Florida Senate - 2013                                     SB 724
       
       
       
       By Senator Brandes
       
       
       
       
       22-00612B-13                                           2013724__
    1                        A bill to be entitled                      
    2         An act relating to Citizens Property Insurance
    3         Corporation; amending s. 215.555, F.S., relating to
    4         the Florida Hurricane Catastrophe Fund; revising the
    5         definition of “covered policy”; amending s. 626.752,
    6         F.S., relating to the exchange of business between an
    7         agent and insurer; applying an exemption from the
    8         requirements of that section to the corporation;
    9         amending s. 627.351, F.S.; revising requirements
   10         relating to quota share primary insurance agreements;
   11         requiring the corporation and authorized insurers to
   12         enter into excess of loss reinsurance agreements and
   13         quota share reinsurance agreements in certain
   14         circumstances; authorizing the corporation’s board of
   15         governors to limit the corporation’s participation;
   16         deleting and revising related definitions; providing
   17         that entering into such agreements is at the
   18         discretion of the insurer; providing that if the
   19         corporation is the reinsurer, all forms and
   20         endorsements must be approved by the Office of
   21         Insurance Regulation; prohibiting the corporation from
   22         sharing risk for certain damages; requiring the
   23         corporation and each insurer to report additional
   24         information to the fund and revising the procedures
   25         for determining whether a risk is eligible for the
   26         corporation; requiring the corporation to implement
   27         eligibility procedures and operational requirements
   28         for certain purposes which include a clearinghouse for
   29         new applications; providing an effective date.
   30  
   31  Be It Enacted by the Legislature of the State of Florida:
   32  
   33         Section 1. Paragraph (c) of subsection (2) of section
   34  215.555, Florida Statutes, is amended to read:
   35         215.555 Florida Hurricane Catastrophe Fund.—
   36         (2) DEFINITIONS.—As used in this section:
   37         (c) “Covered policy” means any insurance policy covering
   38  residential property in this state, including, but not limited
   39  to, a any homeowner’s, mobile home owner’s, farm owner’s,
   40  condominium association, condominium unit owner’s, tenant’s, or
   41  apartment building policy, or any other policy covering a
   42  residential structure or its contents issued by an any
   43  authorized insurer, including a commercial self-insurance fund
   44  holding a certificate of authority issued by the Office of
   45  Insurance Regulation under s. 624.462, the Citizens Property
   46  Insurance Corporation, and any joint underwriting association or
   47  similar entity created under law. The term “covered policy”
   48  includes any collateral protection insurance policy covering
   49  personal residences which protects both the borrower’s and the
   50  lender’s financial interests, in an amount at least equal to the
   51  coverage for the dwelling in place under the lapsed homeowner’s
   52  policy, if such policy can be accurately reported as required
   53  under in subsection (5). Additionally, Covered policies also
   54  include policies covering the peril of wind removed from the
   55  Florida Residential Property and Casualty Joint Underwriting
   56  Association or from the Citizens Property Insurance Corporation,
   57  created under s. 627.351(6), or from the Florida Windstorm
   58  Underwriting Association, created under s. 627.351(2), by an
   59  authorized insurer under the terms and conditions of an executed
   60  Citizens Property Insurance Corporation assumption or
   61  reinsurance agreement between the authorized insurer and the
   62  such association or Citizens Property Insurance corporation.
   63  Each assumption or reinsurance agreement between the association
   64  and such authorized insurer and the or Citizens Property
   65  Insurance corporation must be approved by the Office of
   66  Insurance Regulation before the effective date of the agreement
   67  assumption, and the office of Insurance Regulation must provide
   68  written notification to the board within 15 working days after
   69  such approval. The term “covered policy” does not include any
   70  policy that excludes wind coverage or hurricane coverage or any
   71  reinsurance agreement, other than a Citizens Property Insurance
   72  Corporation reinsurance agreement, and does not include any
   73  policy otherwise meeting this definition which is issued by a
   74  surplus lines insurer or a reinsurer. All commercial residential
   75  excess policies and all deductible buy-back policies that, based
   76  on sound actuarial principles, require individual ratemaking
   77  shall be excluded by rule if the actuarial soundness of the fund
   78  is not jeopardized. For this purpose, the term “excess policy”
   79  means a policy that provides insurance protection for large
   80  commercial property risks and that provides a layer of coverage
   81  above a primary layer insured by another insurer.
   82         Section 2. Subsection (4) of section 626.752, Florida
   83  Statutes, is amended to read:
   84         626.752 Exchange of business.—
   85         (4) The foregoing limitations and restrictions do shall not
   86  be construed and shall not apply to the placing of surplus lines
   87  business under the provisions of part VIII or to Citizens
   88  Property Insurance Corporation acting as an agent to place new
   89  and renewal business with authorized insurers in conjunction
   90  with efforts to reduce the size of the corporation pursuant to
   91  s. 627.351(6).
   92         Section 3. Paragraph (c) of subsection (6) of section
   93  627.351, Florida Statutes, is amended to read:
   94         627.351 Insurance risk apportionment plans.—
   95         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   96         (c) The corporation’s plan of operation:
   97         1. Must provide for adoption of residential property and
   98  casualty insurance policy forms and commercial residential and
   99  nonresidential property insurance forms, which must be approved
  100  by the office before use. The corporation shall adopt the
  101  following policy forms:
  102         a. Standard personal lines policy forms that are
  103  comprehensive multiperil policies providing full coverage of a
  104  residential property equivalent to the coverage provided in the
  105  private insurance market under an HO-3, HO-4, or HO-6 policy.
  106         b. Basic personal lines policy forms that are policies
  107  similar to an HO-8 policy or a dwelling fire policy that provide
  108  coverage meeting the requirements of the secondary mortgage
  109  market, but which is more limited than the coverage under a
  110  standard policy.
  111         c. Commercial lines residential and nonresidential policy
  112  forms that are generally similar to the basic perils of full
  113  coverage obtainable for commercial residential structures and
  114  commercial nonresidential structures in the admitted voluntary
  115  market.
  116         d. Personal lines and commercial lines residential property
  117  insurance forms that cover the peril of wind only. Such The
  118  forms are applicable only to residential properties located in
  119  areas eligible for coverage under the coastal account referred
  120  to in sub-subparagraph (b)2.a.
  121         e. Commercial lines nonresidential property insurance forms
  122  that cover the peril of wind only. Such The forms are applicable
  123  only to nonresidential properties located in areas eligible for
  124  coverage under the coastal account referred to in sub
  125  subparagraph (b)2.a.
  126         f. The corporation may adopt variations of the policy forms
  127  listed in sub-subparagraphs a.-e. which contain more restrictive
  128  coverage.
  129         g. Effective January 1, 2013, the corporation shall offer a
  130  basic personal lines policy similar to an HO-8 policy with
  131  dwelling repair based on common construction materials and
  132  methods.
  133         2. Must provide that the corporation adopt a program that
  134  facilitates the depopulation of residential risks in which the
  135  corporation and authorized insurers enter into excess of loss
  136  reinsurance agreements, quota share reinsurance agreements, or
  137  quota share primary insurance agreements for hurricane coverage,
  138  as defined in s. 627.4025(2)(a), for eligible risks, and adopt
  139  property insurance forms for eligible risks which cover the
  140  peril of wind only. The board of governors may limit the
  141  corporation’s participation in excess of loss reinsurance
  142  agreements, quota share reinsurance agreements, or quota share
  143  primary insurance agreements to those participants capable of
  144  and willing to assume a minimum of 20 percent of the exposure on
  145  the policies subject to such agreement and may specify other
  146  limitations. An agreement in which the corporation retains part
  147  of the risk may provide for the decline of the corporation’s
  148  participation over a period not to exceed 5 years.
  149         a. As used in this subsection, the term:
  150         (I) “Quota share primary insurance” means an arrangement in
  151  which the primary hurricane coverage of an eligible risk is
  152  provided in specified percentages by the corporation and an
  153  authorized insurer. The corporation and authorized insurer are
  154  each solely responsible for a specified percentage of hurricane
  155  coverage of an eligible risk as set forth in a quota share
  156  primary insurance agreement between the corporation and an
  157  authorized insurer and the insurance contract. The
  158  responsibility of the corporation or authorized insurer to pay
  159  its specified percentage of hurricane losses of an eligible
  160  risk, as set forth in the agreement, may not be altered by the
  161  inability of the other party to pay its specified percentage of
  162  losses. Eligible risks that are provided hurricane coverage
  163  through a quota share primary insurance arrangement must be
  164  provided policy forms that set forth the obligations of the
  165  corporation and authorized insurer under the arrangement,
  166  clearly specify the percentages of quota share primary insurance
  167  provided by the corporation and authorized insurer, and
  168  conspicuously and clearly state that the authorized insurer and
  169  the corporation may not be held responsible beyond their
  170  specified percentage of coverage of hurricane losses.
  171         (II) “eligible risks” means personal lines residential and
  172  commercial lines residential risks that are currently insured by
  173  meet the underwriting criteria of the corporation and have been
  174  continuously insured by the corporation since on or before July
  175  1, 2013. Effective January 1, 2014, such risks also must have
  176  had eligibility verified pursuant to sub-subparagraph 5.d and
  177  are located in areas that were eligible for coverage by the
  178  Florida Windstorm Underwriting Association on January 1, 2002.
  179         b. Entering into an excess of loss reinsurance agreement,
  180  quota share reinsurance agreement, or quota share primary
  181  insurance agreement between the corporation and an authorized
  182  insurer is voluntary and at the discretion of the authorized
  183  insurer.
  184         b. The corporation may enter into quota share primary
  185  insurance agreements with authorized insurers at corporation
  186  coverage levels of 90 percent and 50 percent.
  187         c. If the corporation determines that additional coverage
  188  levels are necessary to maximize participation in quota share
  189  primary insurance agreements by authorized insurers, the
  190  corporation may establish additional coverage levels. However,
  191  the corporation’s quota share primary insurance coverage level
  192  may not exceed 90 percent.
  193         d. Any quota share primary insurance agreement entered into
  194  between an authorized insurer and the corporation must provide
  195  for a uniform specified percentage of coverage of hurricane
  196  losses, by county or territory as set forth by the corporation
  197  board, for all eligible risks of the authorized insurer covered
  198  under the agreement.
  199         c.e. Any excess of loss reinsurance agreement, quota share
  200  reinsurance agreement, or quota share primary insurance
  201  agreement entered into between an authorized insurer and the
  202  corporation is subject to review and approval by the office.
  203  However, such agreement may shall be authorized only for as to
  204  insurance contracts entered into between an authorized insurer
  205  and an insured who is already insured by the corporation for
  206  wind coverage. If the corporation is the reinsurer, the
  207  insurance policy forms and endorsements offered by the
  208  authorized insurer must be approved by the office, cover all
  209  perils that are the subject of the risk sharing agreement, and
  210  cover at least the same limits as the corporation policies being
  211  replaced.
  212         d. The corporation may not share risk for extra contractual
  213  damages at common law or under s. 624.155.
  214         e.f. For all eligible risks covered under quota share
  215  primary insurance agreements, the exposure and coverage levels
  216  for both the corporation and authorized insurers must shall be
  217  reported by the corporation to the Florida Hurricane Catastrophe
  218  Fund. For all policies of eligible risks covered under such
  219  agreements, the corporation and the authorized insurer must
  220  maintain complete and accurate records for the purpose of
  221  exposure and loss reimbursement audits as required by fund
  222  rules. The corporation and the authorized insurer shall each
  223  maintain duplicate copies of policy declaration pages and
  224  supporting claims documents.
  225         f. To ensure that exposures are accurately reported to the
  226  Florida Hurricane Catastrophe Fund, the corporation and each
  227  insurer participating in the reinsurance program shall report
  228  its exposure under covered policies to the fund as required
  229  under s. 215.555(5)(c). Each report must also specify the
  230  percentage of liability applicable to the corporation and the
  231  percentage applicable to the insurer with respect to quota share
  232  and similar agreements, or the terms of the excess of loss
  233  agreement in the case of such an agreement. Pursuant to its
  234  authority under s. 215.555, the State Board of Administration
  235  shall adopt rules to administer this sub-subparagraph.
  236         g. The corporation board shall establish in its plan of
  237  operation standards for quota share agreements which ensure that
  238  there is no discriminatory application among insurers as to the
  239  terms of the agreements, pricing of the agreements, incentive
  240  provisions if any, and consideration paid for servicing policies
  241  or adjusting claims.
  242         h. The quota share primary insurance agreement between the
  243  corporation and an authorized insurer must set forth the
  244  specific terms under which coverage is provided, including, but
  245  not limited to, the sale and servicing of policies issued under
  246  the agreement by the insurance agent of the authorized insurer
  247  producing the business, the reporting of information concerning
  248  eligible risks, the payment of premium to the corporation, and
  249  arrangements for the adjustment and payment of hurricane claims
  250  incurred on eligible risks by the claims adjuster and personnel
  251  of the authorized insurer. Entering into a quota sharing
  252  insurance agreement between the corporation and an authorized
  253  insurer is voluntary and at the discretion of the authorized
  254  insurer.
  255         3.a. May provide that the corporation may employ or
  256  otherwise contract with individuals or other entities to provide
  257  administrative or professional services that may be appropriate
  258  to effectuate the plan.
  259         a. The corporation may borrow funds by issuing bonds or by
  260  incurring other indebtedness, and shall have other powers
  261  reasonably necessary to effectuate the requirements of this
  262  subsection, including, without limitation, the power to issue
  263  bonds and incur other indebtedness in order to refinance
  264  outstanding bonds or other indebtedness. The corporation may
  265  seek judicial validation of its bonds or other indebtedness
  266  under chapter 75. The corporation may issue bonds or incur other
  267  indebtedness, or have bonds issued on its behalf by a unit of
  268  local government pursuant to subparagraph (q)2. in the absence
  269  of a hurricane or other weather-related event, upon a
  270  determination by the corporation, subject to approval by the
  271  office, that such action would enable it to efficiently meet the
  272  financial obligations of the corporation and that such
  273  financings are reasonably necessary to effectuate the
  274  requirements of this subsection. The corporation may take all
  275  actions needed to facilitate tax-free status for such bonds or
  276  indebtedness, including formation of trusts or other affiliated
  277  entities. The corporation may pledge assessments, projected
  278  recoveries from the Florida Hurricane Catastrophe Fund, other
  279  reinsurance recoverables, policyholder surcharges and other
  280  surcharges, and other funds available to the corporation as
  281  security for bonds or other indebtedness. In recognition of s.
  282  10, Art. I of the State Constitution, prohibiting the impairment
  283  of obligations of contracts, it is the intent of the Legislature
  284  that no action may not be taken whose purpose is to impair any
  285  bond indenture or financing agreement or any revenue source
  286  committed by contract to such bond or other indebtedness.
  287         b. To ensure that the corporation is operating in an
  288  efficient and economic manner while providing quality service to
  289  policyholders, applicants, and agents, the board shall
  290  commission an independent third-party consultant having
  291  expertise in insurance company management or insurance company
  292  management consulting to prepare a report and make
  293  recommendations on the relative costs and benefits of
  294  outsourcing various policy issuance and service functions to
  295  private servicing carriers or entities performing similar
  296  functions in the private market for a fee, rather than
  297  performing such functions in-house. In making such
  298  recommendations, the consultant shall consider how other
  299  residual markets, both in this state and around the country,
  300  outsource appropriate functions or use servicing carriers to
  301  better match expenses with revenues that fluctuate based on a
  302  widely varying policy count. The report must be completed by
  303  July 1, 2012. Upon receiving the report, the board shall develop
  304  a plan to implement the report and submit the plan for review,
  305  modification, and approval to the Financial Services Commission.
  306  Upon the commission’s approval of the plan, the board shall
  307  begin implementing the plan by January 1, 2013.
  308         4. Must require that the corporation operate subject to the
  309  supervision and approval of a board of governors consisting of
  310  eight individuals who are residents of this state and who are,
  311  from different geographical areas of the this state.
  312         a. The Governor, the Chief Financial Officer, the President
  313  of the Senate, and the Speaker of the House of Representatives
  314  shall each appoint two members of the board. At least one of the
  315  two members appointed by each appointing officer must have
  316  demonstrated expertise in insurance and be is deemed to be
  317  within the scope of the exemption provided under in s.
  318  112.313(7)(b). The Chief Financial Officer shall designate one
  319  of the appointees as chair. All board members serve at the
  320  pleasure of the appointing officer. All members of the board are
  321  subject to removal at will by the officers who appointed them.
  322  All board members, including the chair, shall must be appointed
  323  to serve for 3-year terms beginning annually on a date
  324  designated by the plan. However, for the first term beginning on
  325  or after July 1, 2009, each appointing officer shall appoint one
  326  member of the board for a 2-year term and one member for a 3
  327  year term. A board vacancy shall be filled for the unexpired
  328  term by the appointing officer. The Chief Financial Officer
  329  shall appoint a technical advisory group to provide information
  330  and advice to the board in connection with the board’s duties
  331  under this subsection. The executive director and senior
  332  managers of the corporation shall be engaged by the board and
  333  serve at the pleasure of the board. Any executive director
  334  appointed on or after July 1, 2006, is subject to confirmation
  335  by the Senate. The executive director is responsible for
  336  employing other staff as the corporation may require, subject to
  337  review and concurrence by the board.
  338         b. The board shall create a Market Accountability Advisory
  339  Committee to assist the corporation in developing awareness of
  340  its rates and its customer and agent service levels in
  341  relationship to the voluntary market insurers writing similar
  342  coverage.
  343         (I) The members of the advisory committee consist of the
  344  following 11 persons, one of whom must be elected chair by the
  345  members of the committee: four representatives, one appointed by
  346  the Florida Association of Insurance Agents, one by the Florida
  347  Association of Insurance and Financial Advisors, one by the
  348  Professional Insurance Agents of Florida, and one by the Latin
  349  American Association of Insurance Agencies; three
  350  representatives appointed by the insurers with the three highest
  351  voluntary market share of residential property insurance
  352  business in the state; one representative from the Office of
  353  Insurance Regulation; one consumer appointed by the board who is
  354  insured by the corporation at the time of appointment to the
  355  committee; one representative appointed by the Florida
  356  Association of Realtors; and one representative appointed by the
  357  Florida Bankers Association. All members shall be appointed to
  358  3-year terms and may serve for consecutive terms.
  359         (II)  The committee shall report to the corporation at each
  360  board meeting on insurance market issues that which may include
  361  rates and rate competition within with the voluntary market;
  362  service, including policy issuance, claims processing, and
  363  general responsiveness to policyholders, applicants, and agents;
  364  and matters relating to depopulation.
  365         5. Must provide a procedure for determining the eligibility
  366  of a risk for coverage, as follows:
  367         a. Subject to s. 627.3517, with respect to personal lines
  368  residential risks, if the risk is offered new or renewal
  369  coverage from an authorized insurer at the insurer’s approved
  370  rate under a standard policy including wind coverage or, if
  371  consistent with the insurer’s underwriting rules as filed with
  372  the office, a new or renewal basic policy including wind
  373  coverage, for a new or renewal application to the corporation
  374  for coverage, the risk is not eligible for any new or renewal
  375  policy issued by the corporation unless the premium for coverage
  376  from the authorized insurer is more than 15 percent greater than
  377  the premium for comparable coverage from the corporation. If the
  378  risk is not able to obtain such offer, the risk is eligible for
  379  a standard policy including wind coverage or a basic policy
  380  including wind coverage issued by the corporation; however, if
  381  the risk could not be insured under a standard policy including
  382  wind coverage regardless of market conditions, the risk is
  383  eligible for a basic policy including wind coverage unless
  384  rejected under subparagraph 8. However, a policyholder of the
  385  corporation or a policyholder removed from the corporation
  386  through an assumption agreement until the end of the assumption
  387  period remains eligible for coverage from the corporation
  388  regardless of any offer of coverage from an authorized insurer
  389  or surplus lines insurer. The corporation shall determine the
  390  type of policy to be provided on the basis of objective
  391  standards specified in the underwriting manual and based on
  392  generally accepted underwriting practices.
  393         (I) If the risk accepts an offer of coverage through the
  394  market assistance plan or through a mechanism established by the
  395  corporation before a policy is issued to the risk by the
  396  corporation or during the first 30 days of coverage by the
  397  corporation, and the producing agent who submitted the
  398  application to the plan or to the corporation is not currently
  399  appointed by the insurer, the insurer shall:
  400         (A) Pay to the producing agent of record of the policy for
  401  the first year, an amount that is the greater of the insurer’s
  402  usual and customary commission for the type of policy written or
  403  a fee equal to the usual and customary commission of the
  404  corporation; or
  405         (B) Offer to allow the producing agent of record of the
  406  policy to continue servicing the policy for at least 1 year and
  407  offer to pay the agent the greater of the insurer’s or the
  408  corporation’s usual and customary commission for the type of
  409  policy written.
  410  
  411  If the producing agent is unwilling or unable to accept
  412  appointment, the new insurer shall pay the agent in accordance
  413  with sub-sub-sub-subparagraph (A).
  414         (II) If the corporation enters into a contractual agreement
  415  for a take-out plan, the producing agent of record of the
  416  corporation policy is entitled to retain any unearned commission
  417  on the policy, and the insurer shall:
  418         (A) Pay to the producing agent of record, for the first
  419  year, an amount that is the greater of the insurer’s usual and
  420  customary commission for the type of policy written or a fee
  421  equal to the usual and customary commission of the corporation;
  422  or
  423         (B) Offer to allow the producing agent of record to
  424  continue servicing the policy for at least 1 year and offer to
  425  pay the agent the greater of the insurer’s or the corporation’s
  426  usual and customary commission for the type of policy written.
  427  
  428  If the producing agent is unwilling or unable to accept
  429  appointment, the new insurer shall pay the agent in accordance
  430  with sub-sub-sub-subparagraph (A).
  431         b. With respect to commercial lines residential risks, for
  432  a new application to the corporation for coverage, if the risk
  433  is offered coverage under a policy including wind coverage from
  434  an authorized insurer at its approved rate, the risk is not
  435  eligible for a policy issued by the corporation unless the
  436  premium for coverage from the authorized insurer is more than 15
  437  percent greater than the premium for comparable coverage from
  438  the corporation. If the risk is not able to obtain any such
  439  offer, the risk is eligible for a policy including wind coverage
  440  issued by the corporation. However, a policyholder of the
  441  corporation or a policyholder removed from the corporation
  442  through an assumption agreement until the end of the assumption
  443  period remains eligible for coverage from the corporation
  444  regardless of an offer of coverage from an authorized insurer or
  445  surplus lines insurer.
  446         (I) If the risk accepts an offer of coverage through the
  447  market assistance plan or through a mechanism established by the
  448  corporation before a policy is issued to the risk by the
  449  corporation or during the first 30 days of coverage by the
  450  corporation, and the producing agent who submitted the
  451  application to the plan or the corporation is not currently
  452  appointed by the insurer, the insurer shall:
  453         (A) Pay to the producing agent of record of the policy, for
  454  the first year, an amount that is the greater of the insurer’s
  455  usual and customary commission for the type of policy written or
  456  a fee equal to the usual and customary commission of the
  457  corporation; or
  458         (B) Offer to allow the producing agent of record of the
  459  policy to continue servicing the policy for at least 1 year and
  460  offer to pay the agent the greater of the insurer’s or the
  461  corporation’s usual and customary commission for the type of
  462  policy written.
  463  
  464  If the producing agent is unwilling or unable to accept
  465  appointment, the new insurer shall pay the agent in accordance
  466  with sub-sub-sub-subparagraph (A).
  467         (II) If the corporation enters into a contractual agreement
  468  for a take-out plan, the producing agent of record of the
  469  corporation policy is entitled to retain any unearned commission
  470  on the policy, and the insurer shall:
  471         (A) Pay to the producing agent of record, for the first
  472  year, an amount that is the greater of the insurer’s usual and
  473  customary commission for the type of policy written or a fee
  474  equal to the usual and customary commission of the corporation;
  475  or
  476         (B) Offer to allow the producing agent of record to
  477  continue servicing the policy for at least 1 year and offer to
  478  pay the agent the greater of the insurer’s or the corporation’s
  479  usual and customary commission for the type of policy written.
  480  
  481  If the producing agent is unwilling or unable to accept
  482  appointment, the new insurer shall pay the agent in accordance
  483  with sub-sub-sub-subparagraph (A).
  484         c. For purposes of determining comparable coverage under
  485  sub-subparagraphs a. and b., the comparison must be based on
  486  those forms and coverages that are reasonably comparable. The
  487  corporation may rely on a determination of comparable coverage
  488  and premium made by the producing agent who submits the
  489  application to the corporation, made in the agent’s capacity as
  490  the corporation’s agent. A comparison may be made solely of the
  491  premium with respect to the main building or structure only on
  492  the following basis: the same coverage A or other building
  493  limits; the same percentage hurricane deductible that applies on
  494  an annual basis or that applies to each hurricane for commercial
  495  residential property; the same percentage of ordinance and law
  496  coverage, if the same limit is offered by both the corporation
  497  and the authorized insurer; the same mitigation credits, to the
  498  extent the same types of credits are offered both by the
  499  corporation and the authorized insurer; the same method for loss
  500  payment, such as replacement cost or actual cash value, if the
  501  same method is offered both by the corporation and the
  502  authorized insurer in accordance with underwriting rules; and
  503  any other form or coverage that is reasonably comparable as
  504  determined by the board. If an application is submitted to the
  505  corporation for wind-only coverage in the coastal account, the
  506  premium for the corporation’s wind-only policy plus the premium
  507  for the ex-wind policy that is offered by an authorized insurer
  508  to the applicant must be compared to the premium for multiperil
  509  coverage offered by an authorized insurer, subject to the
  510  standards for comparison specified in this subparagraph. If the
  511  corporation or the applicant requests from the authorized
  512  insurer a breakdown of the premium of the offer by types of
  513  coverage so that a comparison may be made by the corporation or
  514  its agent and the authorized insurer refuses or is unable to
  515  provide such information, the corporation may treat the offer as
  516  not being an offer of coverage from an authorized insurer at the
  517  insurer’s approved rate.
  518         d. Effective January 1, 2014, the corporation shall
  519  implement appropriate eligibility procedures and operational
  520  requirements to ensure that only risks that are eligible for
  521  coverage from the corporation receive such coverage. The
  522  procedures and requirements so implemented must, at a minimum,
  523  include the use of a clearinghouse for new applications which
  524  allows licensed insurers and agents to voluntarily write risks
  525  that have made application for coverage to the corporation and a
  526  mechanism to make renewal offers for existing policies available
  527  to licensed insurers and agents to voluntarily write risks
  528  insured by the corporation. Any risk insured by the corporation
  529  for 3 or more consecutive years may not be renewed and must
  530  submit a new application for coverage. The corporation may
  531  create an appropriate agency or agent mechanism to place new and
  532  renewal business with authorized insurers. Compliance with these
  533  eligibility procedures and operational requirements is a
  534  condition of coverage by the corporation.
  535         6. Must include rules for classifications of risks and
  536  rates.
  537         7. Must provide that if premium and investment income for
  538  an account attributable to a particular calendar year are in
  539  excess of projected losses and expenses for the account
  540  attributable to that year, such excess shall be held in surplus
  541  in the account. Such surplus must be available to defray
  542  deficits in that account as to future years and used for that
  543  purpose before assessing assessable insurers and assessable
  544  insureds as to any calendar year.
  545         8. Must provide objective criteria and procedures to be
  546  uniformly applied to all applicants in determining whether an
  547  individual risk is so hazardous as to be uninsurable. In making
  548  this determination and in establishing the criteria and
  549  procedures, the following must be considered:
  550         a. Whether the likelihood of a loss for the individual risk
  551  is substantially higher than for other risks of the same class;
  552  and
  553         b. Whether the uncertainty associated with the individual
  554  risk is such that an appropriate premium cannot be determined.
  555  
  556  The acceptance or rejection of a risk by the corporation shall
  557  be construed as the private placement of insurance, and the
  558  provisions of chapter 120 do not apply.
  559         9. Must provide that the corporation make its best efforts
  560  to procure catastrophe reinsurance at reasonable rates, to cover
  561  its projected 100-year probable maximum loss as determined by
  562  the board of governors.
  563         10. Must provide that the policies issued by the
  564  corporation must provide that if the corporation or the market
  565  assistance plan obtains an offer from an authorized insurer to
  566  cover the risk at its approved rates, the risk is no longer
  567  eligible for renewal through the corporation, except as
  568  otherwise provided in this subsection.
  569         11. Must provide that corporation policies and applications
  570  must include a notice that the corporation policy could, under
  571  this section, be replaced with a policy issued by an authorized
  572  insurer which does not provide coverage identical to the
  573  coverage provided by the corporation. The notice must also
  574  specify that acceptance of corporation coverage creates a
  575  conclusive presumption that the applicant or policyholder is
  576  aware of this potential.
  577         12. May establish, subject to approval by the office,
  578  different eligibility requirements and operational procedures
  579  for any line or type of coverage for any specified county or
  580  area if the board determines that such changes are justified due
  581  to the voluntary market being sufficiently stable and
  582  competitive in such area or for such line or type of coverage
  583  and that consumers who, in good faith, are unable to obtain
  584  insurance through the voluntary market through ordinary methods
  585  continue to have access to coverage from the corporation. If
  586  coverage is sought in connection with a real property transfer,
  587  the requirements and procedures may not provide an effective
  588  date of coverage later than the date of the closing of the
  589  transfer as established by the transferor, the transferee, and,
  590  if applicable, the lender.
  591         13. Must provide that, with respect to the coastal account,
  592  any assessable insurer that has with a surplus as to
  593  policyholders of $25 million or less writing 25 percent or more
  594  of its total countrywide property insurance premiums in this
  595  state may petition the office, within the first 90 days of each
  596  calendar year, to qualify as a limited apportionment company. A
  597  regular assessment levied by the corporation on a limited
  598  apportionment company for a deficit incurred by the corporation
  599  for the coastal account may be paid to the corporation on a
  600  monthly basis as the assessments are collected by the limited
  601  apportionment company from its insureds. The, but a limited
  602  apportionment company must begin collecting the regular
  603  assessments within not later than 90 days after the regular
  604  assessments are levied by the corporation, and the regular
  605  assessments must be paid in full within 15 months after being
  606  levied by the corporation. A limited apportionment company shall
  607  collect from its policyholders any emergency assessment imposed
  608  under sub-subparagraph (b)3.d. The plan must provide that, if
  609  the office determines that any regular assessment will result in
  610  an impairment of the surplus of a limited apportionment company,
  611  the office may direct that all or part of such assessment be
  612  deferred as provided in subparagraph (q)4. However, an emergency
  613  assessment to be collected from policyholders under sub
  614  subparagraph (b)3.d. may not be limited or deferred.
  615         14. Must provide that the corporation appoint as its
  616  licensed agents only those agents who also hold an appointment
  617  as defined in s. 626.015(3) with an insurer who at the time of
  618  the agent’s initial appointment by the corporation is authorized
  619  to write and is actually writing personal lines residential
  620  property coverage, commercial residential property coverage, or
  621  commercial nonresidential property coverage within the state.
  622         15. Must provide a premium payment plan option to its
  623  policyholders which, at a minimum, allows for quarterly and
  624  semiannual payment of premiums. A monthly payment plan may, but
  625  is not required to, be offered.
  626         16. Must limit coverage on mobile homes or manufactured
  627  homes built before 1994 to actual cash value of the dwelling
  628  rather than replacement costs of the dwelling.
  629         17. May provide such limits of coverage as the board
  630  determines, consistent with the requirements of this subsection.
  631         18. May require commercial property to meet specified
  632  hurricane mitigation construction features as a condition of
  633  eligibility for coverage.
  634         19. Must provide that new or renewal policies issued by the
  635  corporation on or after January 1, 2012, which cover sinkhole
  636  loss do not include coverage for any loss to appurtenant
  637  structures, driveways, sidewalks, decks, or patios that are
  638  directly or indirectly caused by sinkhole activity. The
  639  corporation shall exclude such coverage using a notice of
  640  coverage change, which may be included with the policy renewal,
  641  and not by issuance of a notice of nonrenewal of the excluded
  642  coverage upon renewal of the current policy.
  643         20. As of January 1, 2012, must require that the agent
  644  obtain from an applicant for coverage from the corporation an
  645  acknowledgment signed by the applicant, which includes, at a
  646  minimum, the following statement:
  647  
  648                ACKNOWLEDGMENT OF POTENTIAL SURCHARGE              
  649                      AND ASSESSMENT LIABILITY:                    
  650  
  651         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
  652  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
  653  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
  654  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
  655  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
  656  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
  657  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
  658  LEGISLATURE.
  659         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
  660  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
  661  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
  662  FLORIDA LEGISLATURE.
  663         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
  664  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
  665  STATE OF FLORIDA.
  666         a. The corporation shall maintain, in electronic format or
  667  otherwise, a copy of the applicant’s signed acknowledgment and
  668  provide a copy of the statement to the policyholder as part of
  669  the first renewal after the effective date of this subparagraph.
  670         b. The signed acknowledgment form creates a conclusive
  671  presumption that the policyholder understood and accepted his or
  672  her potential surcharge and assessment liability as a
  673  policyholder of the corporation.
  674         Section 4. This act shall take effect July 1, 2013.