurer or surplus lines insurer.
  452         (I) If the risk accepts an offer of coverage through the
  453  market assistance plan or an offer of coverage through a
  454  mechanism established by the corporation before a policy is
  455  issued to the risk by the corporation or during the first 30
  456  days of coverage by the corporation, and the producing agent who
  457  submitted the application to the plan or the corporation is not
  458  currently appointed by the insurer, the insurer shall:
  459         (A) Pay to the producing agent of record of the policy, for
  460  the first year, an amount that is the greater of the insurer’s
  461  usual and customary commission for the type of policy written or
  462  a fee equal to the usual and customary commission of the
  463  corporation; or
  464         (B) Offer to allow the producing agent of record of the
  465  policy to continue servicing the policy for a period of not less
  466  than 1 year and offer to pay the agent the greater of the
  467  insurer’s or the corporation’s usual and customary commission
  468  for the type of policy written.
  469  
  470  If the producing agent is unwilling or unable to accept
  471  appointment, the new insurer shall pay the agent in accordance
  472  with sub-sub-sub-subparagraph (A).
  473         (II) When the corporation enters into a contractual
  474  agreement for a take-out plan, the producing agent of record of
  475  the corporation policy is entitled to retain any unearned
  476  commission on the policy, and the insurer shall:
  477         (A) Pay to the producing agent of record of the corporation
  478  policy, for the first year, an amount that is the greater of the
  479  insurer’s usual and customary commission for the type of policy
  480  written or a fee equal to the usual and customary commission of
  481  the corporation; or
  482         (B) Offer to allow the producing agent of record of the
  483  corporation policy to continue servicing the policy for a period
  484  of not less than 1 year and offer to pay the agent the greater
  485  of the insurer’s or the corporation’s usual and customary
  486  commission for the type of policy written.
  487  
  488  If the producing agent is unwilling or unable to accept
  489  appointment, the new insurer shall pay the agent in accordance
  490  with sub-sub-sub-subparagraph (A).
  491         c. For purposes of determining comparable coverage under
  492  sub-subparagraphs a. and b., the comparison shall be based on
  493  those forms and coverages that are reasonably comparable. The
  494  corporation may rely on a determination of comparable coverage
  495  and premium made by the producing agent who submits the
  496  application to the corporation, made in the agent’s capacity as
  497  the corporation’s agent. A comparison may be made solely of the
  498  premium with respect to the main building or structure only on
  499  the following basis: the same coverage A or other building
  500  limits; the same percentage hurricane deductible that applies on
  501  an annual basis or that applies to each hurricane for commercial
  502  residential property; the same percentage of ordinance and law
  503  coverage, if the same limit is offered by both the corporation
  504  and the authorized insurer; the same mitigation credits, to the
  505  extent the same types of credits are offered both by the
  506  corporation and the authorized insurer; the same method for loss
  507  payment, such as replacement cost or actual cash value, if the
  508  same method is offered both by the corporation and the
  509  authorized insurer in accordance with underwriting rules; and
  510  any other form or coverage that is reasonably comparable as
  511  determined by the board. If an application is submitted to the
  512  corporation for wind-only coverage in the high-risk account, the
  513  premium for the corporation’s wind-only policy plus the premium
  514  for the ex-wind policy that is offered by an authorized insurer
  515  to the applicant shall be compared to the premium for multiperil
  516  coverage offered by an authorized insurer, subject to the
  517  standards for comparison specified in this subparagraph. If the
  518  corporation or the applicant requests from the authorized
  519  insurer a breakdown of the premium of the offer by types of
  520  coverage so that a comparison may be made by the corporation or
  521  its agent and the authorized insurer refuses or is unable to
  522  provide such information, the corporation may treat the offer as
  523  not being an offer of coverage from an authorized insurer at the
  524  insurer’s approved rate.
  525         6. Must include rules for classifications of risks and
  526  rates therefor.
  527         7. Must provide that if premium and investment income for
  528  an account attributable to a particular calendar year are in
  529  excess of projected losses and expenses for the account
  530  attributable to that year, such excess shall be held in surplus
  531  in the account. Such surplus shall be available to defray
  532  deficits in that account as to future years and shall be used
  533  for that purpose prior to assessing assessable insurers and
  534  assessable insureds as to any calendar year.
  535         8. Must provide objective criteria and procedures to be
  536  uniformly applied for all applicants in determining whether an
  537  individual risk is so hazardous as to be uninsurable. In making
  538  this determination and in establishing the criteria and
  539  procedures, the following shall be considered:
  540         a. Whether the likelihood of a loss for the individual risk
  541  is substantially higher than for other risks of the same class;
  542  and
  543         b. Whether the uncertainty associated with the individual
  544  risk is such that an appropriate premium cannot be determined.
  545  
  546  The acceptance or rejection of a risk by the corporation shall
  547  be construed as the private placement of insurance, and the
  548  provisions of chapter 120 shall not apply.
  549         9. Must provide that the corporation shall make its best
  550  efforts to procure catastrophe reinsurance at reasonable rates,
  551  to cover its projected 100-year probable maximum loss as
  552  determined by the board of governors.
  553         10. The policies issued by the corporation must provide
  554  that, if the corporation or the market assistance plan obtains
  555  an offer from an authorized insurer to cover the risk at its
  556  approved rates, the risk is no longer eligible for renewal
  557  through the corporation, except as otherwise provided in this
  558  subsection.
  559         11. Corporation policies and applications must include a
  560  notice that the corporation policy could, under this section, be
  561  replaced with a policy issued by an authorized insurer that does
  562  not provide coverage identical to the coverage provided by the
  563  corporation. The notice shall also specify that acceptance of
  564  corporation coverage creates a conclusive presumption that the
  565  applicant or policyholder is aware of this potential.
  566         12. May establish, subject to approval by the office,
  567  different eligibility requirements and operational procedures
  568  for any line or type of coverage for any specified county or
  569  area if the board determines that such changes to the
  570  eligibility requirements and operational procedures are
  571  justified due to the voluntary market being sufficiently stable
  572  and competitive in such area or for such line or type of
  573  coverage and that consumers who, in good faith, are unable to
  574  obtain insurance through the voluntary market through ordinary
  575  methods would continue to have access to coverage from the
  576  corporation. When coverage is sought in connection with a real
  577  property transfer, such requirements and procedures shall not
  578  provide for an effective date of coverage later than the date of
  579  the closing of the transfer as established by the transferor,
  580  the transferee, and, if applicable, the lender.
  581         13. Must provide that, with respect to the high-risk
  582  account, any assessable insurer with a surplus as to
  583  policyholders of $25 million or less writing 25 percent or more
  584  of its total countrywide property insurance premiums in this
  585  state may petition the office, within the first 90 days of each
  586  calendar year, to qualify as a limited apportionment company. A
  587  regular assessment levied by the corporation on a limited
  588  apportionment company for a deficit incurred by the corporation
  589  for the high-risk account in 2006 or thereafter may be paid to
  590  the corporation on a monthly basis as the assessments are
  591  collected by the limited apportionment company from its insureds
  592  pursuant to s. 627.3512, but the regular assessment must be paid
  593  in full within 12 months after being levied by the corporation.
  594  A limited apportionment company shall collect from its
  595  policyholders any emergency assessment imposed under sub
  596  subparagraph (b)3.d. The plan shall provide that, if the office
  597  determines that any regular assessment will result in an
  598  impairment of the surplus of a limited apportionment company,
  599  the office may direct that all or part of such assessment be
  600  deferred as provided in subparagraph (q)4. However, there shall
  601  be no limitation or deferment of an emergency assessment to be
  602  collected from policyholders under sub-subparagraph (b)3.d.
  603         14. Must provide that the corporation appoint as its
  604  licensed agents only those agents who also hold an appointment
  605  as defined in s. 626.015(3) with an insurer who at the time of
  606  the agent’s initial appointment by the corporation is authorized
  607  to write and is actually writing personal lines residential
  608  property coverage, commercial residential property coverage, or
  609  commercial nonresidential property coverage within the state.
  610         15. Must provide, by July 1, 2007, a premium payment plan
  611  option to its policyholders which allows at a minimum for
  612  quarterly and semiannual payment of premiums. A monthly payment
  613  plan may, but is not required to, be offered.
  614         16. Must limit coverage on mobile homes or manufactured
  615  homes built prior to 1994 to actual cash value of the dwelling
  616  rather than replacement costs of the dwelling.
  617         17. May provide such limits of coverage as the board
  618  determines, consistent with the requirements of this subsection.
  619         18. May require commercial property to meet specified
  620  hurricane mitigation construction features as a condition of
  621  eligibility for coverage.
  622         19. As of January 1, 2012, must require that the agent
  623  obtain from an applicant for coverage from the corporation an
  624  acknowledgement signed by the applicant, which includes, at a
  625  minimum, the following statement:
  626  
  627         ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT
  628         LIABILITY:
  629  
  630         1. AS A POLICYHOLDER OF CITIZENS PROPERTY
  631         INSURANCE CORPORATION, I UNDERSTAND THAT IF THE
  632         CORPORATION SUSTAINS A DEFICIT AS A RESULT OF
  633         HURRICANE LOSSES OR FOR ANY OTHER REASON, MY POLICY
  634         COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
  635         PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF
  636         THE POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH
  637         AS 45 PERCENT OF MY PREMIUM, OR A DIFFERENT AMOUNT AS
  638         IMPOSED BY THE FLORIDA LEGISLATURE.
  639         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO
  640         EMERGENCY ASSESSMENTS TO THE SAME EXTENT AS
  641         POLICYHOLDERS OF OTHER INSURANCE COMPANIES, OR A
  642         DIFFERENT AMOUNT AS IMPOSED BY THE STATE LEGISLATURE.
  643         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY
  644         INSURANCE CORPORATION IS NOT SUPPORTED BY THE FULL
  645         FAITH AND CREDIT OF THE STATE OF FLORIDA.
  646  
  647         a. The corporation shall maintain, in electronic format or
  648  otherwise, a copy of the applicant’s signed acknowledgement and
  649  provide a copy of the statement to the policyholder as part of
  650  the first renewal after the effective date of this sub
  651  subparagraph.
  652         b. The signed acknowledgement form creates a conclusive
  653  presumption that the policyholder understood and accepted his or
  654  her potential surcharge and assessment liability as a
  655  policyholder of the corporation.
  656         Section 4. Section 627.7031, Florida Statutes, is created
  657  to read:
  658         627.7031 Residential property insurance option.—
  659         (1) An insurer holding a certificate of authority to write
  660  property insurance in this state may offer or renew residential
  661  property insurance policies at rates established in accordance
  662  with s. 627.062(2)(l), subject to all of the requirements and
  663  prohibitions of this section.
  664         (2) An insurer offering or renewing policies at rates
  665  established in accordance with s. 627.062(2)(l) may not purchase
  666  coverage from the Florida Hurricane Catastrophe Fund under the
  667  temporary increase in coverage limit option under s.
  668  215.555(17).
  669         (3) Before the effective date of a newly issued policy at
  670  rates established in accordance with s. 627.062(2)(l) or before
  671  the effective date of a renewal policy at rates established in
  672  accordance with s. 627.062(2)(l), the applicant or insured must
  673  be given the following notice, printed in at least 12-point
  674  boldfaced type:
  675  
  676         THE RATE FOR THIS POLICY IS NOT SUBJECT TO FULL RATE
  677         REGULATION BY THE FLORIDA OFFICE OF INSURANCE
  678         REGULATION AND MAY BE HIGHER THAN RATES APPROVED BY
  679         THAT OFFICE. A RESIDENTIAL PROPERTY POLICY SUBJECT TO
  680         FULL RATE REGULATION REQUIREMENTS MAY BE AVAILABLE
  681         FROM THIS INSURER, ANOTHER INSURER, OR CITIZENS
  682         PROPERTY INSURANCE CORPORATION. PLEASE DISCUSS YOUR
  683         POLICY OPTIONS WITH AN INSURANCE AGENT WHO CAN PROVIDE
  684         A CITIZENS QUOTE. YOU MAY WISH TO VIEW THE OFFICE OF
  685         INSURANCE REGULATION’S WEBSITE AT
  686         WWW.SHOPANDCOMPARERATES.COM FOR MORE INFORMATION ABOUT
  687         CHOICES AVAILABLE TO YOU.
  688  
  689  For policies renewed at a rate established in accordance with s.
  690  627.062(2)(l), the notice must be furnished in writing at the
  691  same time as the renewal notice on a document separate from the
  692  renewal notice, but may be included within the same mailing as
  693  the renewal notice.
  694         (4) Before the effective date of a newly issued policy at
  695  rates established in accordance with s. 627.062(2)(l) or before
  696  the effective date of the first renewal at rates established in
  697  accordance with s. 627.062(2)(l) of a policy originally issued
  698  before the effective date of this section, the applicant or
  699  insured must:
  700         (a) Be provided or offered, for comparison purposes, an
  701  estimate of the premium for a policy from Citizens Property
  702  Insurance Corporation reflecting substantially similar
  703  coverages, limits, and deductibles to the extent available.
  704         (b) Provide the insurer or agent with a signed copy of the
  705  following acknowledgment form, which must be retained by the
  706  insurer or agent for at least 3 years. If the acknowledgment
  707  form is signed by the insured or if the insured remits payment
  708  in the amount of the rate established in accordance with s.
  709  627.062(2)(l) after being mailed, otherwise provided, or offered
  710  the comparison specified in paragraph (a), an insurer renewing a
  711  policy at such rate shall be deemed to comply with this section,
  712  and it is presumed that the insured has been informed and
  713  understands the information contained in the comparison and
  714  acknowledgment forms:
  715  
  716                           ACKNOWLEDGMENT:                         
  717         1. I HAVE REVIEWED THE REQUIRED DISCLOSURES AND
  718         THE REQUIRED PREMIUM COMPARISON.
  719         2. I UNDERSTAND THAT THE RATE FOR THIS
  720         RESIDENTIAL PROPERTY INSURANCE POLICY IS NOT SUBJECT
  721         TO FULL RATE REGULATION BY THE FLORIDA OFFICE OF
  722         INSURANCE REGULATION AND MAY BE HIGHER THAN RATES
  723         APPROVED BY THAT OFFICE.
  724         3. I UNDERSTAND THAT A RESIDENTIAL PROPERTY
  725         INSURANCE POLICY SUBJECT TO FULL RATE REGULATION
  726         REQUIREMENTS MAY BE AVAILABLE FROM CITIZENS PROPERTY
  727         INSURANCE CORPORATION.
  728         4. I UNDERSTAND THAT THE FLORIDA OFFICE OF
  729         INSURANCE REGULATION’S WEBSITE
  730         WWW.SHOPANDCOMPARERATES.COM CONTAINS RESIDENTIAL
  731         PROPERTY INSURANCE RATE COMPARISON INFORMATION.
  732  
  733         (5) The following types of residential property insurance
  734  policies are not eligible for rates established in accordance
  735  with s. 627.062(2)(l) and are not subject to the other
  736  provisions of this section:
  737         (a) Residential property insurance policies that exclude
  738  coverage for the perils of windstorm or hurricane.
  739         (b) Residential property insurance policies subject to a
  740  consent decree, agreement, understanding, or other arrangement
  741  between the insurer and the office relating to rates or premiums
  742  for policies removed from Citizens Property Insurance
  743  Corporation.
  744         Section 5. Effective January 1, 2015, section 627.7031,
  745  Florida Statutes, as created by this act, is amended to read:
  746         627.7031 Residential property insurance option.—
  747         (1) An insurer holding a certificate of authority to write
  748  property insurance in this state may offer or renew residential
  749  property insurance policies at rates established in accordance
  750  with s. 627.062(2)(l), subject to all of the requirements and
  751  prohibitions of this section.
  752         (2) An insurer may offer or renew policies at rates
  753  established in accordance with s. 627.062(2)(l) only if the
  754  insurer has in place a combination of surplus, Florida Hurricane
  755  Catastrophe Fund coverage, reinsurance, and reinsurance
  756  equivalents sufficient to cover the insurer’s 100-year probable
  757  maximum loss. The insurer shall determine its probable maximum
  758  loss using one or more models that meet the standards of the
  759  Florida Commission on Hurricane Loss Projection Methodology.
  760         (3)(2) An insurer offering or renewing policies at rates
  761  established in accordance with s. 627.062(2)(l) may not purchase
  762  coverage from the Florida Hurricane Catastrophe Fund under the
  763  temporary increase in coverage limit option under s.
  764  215.555(17).
  765         (4)(3)(a) Before the effective date of a newly issued
  766  policy at rates established in accordance with s. 627.062(2)(l)
  767  or before the effective date of a renewal policy at rates
  768  established in accordance with s. 627.062(2)(l), the applicant
  769  or insured must be given the following notice, printed in at
  770  least 12-point boldfaced type:
  771  
  772         THE RATE FOR THIS POLICY IS NOT SUBJECT TO FULL RATE
  773         REGULATION BY THE FLORIDA OFFICE OF INSURANCE
  774         REGULATION AND MAY BE HIGHER THAN RATES APPROVED BY
  775         THAT OFFICE. A RESIDENTIAL PROPERTY POLICY SUBJECT TO
  776         FULL RATE REGULATION REQUIREMENTS MAY BE AVAILABLE
  777         FROM THIS INSURER, ANOTHER INSURER, OR CITIZENS
  778         PROPERTY INSURANCE CORPORATION. PLEASE DISCUSS YOUR
  779         POLICY OPTIONS WITH AN INSURANCE AGENT WHO CAN PROVIDE
  780         A CITIZENS QUOTE. YOU MAY WISH TO VIEW THE OFFICE OF
  781         INSURANCE REGULATION’S WEBSITE AT
  782         WWW.SHOPANDCOMPARERATES.COM FOR MORE INFORMATION ABOUT
  783         CHOICES AVAILABLE TO YOU.
  784  
  785         (b) For policies renewed at a rate established in
  786  accordance with s. 627.062(2)(l), the notice described in
  787  paragraph (a) must be furnished in writing at the same time as
  788  the renewal notice on a document separate from the renewal
  789  notice, but may be contained within the same mailing as the
  790  renewal notice.
  791         (5)(4) Before the effective date of a newly issued policy
  792  at rates established in accordance with s. 627.062(2)(l) or
  793  before the effective date of the first renewal at rates
  794  established in accordance with s. 627.062(2)(l) of a policy
  795  originally issued before the effective date of this section, the
  796  applicant or insured must:
  797         (a) Be provided or offered, for comparison purposes, an
  798  estimate of the premium for a policy from Citizens Property
  799  Insurance Corporation reflecting substantially similar
  800  coverages, limits, and deductibles to the extent available.
  801         (b) Provide the insurer or agent with a signed copy of the
  802  following acknowledgment form, which must be retained by the
  803  insurer or agent for at least 3 years. If the acknowledgment
  804  form is signed by the insured or if the insured remits payment
  805  in the amount of the rate established in accordance with s.
  806  627.062(2)(l) after being mailed, otherwise provided, or offered
  807  the comparison specified in paragraph (a), an insurer renewing a
  808  policy at such rate shall be deemed to comply with this section,
  809  and it is presumed that the insured has been informed and
  810  understands the information contained in the comparison and
  811  acknowledgment forms:
  812  
  813                           ACKNOWLEDGMENT:                         
  814         1. I HAVE REVIEWED THE REQUIRED DISCLOSURES AND
  815         THE REQUIRED PREMIUM COMPARISON.
  816         2. I UNDERSTAND THAT THE RATE FOR THIS
  817         RESIDENTIAL PROPERTY INSURANCE POLICY IS NOT SUBJECT
  818         TO FULL RATE REGULATION BY THE FLORIDA OFFICE OF
  819         INSURANCE REGULATION AND MAY BE HIGHER THAN RATES
  820         APPROVED BY THAT OFFICE.
  821         3. I UNDERSTAND THAT A RESIDENTIAL PROPERTY
  822         INSURANCE POLICY SUBJECT TO FULL RATE REGULATION
  823         REQUIREMENTS MAY BE AVAILABLE FROM CITIZENS PROPERTY
  824         INSURANCE CORPORATION.
  825         4. I UNDERSTAND THAT THE FLORIDA OFFICE OF
  826         INSURANCE REGULATION’S WEBSITE
  827         WWW.SHOPANDCOMPARERATES.COM CONTAINS RESIDENTIAL
  828         PROPERTY INSURANCE RATE COMPARISON INFORMATION.
  829  
  830         (6)(5) The following types of residential property
  831  insurance policies are not eligible for rates established in
  832  accordance with s. 627.062(2)(l) and are not subject to the
  833  other provisions of this section:
  834         (a) Residential property insurance policies that exclude
  835  coverage for the perils of windstorm or hurricane.
  836         (b) Residential property insurance policies subject to a
  837  consent decree, agreement, understanding, or other arrangement
  838  between the insurer and the office relating to rates or premiums
  839  for policies removed from Citizens Property Insurance
  840  Corporation.
  841         Section 6. Except as otherwise expressly provided in this
  842  act, this act shall take effect upon becoming a law.
  843  
  844  ================= T I T L E  A M E N D M E N T ================
  845         And the title is amended as follows:
  846         Delete everything before the enacting clause
  847  and insert:
  848                        A bill to be entitled                      
  849         An act relating to residential property insurance;
  850         amending s. 627.062, F.S.; revising costs to be
  851         included in a rate filing; revising the overall
  852         premium increase for a rate filing; revising the
  853         information that must be included in a rate filing
  854         relating to reinsurance; deleting a provision
  855         prohibiting an insurer from implementing a rate
  856         increase within 6 months before it makes certain rate
  857         filings; deleting a provision prohibiting an insurer
  858         from filing for a rate increase within 6 months after
  859         it makes certain rate filings; authorizing an insurer
  860         to use a rate for residential property insurance that
  861         differs from its otherwise filed rate after a
  862         specified date under certain circumstances; requiring
  863         such rates to be filed with the Office of Insurance
  864         Regulation; specifying the maximum difference between
  865         rates; limiting the percentage rate increase as to any
  866         individual policyholder; preserving the authority of
  867         the office to disapprove a rate for inadequacy or
  868         discrimination; providing a future revision that
  869         requires the inclusion of a statement in certain rate
  870         filings relating to the insurer’s current or future
  871         ability to cover a specified probable maximum loss,
  872         requires certification by an insurer relating to the
  873         insurer’s ability to actually cover a specified
  874         probable maximum loss, voids certain rates if an
  875         insurer fails to maintain sufficient funds or
  876         coverages to cover a specified probable maximum loss,
  877         and requires refunds and credits to insureds if an
  878         insurer fails to maintain sufficient funds or
  879         coverages to cover a specified probable maximum loss;
  880         amending s. 627.351, F.S.; requiring insurance agents
  881         to obtain a signed acknowledgment from an applicant
  882         for coverage and certain policyholders relating to
  883         surcharges and assessments potentially being imposed
  884         under a Citizens Property Insurance Corporation
  885         policy; requiring Citizens Property Insurance
  886         Corporation to maintain signed acknowledgments;
  887         specifying that a signed acknowledgment creates an
  888         evidentiary presumption relating to an insured’s
  889         liability for surcharges and assessments; creating s.
  890         627.7031, F.S.; specifying circumstances under which
  891         an insurer may offer or renew residential property
  892         insurance policies subject to the amendments to s.
  893         627.062, F.S., contained in this act; prohibiting such
  894         insurers from procuring coverage under the temporary
  895         increase in coverage limits option; requiring specific
  896         notices to applicant or insured; requiring Citizens
  897         Property Insurance Corporation premium estimates and
  898         signed acknowledgments; specifying ineligible types of
  899         policies; providing a future revision requiring an
  900         insurer to have certain resources to cover a specified
  901         probable maximum loss in order to offer or renew
  902         policies at certain rates; providing effective dates.