CS/HB 245

1
A bill to be entitled
2An act relating to the depopulation programs of
3Citizens Property Insurance Corporation; amending s.
4627.351, F.S.; providing that eligible surplus lines
5insurers may participate, in the same manner and on
6the same terms as an authorized insurer, in
7depopulation, take-out, or keep-out programs relating
8to policies removed from Citizens Property Insurance
9Corporation; providing certain exceptions, conditions,
10and requirements relating to such participation by a
11surplus lines insurer in the corporation's
12depopulation, take-out, or keep-out programs;
13authorizing information from underwriting files and
14confidential files to be released by the corporation
15to specified entities that are considering writing or
16underwriting risks insured by the corporation under
17certain circumstances; specifying that only the
18corporation's transfer of a policy file to an insurer,
19as opposed to the transfer of any file, changes the
20file's public record status; providing an effective
21date.
22
23Be It Enacted by the Legislature of the State of Florida:
24
25     Section 1.  Paragraphs (q) and (x) of subsection (6) of
26section 627.351, Florida Statutes, are amended to read:
27     627.351  Insurance risk apportionment plans.-
28     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.-
29     (q)1.  The corporation shall certify to the office its
30needs for annual assessments as to a particular calendar year,
31and for any interim assessments that it deems to be necessary to
32sustain operations as to a particular year pending the receipt
33of annual assessments. Upon verification, the office shall
34approve such certification, and the corporation shall levy such
35annual or interim assessments. Such assessments shall be
36prorated as provided in paragraph (b). The corporation shall
37take all reasonable and prudent steps necessary to collect the
38amount of assessment due from each assessable insurer,
39including, if prudent, filing suit to collect such assessment.
40If the corporation is unable to collect an assessment from any
41assessable insurer, the uncollected assessments shall be levied
42as an additional assessment against the assessable insurers and
43any assessable insurer required to pay an additional assessment
44as a result of such failure to pay shall have a cause of action
45against such nonpaying assessable insurer. Assessments shall be
46included as an appropriate factor in the making of rates. The
47failure of a surplus lines agent to collect and remit any
48regular or emergency assessment levied by the corporation is
49considered to be a violation of s. 626.936 and subjects the
50surplus lines agent to the penalties provided in that section.
51     2.  The governing body of any unit of local government, any
52residents of which are insured by the corporation, may issue
53bonds as defined in s. 125.013 or s. 166.101 from time to time
54to fund an assistance program, in conjunction with the
55corporation, for the purpose of defraying deficits of the
56corporation. In order to avoid needless and indiscriminate
57proliferation, duplication, and fragmentation of such assistance
58programs, any unit of local government, any residents of which
59are insured by the corporation, may provide for the payment of
60losses, regardless of whether or not the losses occurred within
61or outside of the territorial jurisdiction of the local
62government. Revenue bonds under this subparagraph may not be
63issued until validated pursuant to chapter 75, unless a state of
64emergency is declared by executive order or proclamation of the
65Governor pursuant to s. 252.36 making such findings as are
66necessary to determine that it is in the best interests of, and
67necessary for, the protection of the public health, safety, and
68general welfare of residents of this state and declaring it an
69essential public purpose to permit certain municipalities or
70counties to issue such bonds as will permit relief to claimants
71and policyholders of the corporation. Any such unit of local
72government may enter into such contracts with the corporation
73and with any other entity created pursuant to this subsection as
74are necessary to carry out this paragraph. Any bonds issued
75under this subparagraph shall be payable from and secured by
76moneys received by the corporation from emergency assessments
77under sub-subparagraph (b)3.d., and assigned and pledged to or
78on behalf of the unit of local government for the benefit of the
79holders of such bonds. The funds, credit, property, and taxing
80power of the state or of the unit of local government shall not
81be pledged for the payment of such bonds.
82     3.a.  The corporation shall adopt one or more programs
83subject to approval by the office for the reduction of both new
84and renewal writings in the corporation. Beginning January 1,
852008, any program the corporation adopts for the payment of
86bonuses to an insurer for each risk the insurer removes from the
87corporation shall comply with s. 627.3511(2) and may not exceed
88the amount referenced in s. 627.3511(2) for each risk removed.
89The corporation may consider any prudent and not unfairly
90discriminatory approach to reducing corporation writings, and
91may adopt a credit against assessment liability or other
92liability that provides an incentive for insurers to take risks
93out of the corporation and to keep risks out of the corporation
94by maintaining or increasing voluntary writings in counties or
95areas in which corporation risks are highly concentrated and a
96program to provide a formula under which an insurer voluntarily
97taking risks out of the corporation by maintaining or increasing
98voluntary writings will be relieved wholly or partially from
99assessments under sub-subparagraphs (b)3.a. and b. However, any
100"take-out bonus" or payment to an insurer must be conditioned on
101the property being insured for at least 5 years by the insurer,
102unless canceled or nonrenewed by the policyholder. If the policy
103is canceled or nonrenewed by the policyholder before the end of
104the 5-year period, the amount of the take-out bonus must be
105prorated for the time period the policy was insured. When the
106corporation enters into a contractual agreement for a take-out
107plan, the producing agent of record of the corporation policy is
108entitled to retain any unearned commission on such policy, and
109the insurer shall either:
110     (I)  Pay to the producing agent of record of the policy,
111for the first year, an amount which is the greater of the
112insurer's usual and customary commission for the type of policy
113written or a policy fee equal to the usual and customary
114commission of the corporation; or
115     (II)  Offer to allow the producing agent of record of the
116policy to continue servicing the policy for a period of not less
117than 1 year and offer to pay the agent the insurer's usual and
118customary commission for the type of policy written. If the
119producing agent is unwilling or unable to accept appointment by
120the new insurer, the new insurer shall pay the agent in
121accordance with sub-sub-subparagraph (I).
122     b.  Any credit or exemption from regular assessments
123adopted under this subparagraph shall last no longer than the 3
124years following the cancellation or expiration of the policy by
125the corporation. With the approval of the office, the board may
126extend such credits for an additional year if the insurer
127guarantees an additional year of renewability for all policies
128removed from the corporation, or for 2 additional years if the
129insurer guarantees 2 additional years of renewability for all
130policies so removed.
131     c.  There shall be no credit, limitation, exemption, or
132deferment from emergency assessments to be collected from
133policyholders pursuant to sub-subparagraph (b)3.d.
134     d.  Notwithstanding any other provision of law, for
135purposes of a depopulation, take-out, or keep-out program
136adopted by the corporation, including an initial or renewal
137offer of coverage made to a policyholder removed from the
138corporation pursuant to such program, an eligible surplus lines
139insurer may participate in the program in the same manner and on
140the same terms as an authorized insurer, except as provided
141under this sub-subparagraph.
142     (I)  To qualify for participation, the surplus lines
143insurer must first obtain approval from the office for its
144depopulation, take-out, or keep-out plan and then comply with
145all of the corporation's requirements for the plan applicable to
146admitted insurers and with all statutory provisions applicable
147to the removal of policies from the corporation.
148     (II)  In considering a surplus lines insurer's request for
149approval for its plan, the office must determine that the
150surplus lines insurer meets the following requirements:
151     (A)  Maintains surplus of $50 million on a company or
152pooled basis;
153     (B)  Maintains an A.M. Best Financial Strength Rating of A-
154or better;
155     (C)  Maintains reserves, surplus, reinsurance, and
156reinsurance equivalents sufficient to cover the insurer's 100-
157year probable maximum hurricane loss at least twice in a single
158hurricane season, and submits such reinsurance to the office to
159review for purposes of the take-out;
160     (D)  Provides prominent notice to the policyholder before
161the assumption of the policy that surplus lines policies are not
162provided coverage by the Florida Insurance Guaranty Association,
163and an outline of any substantial differences in coverage
164between the existing policy and the policy being offered to the
165insured; and
166     (E)  Provides similar policy coverage.
167
168This sub-sub-subparagraph does not subject any surplus lines
169insurer to requirements in addition to part VIII of chapter 626.
170Surplus lines brokers making an offer of coverage under this
171sub-subparagraph are not required to comply with s.
172626.916(1)(a), (b), (c), and (e).
173     (III)  Within 10 days after the date of assumption, the
174surplus lines insurer assuming policies from the corporation
175must remit a special deposit equal to the unearned premium net
176of unearned commissions on the assumed block of business to the
177Department of Financial Services, Bureau of Collateral
178Management. The surplus lines insurer must submit to the office
179with the initial deposit an accounting of the policies assumed
180and the amount of unearned premium for such policies along with
181a sworn affidavit attesting to its accuracy by an officer of the
182surplus lines insurer. Thereafter, the surplus lines insurer
183must make a filing within 10 days after each calendar quarter,
184attesting to the unearned premium in force for the previous
185quarter on policies assumed from the corporation, and must
186submit additional funds with that filing if the special deposit
187is insufficient to cover the unearned premium on assumed
188policies, or must receive a return of funds within 60 days if
189the special deposit exceeds the amount of unearned premium
190required for assumed policies. The special deposit is an asset
191of the surplus lines insurer which is held by the department for
192the benefit of state policyholders of the surplus lines insurer
193in the event of the insolvency of the surplus lines insurer. If
194an order of liquidation is entered in any state against the
195surplus lines insurer, the department may use the special
196deposit for payment of unearned premium or policy claims, return
197all or part of the deposit to the domiciliary receiver, or use
198the funds in accordance with any action authorized under part I
199of chapter 631 or in compliance with any order of a court with
200jurisdiction over the insolvency.
201     (IV)  Surplus lines brokers representing a surplus lines
202insurer on a take-out program must obtain confirmation, in
203written or e-mail form, from each producing agent in advance
204stating that the agent is willing to participate in the take-out
205program with the surplus lines insurer engaging in the take-out
206program. The take-out program is also subject to s. 627.3517. If
207a policyholder is selected for removal from the corporation by a
208surplus lines insurer and an authorized insurer, the offer of
209coverage from the authorized insurer shall be given priority by
210the corporation.
211     4.  The plan shall provide for the deferment, in whole or
212in part, of the assessment of an assessable insurer, other than
213an emergency assessment collected from policyholders pursuant to
214sub-subparagraph (b)3.d., if the office finds that payment of
215the assessment would endanger or impair the solvency of the
216insurer. In the event an assessment against an assessable
217insurer is deferred in whole or in part, the amount by which
218such assessment is deferred may be assessed against the other
219assessable insurers in a manner consistent with the basis for
220assessments set forth in paragraph (b).
221     5.  Effective July 1, 2007, in order to evaluate the costs
222and benefits of approved take-out plans, if the corporation pays
223a bonus or other payment to an insurer for an approved take-out
224plan, it shall maintain a record of the address or such other
225identifying information on the property or risk removed in order
226to track if and when the property or risk is later insured by
227the corporation.
228     6.  Any policy taken out, assumed, or removed from the
229corporation is, as of the effective date of the take-out,
230assumption, or removal, direct insurance issued by the insurer
231and not by the corporation, even if the corporation continues to
232service the policies. This subparagraph applies to policies of
233the corporation and not policies taken out, assumed, or removed
234from any other entity.
235     (x)1.  The following records of the corporation are
236confidential and exempt from the provisions of s. 119.07(1) and
237s. 24(a), Art. I of the State Constitution:
238     a.  Underwriting files, except that a policyholder or an
239applicant shall have access to his or her own underwriting
240files. Confidential and exempt underwriting file records may
241also be released to other governmental agencies upon written
242request and demonstration of need; such records held by the
243receiving agency remain confidential and exempt as provided
244herein.
245     b.  Claims files, until termination of all litigation and
246settlement of all claims arising out of the same incident,
247although portions of the claims files may remain exempt, as
248otherwise provided by law. Confidential and exempt claims file
249records may be released to other governmental agencies upon
250written request and demonstration of need; such records held by
251the receiving agency remain confidential and exempt as provided
252herein.
253     c.  Records obtained or generated by an internal auditor
254pursuant to a routine audit, until the audit is completed, or if
255the audit is conducted as part of an investigation, until the
256investigation is closed or ceases to be active. An investigation
257is considered "active" while the investigation is being
258conducted with a reasonable, good faith belief that it could
259lead to the filing of administrative, civil, or criminal
260proceedings.
261     d.  Matters reasonably encompassed in privileged attorney-
262client communications.
263     e.  Proprietary information licensed to the corporation
264under contract and the contract provides for the confidentiality
265of such proprietary information.
266     f.  All information relating to the medical condition or
267medical status of a corporation employee which is not relevant
268to the employee's capacity to perform his or her duties, except
269as otherwise provided in this paragraph. Information that is
270exempt shall include, but is not limited to, information
271relating to workers' compensation, insurance benefits, and
272retirement or disability benefits.
273     g.  Upon an employee's entrance into the employee
274assistance program, a program to assist any employee who has a
275behavioral or medical disorder, substance abuse problem, or
276emotional difficulty which affects the employee's job
277performance, all records relative to that participation shall be
278confidential and exempt from the provisions of s. 119.07(1) and
279s. 24(a), Art. I of the State Constitution, except as otherwise
280provided in s. 112.0455(11).
281     h.  Information relating to negotiations for financing,
282reinsurance, depopulation, or contractual services, until the
283conclusion of the negotiations.
284     i.  Minutes of closed meetings regarding underwriting
285files, and minutes of closed meetings regarding an open claims
286file until termination of all litigation and settlement of all
287claims with regard to that claim, except that information
288otherwise confidential or exempt by law shall be redacted.
289     2.  If an authorized insurer, reinsurance intermediary,
290eligible surplus lines insurer, or entity that has been created
291to seek authority to write property insurance in this state is
292considering writing or assisting in the underwriting of a risk
293insured by the corporation, relevant information from both the
294underwriting files and confidential claims files may be released
295to the insurer, reinsurance intermediary, eligible surplus lines
296insurer, or entity that has been created to seek authority to
297write property insurance in this state provided the recipient
298insurer agrees in writing, notarized and under oath, to maintain
299the confidentiality of such files. If a policy file is
300transferred to an insurer, that policy file is no longer a
301public record because it is not held by an agency subject to the
302provisions of the public records law. Underwriting files and
303confidential claims files may also be released to staff and the
304board of governors of the market assistance plan established
305pursuant to s. 627.3515, who must retain the confidentiality of
306such files, except such files may be released to authorized
307insurers that are considering assuming the risks to which the
308files apply, provided the insurer agrees in writing, notarized
309and under oath, to maintain the confidentiality of such files.
310Finally, the corporation or the board or staff of the market
311assistance plan may make the following information obtained from
312underwriting files and confidential claims files available to
313licensed general lines insurance agents: name, address, and
314telephone number of the residential property owner or insured;
315location of the risk; rating information; loss history; and
316policy type. The receiving licensed general lines insurance
317agent must retain the confidentiality of the information
318received.
319     3.  A policyholder who has filed suit against the
320corporation has the right to discover the contents of his or her
321own claims file to the same extent that discovery of such
322contents would be available from a private insurer in litigation
323as provided by the Florida Rules of Civil Procedure, the Florida
324Evidence Code, and other applicable law. Pursuant to subpoena, a
325third party has the right to discover the contents of an
326insured's or applicant's underwriting or claims file to the same
327extent that discovery of such contents would be available from a
328private insurer by subpoena as provided by the Florida Rules of
329Civil Procedure, the Florida Evidence Code, and other applicable
330law, and subject to any confidentiality protections requested by
331the corporation and agreed to by the seeking party or ordered by
332the court. The corporation may release confidential underwriting
333and claims file contents and information as it deems necessary
334and appropriate to underwrite or service insurance policies and
335claims, subject to any confidentiality protections deemed
336necessary and appropriate by the corporation.
337     4.  Portions of meetings of the corporation are exempt from
338the provisions of s. 286.011 and s. 24(b), Art. I of the State
339Constitution wherein confidential underwriting files or
340confidential open claims files are discussed. All portions of
341corporation meetings which are closed to the public shall be
342recorded by a court reporter. The court reporter shall record
343the times of commencement and termination of the meeting, all
344discussion and proceedings, the names of all persons present at
345any time, and the names of all persons speaking. No portion of
346any closed meeting shall be off the record. Subject to the
347provisions hereof and s. 119.07(1)(d)-(f), the court reporter's
348notes of any closed meeting shall be retained by the corporation
349for a minimum of 5 years. A copy of the transcript, less any
350exempt matters, of any closed meeting wherein claims are
351discussed shall become public as to individual claims after
352settlement of the claim.
353     Section 2.  This act shall take effect upon becoming a law.


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