Florida Senate - 2013                                    SB 1770
       
       
       
       By the Committee on Banking and Insurance
       
       
       
       
       597-02041-13                                          20131770__
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         215.555, F.S.; changing the name of the Florida
    4         Hurricane Catastrophe Fund Finance Corporation to the
    5         State Board of Administration Finance Corporation;
    6         creating s. 215.5551, F.S.; creating the Florida
    7         Catastrophe Risk Capital Access Facility to increase
    8         the access of small domestic insurers to risk-capital
    9         markets; providing intent; establishing the facility
   10         in the State Board of Administration; providing the
   11         purposes of the facility; requiring the facility to be
   12         funded entirely by participating insurers after
   13         initial apportionment; providing limitations;
   14         providing for a board of directors; providing immunity
   15         from liability; providing for an annual report;
   16         amending s. 624.155, F.S.; providing that Citizens
   17         Property Insurance Corporation is an insurer subject
   18         to civil actions as an agent of the state covered by
   19         sovereign immunity; amending s. 626.752, F.S.,
   20         relating to the exchange of business between an agent
   21         and insurer; providing an exemption from the
   22         requirements of that section to the corporation under
   23         certain circumstances; amending s. 627.062, F.S.;
   24         requiring the Office of Insurance Regulation to
   25         calculate and publish insurance inflation factors for
   26         use in residential property insurance filings;
   27         prohibiting the office from disapproving a rate as
   28         excessive due to the insurer’s purchase of reinsurance
   29         for certain purposes; deleting obsolete provisions;
   30         conforming cross-references; amending s. 627.0628,
   31         F.S.; requiring the Florida Commission on Hurricane
   32         Loss Projection Methodology to consider methods for
   33         improving the accuracy of wind mitigation discounts;
   34         amending s. 627.0629, F.S.; requiring insurers to
   35         provide notice of mitigation discounts in a
   36         residential property insurance rate filing; revising
   37         the criteria for when the office may hold a public
   38         hearing regarding a rate filing; amending s. 627.171,
   39         F.S.; allowing a consent to an excess rate to apply to
   40         subsequent policy renewals; limiting the allowable
   41         amount of excess rates to counties where there is no
   42         competition; amending s. 627.351, F.S.; revising
   43         legislative intent with respect to the corporation;
   44         reducing the value of residential structures that can
   45         be covered by the corporation; revising the
   46         corporation’s eligibility criteria for structures
   47         located seaward of the coastal construction control
   48         line; requiring the corporation’s board of governors
   49         to concur with certain decisions by the executive
   50         director; providing for risk-sharing agreements
   51         between the corporation and other insurers and
   52         specifying the requirements and limitations of such
   53         agreements; revising provisions relating to the
   54         appointment of the board of governors and the
   55         executive director; deleting provisions allowing a
   56         policyholder removed from the corporation to remain
   57         eligible for coverage regardless of an offer of
   58         coverage from an authorized insurer; revising
   59         corporation criteria for appointing agents; requiring
   60         disclosure of potential corporation surcharges and
   61         policyholder obligations to try and obtain private
   62         market coverage; revising provisions relating to the
   63         Auditor General’s review of the corporation; requiring
   64         the board to contract with an independent auditing
   65         firm to conduct performance audits; authorizing the
   66         corporation to adopt programs that encourage insurers
   67         to remove policies from the corporation through a loan
   68         secured by a surplus note; revising provisions
   69         relating to purchases by the corporation; providing
   70         that the corporation is subject to state agency
   71         purchasing requirements; requiring the corporation to
   72         provide notice of purchasing decisions; providing
   73         procedures for protesting such decisions; providing
   74         applicability; revising the corporation’s rate
   75         standards; requiring that corporation rates be
   76         competitive with approved rates charged in the
   77         admitted market, actuarially sound, and include a
   78         catastrophe risk load factor; providing exceptions;
   79         limiting rate increases for specified personal and
   80         commercial lines residential policies and allowing an
   81         additional rate increase; requiring the corporation to
   82         annually certify its rates; requiring the board of
   83         directors to provide recommendations to the
   84         Legislature on ways of providing rate relief to those
   85         who demonstrate a financial need; deleting obsolete
   86         provisions; creating s. 627.3518, F.S.; establishing a
   87         clearinghouse within the corporation for identifying
   88         and diverting insurance coverage to private insurers;
   89         providing definitions; providing requirements and
   90         duties of the corporation, insurers, and agents;
   91         providing for an alternative to submitting risks to
   92         the corporation; amending s. 627.405, F.S.;
   93         authorizing policyholders to assign benefits subject
   94         to conditions in the policy; amending s. 627.410,
   95         F.S.; conforming provisions to changes made by the
   96         act; creating s. 627.4102, F.S.; providing for an
   97         informational filing of certain forms that are exempt
   98         from the Office of Insurance Regulation’s approval
   99         process; requiring an informational filing to include
  100         a notarized certification from the insurer and
  101         providing a statement that must be included in the
  102         certification; requiring a Notice of Change in Policy
  103         Terms form to be filed with a changed renewal policy;
  104         providing effective dates.
  105  
  106  Be It Enacted by the Legislature of the State of Florida:
  107  
  108         Section 1. Paragraph (n) of subsection (2) and paragraph
  109  (d) of subsection (6) of section 215.555, Florida Statutes, are
  110  amended to read:
  111         215.555 Florida Hurricane Catastrophe Fund.—
  112         (2) DEFINITIONS.—As used in this section:
  113         (n) “Corporation” means the State Board of Administration
  114  Florida Hurricane Catastrophe Fund Finance Corporation created
  115  in paragraph (6)(d).
  116         (6) REVENUE BONDS.—
  117         (d) State Board of Administration Florida Hurricane
  118  Catastrophe Fund Finance Corporation.—
  119         1. In addition to the findings and declarations in
  120  subsection (1), the Legislature also finds and declares that:
  121         a. The public benefits corporation created under this
  122  paragraph will provide a mechanism necessary for the cost
  123  effective and efficient issuance of bonds. This mechanism will
  124  eliminate unnecessary costs in the bond issuance process,
  125  thereby increasing the amounts available for to pay
  126  reimbursement for losses to property sustained as a result of
  127  hurricane damage.
  128         b. The purpose of such bonds is to fund reimbursements
  129  through the Florida Hurricane Catastrophe Fund to pay for the
  130  costs of construction, reconstruction, repair, restoration, and
  131  other costs associated with damage to properties of
  132  policyholders of covered policies due to the occurrence of a
  133  hurricane.
  134         c. The efficacy of the financing mechanism will be enhanced
  135  by the corporation’s ownership of the assessments, by the
  136  insulation of the assessments from possible bankruptcy
  137  proceedings, and by covenants of the state with the
  138  corporation’s bondholders.
  139         2.a.The State Board of Administration Finance Corporation
  140  There is created, which is a public benefits corporation and,
  141  which is an instrumentality of the state, to be known as the
  142  Florida Hurricane Catastrophe Fund Finance Corporation. The
  143  State Board of Administration Finance Corporation is for all
  144  purposes the successor to the Florida Hurricane Catastrophe Fund
  145  Finance Corporation.
  146         a.b. The corporation shall operate under a five-member
  147  board of directors consisting of the Governor or a designee, the
  148  Chief Financial Officer or a designee, the Attorney General or a
  149  designee, the director of the Division of Bond Finance of the
  150  State Board of Administration, and the Chief Operating Officer
  151  senior employee of the State Board of Administration responsible
  152  for operations of the Florida Hurricane Catastrophe Fund.
  153         b.c. The corporation has all of the powers of corporations
  154  under chapter 607 and under chapter 617, subject only to the
  155  provisions of this subsection.
  156         c.d. The corporation may issue bonds and engage in such
  157  other financial transactions as are necessary to provide
  158  sufficient funds to achieve the purposes of this section.
  159         d.e. The corporation may invest in any of the investments
  160  authorized under s. 215.47.
  161         e.f. There is shall be no liability on the part of, and no
  162  cause of action shall arise against, any board members or
  163  employees of the corporation for any actions taken by them in
  164  the performance of their duties under this paragraph.
  165         3.a. In actions under chapter 75 to validate any bonds
  166  issued by the corporation, the notice required by s. 75.06 must
  167  shall be published in two newspapers of general circulation in
  168  the state, and the complaint and order of the court shall be
  169  served only on the State Attorney of the Second Judicial
  170  Circuit.
  171         b. The state hereby covenants with holders of bonds of the
  172  corporation that the state will not repeal or abrogate the power
  173  of the board to direct the Office of Insurance Regulation to
  174  levy the assessments and to collect the proceeds of the revenues
  175  pledged to the payment of such bonds as long as any such bonds
  176  remain outstanding unless adequate provision has been made for
  177  the payment of such bonds pursuant to the documents authorizing
  178  the issuance of the such bonds.
  179         c.4. The bonds of the corporation are not a debt of the
  180  state or of any political subdivision, and neither the state nor
  181  any political subdivision is liable on such bonds. The
  182  corporation may not does not have the power to pledge the
  183  credit, the revenues, or the taxing power of the state or of any
  184  political subdivision. The credit, revenues, or taxing power of
  185  the state or of any political subdivision may shall not be
  186  deemed to be pledged to the payment of any bonds of the
  187  corporation.
  188         d.5.a. The property, revenues, and other assets of the
  189  corporation; the transactions and operations of the corporation
  190  and the income from such transactions and operations; and all
  191  bonds issued under this paragraph and interest on such bonds are
  192  exempt from taxation by the state and any political subdivision,
  193  including the intangibles tax under chapter 199 and the income
  194  tax under chapter 220. This exemption does not apply to any tax
  195  imposed by chapter 220 on interest, income, or profits on debt
  196  obligations owned by corporations other than the State Board of
  197  Administration Florida Hurricane Catastrophe Fund Finance
  198  Corporation.
  199         e.b. All bonds of the corporation are shall be and
  200  constitute legal investments without limitation for all public
  201  bodies of this state; for all banks, trust companies, savings
  202  banks, savings associations, savings and loan associations, and
  203  investment companies; for all administrators, executors,
  204  trustees, and other fiduciaries; for all insurance companies and
  205  associations and other persons carrying on an insurance
  206  business; and for all other persons who are now or may hereafter
  207  be authorized to invest in bonds or other obligations of the
  208  state and are shall be and constitute eligible securities to be
  209  deposited as collateral for the security of any state, county,
  210  municipal, or other public funds. This sub-subparagraph shall be
  211  considered as additional and supplemental authority and may
  212  shall not be limited without specific reference to this sub
  213  subparagraph.
  214         4.6. The corporation and its corporate existence shall
  215  continue until terminated by law; however, no such law shall
  216  take effect as long as the corporation has bonds outstanding
  217  unless adequate provision has been made for the payment of such
  218  bonds pursuant to the documents authorizing the issuance of such
  219  bonds. Upon termination of the existence of the corporation, all
  220  of its rights and properties in excess of its obligations shall
  221  pass to and be vested in the state.
  222         Section 2. Section 215.5551, Florida Statutes, is created
  223  to read:
  224         215.5551Florida Catastrophe Risk Capital Access Facility.
  225         (1) The Legislature finds that the global market for
  226  catastrophe risk has expanded dramatically, resulting in the
  227  availability of billions of dollars in additional risk capital
  228  for insurers and new and innovative alternative risk-transfer
  229  mechanisms. The Legislature also finds that having access to
  230  additional risk capital and risk-transfer mechanisms provides
  231  insurers providing coverage in this state with an opportunity to
  232  expand their capacity to write additional business and diversify
  233  their catastrophe risk. The Legislature further finds that
  234  despite an expansion in the amount of available global risk
  235  capital, small insurers, particularly smaller domestic insurers,
  236  writing property insurance in this state face substantial
  237  challenges accessing these global markets when the relatively
  238  small amount of risk finance required by any one company is not
  239  economically viable. Therefore, it is the intent of the
  240  Legislature to create a mechanism to facilitate the access of
  241  small domestic insurers to global risk capital markets and risk
  242  transfer mechanisms.
  243         (2) Effective July 1, 2013, the Florida Catastrophe Risk
  244  Capital Access Facility is created within the State Board of
  245  Administration. The facility is not defined nor may it function
  246  as an insurer, reinsurer, or other risk-bearing entity under
  247  state law.
  248         (3) The facility shall:
  249         (a) Aggregate the demand for risk finance from global
  250  capital markets among smaller volume domestic property insurance
  251  companies writing business in this state.
  252         (b) Design and execute risk-transfer tools such as
  253  insurance-linked securities and other securitization models for
  254  participating insurers, and use special purpose vehicles or
  255  protected cells, onshore or offshore, as appropriate, to
  256  increase access to risk capital.
  257         (c) Identify and coordinate appropriate risk-transfer
  258  products and opportunities, initially targeting layers of
  259  coverage below, alongside, and above the portion of the
  260  reinsurance market covered by the Florida Hurricane Catastrophe
  261  Fund.
  262         (d) Establish and maintain regular and ongoing contact with
  263  global risk capital market participants, institutions, and
  264  investors, in order to identify opportunities that satisfy and
  265  coordinate insurer demand for additional risk capital.
  266         (4) After an initial apportionment for startup purposes,
  267  the facility shall be funded entirely by participating insurers
  268  on a pro rata basis.
  269         (5) In conducting its affairs, the facility may not:
  270         (a) Take a position in, or provide financial support for,
  271  risk-transfer transactions;
  272         (b) Be a guarantor of premium or make any other financial
  273  guarantees to participating insurers;
  274         (c) Create contractual obligations on the part of the
  275  state; or
  276         (d) Levy taxes or assessments.
  277         (6) The facility shall be governed by a board of directors
  278  composed of seven members, one from the Department of Financial
  279  Services; one from the State Board of Administration; one from
  280  the Office of Insurance Regulation; three industry members
  281  representing Florida property insurance writers, the reinsurance
  282  community, and the financial securities industry; and one member
  283  appointed by a majority of the board. The board may employ or
  284  contract with such staff and professionals as the board deems
  285  necessary to accomplish its purpose.
  286         (7) There shall be no liability on the part of, and no
  287  cause of action of any nature may arise against, the facility or
  288  its agents or employees, the board of directors, or the
  289  department or office or their representatives for any action
  290  taken by them in the performance of their powers and duties
  291  under this section.
  292         (8) The facility shall submit a report to the Financial
  293  Services Commission by January 1 of each year describing
  294  facility activities and transactions undertaken by participating
  295  insurers.
  296         Section 3. Subsection (1) of section 624.155, Florida
  297  Statutes, is amended and subsection (10) is added to that
  298  section, to read:
  299         624.155 Civil remedy.—
  300         (1) Any person may bring a civil action against an insurer,
  301  including Citizens Property Insurance Corporation, if when such
  302  person is damaged:
  303         (a) By a violation of any of the following provisions by
  304  the insurer:
  305         1. Section 626.9541(1)(i), (o), or (x);
  306         2. Section 626.9551;
  307         3. Section 626.9705;
  308         4. Section 626.9706;
  309         5. Section 626.9707; or
  310         6. Section 627.7283.
  311         (b) By the commission of any of the following acts by the
  312  insurer:
  313         1. Not attempting in good faith to settle claims if when,
  314  under all the circumstances, it could and should have done so,
  315  had it acted fairly and honestly toward its insured and with due
  316  regard for her or his interests;
  317         2. Making claims payments to insureds or beneficiaries not
  318  accompanied by a statement setting forth the coverage under
  319  which payments are being made; or
  320         3. Except as to liability coverages, failing to promptly
  321  settle claims, when the obligation to settle a claim has become
  322  reasonably clear, under one portion of the insurance policy
  323  coverage in order to influence settlements under other portions
  324  of the insurance policy coverage.
  325  
  326  Notwithstanding the provisions of this subsection the above to
  327  the contrary, a person pursuing a remedy under this section need
  328  not prove that such act was committed or performed with such
  329  frequency as to indicate a general business practice.
  330         (10) For the purposes of this section, Citizens Property
  331  Insurance Corporation is an agent of the state covered under s.
  332  768.28.
  333         Section 4. Subsection (4) of section 626.752, Florida
  334  Statutes, is amended to read:
  335         626.752 Exchange of business.—
  336         (4) The foregoing limitations and restrictions do shall not
  337  be construed and shall not apply to the placing of surplus lines
  338  business under the provisions of part VIII, or to Citizens
  339  Property Insurance Corporation when placing new and renewal
  340  business with authorized insurers in order to reduce the size of
  341  the corporation pursuant to s. 627.3518.
  342         Section 5. Subsection (2) and paragraph (d) of subsection
  343  (3) of section 627.062, Florida Statutes, are amended to read:
  344         627.062 Rate standards.—
  345         (2) As to all such classes of insurance:
  346         (a) Insurers or rating organizations shall establish and
  347  use rates, rating schedules, or rating manuals that allow the
  348  insurer a reasonable rate of return on the classes of insurance
  349  written in this state. A copy of rates, rating schedules, rating
  350  manuals, premium credits or discount schedules, and surcharge
  351  schedules, and changes thereto, must be filed with the office in
  352  accordance with under one of the following procedures:
  353         1. If the filing is made at least 90 days before the
  354  proposed effective date and is not implemented during the
  355  office’s review of the filing and any proceeding and judicial
  356  review, such filing is considered a “file and use” filing. In
  357  such case, the office shall finalize its review by issuance of a
  358  notice of intent to approve or a notice of intent to disapprove
  359  within 90 days after receipt of the filing. The notice of intent
  360  to approve and the notice of intent to disapprove constitute
  361  agency action for purposes of the Administrative Procedure Act.
  362  Requests for supporting information, requests for mathematical
  363  or mechanical corrections, or notification to the insurer by the
  364  office of its preliminary findings does not toll the 90-day
  365  period during any such proceedings and subsequent judicial
  366  review. The rate shall be deemed approved if the office does not
  367  issue a notice of intent to approve or a notice of intent to
  368  disapprove within 90 days after receipt of the filing.
  369         2. If the filing is not made in accordance with
  370  subparagraph 1., such filing must be made as soon as
  371  practicable, but within 30 days after the effective date, and is
  372  considered a “use and file” filing. An insurer making a “use and
  373  file” filing is potentially subject to an order by the office to
  374  return to policyholders those portions of rates found to be
  375  excessive to policyholders, as provided in paragraph (i) (h).
  376         3. For all property insurance filings made or submitted
  377  after January 25, 2007, but before May 1, 2012, an insurer
  378  seeking a rate that is greater than the rate most recently
  379  approved by the office shall make a “file and use” filing. For
  380  purposes of this subparagraph, motor vehicle collision and
  381  comprehensive coverages are not considered property coverages.
  382         (b) Upon receiving a rate filing, the office shall review
  383  the filing to determine if a rate is excessive, inadequate, or
  384  unfairly discriminatory. In making that determination, the
  385  office shall, in accordance with generally accepted and
  386  reasonable actuarial techniques, consider the following factors:
  387         1. Past and prospective loss experience within and without
  388  this state.
  389         2. Past and prospective expenses.
  390         3. The degree of competition among insurers for the risk
  391  insured.
  392         4. Investment income reasonably expected by the insurer,
  393  consistent with the insurer’s investment practices, from
  394  investable premiums anticipated from in the filing, plus any
  395  other expected income from currently invested assets
  396  representing the amount expected on unearned premium reserves
  397  and loss reserves. The commission may adopt rules that use using
  398  reasonable techniques of actuarial science and economics to
  399  specify the manner in which insurers calculate investment income
  400  attributable to classes of insurance written in this state and
  401  the manner in which investment income is used to calculate
  402  insurance rates. Such rules manner must allow contemplate
  403  allowances for an underwriting profit factor and full
  404  consideration of investment income which produce a reasonable
  405  rate of return; however, investment income from invested surplus
  406  may not be considered.
  407         5. The reasonableness of the judgment reflected in the
  408  filing.
  409         6. Dividends, savings, or unabsorbed premium deposits
  410  allowed or returned to state Florida policyholders, members, or
  411  subscribers.
  412         7. The adequacy of loss reserves.
  413         8. The cost of reinsurance. The office may not disapprove a
  414  rate as excessive solely due solely to the insurer having
  415  obtained catastrophic reinsurance to cover the insurer’s
  416  estimated 250-year probable maximum loss or any lower level of
  417  loss, or due solely to an admitted carrier purchasing private
  418  reinsurance that would insure against potential deficits within
  419  the Florida Hurricane Catastrophe Fund which the most recent
  420  estimate made pursuant to s. 215.555(4)(c)2. predicts would be
  421  funded through revenue bonds issued under s. 215.555(6).
  422         9. Trend factors, including trends in actual losses per
  423  insured unit for the insurer making the filing.
  424         10. Conflagration and catastrophe hazards, if applicable.
  425         11. Projected hurricane losses, if applicable, which must
  426  be estimated using a model or method found to be acceptable or
  427  reliable by the Florida Commission on Hurricane Loss Projection
  428  Methodology, and as further provided in s. 627.0628.
  429         12. A reasonable margin for underwriting profit and
  430  contingencies.
  431         13. The cost of medical services, if applicable.
  432         14. Other relevant factors that affect the frequency or
  433  severity of claims or expenses.
  434         (c) The office shall calculate and publish insurance
  435  inflation factors based on noncatastrophe direct loss costs for
  436  use in residential property insurance filings. The office shall
  437  update the published factors at least annually and make them
  438  available on its website. The calculation of insurance inflation
  439  factors are not subject to rulemaking under chapter 120.
  440         1. An insurer making a residential property insurance rate
  441  filing that proposes a change in noncatastrophe base rates by a
  442  uniform factor equal to or less than the applicable published
  443  insurance inflation factor, may make a rate filing under s.
  444  627.0645 which consists of a rate certification in lieu of a
  445  full rate filing under paragraph (a). The office shall verify
  446  insurer use of the appropriate published inflation factor and,
  447  if the inflation factor is used appropriately, the filed rates
  448  shall be deemed not excessive.
  449         2. An insurer filing under this paragraph may make a
  450  separate filing pursuant to paragraph (l) to adjust its rates
  451  for reinsurance rates, reinsurance financing costs and products,
  452  and cash buildup factor costs. The insurance inflation factors
  453  do not apply to these filings.
  454         3. This paragraph does not apply to filings made by
  455  Citizens Property Insurance Corporation.
  456         (d)(c) In the case of fire insurance rates, consideration
  457  must be given to the availability of water supplies and the
  458  experience of the fire insurance business during a period of not
  459  less than the most recent 5-year or longer period for which such
  460  experience is available.
  461         (e)(d) If conflagration or catastrophe hazards are
  462  considered by an insurer in its rates or rating plan, including
  463  surcharges and discounts, the insurer must shall establish a
  464  reserve for that portion of the premium allocated to such hazard
  465  and maintain the premium in a catastrophe reserve. Removal of
  466  such premiums from the reserve for purposes other than paying
  467  claims associated with a catastrophe or purchasing reinsurance
  468  for catastrophes must be approved by the office. Any ceding
  469  commission received by an insurer purchasing reinsurance for
  470  catastrophes must be placed in the catastrophe reserve.
  471         (f)(e) After consideration of the rate factors provided in
  472  paragraphs (b), (c), and (d), and (e) the office may find a rate
  473  to be excessive, inadequate, or unfairly discriminatory based
  474  upon the following standards:
  475         1. Rates shall be deemed excessive if they are likely to
  476  produce a profit from Florida business which is unreasonably
  477  high in relation to the risk involved in the class of business
  478  or if expenses are unreasonably high in relation to services
  479  rendered.
  480         2. Rates shall be deemed excessive if, among other things,
  481  the rate structure established by a stock insurance company
  482  provides for replenishment of surpluses from premiums, if the
  483  such replenishment is attributable to investment losses.
  484         3. Rates shall be deemed inadequate if they are clearly
  485  insufficient, together with the investment income attributable
  486  to them, they are clearly insufficient to sustain projected
  487  losses and expenses in the class of business to which they
  488  apply.
  489         4. A rating plan, including discounts, credits, or
  490  surcharges, shall be deemed unfairly discriminatory if it fails
  491  to clearly and equitably reflect consideration of the
  492  policyholder’s participation in a risk management program
  493  adopted pursuant to s. 627.0625.
  494         5. A rate shall be deemed inadequate as to the premium
  495  charged to a risk or group of risks if discounts or credits are
  496  allowed which exceed a reasonable reflection of expense savings
  497  and reasonably expected loss experience from the risk or group
  498  of risks.
  499         6. A rate shall be deemed unfairly discriminatory as to a
  500  risk or group of risks if the application of premium discounts,
  501  credits, or surcharges among such risks does not bear a
  502  reasonable relationship to the expected loss and expense
  503  experience among the various risks.
  504         (g)(f) In reviewing a rate filing, the office may require
  505  the insurer to provide, at the insurer’s expense, all
  506  information necessary to evaluate the condition of the company
  507  and the reasonableness of the filing according to the criteria
  508  enumerated in this section.
  509         (h)(g) The office may at any time review a rate, rating
  510  schedule, rating manual, or rate change; the pertinent records
  511  of the insurer; and market conditions. If the office finds on a
  512  preliminary basis that a rate may be excessive, inadequate, or
  513  unfairly discriminatory, the office shall initiate proceedings
  514  to disapprove the rate and shall so notify the insurer. However,
  515  the office may not disapprove as excessive any rate for which it
  516  has given final approval or which has been deemed approved for 1
  517  year after the effective date of the filing unless the office
  518  finds that a material misrepresentation or material error was
  519  made by the insurer or was contained in the filing. Upon
  520  notification being notified, the insurer or rating organization
  521  shall, within 60 days, file with the office all information
  522  that, in the belief of the insurer or organization, proves the
  523  reasonableness, adequacy, and fairness of the rate or rate
  524  change. The office shall issue a notice of intent to approve or
  525  a notice of intent to disapprove pursuant to paragraph (a)
  526  within 90 days after receipt of the insurer’s initial response.
  527  In such instances and in any administrative proceeding relating
  528  to the legality of the rate, the insurer or rating organization
  529  shall carry the burden of proof of showing, by a preponderance
  530  of the evidence, to show that the rate is not excessive,
  531  inadequate, or unfairly discriminatory. After the office
  532  notifies an insurer that a rate may be excessive, inadequate, or
  533  unfairly discriminatory, unless the office withdraws the
  534  notification, the insurer may not alter the rate except to
  535  conform to the office’s notice until the earlier of 120 days
  536  after the date the notification was provided or 180 days after
  537  the date of implementing the rate. The office, Subject to
  538  chapter 120, the office may disapprove without the 60-day
  539  notification any rate increase filed by an insurer within the
  540  prohibited time period or during the time that the legality of
  541  the increased rate is being contested.
  542         (i)(h) If the office finds that a rate or rate change is
  543  excessive, inadequate, or unfairly discriminatory, the office
  544  shall issue an order of disapproval requiring specifying that a
  545  new rate or rate schedule, which responds to the findings of the
  546  office, be filed by the insurer. The office shall further order,
  547  for any “use and file” filing made in accordance with
  548  subparagraph (a)2., that the portion of premiums charged which
  549  constitute each policyholder constituting the portion of the
  550  rate above that which was actuarially justified be returned to
  551  the policyholder in the form of a credit or refund. If the
  552  office finds that an insurer’s rate or rate change is
  553  inadequate, the new rate or rate schedule filed with the office
  554  in response to such a finding applies is applicable only to new
  555  or renewal business of the insurer written by the insurer on or
  556  after the effective date of the responsive filing.
  557         (j)(i) Except as otherwise specifically provided in this
  558  chapter, for property and casualty insurance the office may not
  559  directly or indirectly:
  560         1. Prohibit an any insurer, including any residual market
  561  plan or joint underwriting association, from paying acquisition
  562  costs based on the full amount of premium, as defined in s.
  563  627.403, applicable to any policy, or prohibit any such insurer
  564  from including the full amount of acquisition costs in a rate
  565  filing; or
  566         2. Impede, abridge, or otherwise compromise an insurer’s
  567  right to acquire policyholders, advertise, or appoint agents,
  568  including the calculation, manner, or amount of such agent
  569  commissions, if any.
  570         (k)(j) With respect to residential property insurance rate
  571  filings, the rate filing must account for mitigation measures
  572  undertaken by policyholders to reduce hurricane losses.
  573         (l)(k)1. A residential property insurer may make a separate
  574  filing limited solely to an adjustment of its rates for
  575  reinsurance, the cost of financing products used as a
  576  replacement for reinsurance, financing costs incurred in the
  577  purchase of reinsurance, and the actual cost paid due to the
  578  application of the cash build-up factor pursuant to s.
  579  215.555(5)(b) if the insurer:
  580         a. Elects to purchase financing products, such as a
  581  liquidity instrument or line of credit, in which case the cost
  582  included in filing for the liquidity instrument or line of
  583  credit may not result in a premium increase exceeding 3 percent
  584  for any individual policyholder. All costs contained in the
  585  filing may not result in an overall premium increase of more
  586  than 15 percent for any individual policyholder.
  587         b. Includes in the filing a copy of all of its reinsurance,
  588  liquidity instrument, or line of credit contracts; proof of the
  589  billing or payment for the contracts; and the calculation upon
  590  which the proposed rate change is based demonstrating that the
  591  costs meet the criteria of this section.
  592         2. An insurer that purchases reinsurance or financing
  593  products from an affiliated company may make a separate filing
  594  only if the costs for such reinsurance or financing products are
  595  charged at or below charges made for comparable coverage by
  596  nonaffiliated reinsurers or financial entities making such
  597  coverage or financing products available in this state.
  598         3. An insurer may make only one filing per 12-month period
  599  under this paragraph.
  600         4. An insurer that elects to implement a rate change under
  601  this paragraph must file its rate filing with the office at
  602  least 45 days before the effective date of the rate change.
  603  After an insurer submits a complete filing that meets all of the
  604  requirements of this paragraph, the office has 45 days after the
  605  date of the filing to review the rate filing and determine if
  606  the rate is excessive, inadequate, or unfairly discriminatory.
  607  
  608  The provisions of this subsection do not apply to workers’
  609  compensation, employer’s liability insurance, and motor vehicle
  610  insurance.
  611         (3)
  612         (d)1. The following categories or kinds of insurance and
  613  types of commercial lines risks are not subject to paragraph
  614  (2)(a) or paragraph (2)(g) (2)(f):
  615         a. Excess or umbrella.
  616         b. Surety and fidelity.
  617         c. Boiler and machinery and leakage and fire extinguishing
  618  equipment.
  619         d. Errors and omissions.
  620         e. Directors and officers, employment practices, fiduciary
  621  liability, and management liability.
  622         f. Intellectual property and patent infringement liability.
  623         g. Advertising injury and Internet liability insurance.
  624         h. Property risks rated under a highly protected risks
  625  rating plan.
  626         i. General liability.
  627         j. Nonresidential property, except for collateral
  628  protection insurance as defined in s. 624.6085.
  629         k. Nonresidential multiperil.
  630         l. Excess property.
  631         m. Burglary and theft.
  632         n. Any other commercial lines categories or kinds of
  633  insurance or types of commercial lines risks that the office
  634  determines should not be subject to paragraph (2)(a) or
  635  paragraph (2)(g) (2)(f) because of the existence of a
  636  competitive market for such insurance, similarity of such
  637  insurance to other categories or kinds of insurance not subject
  638  to paragraph (2)(a) or paragraph (2)(g) (2)(f), or to improve
  639  the general operational efficiency of the office.
  640         2. Insurers or rating organizations shall establish and use
  641  rates, rating schedules, or rating manuals that to allow the
  642  insurer a reasonable rate of return on insurance and risks
  643  described in subparagraph 1. which are written in this state.
  644         3. An insurer must notify the office of any changes to
  645  rates for insurance and risks described in subparagraph 1.
  646  within 30 days after the effective date of the change. The
  647  notice must include the name of the insurer, the type or kind of
  648  insurance subject to rate change, total premium written during
  649  the immediately preceding year by the insurer for the type or
  650  kind of insurance subject to the rate change, and the average
  651  statewide percentage change in rates. Underwriting files,
  652  premiums, losses, and expense statistics relating with regard to
  653  such insurance and risks written by an insurer must be
  654  maintained by the insurer and subject to examination by the
  655  office. Upon examination, the office, in accordance with
  656  generally accepted and reasonable actuarial techniques, shall
  657  consider the rate factors in paragraphs (2)(b), (d) (c), and (e)
  658  (d) and the standards in paragraph (2)(f) (2)(e) to determine if
  659  the rate is excessive, inadequate, or unfairly discriminatory.
  660         4. A rating organization must notify the office of any
  661  changes to loss cost for insurance and risks described in
  662  subparagraph 1. within 30 days after the effective date of the
  663  change. The notice must include the name of the rating
  664  organization, the type or kind of insurance subject to a loss
  665  cost change, loss costs during the immediately preceding year
  666  for the type or kind of insurance subject to the loss cost
  667  change, and the average statewide percentage change in loss
  668  cost. Actuarial data relating with regard to changes to loss
  669  cost for risks not subject to paragraph (2)(a) or paragraph
  670  (2)(g) (2)(f) must be maintained by the rating organization for
  671  2 years after the effective date of the change and are subject
  672  to examination by the office. The office may require the rating
  673  organization to incur the costs associated with an examination.
  674  Upon examination, the office, in accordance with generally
  675  accepted and reasonable actuarial techniques, shall consider the
  676  rate factors in paragraphs (2)(b), (d), and (e) (2)(b)-(d) and
  677  the standards in paragraph (2)(f) (2)(e) to determine if the
  678  rate is excessive, inadequate, or unfairly discriminatory.
  679         Section 6. Paragraphs (a) and (b) of subsection (3) of
  680  section 627.0628, Florida Statutes, are amended to read:
  681         627.0628 Florida Commission on Hurricane Loss Projection
  682  Methodology; public records exemption; public meetings
  683  exemption.—
  684         (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
  685         (a) The commission shall consider any actuarial methods,
  686  principles, standards, models, or output ranges that have the
  687  potential for improving the accuracy of or reliability of the
  688  hurricane loss projections and wind mitigation discounts used in
  689  residential property insurance rate filings. The commission
  690  shall, from time to time, adopt findings as to the accuracy or
  691  reliability of particular methods, principles, standards,
  692  models, or output ranges.
  693         (b) The commission shall consider any actuarial methods,
  694  principles, standards, or models that have the potential for
  695  improving the accuracy of or reliability of projecting probable
  696  maximum loss levels. The commission shall adopt findings as to
  697  the accuracy or reliability of particular methods, principles,
  698  standards, or models related to probable maximum loss
  699  calculations. The commission shall review models for accuracy of
  700  use when establishing wind mitigation discounts.
  701         Section 7. Subsections (1) and (6) of section 627.0629,
  702  Florida Statutes, are amended to read:
  703         627.0629 Residential property insurance; rate filings.—
  704         (1) It is the intent of the Legislature that insurers
  705  provide savings to consumers who install or implement windstorm
  706  damage mitigation techniques, alterations, or solutions to their
  707  properties to prevent windstorm losses. A rate filing for
  708  residential property insurance must include notice of the
  709  mitigation discounts offered by the insurer, which must be
  710  actuarially reasonable discounts, credits, or other rate
  711  differentials, or appropriate reductions in deductibles, for
  712  properties on which fixtures or construction techniques
  713  demonstrated to reduce the amount of loss in a windstorm have
  714  been installed or implemented. The fixtures or construction
  715  techniques must include, but are not limited to, fixtures or
  716  construction techniques that enhance roof strength, roof
  717  covering performance, roof-to-wall strength, wall-to-floor-to
  718  foundation strength, opening protection, and the impact
  719  resistance of window, door, and skylight openings strength.
  720  Credits, discounts, or other rate differentials, or appropriate
  721  reductions in deductibles, for fixtures and construction
  722  techniques that meet the minimum requirements of the Florida
  723  Building Code must be included in the rate filing. The office
  724  shall determine the discounts, credits, other rate
  725  differentials, and appropriate reductions in deductibles that
  726  reflect the full actuarial value of such revaluation, which may
  727  be used by insurers in rate filings.
  728         (6) The office may hold a public hearing for a any rate
  729  filing that is based in whole or in part on data from a computer
  730  model which exceeds may not exceed 15 percent in counties the
  731  office determines do not have a reasonable degree of competition
  732  unless there is a public hearing.
  733         Section 8. Section 627.171, Florida Statutes, is amended to
  734  read:
  735         627.171 Excess rates.—
  736         (1) With the written consent of the insured signed before
  737  prior to the policy inception date and filed with the insurer,
  738  the insurer may use a rate in excess of the otherwise applicable
  739  filed rate on any specific risk. The signed consent form is
  740  valid for subsequent renewals and must include the filed rate as
  741  well as the excess rate for the risk insured., and A copy of the
  742  form must be maintained by the insurer for 3 years and be
  743  available for review by the office.
  744         (2) In those counties in which the office has determined
  745  there is not a reasonable degree of competition, an insurer may
  746  not use excess rates authorized under pursuant to this section
  747  for more than 10 percent of its commercial insurance policies
  748  written or renewed in each calendar year for any line of
  749  commercial insurance or for more than 5 percent of its personal
  750  lines insurance policies written or renewed in each calendar
  751  year for any line of personal insurance. In determining the 10
  752  percent limitation for commercial insurance policies, the
  753  insurer shall exclude a any workers’ compensation policy that
  754  was written for an employer who had coverage in the joint
  755  underwriting plan created by s. 627.311(5) immediately before
  756  prior to the writing of the policy by the insurer and a any
  757  workers’ compensation policy that was written for an employer
  758  who had been offered coverage in the joint underwriting plan but
  759  who was written a policy by the insurer in lieu of accepting the
  760  joint underwriting plan policy. Such These workers’ compensation
  761  policies shall be excluded from the 10-percent limitation for
  762  the first 3 years of coverage.
  763         Section 9. Paragraphs (a), (b), (c), (g), (i), (m), (q),
  764  and (z) of subsection (6) of section 627.351, Florida Statutes,
  765  are amended to read:
  766         627.351 Insurance risk apportionment plans.—
  767         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  768         (a) The public purpose of this subsection is to ensure that
  769  there is an orderly market for property insurance for residents
  770  and businesses of this state.
  771         1. The Legislature finds that private insurers are entering
  772  the Florida property insurance market unwilling or unable to
  773  provide affordable property insurance coverage in many regions
  774  of the state. The Legislature further finds that when Citizens
  775  Property Insurance Corporation offers rates that are not
  776  adequate to cover the average costs that are generated from the
  777  claims filed by its policyholders, the deficiency may create a
  778  financial burden on all other state policyholders who must
  779  purchase their own insurance from private insurers at full
  780  actuarial cost and pay an added fee to cover a portion of the
  781  cost for claims filed by policyholders of the corporation. The
  782  Legislature intends that the corporation not act as a barrier or
  783  competitor to the private insurance market but be available to
  784  residents of in this state only if there is no private market
  785  coverage available at rates determined reasonable by the Office
  786  of Insurance Regulation to the extent sought and needed. The
  787  absence of affordable property insurance threatens the public
  788  health, safety, and welfare and likewise threatens the economic
  789  health of the state. As the corporation has continued its rapid
  790  growth and exposure, it increasingly threatens state residents
  791  with having to absorb an even greater financial burden than they
  792  are currently bearing. The state, therefore, has a compelling
  793  public interest and a public purpose to assist in assuring that
  794  property in the state is insured and that it is insured at
  795  affordable, actuarially sound, noncompetitive rates so as to
  796  facilitate the remediation, reconstruction, and replacement of
  797  damaged or destroyed property without overburdening the
  798  policyholders of this state in order to reduce or avoid the
  799  negative effects on otherwise resulting to the public health,
  800  safety, and welfare; on, to the economy of the state; and on,
  801  and to the revenues of the state and local governments which are
  802  needed to provide for the public welfare. It is necessary,
  803  therefore, to make provide affordable, actuarially sound,
  804  noncompetitive property insurance available to applicants who
  805  are, in good faith, entitled to procure insurance through the
  806  voluntary market but are unable to do so. The Legislature
  807  intends, therefore, that affordable, actuarially sound,
  808  noncompetitive property insurance be provided and that it
  809  continue to be provided, as long as necessary, through Citizens
  810  Property Insurance Corporation, a government entity that is an
  811  integral part of the state, and that is not a private insurance
  812  company, or through referrals to private insurers participating
  813  in a clearinghouse established by the corporation. To that end,
  814  the corporation shall strive to promote increase the
  815  availability of affordable and actuarially sound private
  816  property insurance in this state, supplemented by coverage
  817  provided by the corporation if appropriate, while achieving
  818  efficiencies and economies, and while providing service to
  819  policyholders, applicants, and agents which is no less than the
  820  quality generally provided in the voluntary market, for the
  821  achievement of the foregoing public purposes. Because it is
  822  essential for this government entity to have the maximum
  823  financial resources to pay claims following a catastrophic
  824  hurricane, it is further the intent of the Legislature that the
  825  corporation continue to be an integral part of the state and not
  826  a private insurance company, and that the income of the
  827  corporation be exempt from federal income taxation, and that
  828  interest on the debt obligations issued by the corporation be
  829  exempt from federal income taxation.
  830         2. The Residential Property and Casualty Joint Underwriting
  831  Association originally created by this statute shall be known as
  832  the Citizens Property Insurance Corporation. The corporation
  833  shall provide insurance for residential and commercial property
  834  insurance, for applicants who are eligible entitled, but, in
  835  good faith, are unable to procure insurance through the
  836  voluntary market. The corporation shall operate pursuant to a
  837  plan of operation approved by order of the Financial Services
  838  Commission. The plan is subject to continuous review by the
  839  commission, and. the commission may, by order, withdraw approval
  840  of all or part of a plan if the commission determines that
  841  conditions have changed since approval was granted and that the
  842  purposes of the plan require changes in the plan. For the
  843  purposes of this subsection, residential coverage includes both
  844  personal lines residential coverage, which consists of the type
  845  of coverage provided by homeowner’s, mobile home owner’s,
  846  dwelling, tenant’s, condominium unit owner’s, and similar
  847  policies; and commercial lines residential coverage, which
  848  consists of the type of coverage provided by condominium
  849  association, apartment building, and similar policies.
  850         3. With respect to coverage for personal lines residential
  851  structures:
  852         a. Effective January 1, 2014 2009, a personal lines
  853  residential structure that has a dwelling replacement cost of $1
  854  $2 million or more, or a single condominium unit that has a
  855  combined dwelling and contents replacement cost of $1 $2 million
  856  or more is not eligible for coverage by the corporation. Such
  857  dwellings insured by the corporation on December 31, 2013 2008,
  858  may continue to be covered by the corporation until the end of
  859  the policy term. However, such dwellings may reapply and obtain
  860  coverage if the property owner provides the corporation with a
  861  sworn affidavit from one or more insurance agents, on a form
  862  provided by the corporation, stating that the agents have made
  863  their best efforts to obtain coverage and that the property has
  864  been rejected for coverage by at least one authorized insurer
  865  and at least three surplus lines insurers. If such conditions
  866  are met, the dwelling may be insured by the corporation for up
  867  to 3 years, after which time the dwelling is ineligible for
  868  coverage. The office shall approve the method used by the
  869  corporation for valuing the dwelling replacement costs under
  870  cost for the purposes of this subparagraph. If a policyholder is
  871  insured by the corporation before prior to being determined to
  872  be ineligible pursuant to this subparagraph and such
  873  policyholder files a lawsuit challenging the determination, the
  874  policyholder may remain insured by the corporation until the
  875  conclusion of the litigation.
  876         b. Effective January 1, 2015, a structure that has a
  877  dwelling replacement cost of $900,000 or more, or a single
  878  condominium unit that has a combined dwelling and contents
  879  replacement cost of $900,000 or more, is not eligible for
  880  coverage by the corporation. Such dwellings insured by the
  881  corporation on December 31, 2014, may continue to be covered by
  882  the corporation until the end of the policy term.
  883         c. Effective January 1, 2016, a structure that has a
  884  dwelling replacement cost of $800,000 or more, or a single
  885  condominium unit that has a combined dwelling and contents
  886  replacement cost of $800,000 or more, is not eligible for
  887  coverage by the corporation. Such dwellings insured by the
  888  corporation on December 31, 2015, may continue to be covered by
  889  the corporation until the end of the policy term.
  890         d. Effective January 1, 2017, a structure that has a
  891  dwelling replacement cost of $700,000 or more, or a single
  892  condominium unit that has a combined dwelling and contents
  893  replacement cost of $700,000 or more, is not eligible for
  894  coverage by the corporation. Such dwellings insured by the
  895  corporation on December 31, 2016, may continue to be covered by
  896  the corporation until the end of the policy term.
  897         e. Effective January 1, 2018, a structure that has a
  898  dwelling replacement cost of $600,000 or more, or a single
  899  condominium unit that has a combined dwelling and contents
  900  replacement cost of $600,000 or more, is not eligible for
  901  coverage by the corporation. Such dwellings insured by the
  902  corporation on December 31, 2017, may continue to be covered by
  903  the corporation until the end of the policy term.
  904         f. Effective January 1, 2019, a structure that has a
  905  dwelling replacement cost of $500,000 or more, or a single
  906  condominium unit that has a combined dwelling and contents
  907  replacement cost of $500,000 or more, is not eligible for
  908  coverage by the corporation. Such dwellings insured by the
  909  corporation on December 31, 2018, may continue to be covered by
  910  the corporation until the end of the policy term.
  911         4. It is the intent of the Legislature that policyholders,
  912  applicants, and agents of the corporation receive service and
  913  treatment of the highest possible level but never less than that
  914  generally provided in the voluntary market. It is also intended
  915  that the corporation be held to service standards no less than
  916  those applied to insurers in the voluntary market by the office
  917  with respect to responsiveness, timeliness, customer courtesy,
  918  and overall dealings with policyholders, applicants, or agents
  919  of the corporation.
  920         5. Any structure for which a notice of commencement has
  921  been issued on or after July 1, 2013, pursuant to s. 713.135,
  922  which is located seaward of the coastal construction control
  923  line created pursuant to s. 161.053, is ineligible for coverage
  924  through the corporation unless the structure meets the coastal
  925  code-plus building code criteria developed and recommended by
  926  the Florida Building Commission. Effective January 1, 2009, a
  927  personal lines residential structure that is located in the
  928  “wind-borne debris region,” as defined in s. 1609.2,
  929  International Building Code (2006), and that has an insured
  930  value on the structure of $750,000 or more is not eligible for
  931  coverage by the corporation unless the structure has opening
  932  protections as required under the Florida Building Code for a
  933  newly constructed residential structure in that area. A
  934  residential structure shall be deemed to comply with this
  935  subparagraph if it has shutters or opening protections on all
  936  openings and if such opening protections complied with the
  937  Florida Building Code at the time they were installed.
  938         6. For any claim filed under any policy of the corporation,
  939  a public adjuster may not charge, agree to, or accept any
  940  compensation, payment, commission, fee, or other thing of value
  941  greater than 10 percent of the additional amount actually paid
  942  over the amount that was originally offered by the corporation
  943  for any one claim.
  944         (b)1. All insurers authorized to write one or more subject
  945  lines of business in this state are subject to assessment by the
  946  corporation and, for the purposes of this subsection, are
  947  referred to collectively as “assessable insurers.” Insurers
  948  writing one or more subject lines of business in this state
  949  pursuant to part VIII of chapter 626 are not assessable
  950  insurers; however, but insureds who procure one or more subject
  951  lines of business in this state pursuant to part VIII of chapter
  952  626 are subject to assessment by the corporation and are
  953  referred to collectively as “assessable insureds.” An insurer’s
  954  assessment liability begins on the first day of the calendar
  955  year following the year in which the insurer was issued a
  956  certificate of authority to transact insurance for subject lines
  957  of business in this state and terminates 1 year after the end of
  958  the first calendar year during which the insurer no longer holds
  959  a certificate of authority to transact insurance for subject
  960  lines of business in this state.
  961         2.a. All revenues, assets, liabilities, losses, and
  962  expenses of the corporation shall be divided into three separate
  963  accounts as follows:
  964         (I) A personal lines account for personal residential
  965  policies issued by the corporation, or issued by the Residential
  966  Property and Casualty Joint Underwriting Association and renewed
  967  by the corporation, which provides comprehensive, multiperil
  968  coverage on risks that are not located in areas eligible for
  969  coverage by the Florida Windstorm Underwriting Association as
  970  those areas were defined on January 1, 2002, and for policies
  971  that do not provide coverage for the peril of wind on risks that
  972  are located in such areas;
  973         (II) A commercial lines account for commercial residential
  974  and commercial nonresidential policies issued by the
  975  corporation, or issued by the Residential Property and Casualty
  976  Joint Underwriting Association and renewed by the corporation,
  977  which provides coverage for basic property perils on risks that
  978  are not located in areas eligible for coverage by the Florida
  979  Windstorm Underwriting Association as those areas were defined
  980  on January 1, 2002, and for policies that do not provide
  981  coverage for the peril of wind on risks that are located in such
  982  areas; and
  983         (III) A coastal account for personal residential policies
  984  and commercial residential and commercial nonresidential
  985  property policies issued by the corporation, or transferred to
  986  the corporation, which provides coverage for the peril of wind
  987  on risks that are located in areas eligible for coverage by the
  988  Florida Windstorm Underwriting Association as those areas were
  989  defined on January 1, 2002. The corporation may offer policies
  990  that provide multiperil coverage and the corporation shall
  991  continue to offer policies that provide coverage only for the
  992  peril of wind for risks located in areas eligible for coverage
  993  in the coastal account. In issuing multiperil coverage, the
  994  corporation may use its approved policy forms and rates for the
  995  personal lines account. An applicant or insured who is eligible
  996  to purchase a multiperil policy from the corporation may
  997  purchase a multiperil policy from an authorized insurer without
  998  prejudice to the applicant’s or insured’s eligibility to
  999  prospectively purchase a policy that provides coverage only for
 1000  the peril of wind from the corporation. An applicant or insured
 1001  who is eligible for a corporation policy that provides coverage
 1002  only for the peril of wind may elect to purchase or retain such
 1003  policy and also purchase or retain coverage excluding wind from
 1004  an authorized insurer without prejudice to the applicant’s or
 1005  insured’s eligibility to prospectively purchase a policy that
 1006  provides multiperil coverage from the corporation. It is the
 1007  goal of the Legislature that there be an overall average savings
 1008  of 10 percent or more for a policyholder who currently has a
 1009  wind-only policy with the corporation, and an ex-wind policy
 1010  with a voluntary insurer or the corporation, and who obtains a
 1011  multiperil policy from the corporation. It is the intent of the
 1012  Legislature that the offer of multiperil coverage in the coastal
 1013  account be made and implemented in a manner that does not
 1014  adversely affect the tax-exempt status of the corporation or
 1015  creditworthiness of or security for currently outstanding
 1016  financing obligations or credit facilities of the coastal
 1017  account, the personal lines account, or the commercial lines
 1018  account. The coastal account must also include quota share
 1019  primary insurance under subparagraph (c)2. The area eligible for
 1020  coverage under the coastal account also includes the area within
 1021  Port Canaveral, which is bordered on the south by the City of
 1022  Cape Canaveral, bordered on the west by the Banana River, and
 1023  bordered on the north by Federal Government property.
 1024         b. The three separate accounts must be maintained as long
 1025  as financing obligations entered into by the Florida Windstorm
 1026  Underwriting Association or Residential Property and Casualty
 1027  Joint Underwriting Association are outstanding, in accordance
 1028  with the terms of the corresponding financing documents. If the
 1029  financing obligations are no longer outstanding, the corporation
 1030  may use a single account for all revenues, assets, liabilities,
 1031  losses, and expenses of the corporation. Consistent with this
 1032  subparagraph and prudent investment policies that minimize the
 1033  cost of carrying debt, the board shall exercise its best efforts
 1034  to retire existing debt or obtain the approval of necessary
 1035  parties to amend the terms of existing debt, in order so as to
 1036  structure the most efficient plan for consolidating to
 1037  consolidate the three separate accounts into a single account.
 1038         c. Creditors of the Residential Property and Casualty Joint
 1039  Underwriting Association and the accounts specified in sub-sub
 1040  subparagraphs a.(I) and (II) may have a claim against, and
 1041  recourse to, those accounts and no claim against, or recourse
 1042  to, the account referred to in sub-sub-subparagraph a.(III).
 1043  Creditors of the Florida Windstorm Underwriting Association have
 1044  a claim against, and recourse to, the account referred to in
 1045  sub-sub-subparagraph a.(III) and no claim against, or recourse
 1046  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
 1047  (II).
 1048         d. Revenues, assets, liabilities, losses, and expenses not
 1049  attributable to particular accounts shall be prorated among the
 1050  accounts.
 1051         e. The Legislature finds that the revenues of the
 1052  corporation are revenues that are necessary to meet the
 1053  requirements set forth in documents authorizing the issuance of
 1054  bonds under this subsection.
 1055         f. The income of the corporation may not inure to the
 1056  benefit of any private person.
 1057         3. With respect to a deficit in an account:
 1058         a. After accounting for the Citizens policyholder surcharge
 1059  imposed under sub-subparagraph i., if the remaining projected
 1060  deficit incurred in the coastal account in a particular calendar
 1061  year:
 1062         (I) Is not greater than 2 percent of the aggregate
 1063  statewide direct written premium for the subject lines of
 1064  business for the prior calendar year, the entire deficit shall
 1065  be recovered through regular assessments of assessable insurers
 1066  under paragraph (q) and assessable insureds.
 1067         (II) Exceeds 2 percent of the aggregate statewide direct
 1068  written premium for the subject lines of business for the prior
 1069  calendar year, the corporation shall levy regular assessments on
 1070  assessable insurers under paragraph (q) and on assessable
 1071  insureds in an amount equal to the greater of 2 percent of the
 1072  projected deficit or 2 percent of the aggregate statewide direct
 1073  written premium for the subject lines of business for the prior
 1074  calendar year. Any remaining projected deficit shall be
 1075  recovered through emergency assessments under sub-subparagraph
 1076  d.
 1077         b. Each assessable insurer’s share of the amount being
 1078  assessed under sub-subparagraph a. must be in the proportion
 1079  that the assessable insurer’s direct written premium for the
 1080  subject lines of business for the year preceding the assessment
 1081  bears to the aggregate statewide direct written premium for the
 1082  subject lines of business for that year. The assessment
 1083  percentage applicable to each assessable insured is the ratio of
 1084  the amount being assessed under sub-subparagraph a. to the
 1085  aggregate statewide direct written premium for the subject lines
 1086  of business for the prior year. Assessments levied by the
 1087  corporation on assessable insurers under sub-subparagraph a.
 1088  must be paid as required by the corporation’s plan of operation
 1089  and paragraph (q). Assessments levied by the corporation on
 1090  assessable insureds under sub-subparagraph a. shall be collected
 1091  by the surplus lines agent at the time the surplus lines agent
 1092  collects the surplus lines tax required by s. 626.932, and paid
 1093  to the Florida Surplus Lines Service Office at the time the
 1094  surplus lines agent pays the surplus lines tax to that office.
 1095  Upon receipt of regular assessments from surplus lines agents,
 1096  the Florida Surplus Lines Service Office shall transfer the
 1097  assessments directly to the corporation as determined by the
 1098  corporation.
 1099         c. After accounting for the Citizens policyholder surcharge
 1100  imposed under sub-subparagraph i., the remaining projected
 1101  deficits in the personal lines account and in the commercial
 1102  lines account in a particular calendar year shall be recovered
 1103  through emergency assessments under sub-subparagraph d.
 1104         d. Upon a determination by the executive director, with the
 1105  concurrence of the board of governors, that a projected deficit
 1106  in an account exceeds the amount that is expected to be
 1107  recovered through regular assessments under sub-subparagraph a.,
 1108  plus the amount that is expected to be recovered through
 1109  policyholder surcharges under sub-subparagraph i., the executive
 1110  director, with concurrence by the board, after verification by
 1111  the office and approval by the Financial Services Commission,
 1112  shall levy emergency assessments for as many years as necessary
 1113  to cover the deficits, to be collected by assessable insurers
 1114  and the corporation and collected from assessable insureds upon
 1115  issuance or renewal of policies for subject lines of business,
 1116  excluding National Flood Insurance policies. The amount
 1117  collected in a particular year must be a uniform percentage of
 1118  that year’s direct written premium for subject lines of business
 1119  and all accounts of the corporation, excluding National Flood
 1120  Insurance Program policy premiums, as annually determined by the
 1121  executive director, with concurrence by the board, and verified
 1122  by the office. The office shall verify the arithmetic
 1123  calculations involved in the board’s determination within 30
 1124  days after receipt of the information on which the determination
 1125  was based. The office shall notify assessable insurers and the
 1126  Florida Surplus Lines Service Office of the date on which
 1127  assessable insurers shall begin to collect and assessable
 1128  insureds shall begin to pay such assessment. The date must be at
 1129  least may be not less than 90 days after the date the
 1130  corporation levies emergency assessments pursuant to this sub
 1131  subparagraph. Notwithstanding any other provision of law, the
 1132  corporation and each assessable insurer that writes subject
 1133  lines of business shall collect emergency assessments from its
 1134  policyholders without such obligation being affected by any
 1135  credit, limitation, exemption, or deferment. Emergency
 1136  assessments levied by the corporation on assessable insureds
 1137  shall be collected by the surplus lines agent at the time the
 1138  surplus lines agent collects the surplus lines tax required by
 1139  s. 626.932 and paid to the Florida Surplus Lines Service Office
 1140  at the time the surplus lines agent pays the surplus lines tax
 1141  to that office. The emergency assessments collected shall be
 1142  transferred directly to the corporation on a periodic basis as
 1143  determined by the corporation and held by the corporation solely
 1144  in the applicable account. The aggregate amount of emergency
 1145  assessments levied for an account under this sub-subparagraph in
 1146  any calendar year may be less than but not exceed the greater of
 1147  10 percent of the amount needed to cover the deficit, plus
 1148  interest, fees, commissions, required reserves, and other costs
 1149  associated with financing the original deficit, or 10 percent of
 1150  the aggregate statewide direct written premium for subject lines
 1151  of business and all accounts of the corporation for the prior
 1152  year, plus interest, fees, commissions, required reserves, and
 1153  other costs associated with financing the deficit.
 1154         e. The corporation may pledge the proceeds of assessments,
 1155  projected recoveries from the Florida Hurricane Catastrophe
 1156  Fund, other insurance and reinsurance recoverables, policyholder
 1157  surcharges and other surcharges, and other funds available to
 1158  the corporation as the source of revenue for and to secure bonds
 1159  issued under paragraph (q), bonds or other indebtedness issued
 1160  under subparagraph (c)3., or lines of credit or other financing
 1161  mechanisms issued or created under this subsection, or to retire
 1162  any other debt incurred as a result of deficits or events giving
 1163  rise to deficits, or in any other way that the executive
 1164  director, with the concurrence of the board, determines will
 1165  efficiently recover such deficits. The purpose of the lines of
 1166  credit or other financing mechanisms is to provide additional
 1167  resources to assist the corporation in covering claims and
 1168  expenses attributable to a catastrophe. As used in this
 1169  subsection, the term “assessments” includes regular assessments
 1170  under sub-subparagraph a. or subparagraph (q)1. and emergency
 1171  assessments under sub-subparagraph d. Emergency assessments
 1172  collected under sub-subparagraph d. are not part of an insurer’s
 1173  rates, are not premium, and are not subject to premium tax,
 1174  fees, or commissions; however, failure to pay the emergency
 1175  assessment shall be treated as failure to pay premium. The
 1176  emergency assessments under sub-subparagraph d. shall continue
 1177  as long as any bonds issued or other indebtedness incurred with
 1178  respect to a deficit for which the assessment was imposed remain
 1179  outstanding, unless adequate provision has been made for the
 1180  payment of such bonds or other indebtedness pursuant to the
 1181  documents governing such bonds or indebtedness.
 1182         f. As used in this subsection for purposes of any deficit
 1183  incurred on or after January 25, 2007, the term “subject lines
 1184  of business” means insurance written by assessable insurers or
 1185  procured by assessable insureds for all property and casualty
 1186  lines of business in this state, but not including workers’
 1187  compensation or medical malpractice. As used in this sub
 1188  subparagraph, the term “property and casualty lines of business”
 1189  includes all lines of business identified on Form 2, Exhibit of
 1190  Premiums and Losses, in the annual statement required of
 1191  authorized insurers under s. 624.424 and any rule adopted under
 1192  this section, except for those lines identified as accident and
 1193  health insurance and except for policies written under the
 1194  National Flood Insurance Program or the Federal Crop Insurance
 1195  Program. For purposes of this sub-subparagraph, the term
 1196  “workers’ compensation” includes both workers’ compensation
 1197  insurance and excess workers’ compensation insurance.
 1198         g. The Florida Surplus Lines Service Office shall annually
 1199  determine annually the aggregate statewide written premium in
 1200  subject lines of business procured by assessable insureds and
 1201  report that information to the corporation in a form and at a
 1202  time the corporation specifies to ensure that the corporation
 1203  can meet the requirements of this subsection and the
 1204  corporation’s financing obligations.
 1205         h. The Florida Surplus Lines Service Office shall verify
 1206  the proper application by surplus lines agents of assessment
 1207  percentages for regular assessments and emergency assessments
 1208  levied under this subparagraph on assessable insureds and assist
 1209  the corporation in ensuring the accurate, timely collection and
 1210  payment of assessments by surplus lines agents as required by
 1211  the corporation.
 1212         i. In 2008 or thereafter, Upon a determination by the board
 1213  of governors that an account has a projected deficit, the board
 1214  shall levy a Citizens policyholder surcharge against all
 1215  policyholders of the corporation.
 1216         (I) The surcharge shall be levied as a uniform percentage
 1217  of the premium for the policy of up to 15 percent of the policy
 1218  such premium, which funds shall be used to offset the deficit.
 1219         (II) The surcharge is payable upon cancellation or
 1220  termination of the policy, upon renewal of the policy, or upon
 1221  issuance of a new policy by the corporation within the first 12
 1222  months after the date of the levy or the period of time
 1223  necessary to fully collect the surcharge amount.
 1224         (III) The corporation may not levy any regular assessments
 1225  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1226  subparagraph b. with respect to a particular year’s deficit
 1227  until the corporation has first levied the full amount of the
 1228  surcharge authorized by this sub-subparagraph.
 1229         (IV) The surcharge is not considered premium and is not
 1230  subject to commissions, fees, or premium taxes. However, failure
 1231  to pay the surcharge shall be treated as failure to pay premium.
 1232         j. If the amount of any assessments or surcharges collected
 1233  from corporation policyholders, assessable insurers or their
 1234  policyholders, or assessable insureds exceeds the amount of the
 1235  deficits, such excess amounts shall be remitted to and retained
 1236  by the corporation in a reserve to be used by the corporation,
 1237  as determined by the executive director, with the concurrence of
 1238  the board of governors, and approved by the office, to pay
 1239  claims or reduce any past, present, or future plan-year deficits
 1240  or to reduce outstanding debt.
 1241         (c) The corporation’s plan of operation:
 1242         1. Must provide for adoption of residential property and
 1243  casualty insurance policy forms and commercial residential and
 1244  nonresidential property insurance forms, which must be approved
 1245  by the office before use. The corporation shall adopt the
 1246  following policy forms:
 1247         a. Standard personal lines policy forms that are
 1248  comprehensive multiperil policies providing full coverage of a
 1249  residential property equivalent to the coverage provided in the
 1250  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1251         b. Basic personal lines policy forms that are policies
 1252  similar to an HO-8 policy or a dwelling fire policy that provide
 1253  coverage meeting the requirements of the secondary mortgage
 1254  market, but which is more limited than the coverage under a
 1255  standard policy.
 1256         c. Commercial lines residential and nonresidential policy
 1257  forms that are generally similar to the basic perils of full
 1258  coverage obtainable for commercial residential structures and
 1259  commercial nonresidential structures in the admitted voluntary
 1260  market.
 1261         d. Personal lines and commercial lines residential property
 1262  insurance forms that cover the peril of wind only. Such The
 1263  forms are applicable only to residential properties located in
 1264  areas eligible for coverage under the coastal account referred
 1265  to in sub-subparagraph (b)2.a.
 1266         e. Commercial lines nonresidential property insurance forms
 1267  that cover the peril of wind only. Such The forms are applicable
 1268  only to nonresidential properties located in areas eligible for
 1269  coverage under the coastal account referred to in sub
 1270  subparagraph (b)2.a.
 1271         f. The corporation may adopt variations of the policy forms
 1272  listed in sub-subparagraphs a.-e. which contain more restrictive
 1273  coverage.
 1274         g. Effective January 1, 2013, the corporation shall offer a
 1275  basic personal lines policy similar to an HO-8 policy with
 1276  dwelling repair based on common construction materials and
 1277  methods.
 1278         2. Must provide that the corporation and an authorized
 1279  insurer may enter into a risk-sharing agreement for the purpose
 1280  of reducing the corporation’s exposure. As used in this
 1281  subparagraph, the term “risk-sharing agreement” means an
 1282  agreement between the corporation and an authorized insurer for
 1283  the corporation to retain part, but not all, of the risk for a
 1284  specified group of policies or specified perils within a group
 1285  of policies, as part of the terms for removal of policies from
 1286  the corporation.
 1287         a. Entering into a risk-sharing agreement is voluntary and
 1288  at the discretion of the corporation and the authorized insurer.
 1289  To avoid unnecessary expense, the executive director, with
 1290  concurrence of the board of governors, may limit the
 1291  corporation’s participation in risk-sharing agreements to those
 1292  participants capable and willing to assume a minimum of 25
 1293  percent of the exposure on at least 100,000 policies and may
 1294  specify other limitations. A risk-sharing agreement in which the
 1295  corporation retains part of the risk may not exceed 5 years.
 1296         b. The risk-sharing agreement may cover policies in any
 1297  account and may cover any perils. The corporation may act as a
 1298  reinsurer or a cedent under a risk sharing agreement or an
 1299  excess of loss agreement. If the corporation is the reinsurer,
 1300  the insurance policy forms and endorsements must be approved by
 1301  the office, cover all perils that are the subject of the risk
 1302  sharing agreement, and cover at least the same limits as the
 1303  corporation policies being replaced.
 1304         c. The terms of each risk-sharing agreement must ensure
 1305  that the consideration received by the corporation is
 1306  commensurate with the risk retained by the corporation and the
 1307  risk assumed by the authorized insurer. The corporation may not
 1308  share risk for bad faith.
 1309         d. The risk-sharing agreement must specify the proportion
 1310  of exposure that the authorized insurer reports to the Florida
 1311  Hurricane Catastrophe Fund and the exposure retained by the
 1312  corporation. Each shall pay premium and receive reimbursements
 1313  from the fund for the exposure that they retain or assume as
 1314  provided in the risk-sharing agreement. The risk retained or
 1315  assumed is eligible for coverage by the fund and is not
 1316  considered reinsurance for purposes of coverage by the fund.
 1317  However, the authorized insurer and the corporation may report
 1318  participation in the risk sharing agreement on their financial
 1319  statements as reinsurance if appropriate according to the
 1320  characteristics of the agreement based on statutory accounting
 1321  rules and instructions.
 1322         e. Notwithstanding any other provision of law:
 1323         (I) Policies offered coverage by the corporation or an
 1324  authorized insurer through a risk-sharing agreement are not
 1325  eligible for coverage by the corporation outside of the
 1326  agreement; and
 1327         (II) A risk-sharing agreement between the corporation and
 1328  an authorized insurer is not subject to the requirements of a
 1329  take-out or keep-out program under ss. 627.3517 and this
 1330  subsection, except that the agreement must be filed by the
 1331  authorized insurer with the office for review and approval
 1332  before the execution of the agreement by the insurer.
 1333         f. To ensure that exposures are accurately reported to the
 1334  Florida Hurricane Catastrophe Fund, the corporation and each
 1335  insurer participating in a risk-sharing agreement under this
 1336  subparagraph must report its exposure under covered policies to
 1337  the fund as required under s. 215.555(5)(c), including the
 1338  requirement that, by September 1 of each year, each insurer
 1339  notify the board of its insured values under covered policies as
 1340  of June 30 of that year. Each report must also specify the
 1341  percentage of liability applicable to the corporation and the
 1342  percentage applicable to the insurer. Pursuant to its authority
 1343  under s. 215.555, the State Board of Administration shall adopt
 1344  rules to administer this sub-subparagraph.
 1345         2. Must provide that the corporation adopt a program in
 1346  which the corporation and authorized insurers enter into quota
 1347  share primary insurance agreements for hurricane coverage, as
 1348  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1349  property insurance forms for eligible risks which cover the
 1350  peril of wind only.
 1351         a. As used in this subsection, the term:
 1352         (I) “Quota share primary insurance” means an arrangement in
 1353  which the primary hurricane coverage of an eligible risk is
 1354  provided in specified percentages by the corporation and an
 1355  authorized insurer. The corporation and authorized insurer are
 1356  each solely responsible for a specified percentage of hurricane
 1357  coverage of an eligible risk as set forth in a quota share
 1358  primary insurance agreement between the corporation and an
 1359  authorized insurer and the insurance contract. The
 1360  responsibility of the corporation or authorized insurer to pay
 1361  its specified percentage of hurricane losses of an eligible
 1362  risk, as set forth in the agreement, may not be altered by the
 1363  inability of the other party to pay its specified percentage of
 1364  losses. Eligible risks that are provided hurricane coverage
 1365  through a quota share primary insurance arrangement must be
 1366  provided policy forms that set forth the obligations of the
 1367  corporation and authorized insurer under the arrangement,
 1368  clearly specify the percentages of quota share primary insurance
 1369  provided by the corporation and authorized insurer, and
 1370  conspicuously and clearly state that the authorized insurer and
 1371  the corporation may not be held responsible beyond their
 1372  specified percentage of coverage of hurricane losses.
 1373         (II) “Eligible risks” means personal lines residential and
 1374  commercial lines residential risks that meet the underwriting
 1375  criteria of the corporation and are located in areas that were
 1376  eligible for coverage by the Florida Windstorm Underwriting
 1377  Association on January 1, 2002.
 1378         b. The corporation may enter into quota share primary
 1379  insurance agreements with authorized insurers at corporation
 1380  coverage levels of 90 percent and 50 percent.
 1381         c. If the corporation determines that additional coverage
 1382  levels are necessary to maximize participation in quota share
 1383  primary insurance agreements by authorized insurers, the
 1384  corporation may establish additional coverage levels. However,
 1385  the corporation’s quota share primary insurance coverage level
 1386  may not exceed 90 percent.
 1387         d. Any quota share primary insurance agreement entered into
 1388  between an authorized insurer and the corporation must provide
 1389  for a uniform specified percentage of coverage of hurricane
 1390  losses, by county or territory as set forth by the corporation
 1391  board, for all eligible risks of the authorized insurer covered
 1392  under the agreement.
 1393         e. Any quota share primary insurance agreement entered into
 1394  between an authorized insurer and the corporation is subject to
 1395  review and approval by the office. However, such agreement shall
 1396  be authorized only as to insurance contracts entered into
 1397  between an authorized insurer and an insured who is already
 1398  insured by the corporation for wind coverage.
 1399         f. For all eligible risks covered under quota share primary
 1400  insurance agreements, the exposure and coverage levels for both
 1401  the corporation and authorized insurers shall be reported by the
 1402  corporation to the Florida Hurricane Catastrophe Fund. For all
 1403  policies of eligible risks covered under such agreements, the
 1404  corporation and the authorized insurer must maintain complete
 1405  and accurate records for the purpose of exposure and loss
 1406  reimbursement audits as required by fund rules. The corporation
 1407  and the authorized insurer shall each maintain duplicate copies
 1408  of policy declaration pages and supporting claims documents.
 1409         g. The corporation board shall establish in its plan of
 1410  operation standards for quota share agreements which ensure that
 1411  there is no discriminatory application among insurers as to the
 1412  terms of the agreements, pricing of the agreements, incentive
 1413  provisions if any, and consideration paid for servicing policies
 1414  or adjusting claims.
 1415         h. The quota share primary insurance agreement between the
 1416  corporation and an authorized insurer must set forth the
 1417  specific terms under which coverage is provided, including, but
 1418  not limited to, the sale and servicing of policies issued under
 1419  the agreement by the insurance agent of the authorized insurer
 1420  producing the business, the reporting of information concerning
 1421  eligible risks, the payment of premium to the corporation, and
 1422  arrangements for the adjustment and payment of hurricane claims
 1423  incurred on eligible risks by the claims adjuster and personnel
 1424  of the authorized insurer. Entering into a quota sharing
 1425  insurance agreement between the corporation and an authorized
 1426  insurer is voluntary and at the discretion of the authorized
 1427  insurer.
 1428         3.a. May provide that the corporation may employ or
 1429  otherwise contract with individuals or other entities to provide
 1430  administrative or professional services that may be appropriate
 1431  to effectuate the plan. The corporation may borrow funds by
 1432  issuing bonds or by incurring other indebtedness, and shall have
 1433  other powers reasonably necessary to effectuate the requirements
 1434  of this subsection, including, without limitation, the power to
 1435  issue bonds and incur other indebtedness in order to refinance
 1436  outstanding bonds or other indebtedness. The corporation may
 1437  seek judicial validation of its bonds or other indebtedness
 1438  under chapter 75. The corporation may issue bonds or incur other
 1439  indebtedness, or have bonds issued on its behalf by a unit of
 1440  local government pursuant to subparagraph (q)2. in the absence
 1441  of a hurricane or other weather-related event, upon a
 1442  determination by the corporation, subject to approval by the
 1443  office, that such action would enable it to efficiently meet the
 1444  financial obligations of the corporation and that such
 1445  financings are reasonably necessary to effectuate the
 1446  requirements of this subsection. The corporation may take all
 1447  actions needed to facilitate tax-free status for such bonds or
 1448  indebtedness, including formation of trusts or other affiliated
 1449  entities. The corporation may pledge assessments, projected
 1450  recoveries from the Florida Hurricane Catastrophe Fund, other
 1451  reinsurance recoverables, Citizens policyholder surcharges and
 1452  other surcharges, and other funds available to the corporation
 1453  as security for bonds or other indebtedness. In recognition of
 1454  s. 10, Art. I of the State Constitution, prohibiting the
 1455  impairment of obligations of contracts, it is the intent of the
 1456  Legislature that no action not be taken whose purpose is to
 1457  impair any bond indenture or financing agreement or any revenue
 1458  source committed by contract to such bond or other indebtedness.
 1459         b. May provide that the corporation employ or otherwise
 1460  contract with individuals or other entities to provide
 1461  administrative or professional services that may be appropriate
 1462  to effectuate the plan. To ensure that the corporation is
 1463  operating in an efficient and economic manner while providing
 1464  quality service to policyholders, applicants, and agents, the
 1465  board shall commission an independent third-party consultant
 1466  having expertise in insurance company management or insurance
 1467  company management consulting to prepare a report and make
 1468  recommendations on the relative costs and benefits of
 1469  outsourcing various policy issuance and service functions to
 1470  private servicing carriers or entities performing similar
 1471  functions in the private market for a fee, rather than
 1472  performing such functions in-house. In making such
 1473  recommendations, the consultant shall consider how other
 1474  residual markets, both in this state and around the country,
 1475  outsource appropriate functions or use servicing carriers to
 1476  better match expenses with revenues that fluctuate based on a
 1477  widely varying policy count. The report must be completed by
 1478  July 1, 2012. Upon receiving the report, the executive director,
 1479  with the concurrence of the board, shall develop a plan to
 1480  implement the report and submit the plan for review,
 1481  modification, and approval to the Financial Services Commission.
 1482  Upon the commission’s approval of the plan, the board shall
 1483  begin implementing the plan by January 1, 2013.
 1484         4. Must require that the corporation operate subject to the
 1485  supervision and approval of a board of governors consisting of
 1486  eight individuals who are residents of this state and who are,
 1487  from different geographical areas of the this state.
 1488         a. The Governor, the Chief Financial Officer, the President
 1489  of the Senate, and the Speaker of the House of Representatives
 1490  shall each appoint two members of the board. All board members,
 1491  except those appointed by the speaker, must be confirmed by the
 1492  Senate during the legislative session following their
 1493  appointment. At least one of the two members appointed by each
 1494  appointing officer must have demonstrated expertise in insurance
 1495  and must be is deemed to be within the scope of the exemption
 1496  provided under in s. 112.313(7)(b). The Chief Financial Officer
 1497  shall designate one of the appointees as chair for the purpose
 1498  of presiding over the orderly conduct of meetings. An appointee
 1499  serves as chair for no more than one term. All board members
 1500  serve at the pleasure of the appointing officer. All members of
 1501  the board are subject to removal at will by the officers who
 1502  appointed them. All board members, including the chair, shall
 1503  must be appointed to serve for 3-year terms beginning annually
 1504  on a date designated by the plan. However, for the first term
 1505  beginning on or after July 1, 2009, each appointing officer
 1506  shall appoint one member of the board for a 2-year term and one
 1507  member for a 3-year term. A board vacancy shall be filled for
 1508  the unexpired term by the appointing officer. A board member may
 1509  not serve for more than two terms, except that a board member
 1510  appointed to fill an unexpired term created by a vacancy may be
 1511  appointed for two subsequent terms. The Chief Financial Officer
 1512  shall appoint a technical advisory group to provide information
 1513  and advice to the executive director and the board in connection
 1514  with the corporation’s board’s duties under this subsection. The
 1515  executive director shall be appointed by and serve at the
 1516  pleasure of the Governor and the Chief Financial Officer. and
 1517  Senior managers of the corporation shall be appointed by the
 1518  executive director, with the concurrence of engaged by the
 1519  board, and serve at the pleasure of the executive director
 1520  board. Appointment of the Any executive director appointed on or
 1521  after July 1, 2006, is subject to confirmation by the Senate
 1522  upon original appointment and upon the election or reelection of
 1523  the Governor and Chief Financial Officer if retained. The
 1524  executive director is responsible for employing other staff as
 1525  the corporation may require, subject to review and concurrence
 1526  by the board.
 1527         b. The board shall create a Market Accountability Advisory
 1528  Committee to assist the corporation in developing awareness of
 1529  its rates and its customer and agent service levels in
 1530  relationship to the voluntary market insurers writing similar
 1531  coverage.
 1532         (I) The members of the advisory committee consist of the
 1533  following 11 persons, one of whom must be elected chair by the
 1534  members of the committee: four representatives, one appointed by
 1535  the Florida Association of Insurance Agents, one by the Florida
 1536  Association of Insurance and Financial Advisors, one by the
 1537  Professional Insurance Agents of Florida, and one by the Latin
 1538  American Association of Insurance Agencies; three
 1539  representatives appointed by the insurers with the three highest
 1540  voluntary market share of residential property insurance
 1541  business in the state; one representative from the Office of
 1542  Insurance Regulation; one consumer appointed by the board who is
 1543  insured by the corporation at the time of appointment to the
 1544  committee; one representative appointed by the Florida
 1545  Association of Realtors; and one representative appointed by the
 1546  Florida Bankers Association. All members shall be appointed to
 1547  3-year terms, serve at the pleasure of the board of governors,
 1548  and may serve for consecutive terms.
 1549         (II) The committee shall report to the corporation at each
 1550  board meeting on insurance market issues that which may include
 1551  rates and rate competition within with the voluntary market;
 1552  service, including policy issuance, claims processing, and
 1553  general responsiveness to policyholders, applicants, and agents;
 1554  and matters relating to depopulation.
 1555         5. Must provide a procedure for determining the eligibility
 1556  of a risk for coverage by the corporation which applies to both
 1557  new and renewal policies, as follows:
 1558         a. Subject to s. 627.3517, with respect to personal lines
 1559  residential risks, if the risk is offered coverage from an
 1560  authorized insurer at the insurer’s approved rate under a
 1561  standard policy including wind coverage or, if consistent with
 1562  the insurer’s underwriting rules as filed with the office, a
 1563  basic policy including wind coverage, for a new application to
 1564  the corporation for coverage, the risk is not eligible for any
 1565  policy issued by the corporation unless the premium for coverage
 1566  from the authorized insurer is more than 15 percent greater than
 1567  the premium for comparable coverage from the corporation. If the
 1568  risk is not able to obtain such offer, the risk is eligible for
 1569  a standard policy including wind coverage or a basic policy
 1570  including wind coverage issued by the corporation; however, if
 1571  the risk could not be insured under a standard policy including
 1572  wind coverage regardless of market conditions, the risk is
 1573  eligible for a basic policy including wind coverage unless
 1574  rejected under subparagraph 8. However, a policyholder of the
 1575  corporation or a policyholder removed from the corporation
 1576  through an assumption agreement until the end of the assumption
 1577  period remains eligible for coverage from the corporation
 1578  regardless of any offer of coverage from an authorized insurer
 1579  or surplus lines insurer. The corporation shall determine the
 1580  type of policy to be provided on the basis of objective
 1581  standards specified in the underwriting manual and based on
 1582  generally accepted underwriting practices.
 1583         (I) If the risk accepts an offer of coverage through the
 1584  market assistance plan or through a mechanism established by the
 1585  corporation before a policy is issued to the risk by the
 1586  corporation or during the first 30 days of coverage by the
 1587  corporation, and the producing agent who submitted the
 1588  application to the plan or to the corporation is not currently
 1589  appointed by the insurer, the insurer shall:
 1590         (A) Pay to the producing agent of record of the policy for
 1591  the first year, an amount that is the greater of the insurer’s
 1592  usual and customary commission for the type of policy written or
 1593  a fee equal to the usual and customary commission of the
 1594  corporation; or
 1595         (B) Offer to allow the producing agent of record of the
 1596  policy to continue servicing the policy for at least 1 year and
 1597  offer to pay the agent the greater of the insurer’s or the
 1598  corporation’s usual and customary commission for the type of
 1599  policy written.
 1600  
 1601  If the producing agent is unwilling or unable to accept
 1602  appointment, the new insurer shall pay the agent in accordance
 1603  with sub-sub-sub-subparagraph (A).
 1604         (II) If the corporation enters into a contractual agreement
 1605  for a take-out plan, the producing agent of record of the
 1606  corporation policy is entitled to retain any unearned commission
 1607  on the policy, and the insurer shall:
 1608         (A) Pay to the producing agent of record, for the first
 1609  year, an amount that is the greater of the insurer’s usual and
 1610  customary commission for the type of policy written or a fee
 1611  equal to the usual and customary commission of the corporation;
 1612  or
 1613         (B) Offer to allow the producing agent of record to
 1614  continue servicing the policy for at least 1 year and offer to
 1615  pay the agent the greater of the insurer’s or the corporation’s
 1616  usual and customary commission for the type of policy written.
 1617  
 1618  If the producing agent is unwilling or unable to accept
 1619  appointment, the new insurer shall pay the agent in accordance
 1620  with sub-sub-sub-subparagraph (A).
 1621         b. With respect to commercial lines residential risks, for
 1622  a new application to the corporation for coverage, if the risk
 1623  is offered coverage under a policy including wind coverage from
 1624  an authorized insurer at its approved rate, the risk is not
 1625  eligible for a policy issued by the corporation unless the
 1626  premium for coverage from the authorized insurer is more than 15
 1627  percent greater than the premium for comparable coverage from
 1628  the corporation. If the risk is not able to obtain any such
 1629  offer, the risk is eligible for a policy including wind coverage
 1630  issued by the corporation. However, a policyholder of the
 1631  corporation or a policyholder removed from the corporation
 1632  through an assumption agreement until the end of the assumption
 1633  period remains eligible for coverage from the corporation
 1634  regardless of an offer of coverage from an authorized insurer or
 1635  surplus lines insurer.
 1636         (I) If the risk accepts an offer of coverage through the
 1637  market assistance plan or through a mechanism established by the
 1638  corporation before a policy is issued to the risk by the
 1639  corporation or during the first 30 days of coverage by the
 1640  corporation, and the producing agent who submitted the
 1641  application to the plan or the corporation is not currently
 1642  appointed by the insurer, the insurer shall:
 1643         (A) Pay to the producing agent of record of the policy, for
 1644  the first year, an amount that is the greater of the insurer’s
 1645  usual and customary commission for the type of policy written or
 1646  a fee equal to the usual and customary commission of the
 1647  corporation; or
 1648         (B) Offer to allow the producing agent of record of the
 1649  policy to continue servicing the policy for at least 1 year and
 1650  offer to pay the agent the greater of the insurer’s or the
 1651  corporation’s usual and customary commission for the type of
 1652  policy written.
 1653  
 1654  If the producing agent is unwilling or unable to accept
 1655  appointment, the new insurer shall pay the agent in accordance
 1656  with sub-sub-sub-subparagraph (A).
 1657         (II) If the corporation enters into a contractual agreement
 1658  for a take-out plan, the producing agent of record of the
 1659  corporation policy is entitled to retain any unearned commission
 1660  on the policy, and the insurer shall:
 1661         (A) Pay to the producing agent of record, for the first
 1662  year, an amount that is the greater of the insurer’s usual and
 1663  customary commission for the type of policy written or a fee
 1664  equal to the usual and customary commission of the corporation;
 1665  or
 1666         (B) Offer to allow the producing agent of record to
 1667  continue servicing the policy for at least 1 year and offer to
 1668  pay the agent the greater of the insurer’s or the corporation’s
 1669  usual and customary commission for the type of policy written.
 1670  
 1671  If the producing agent is unwilling or unable to accept
 1672  appointment, the new insurer shall pay the agent in accordance
 1673  with sub-sub-sub-subparagraph (A).
 1674         c. For purposes of determining comparable coverage under
 1675  sub-subparagraphs a. and b., the comparison must be based on
 1676  those forms and coverages that are reasonably comparable. The
 1677  corporation may rely on a determination of comparable coverage
 1678  and premium made by the producing agent who submits the
 1679  application to the corporation, made in the agent’s capacity as
 1680  the corporation’s agent. A comparison may be made solely of the
 1681  premium with respect to the main building or structure only on
 1682  the following basis: the same coverage A or other building
 1683  limits; the same percentage hurricane deductible that applies on
 1684  an annual basis or that applies to each hurricane for commercial
 1685  residential property; the same percentage of ordinance and law
 1686  coverage, if the same limit is offered by both the corporation
 1687  and the authorized insurer; the same mitigation credits, to the
 1688  extent the same types of credits are offered both by the
 1689  corporation and the authorized insurer; the same method for loss
 1690  payment, such as replacement cost or actual cash value, if the
 1691  same method is offered both by the corporation and the
 1692  authorized insurer in accordance with underwriting rules; and
 1693  any other form or coverage that is reasonably comparable as
 1694  determined by the board. If an application is submitted to the
 1695  corporation for wind-only coverage in the coastal account, the
 1696  premium for the corporation’s wind-only policy plus the premium
 1697  for the ex-wind policy that is offered by an authorized insurer
 1698  to the applicant must be compared to the premium for multiperil
 1699  coverage offered by an authorized insurer, subject to the
 1700  standards for comparison specified in this subparagraph. If the
 1701  corporation or the applicant requests from the authorized
 1702  insurer a breakdown of the premium of the offer by types of
 1703  coverage so that a comparison may be made by the corporation or
 1704  its agent and the authorized insurer refuses or is unable to
 1705  provide such information, the corporation may treat the offer as
 1706  not being an offer of coverage from an authorized insurer at the
 1707  insurer’s approved rate.
 1708         6. Must include rules for classifications of risks and
 1709  rates.
 1710         7. Must provide that if premium and investment income for
 1711  an account attributable to a particular calendar year are in
 1712  excess of projected losses and expenses for the account
 1713  attributable to that year, such excess must shall be held in
 1714  surplus in the account. Such surplus must be available to defray
 1715  deficits in that account as to future years and used for that
 1716  purpose before assessing assessable insurers and assessable
 1717  insureds as to any calendar year.
 1718         8. Must provide objective criteria and procedures that are
 1719  to be uniformly applied to all applicants in determining whether
 1720  an individual risk is so hazardous as to be uninsurable. In
 1721  making this determination and in establishing the criteria and
 1722  procedures, the following must be considered:
 1723         a. Whether the likelihood of a loss for the individual risk
 1724  is substantially higher than for other risks of the same class;
 1725  and
 1726         b. Whether the uncertainty associated with the individual
 1727  risk is such that an appropriate premium cannot be determined.
 1728  
 1729  The acceptance or rejection of a risk by the corporation shall
 1730  be construed as the private placement of insurance, and the
 1731  provisions of chapter 120 do not apply.
 1732         9. Must provide that the corporation make its best efforts
 1733  to procure catastrophe reinsurance at reasonable rates, to cover
 1734  its projected 100-year probable maximum loss as determined by
 1735  the board of governors.
 1736         10. Must provide that the policies issued by the
 1737  corporation must provide that if the corporation or the market
 1738  assistance plan obtains an offer from an authorized insurer to
 1739  cover the risk at its approved rates, the risk is no longer
 1740  eligible for renewal through the corporation, except as
 1741  otherwise provided in this subsection.
 1742         11. Must provide that corporation policies and applications
 1743  must include a notice that the corporation policy could, under
 1744  this section, be replaced with a policy issued by an authorized
 1745  insurer which does not provide coverage identical to the
 1746  coverage provided by the corporation. The notice must also
 1747  specify that acceptance of corporation coverage creates a
 1748  conclusive presumption that the applicant or policyholder is
 1749  aware of this potential.
 1750         12. May establish, subject to approval by the office,
 1751  different eligibility requirements and operational procedures
 1752  for any line or type of coverage for any specified county or
 1753  area if the board determines that such changes are justified due
 1754  to the voluntary market being sufficiently stable and
 1755  competitive in such area or for such line or type of coverage
 1756  and that consumers who, in good faith, are unable to obtain
 1757  insurance through the voluntary market through ordinary methods
 1758  continue to have access to coverage from the corporation. If
 1759  coverage is sought in connection with a real property transfer,
 1760  the requirements and procedures may not provide an effective
 1761  date of coverage later than the date of the closing of the
 1762  transfer as established by the transferor, the transferee, and,
 1763  if applicable, the lender.
 1764         13. Must provide that, with respect to the coastal account,
 1765  any assessable insurer that has with a surplus as to
 1766  policyholders of $25 million or less writing 25 percent or more
 1767  of its total countrywide property insurance premiums in this
 1768  state may petition the office, within the first 90 days of each
 1769  calendar year, petition the office to qualify as a limited
 1770  apportionment company. A regular assessment levied by the
 1771  corporation on a limited apportionment company for a deficit
 1772  incurred by the corporation for the coastal account may be paid
 1773  to the corporation on a monthly basis as the assessments are
 1774  collected by the limited apportionment company from its
 1775  insureds. The, but a limited apportionment company must begin
 1776  collecting the regular assessments within not later than 90 days
 1777  after the regular assessments are levied by the corporation, and
 1778  the regular assessments must be paid in full within 15 months
 1779  after being levied by the corporation. A limited apportionment
 1780  company shall collect from its policyholders any emergency
 1781  assessment imposed under sub-subparagraph (b)3.d. The plan must
 1782  provide that, if the office determines that any regular
 1783  assessment will result in an impairment of the surplus of a
 1784  limited apportionment company, the office may direct that all or
 1785  part of such assessment be deferred as provided in subparagraph
 1786  (q)4. However, an emergency assessment to be collected from
 1787  policyholders under sub-subparagraph (b)3.d. may not be limited
 1788  or deferred.
 1789         14. Must provide that the corporation appoint as its
 1790  licensed agents only those agents who at the time of initial
 1791  appointment also hold an appointment as defined in s. 626.015(3)
 1792  with an insurer who at the time of the agent’s initial
 1793  appointment by the corporation is authorized to write and is
 1794  actually writing personal lines residential property coverage,
 1795  commercial residential property coverage, or commercial
 1796  nonresidential property coverage within the state. As a
 1797  condition of continued appointment, agents of the corporation
 1798  must maintain appropriate documentation specified by the
 1799  corporation which warrants and certifies that alternative
 1800  coverage was annually sought for each risk placed by that agent
 1801  with the corporation in accordance with s. 627.3518. After
 1802  January 1, 2014, if an agent places a policy with the
 1803  corporation which was ineligible for coverage based on
 1804  eligibility standards at the time of placement, agent
 1805  commissions may not be paid on that policy.
 1806         15. Must provide a premium payment plan option to its
 1807  policyholders which, at a minimum, allows for quarterly and
 1808  semiannual payment of premiums. A monthly payment plan may, but
 1809  is not required to, be offered.
 1810         16. Must limit coverage on mobile homes or manufactured
 1811  homes built before 1994 to actual cash value of the dwelling
 1812  rather than replacement costs of the dwelling.
 1813         17. May provide such limits of coverage as the board
 1814  determines, consistent with the requirements of this subsection.
 1815         18. May require commercial property to meet specified
 1816  hurricane mitigation construction features as a condition of
 1817  eligibility for coverage.
 1818         19. Must provide that new or renewal policies issued by the
 1819  corporation on or after January 1, 2012, which cover sinkhole
 1820  loss do not include coverage for any loss to appurtenant
 1821  structures, driveways, sidewalks, decks, or patios that are
 1822  directly or indirectly caused by sinkhole activity. The
 1823  corporation shall exclude such coverage using a notice of
 1824  coverage change, which may be included with the policy renewal,
 1825  and not by issuance of a notice of nonrenewal of the excluded
 1826  coverage upon renewal of the current policy.
 1827         20. Must, as of July January 1, 2014 2012, must require
 1828  that the agent obtain from an applicant for coverage from the
 1829  corporation an acknowledgment signed by the applicant, which
 1830  includes, at a minimum, the following statement:
 1831  
 1832   ACKNOWLEDGMENT OF POTENTIAL SURCHARGEAND ASSESSMENT LIABILITY:  
 1833  
 1834         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
 1835  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
 1836  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
 1837  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 1838  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
 1839  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
 1840  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 1841  LEGISLATURE.
 1842         2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
 1843  SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
 1844  BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
 1845  BE ELIGIBLE FOR COVERAGE BY CITIZENS I MUST FIRST TRY TO OBTAIN
 1846  PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
 1847  WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
 1848  ARE REGULATED AND APPROVED BY THE STATE.
 1849         3.2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
 1850  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
 1851  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
 1852  FLORIDA LEGISLATURE.
 1853         4.3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
 1854  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
 1855  STATE OF FLORIDA.
 1856         a. The corporation shall maintain, in electronic format or
 1857  otherwise, a copy of the applicant’s signed acknowledgment and
 1858  provide a copy of the statement to the policyholder as part of
 1859  his or her the first renewal after the effective date of this
 1860  subparagraph.
 1861         b. The signed acknowledgment form creates a conclusive
 1862  presumption that the policyholder understood and accepted his or
 1863  her potential surcharge and assessment liability as a
 1864  policyholder of the corporation.
 1865         (g) The executive director, with the concurrence of the
 1866  board, shall determine whether it is more cost-effective and in
 1867  the best interests of the corporation to use legal services
 1868  provided by in-house attorneys employed by the corporation
 1869  rather than contracting with outside counsel. In making such
 1870  determination, the board shall document its findings and shall
 1871  consider: the expertise needed; whether time commitments exceed
 1872  in-house staff resources; whether local representation is
 1873  needed; the travel, lodging and other costs associated with in
 1874  house representation; and such other factors that the board
 1875  determines are relevant.
 1876         (i)1. The Office of the Internal Auditor is established
 1877  within the corporation to provide a central point for
 1878  coordination of and responsibility for activities that promote
 1879  accountability, integrity, and efficiency to the policyholders
 1880  and to the taxpayers of this state. The internal auditor shall
 1881  be appointed by the board of governors, shall report to and be
 1882  under the general supervision of the board of governors, and is
 1883  not subject to supervision by an any employee of the
 1884  corporation. Administrative staff and support shall be provided
 1885  by the corporation. The internal auditor shall be appointed
 1886  without regard to political affiliation. It is the duty and
 1887  responsibility of the internal auditor to:
 1888         a. Provide direction for, supervise, conduct, and
 1889  coordinate audits, investigations, and management reviews
 1890  relating to the programs and operations of the corporation.
 1891         b. Conduct, supervise, or coordinate other activities
 1892  carried out or financed by the corporation for the purpose of
 1893  promoting efficiency in the administration of, or preventing and
 1894  detecting fraud, abuse, and mismanagement in, its programs and
 1895  operations.
 1896         c. Submit final audit reports, reviews, or investigative
 1897  reports to the board of governors, the executive director, the
 1898  members of the Financial Services Commission, and the President
 1899  of the Senate and the Speaker of the House of Representatives.
 1900         d. Keep the executive director and the board of governors
 1901  informed concerning fraud, abuses, and internal control
 1902  deficiencies relating to programs and operations administered or
 1903  financed by the corporation, recommend corrective action, and
 1904  report on the progress made in implementing corrective action.
 1905         e. Report expeditiously to the Department of Law
 1906  Enforcement or other law enforcement agencies, as appropriate,
 1907  whenever the internal auditor has reasonable grounds to believe
 1908  there has been a violation of criminal law.
 1909         2. On or before February 15, the internal auditor shall
 1910  prepare an annual report evaluating the effectiveness of the
 1911  internal controls of the corporation and providing
 1912  recommendations for corrective action, if necessary, and
 1913  summarizing the audits, reviews, and investigations conducted by
 1914  the office during the preceding fiscal year. The final report
 1915  shall be furnished to the board of governors and the executive
 1916  director, the President of the Senate, the Speaker of the House
 1917  of Representatives, and the Financial Services Commission.
 1918         (m)1. The Auditor General shall conduct an operational
 1919  audit of the corporation annually every 3 years to evaluate
 1920  management’s performance in administering laws, policies, and
 1921  procedures governing the operations of the corporation in an
 1922  efficient and effective manner. The scope of the review must
 1923  shall include, but is not limited to, evaluating claims
 1924  handling, customer service, take-out programs and bonuses;,
 1925  financing arrangements made to address a 100-year probable
 1926  maximum loss; personnel costs and administration; underwriting,
 1927  including processes designed to ensure compliance with policy
 1928  eligibility requirements of law;, procurement of goods and
 1929  services;, internal controls;, and the internal audit function;
 1930  and related internal controls. A copy of the report shall be
 1931  provided to the corporation’s board, the President of the
 1932  Senate, the Speaker of the House of Representatives, each member
 1933  of the Financial Services Commission, and the Office of
 1934  Insurance Regulation. The initial audit must be completed by
 1935  February 1, 2009.
 1936         2. The executive director, with the concurrence of the
 1937  board, shall contract with an independent auditing firm to
 1938  conduct a performance audit of the corporation every 2 years.
 1939  The objectives of the audit include, but are not limited to, an
 1940  evaluation, within the context of insurance industry best
 1941  practices, of the corporation’s strategic planning processes,
 1942  the functionality of the corporation’s organizational structure,
 1943  the compensation levels of senior management, and the overall
 1944  management and operations of the corporation. A copy of the
 1945  audit report shall be provided to the corporation’s board, the
 1946  President of the Senate, the Speaker of the House of
 1947  Representatives, each member of the Financial Services
 1948  Commission, the Office of Insurance Regulation, and the Auditor
 1949  General. The initial audit must be completed by June 1, 2014.
 1950         (q)1. The corporation shall certify to the office its needs
 1951  for annual assessments as to a particular calendar year, and for
 1952  any interim assessments that it deems to be necessary to sustain
 1953  operations as to a particular year pending the receipt of annual
 1954  assessments. Upon verification, the office shall approve such
 1955  certification, and the corporation shall levy such annual or
 1956  interim assessments. Such assessments shall be prorated as
 1957  provided in paragraph (b). The corporation shall take all
 1958  reasonable and prudent steps necessary to collect the amount of
 1959  assessments due from each assessable insurer, including, if
 1960  prudent, filing suit to collect the assessments, and the office
 1961  may provide such assistance to the corporation it deems
 1962  appropriate. If the corporation is unable to collect an
 1963  assessment from any assessable insurer, the uncollected
 1964  assessments shall be levied as an additional assessment against
 1965  the assessable insurers and any assessable insurer required to
 1966  pay an additional assessment as a result of such failure to pay
 1967  shall have a cause of action against the such nonpaying
 1968  assessable insurer. Assessments must shall be included as an
 1969  appropriate factor in the making of rates. The failure of a
 1970  surplus lines agent to collect and remit any regular or
 1971  emergency assessment levied by the corporation is considered to
 1972  be a violation of s. 626.936 and subjects the surplus lines
 1973  agent to the penalties provided in that section.
 1974         2. The governing body of any unit of local government, any
 1975  residents of which are insured by the corporation, may issue
 1976  bonds as defined in s. 125.013 or s. 166.101 from time to time
 1977  to fund an assistance program, in conjunction with the
 1978  corporation, for the purpose of defraying deficits of the
 1979  corporation. In order to avoid needless and indiscriminate
 1980  proliferation, duplication, and fragmentation of such assistance
 1981  programs, the any unit of local government, any residents of
 1982  which are insured by the corporation, may provide for the
 1983  payment of losses, regardless of whether or not the losses
 1984  occurred within or outside of the territorial jurisdiction of
 1985  the local government. Revenue bonds under this subparagraph may
 1986  not be issued until validated pursuant to chapter 75, unless a
 1987  state of emergency is declared by executive order or
 1988  proclamation of the Governor pursuant to s. 252.36 which makes
 1989  making such findings as are necessary to determine that it is in
 1990  the best interests of, and necessary for, the protection of the
 1991  public health, safety, and general welfare of residents of this
 1992  state and declaring it an essential public purpose to permit
 1993  certain municipalities or counties to issue such bonds as will
 1994  permit relief to claimants and policyholders of the corporation.
 1995  Any such unit of local government may enter into such contracts
 1996  with the corporation and with any other entity created pursuant
 1997  to this subsection as are necessary to carry out this paragraph.
 1998  Any bonds issued are under this subparagraph shall be payable
 1999  from and secured by moneys received by the corporation from
 2000  emergency assessments under sub-subparagraph (b)3.d., and
 2001  assigned and pledged to or on behalf of the unit of local
 2002  government for the benefit of the holders of such bonds. The
 2003  funds, credit, property, and taxing power of the state or of the
 2004  unit of local government may shall not be pledged for the
 2005  payment of such bonds.
 2006         3.a. The corporation shall adopt one or more programs
 2007  subject to approval by the office for the reduction of both new
 2008  and renewal writings by in the corporation. The corporation may
 2009  consider any prudent and not unfairly discriminatory approach to
 2010  reducing corporation writings.
 2011         a. The corporation may adopt a credit against assessment
 2012  liability or other liability which provides an incentive for
 2013  insurers to take and keep risks out of the corporation by
 2014  maintaining or increasing voluntary writings in counties or
 2015  areas in which corporation risks are highly concentrated, and a
 2016  program to provide a formula under which an insurer voluntarily
 2017  taking risks out of the corporation by maintaining or increasing
 2018  voluntary writings is relieved, wholly or partially, from
 2019  assessments under sub-subparagraph (b)3.a.
 2020         b.Beginning January 1, 2008, Any program the corporation
 2021  adopts for the payment of bonuses to an insurer for each risk
 2022  the insurer removes from the corporation must shall comply with
 2023  s. 627.3511(2) and may not exceed the amount referenced in s.
 2024  627.3511(2) for each risk removed. The corporation may consider
 2025  any prudent and not unfairly discriminatory approach to reducing
 2026  corporation writings, and may adopt a credit against assessment
 2027  liability or other liability that provides an incentive for
 2028  insurers to take risks out of the corporation and to keep risks
 2029  out of the corporation by maintaining or increasing voluntary
 2030  writings in counties or areas in which corporation risks are
 2031  highly concentrated and a program to provide a formula under
 2032  which an insurer voluntarily taking risks out of the corporation
 2033  by maintaining or increasing voluntary writings will be relieved
 2034  wholly or partially from assessments under sub-subparagraph
 2035  (b)3.a. However, Any “take-out bonus” or payment to an insurer
 2036  must be conditioned on the property being insured for at least 5
 2037  years by the insurer, unless canceled or nonrenewed by the
 2038  policyholder. If the policy is canceled or nonrenewed by the
 2039  policyholder before the end of the 5-year period, the amount of
 2040  the take-out bonus must be prorated for the time period the
 2041  policy was insured. If When the corporation enters into a
 2042  contractual agreement for a take-out plan, the producing agent
 2043  of record of the corporation policy is entitled to retain any
 2044  unearned commission on such policy, and the insurer shall
 2045  either:
 2046         (I) Pay to the producing agent of record of the policy, for
 2047  the first year, an amount which is the greater of the insurer’s
 2048  usual and customary commission for the type of policy written or
 2049  a policy fee equal to the usual and customary commission of the
 2050  corporation; or
 2051         (II) Offer to allow the producing agent of record of the
 2052  policy to continue servicing the policy for at least a period of
 2053  not less than 1 year and offer to pay the agent the insurer’s
 2054  usual and customary commission for the type of policy written.
 2055  If the producing agent is unwilling or unable to accept
 2056  appointment by the new insurer, the new insurer shall pay the
 2057  agent in accordance with sub-sub-subparagraph (I).
 2058         c.b. Any credit or exemption from regular assessments
 2059  adopted under this subparagraph shall last up to no longer than
 2060  the 3 years after following the cancellation or expiration of
 2061  the policy by the corporation. With the approval of the office,
 2062  the board may extend such credits for an additional year if the
 2063  insurer guarantees an additional year of renewability for all
 2064  policies removed from the corporation, or for 2 additional years
 2065  if the insurer guarantees 2 additional years of renewability for
 2066  all policies so removed.
 2067         d.c.A There shall be no credit, limitation, exemption, or
 2068  deferment from emergency assessments to be collected from
 2069  policyholders pursuant to sub-subparagraph (b)3.d. is
 2070  prohibited.
 2071         4. The corporation plan shall provide for the deferment, in
 2072  whole or in part, of the assessment of an assessable insurer,
 2073  other than an emergency assessment collected from policyholders
 2074  pursuant to sub-subparagraph (b)3.d., if the office finds that
 2075  payment of the assessment would endanger or impair the solvency
 2076  of the insurer. If In the event an assessment against an
 2077  assessable insurer is deferred in whole or in part, the amount
 2078  by which such assessment is deferred may be assessed against the
 2079  other assessable insurers in a manner consistent with the basis
 2080  for assessments set forth in paragraph (b).
 2081         5. Effective July 1, 2007, In order to evaluate the costs
 2082  and benefits of approved take-out plans, if the corporation pays
 2083  a bonus or other payment to an insurer for an approved take-out
 2084  plan, it shall maintain a record of the address or such other
 2085  identifying information on the property or risk removed in order
 2086  to track if and when the property or risk is later insured by
 2087  the corporation.
 2088         6. Any policy taken out, assumed, or removed from the
 2089  corporation is, as of the effective date of the take-out,
 2090  assumption, or removal, direct insurance issued by the insurer
 2091  and not by the corporation, even if the corporation continues to
 2092  service the policies. This subparagraph applies to policies of
 2093  the corporation and not policies taken out, assumed, or removed
 2094  from any other entity.
 2095         6. The corporation may adopt one or more programs to
 2096  encourage authorized insurers to remove policies from the
 2097  corporation through a loan from the corporation to an insurer
 2098  secured by a surplus note that contains such necessary and
 2099  reasonable provisions as the corporation requires. Such surplus
 2100  note is subject to the review and approval of the office
 2101  pursuant to s. 628.401. The corporation may include, but is not
 2102  limited to, provisions regarding the maximum size of a loan to
 2103  an insurer, capital matching requirements, the relationship
 2104  between the aggregate number of policies or amount of loss
 2105  exposure removed from the association and the amount of a loan,
 2106  retention requirements related to policies removed from the
 2107  corporation, and limitations on the number of insurers receiving
 2108  loans from the corporation under any one management group in
 2109  whatever form or arrangement. If a loan secured by a surplus
 2110  note is provided to a new mutual insurance company, the
 2111  corporation may require the board of the new mutual insurer to
 2112  have a majority of independent board members, may restrict the
 2113  ability of the new mutual insurer to convert to a stock insurer
 2114  while the mutual insurer owes any principal or interest under
 2115  the surplus note to the corporation, establish a capital match
 2116  requirement of up to $1 of private capital for each $4 of the
 2117  corporation’s loan to a new mutual insurer, and limit the
 2118  eligibility of a new mutual insurer for a waiver of the ceding
 2119  commission traditionally associated with take-out programs from
 2120  the corporation to those new mutual insurers that agree
 2121  contractually to maintain an expense ratio below 20 per cent of
 2122  written premium. For this purpose, the term “expense ratio”
 2123  means the sum of agent commissions and other acquisition
 2124  expenses; general and administrative expenses; and premium
 2125  taxes, licenses, and fees, divided by the gross written premium.
 2126         (z) In enacting the provisions of this section, the
 2127  Legislature recognizes that both the Florida Windstorm
 2128  Underwriting Association and the Residential Property and
 2129  Casualty Joint Underwriting Association have entered into
 2130  financing arrangements that obligate each entity to service its
 2131  debts and maintain the capacity to repay funds secured under
 2132  these financing arrangements. It is the intent of the
 2133  Legislature that nothing in this section not be construed to
 2134  compromise, diminish, or interfere with the rights of creditors
 2135  under such financing arrangements. It is further the intent of
 2136  the Legislature to preserve the obligations of the Florida
 2137  Windstorm Underwriting Association and Residential Property and
 2138  Casualty Joint Underwriting Association with regard to
 2139  outstanding financing arrangements, with such obligations
 2140  passing entirely and unchanged to the corporation and,
 2141  specifically, to the applicable account of the corporation. So
 2142  long as any bonds, notes, indebtedness, or other financing
 2143  obligations of the Florida Windstorm Underwriting Association or
 2144  the Residential Property and Casualty Joint Underwriting
 2145  Association are outstanding, under the terms of the financing
 2146  documents pertaining to them, the executive director of the
 2147  corporation, with the concurrence of the governing board, of the
 2148  corporation shall have and shall exercise the authority to levy,
 2149  charge, collect, and receive all premiums, assessments,
 2150  surcharges, charges, revenues, and receipts that the
 2151  associations had authority to levy, charge, collect, or receive
 2152  under the provisions of subsection (2) and this subsection,
 2153  respectively, as they existed on January 1, 2002, to provide
 2154  moneys, without exercise of the authority provided by this
 2155  subsection, in at least the amounts, and by the times, as would
 2156  be provided under those former provisions of subsection (2) or
 2157  this subsection, respectively, so that the value, amount, and
 2158  collectability of any assets, revenues, or revenue source
 2159  pledged or committed to, or any lien thereon securing such
 2160  outstanding bonds, notes, indebtedness, or other financing
 2161  obligations is will not be diminished, impaired, or adversely
 2162  affected by the amendments made by this section act and to
 2163  permit compliance with all provisions of financing documents
 2164  pertaining to such bonds, notes, indebtedness, or other
 2165  financing obligations, or the security or credit enhancement for
 2166  them, and any reference in this subsection to bonds, notes,
 2167  indebtedness, financing obligations, or similar obligations, of
 2168  the corporation must shall include like instruments or contracts
 2169  of the Florida Windstorm Underwriting Association and the
 2170  Residential Property and Casualty Joint Underwriting Association
 2171  to the extent not inconsistent with the provisions of the
 2172  financing documents pertaining to them.
 2173         Section 10. Effective October 1, 2013, paragraph (e) of
 2174  subsection (6) of section 627.351, Florida Statutes, is amended
 2175  to read
 2176         627.351 Insurance risk apportionment plans.—
 2177         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2178         (e) The corporation is subject to s. 287.057 for the
 2179  purchase of commodities and contractual services except as
 2180  otherwise provided in this paragraph. Services provided by
 2181  tradepersons or technical experts to assist a licensed adjuster
 2182  in the evaluation of individual claims are not subject to the
 2183  procurement requirements of this section. Additionally, the
 2184  procurement of financial services providers and underwriters
 2185  must be made pursuant to s. 627.3513 Purchases that equal or
 2186  exceed $2,500, but are less than $25,000, shall be made by
 2187  receipt of written quotes, written record of telephone quotes,
 2188  or informal bids, whenever practical. The procurement of goods
 2189  or services valued at or over $25,000 shall be subject to
 2190  competitive solicitation, except in situations where the goods
 2191  or services are provided by a sole source or are deemed an
 2192  emergency purchase; the services are exempted from competitive
 2193  solicitation requirements under s. 287.057(3)(f); or the
 2194  procurement of services is subject to s. 627.3513. Justification
 2195  for the sole-sourcing or emergency procurement must be
 2196  documented. Contracts for goods or services valued at or more
 2197  than over $100,000 are subject to approval by the board.
 2198         1. The corporation is an agency for the purposes of s.
 2199  287.057, except for subsection (22) of that section for which
 2200  the corporation is an eligible user.
 2201         a. The authority of the Department of Management Services
 2202  and the Chief Financial Officer under s. 287.057 extends to the
 2203  corporation as if the corporation were an agency.
 2204         b. The executive director of the corporation is the agency
 2205  head under s. 287.057, except for resolution of bid protests for
 2206  which the board would serve as the agency head.
 2207         2. The corporation must provide notice of a decision or
 2208  intended decision concerning a solicitation, contract award, or
 2209  exceptional purchase by electronic posting. Such notice must
 2210  contain the following statement: “Failure to file a protest
 2211  within the time prescribed in this section constitutes a waiver
 2212  of proceedings.”
 2213         a. A person adversely affected by the corporation’s
 2214  decision or intended decision to award a contract pursuant to s.
 2215  287.057(1) or s. 287.057(3)(c) who elects to challenge the
 2216  decision must file a written notice of protest with the
 2217  executive director of the corporation within 72 hours after the
 2218  corporation posts a notice of its decision or intended decision.
 2219  For a protest of the terms, conditions, and specifications
 2220  contained in a solicitation, including any provisions governing
 2221  the methods for ranking bids, proposals, replies, awarding
 2222  contracts, reserving rights of further negotiation, or modifying
 2223  or amending any contract, the notice of protest must be filed in
 2224  writing within 72 hours after the posting of the solicitation.
 2225  Saturdays, Sundays, and state holidays are excluded in the
 2226  computation of the 72-hour time period.
 2227         b. A formal written protest must be filed within 10 days
 2228  after the date the notice of protest is filed. The formal
 2229  written protest must state with particularity the facts and law
 2230  upon which the protest is based. Upon receipt of a formal
 2231  written protest that has been timely filed, the corporation must
 2232  stop the solicitation or contract award process until the
 2233  subject of the protest is resolved by final board action unless
 2234  the executive director sets forth in writing particular facts
 2235  and circumstances that require the continuance of the
 2236  solicitation or contract award process without delay in order to
 2237  avoid an immediate and serious danger to the public health,
 2238  safety, or welfare. The corporation must provide an opportunity
 2239  to resolve the protest by mutual agreement between the parties
 2240  within 7 business days after receipt of the formal written
 2241  protest. If the subject of a protest is not resolved by mutual
 2242  agreement within 7 business days, the corporation’s board must
 2243  place the protest on the agenda and resolve it at its next
 2244  regularly scheduled meeting. The protest must be heard by the
 2245  board at a publicly noticed meeting in accordance with
 2246  procedures established by the board.
 2247         c. In a protest of an invitation-to-bid or request-for
 2248  proposals procurement, submissions made after the bid or
 2249  proposal opening which amend or supplement the bid or proposal
 2250  may not be considered. In protesting an invitation-to-negotiate
 2251  procurement, submissions made after the corporation announces
 2252  its intent to award a contract, reject all replies, or withdraw
 2253  the solicitation that amends or supplements the reply may not be
 2254  considered. Unless otherwise provided by law, the burden of
 2255  proof rests with the party protesting the corporation’s action.
 2256  In a competitive-procurement protest, other than a rejection of
 2257  all bids, proposals, or replies, the corporation’s board must
 2258  conduct a de novo proceeding to determine whether the
 2259  corporation’s proposed action is contrary to the corporation’s
 2260  governing statutes, the corporation’s rules or policies, or the
 2261  solicitation specifications. The standard of proof for the
 2262  proceeding is whether the corporation’s action was clearly
 2263  erroneous, contrary to competition, arbitrary, or capricious. In
 2264  any bid-protest proceeding contesting an intended corporation
 2265  action to reject all bids, proposals, or replies, the standard
 2266  of review by the board is whether the corporation’s intended
 2267  action is illegal, arbitrary, dishonest, or fraudulent.
 2268         d. Failure to file a notice of protest or failure to file a
 2269  formal written protest constitutes a waiver of proceedings.
 2270         3. Contract actions and decisions by the board under this
 2271  paragraph are final. Any further legal remedy must be made in
 2272  the Circuit Court of Leon County.
 2273         Section 11. The purchase of commodities and contractual
 2274  services by Citizens Property Insurance Corporation commenced
 2275  before October 1, 2013, is governed by the law in effect on
 2276  September 30, 2013.
 2277         Section 12. Effective January 1, 2014, paragraph (n) of
 2278  subsection (6) of section 627.351, Florida Statutes, is amended
 2279  to read:
 2280         627.351 Insurance risk apportionment plans.—
 2281         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2282         (n)1. Rates for coverage provided by the corporation must
 2283  be actuarially sound and subject to s. 627.062, Except as
 2284  otherwise provided in this paragraph, rates for coverage
 2285  provided by the corporation must be actuarially sound and not
 2286  competitive with approved rates charged in the admitted
 2287  voluntary market in order for the corporation to function as a
 2288  residual market mechanism that provides insurance only if
 2289  insurance cannot be procured in the voluntary market.
 2290         a. In establishing actuarially sound rates the corporation
 2291  shall include an appropriate catastrophe risk load factor that
 2292  reflects the actual catastrophic risk exposure retained by the
 2293  corporation.
 2294         b. In establishing noncompetitive rates for personal and
 2295  commercial lines residential policies, the average rates of the
 2296  corporation for each rating territory may not be less than the
 2297  average rates charged by the insurer that had the highest
 2298  average rate in that rating territory among the 20 voluntary
 2299  admitted insurers with the greatest total direct written premium
 2300  in the state for that line of business in the preceding year.
 2301         c. In establishing noncompetitive rates for mobile home
 2302  coverage, the average rates of the corporation may not be less
 2303  than the average rates charged by the insurer that had the
 2304  highest average rate in that rating territory among the five
 2305  voluntary admitted insurers with the greatest total written
 2306  premium for mobile home owner’s policies in the state in the
 2307  preceding year. The corporation shall file its recommended rates
 2308  with the office at least annually. The corporation shall provide
 2309  any additional information regarding the rates which the office
 2310  requires. The office shall consider the recommendations of the
 2311  board and issue a final order establishing the rates for the
 2312  corporation within 45 days after the recommended rates are
 2313  filed. The corporation may not pursue an administrative
 2314  challenge or judicial review of the final order of the office.
 2315         d. Rates for commercial nonresidential policies must be
 2316  actuarially sound in accordance with sub-subparagraph a.
 2317         e. The requirements of sub-subparagraphs b. and c. do not
 2318  apply to rates in territories where the office determines there
 2319  is not a reasonable degree of competition. In such territories
 2320  the corporation’s rates must be actuarially sound in accordance
 2321  with sub-subparagraph a.
 2322         2. In addition to the rates otherwise determined pursuant
 2323  to this paragraph, the corporation shall impose and collect an
 2324  amount equal to the premium tax provided in s. 624.509 to
 2325  augment the financial resources of the corporation.
 2326         3. After the public hurricane loss-projection model under
 2327  s. 627.06281 has been found to be accurate and reliable by the
 2328  Florida Commission on Hurricane Loss Projection Methodology, the
 2329  model shall serve as the minimum benchmark for determining the
 2330  windstorm portion of the corporation’s rates. This subparagraph
 2331  does not require or allow the corporation to adopt rates lower
 2332  than the rates otherwise required or allowed by this paragraph.
 2333         4. The rate filings for the corporation which were approved
 2334  by the office and took effect January 1, 2007, are rescinded,
 2335  except for those rates that were lowered. As soon as possible,
 2336  the corporation shall begin using the lower rates that were in
 2337  effect on December 31, 2006, and provide refunds to
 2338  policyholders who paid higher rates as a result of that rate
 2339  filing. The rates in effect on December 31, 2006, remain in
 2340  effect for the 2007 and 2008 calendar years except for any rate
 2341  change that results in a lower rate. The next rate change that
 2342  may increase rates shall take effect pursuant to a new rate
 2343  filing recommended by the corporation and established by the
 2344  office, subject to this paragraph.
 2345         5. Beginning on July 15, 2009, and annually thereafter, the
 2346  corporation must make a recommended actuarially sound rate
 2347  filing for each personal and commercial line of business it
 2348  writes, to be effective no earlier than January 1, 2010.
 2349         3.6.For policies initially insured by the corporation
 2350  before July 1, 2013, and which have continuously been insured by
 2351  the corporation since that date, Beginning on or after January
 2352  1, 2010, and notwithstanding the board’s recommended rates and
 2353  the office’s final order regarding the corporation’s filed rates
 2354  under subparagraph 1., the corporation shall annually implement
 2355  a rate increase that which, except for sinkhole coverage, does
 2356  not exceed 10 percent for any territory single policy issued by
 2357  the corporation, excluding coverage changes and surcharges. This
 2358  subparagraph is limited to:
 2359         a. Personal lines residential policies that have a dwelling
 2360  replacement cost of less than $300,000 and that cover homestead
 2361  personal residential properties or occupied permanent
 2362  residencies having a written rental agreement for at least 12
 2363  months.
 2364         b. Personal lines residential wind-only policies that cover
 2365  homestead personal residential properties, or that are occupied
 2366  permanent residencies that have a written rental agreement for
 2367  no less than 12 months, and have a dwelling replacement cost of
 2368  less than:
 2369         (1) $1 million on July 1, 2013.
 2370         (II) $800,000 on January 1, 2014.
 2371         (III) $600,000 on January 1, 2015.
 2372         c. Commercial lines residential properties.
 2373         4. The corporation shall also implement the following:
 2374         a.7.The corporation may also implement An increase to
 2375  reflect the effect on the corporation of the cash buildup factor
 2376  pursuant to s. 215.555(5)(b).
 2377         b. An increase of up to 3 percent, which shall only be used
 2378  to purchase catastrophe reinsurance or other risk transfer
 2379  mechanisms for purposes of protecting the corporation and its
 2380  policyholders from potential shortfalls and assessments. In any
 2381  year for which the full 3 percent increase is imposed, there
 2382  must also be a corresponding 3 percent decrease, 1 percent per
 2383  account, from the Citizens policyholder surcharge in (b)3.i.,
 2384  for that year.
 2385         5.8. The corporation’s implementation of rates as
 2386  prescribed in subparagraph 3. 6. shall cease for any line of
 2387  business written by the corporation upon the corporation’s
 2388  implementation of the rates described in subparagraph 1.
 2389  actuarially sound rates. Thereafter, the corporation shall
 2390  annually make a recommended actuarially sound rate filing
 2391  implementing such rates for each commercial and personal line of
 2392  business the corporation writes.
 2393         6. The corporation shall annually certify to the office
 2394  that its rates comply with the requirements of this paragraph.
 2395  If any adjustment in the rates or rating factors of the
 2396  corporation is necessary to ensure such compliance, the
 2397  corporation shall make and implement such adjustments and file
 2398  its revised rates and rating factors with the office. If the
 2399  office thereafter determines that the revised rates and rating
 2400  factors fail to comply with this paragraph, it shall notify the
 2401  corporation and require the corporation to amend its rates or
 2402  rating factors in conjunction with its next rate filing. The
 2403  office must notify the corporation by electronic means of any
 2404  rate filing it approves for any insurer among the insurers
 2405  referred to in this paragraph.
 2406         7. By January 1, 2014, the board shall provide
 2407  recommendations to the Legislature on how to provide relief to a
 2408  policyholder whose premium reflects the full rate required under
 2409  subparagraph 1. and who demonstrates a financial need at the
 2410  time of application or renewal.
 2411         Section 13. Section 627.3518, Florida Statutes, is created
 2412  to read:
 2413         627.3518Citizens Property Insurance Corporation
 2414  clearinghouse.—The Legislature recognizes that Citizens Property
 2415  Insurance Corporation has authority to establish a clearinghouse
 2416  as a separate organizational unit within the corporation for the
 2417  purpose of determining the eligibility of new and renewal risks,
 2418  excluding commercial residential, seeking coverage through the
 2419  corporation and facilitating the identification and diversion of
 2420  ineligible applicants and current policyholders from the
 2421  corporation into the voluntary insurance market. The purpose of
 2422  this section is to augment that authority by providing a
 2423  framework for the corporation to implement such program by July
 2424  1, 2013.
 2425         (1) DEFINITIONS.—As used in this section, the term:
 2426         (a) “Clearinghouse” means the clearinghouse diversion
 2427  program created under this section.
 2428         (b) “Corporation” means Citizens Property Insurance
 2429  Corporation.
 2430         (c) “Exclusive agent” means any licensed insurance agent
 2431  who has, by contract, agreed to act exclusively for one company
 2432  or group of affiliated insurance companies, and who is
 2433  disallowed by that contract to directly write for any other
 2434  unaffiliated insurer absent express consent from the company or
 2435  group of affiliated companies.
 2436         (d) “Independent agent” means a licensed insurance agent
 2437  who is not required by contract to act only on behalf of one
 2438  company or group of affiliated insurance companies.
 2439         (2) The clearinghouse shall have all the rights and
 2440  responsibilities in carrying out its duties as a licensed
 2441  general lines agent, but is not required to employ or engage a
 2442  licensed general lines agent or maintain an insurance agency
 2443  license in order to solicit and place insurance coverage. In
 2444  establishing the clearinghouse the corporation:
 2445         (a) Shall require all new applications for coverage and all
 2446  policies up for renewal to be submitted to the clearinghouse to
 2447  facilitate obtaining an offer of coverage from an authorized
 2448  insurer before binding or renewing coverage with the
 2449  corporation.
 2450         (b) Shall develop an enhanced application for obtaining
 2451  information that will assist private insurers in determining
 2452  whether or not to make an offer of coverage through the
 2453  clearinghouse.
 2454         (c) Shall require all new applications for coverage to be
 2455  subject to a 48-hour period that allows a private insurer
 2456  participating in the clearinghouse to select applicants for
 2457  coverage before the application is submitted to the corporation
 2458  for coverage. The insurer may issue a binder to a selected
 2459  applicant for at least 30 days, but not more than 60 days.
 2460         (d) Notwithstanding s. 626.916(1), if an applicant for new
 2461  or renewal coverage from the corporation does not receive an
 2462  offer of coverage from an admitted insurer, the applicant may
 2463  accept an offer from a surplus lines insurer eligible under ss.
 2464  626.913-626.937.
 2465         (e) Shall provide funds to operate the clearinghouse. The
 2466  corporation may charge a reasonable fee as a percentage of an
 2467  agent’s commission to offset, or partially offset the costs of
 2468  the clearinghouse. However, insurers participating in the
 2469  clearinghouse are not required to pay a fee to use the
 2470  clearinghouse to renew policies initially written through the
 2471  clearinghouse.
 2472         (f) Shall enter into contracts with licensed property
 2473  insurance companies operating in this state to participate in
 2474  the clearinghouse and accept appointments from voluntary market
 2475  insurers.
 2476         (g) May employ or otherwise contract with individuals or
 2477  other entities to provide administrative or professional
 2478  services in accordance with purchasing requirements set forth in
 2479  corporation’s plan under s. 627.351(6)(c).
 2480         (3) A licensed insurer may participate in the
 2481  clearinghouse. Insurers making offers of coverage to new
 2482  applicants or renewing policyholders through the clearinghouse:
 2483         (a) Are not required to individually appoint an agent whose
 2484  customer is bound and underwritten through the clearinghouse for
 2485  as long as that policy remains with the insurer. Insurers may
 2486  appoint an agent whose customer is initially underwritten and
 2487  bound through the clearinghouse. If an insurer accepts a policy
 2488  from an agent who is not appointed and thereafter elects to
 2489  accept a policy from that agent which was not submitted through
 2490  the program, the provisions of s. 626.112 requiring appointment
 2491  apply to that agent.
 2492         (b) Shall enter into a limited agency agreement with each
 2493  agent whose customer is underwritten and bound through the
 2494  clearinghouse and who is not appointed in accordance with this
 2495  subsection.
 2496         (c) Shall enter into its standard agency agreement with
 2497  each agent whose customer is underwritten and bound through the
 2498  clearinghouse if that agent has been appointed by the insurer
 2499  pursuant to s. 626.112.
 2500         (d) Must comply with the s. 627.4133(2).
 2501         (4) Notwithstanding section 627.3517, if an applicant for
 2502  new coverage from the corporation is offered coverage from an
 2503  admitted insurer through the clearinghouse or through an
 2504  alternative option under subsection (7) at a rate that is at or
 2505  below the eligibility threshold established in s. 627.351(c)5.,
 2506  the risk is not eligible for coverage with the corporation.
 2507  Notwithstanding any other provisions of law, if a policyholder
 2508  at renewal is provided an offer of coverage from an admitted
 2509  insurer through the program or through an alternative option
 2510  under subsection (7), and the offer is no more than 15 percent
 2511  above the policyholder’s premium for comparable coverage through
 2512  the corporation, the risk is not eligible for coverage with the
 2513  corporation.
 2514         (5) Independent insurance agents submitting new
 2515  applications for coverage or who are the agent of record on a
 2516  renewal policy submitted to the clearinghouse:
 2517         (a) Notwithstanding s. 626.112, are not required to be
 2518  appointed by an insurer participating in the clearinghouse for
 2519  policies written solely through the clearinghouse.
 2520         (b) May accept an appointment from an insurer participating
 2521  in the clearinghouse.
 2522         (c) Must enter into a standard or limited agency agreement
 2523  with the insurer, at the insurer’s option.
 2524         (d) Must maintain the exclusive use of expirations,
 2525  records, or other written or electronic information directly
 2526  related to such applications or renewals written through the
 2527  corporation or through an insurer participating in the
 2528  clearinghouse. Such expirations, records, or other written or
 2529  electronic information may be used to review an application,
 2530  issue a policy, or for any other purpose necessary for placing
 2531  such business through the clearinghouse.
 2532         (6) Exclusive agents submitting new applications for
 2533  coverage or that are the agent of record on a renewal policy
 2534  submitted to the program:
 2535         (a) Notwithstanding s. 626.112, are not required to be
 2536  appointed by an insurer participating in the clearinghouse for
 2537  policies written solely through the clearinghouse.
 2538         (b) May provide the new applicant or renewing policyholder
 2539  the opportunity to accept an offer of coverage from an insurer
 2540  that is participating in the clearinghouse and that had a
 2541  limited servicing agreement approved by the exclusive agent’s
 2542  insurer.
 2543         (c) Must enter into only a limited servicing agreement with
 2544  the insurer making an offer of coverage.
 2545         (d) Must maintain the exclusive use of expirations,
 2546  records, or other written or electronic information directly
 2547  related to such applications or renewals written through the
 2548  corporation or through an insurer participating in the program,
 2549  notwithstanding s. 627.351(6)(c)5.a.(I)(B) and (II)(B). Such
 2550  expirations, records, or other written or electronic information
 2551  may be used to review an application, issue a policy, or for any
 2552  other purpose necessary for placing such business through the
 2553  clearinghouse.
 2554         (7) The corporation may recognize private entities that the
 2555  independent agent elects to use as an alternative to submitting
 2556  a risk to the clearinghouse. An alternative option allowed under
 2557  this subsection shall obtain offers of coverage from authorized
 2558  insurers for new applicants seeking coverage from the
 2559  corporation and for corporation policyholders on renewal. The
 2560  alternative option may not be used as a replacement for the
 2561  clearinghouse. Neither the clearinghouse nor a private entity
 2562  operating under this subsection may prohibit insurers from
 2563  electing to participate in more than one program or alternative,
 2564  and an insurer participating in the private entity alternative
 2565  must also participate in the clearinghouse.
 2566         (8) Submission of an application for coverage by the
 2567  corporation to the clearinghouse does not constitute the binding
 2568  of coverage by the corporation, and failure of the clearinghouse
 2569  to obtain an offer of coverage by an insurer is not considered
 2570  acceptance of coverage of the risk by the corporation.
 2571         Section 14. Subsection (1) of section 627.405, Florida
 2572  Statutes, is amended to read:
 2573         627.405 Insurable interest; property.—
 2574         (1) A No contract for property of insurance of property or
 2575  of any interest in property or arising from property is not
 2576  shall be enforceable as to the insurance except for the benefit
 2577  of persons having an insurable interest in the things insured as
 2578  at the time of the loss. Policyholders under a contract of
 2579  property insurance may assign benefits to be received under that
 2580  contract consistent with, and subject to, the conditions in the
 2581  policy.
 2582         Section 15. Subsection (1) of section 627.410, Florida
 2583  Statutes, is amended to read:
 2584         627.410 Filing, approval of forms.—
 2585         (1) A No basic insurance policy or annuity contract form,
 2586  or application form where written application is required and is
 2587  to be made a part of the policy or contract, or group
 2588  certificates issued under a master contract delivered in this
 2589  state, or printed rider or endorsement form or form of renewal
 2590  certificate, may not shall be delivered or issued for delivery
 2591  in this state, unless the form has been filed with the office by
 2592  or on in behalf of the insurer that which proposes to use such
 2593  form and has been approved by the office or filed pursuant to s.
 2594  627.4102. This provision does not apply to surety bonds or to
 2595  policies, riders, endorsements, or forms of unique character
 2596  that which are designed for and used with relation to insurance
 2597  on upon a particular subject, (other than as to health
 2598  insurance), or that which relate to the manner of distributing
 2599  distribution of benefits or to the reservation of rights and
 2600  benefits under life or health insurance policies and are used at
 2601  the request of the individual policyholder, contract holder, or
 2602  certificateholder. For As to group insurance policies
 2603  effectuated and delivered outside this state but covering
 2604  persons resident in this state, the group certificates to be
 2605  delivered or issued for delivery in this state shall be filed
 2606  with the office for information purposes only.
 2607         Section 16. Section 627.4102, Florida Statutes, is created
 2608  to read:
 2609         627.4102 Informational filing of forms; certification.—
 2610         (1) Property and casualty forms, except workers’
 2611  compensation forms, are exempt from the approval process
 2612  required under s. 627.410 if:
 2613         (a) The form has been electronically submitted to the
 2614  office in an informational filing made through I-File 30 days
 2615  before the delivery or issuance for delivery of the form within
 2616  this state; and
 2617         (b) At the time the informational filing is made, a
 2618  notarized certification is attached to the filing which
 2619  certifies that each form within the filing is in compliance with
 2620  all applicable state laws and rules. The certification must be
 2621  on the insurer’s letterhead and signed and dated by the
 2622  insurer’s president, chief executive officer, general counsel,
 2623  or an employee of the insurer responsible for the filing on
 2624  behalf of the insurer. The certification must contain the
 2625  following statement, and no other language: “I, ...[name]..., as
 2626  ...[title]... of ...[insurer name]..., do hereby certify that
 2627  this form filing has been thoroughly and diligently reviewed by
 2628  me and by all appropriate company personnel, as well as company
 2629  consultants, if applicable, and certify that each form contained
 2630  within the filing is in compliance with all applicable Florida
 2631  laws and rules. Should a form be found that is not in compliance
 2632  with Florida laws and rules, I acknowledge that the Office of
 2633  Insurance Regulation shall disapprove the form.”
 2634         (2) If the filing contains a form that is not in compliance
 2635  with state laws and rules, the form filing, at the discretion of
 2636  the office, is subject to prior review and approval pursuant to
 2637  s. 627.410, and the period for review and approval established
 2638  under s. 627.410(2) begins to run on the date the office
 2639  notifies the insurer of the discovery of the noncompliant form.
 2640         (3) A Notice of Change in Policy Terms form required under
 2641  s. 627.43141(2) shall be filed as a part of the informational
 2642  filing for a renewal policy that contains a change. All
 2643  modifications, additions, or deletions of terms, coverages,
 2644  duties, or conditions shall be enumerated within the body of the
 2645  form. If a renewal policy that was certified requires such form,
 2646  the insurer must provide a copy to the named insured’s agent
 2647  pursuant to s. 627.43141(6)(c) before or upon providing the form
 2648  to the named insured.
 2649         (4) This section does not preclude an insurer from electing
 2650  to file any form for approval under s. 627.410 which would
 2651  otherwise be exempt under this section.
 2652         (5) The provisions of this section supersede and replace
 2653  the existing order issued by the office exempting specified
 2654  property and casualty forms from the requirements of s. 627.410.
 2655         Section 17. Except as otherwise expressly provided in the
 2656  act, this act shall take effect July 1, 2013.