Florida Senate - 2014                        COMMITTEE AMENDMENT
       Bill No. SB 416
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  02/04/2014           .                                

    1         Senate Amendment (with title amendment)
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Paragraph (ee) of subsection (6) of section
    6  627.351, Florida Statutes, is amended, present paragraphs (ff)
    7  through (hh) of that subsection are redesignated as paragraphs
    8  (gg) through (ii), respectively, and new paragraphs (ff) is
    9  added to that subsection, to read:
   10         627.351 Insurance risk apportionment plans.—
   12         (ee) At least once every 6 months, the corporation shall
   13  submit a report to the office disclosing:
   14         1. The total number of requests received for residential
   15  sinkhole loss coverage;
   16         2. The total number of policies issued for residential
   17  sinkhole loss coverage;
   18         3.The total number of requests declined for residential
   19  sinkhole loss coverage; and
   20         4. The reasons for declining requests for residential
   21  sinkhole loss coverage The office may establish a pilot program
   22  to offer optional sinkhole coverage in one or more counties or
   23  other territories of the corporation for the purpose of
   24  implementing s. 627.706, as amended by s. 30, chapter 2007-1,
   25  Laws of Florida. Under the pilot program, the corporation is not
   26  required to issue a notice of nonrenewal to exclude sinkhole
   27  coverage upon the renewal of existing policies, but may exclude
   28  such coverage using a notice of coverage change.
   29         (ff)The Legislature finds that providing a program to
   30  repair property damaged by sinkholes safeguards the public’s
   31  health, safety, and welfare and that it is in the public’s
   32  interest for sinkhole loss claims to be resolved by stabilizing
   33  the land and structure and repairing the foundation of the
   34  damaged structure. The Legislature further finds that, in the
   35  past, many homeowners who obtained payouts from the corporation
   36  for a sinkhole claim did not use the funds to repair or
   37  remediate the claimed damage, thereby harming the real estate
   38  marketability of their homes and the valuation of other homes in
   39  the area. Therefore, the corporation shall establish a Citizens
   40  Sinkhole Stabilization Repair Program to promote the repair and
   41  remediation of sinkhole damage to homes. By March 31, 2015, any
   42  claim against a corporation policy that covers residential
   43  sinkhole loss for which it is determined that a covered sinkhole
   44  loss has occurred must be included in and governed by the repair
   45  program for the purpose of making stabilization repairs. The
   46  determination of whether a policyholder has a covered sinkhole
   47  loss will be made by the corporation or through neutral
   48  evaluation, judicial decree, or final judgment.
   49         1. As used in this paragraph, the term:
   50         a. “Engineering report” means the report issued pursuant to
   51  s. 627.7073(1).
   52         b. “Neutral evaluation” and “neutral evaluator” have the
   53  same meanings as provided in s. 627.706(2).
   54         c. “Recommendation of the engineer” means the
   55  recommendation of the professional engineer engaged by the
   56  corporation and included in the report pursuant to s.
   57  627.7073(1)(a)5.
   58         d. “Sinkhole loss” has the same meaning as provided in s.
   59  627.706(2).
   60         e. “Stabilization repair” means stabilizing the land and
   61  structure caused by sinkhole activity and repairing the damaged
   62  structure.
   63         f. “Stabilization repair contractor” means a contractor who
   64  makes stabilization repairs.
   65         2. The repair program shall be managed by the corporation
   66  and must include the following components:
   67         a.The policyholder may not be required to advance payment
   68  for stabilization repairs.
   69         b.Stabilization repairs must be conducted by a
   70  stabilization repair contractor selected from an approved
   71  stabilization repair contractor pool procured by the corporation
   72  pursuant to an open and transparent process. Each contractor
   73  within the pool must be qualified and approved by the
   74  corporation based on criteria that include the following
   75  requirements:
   76         (I)The stabilization repair contractor corporate entity
   77  must demonstrate experience in the stabilization of sinkhole
   78  activity pursuant to requirements established by the
   79  corporation.
   80         (II) The stabilization repair contractor must be certified
   81  as a contractor pursuant to s. 489.113(1).
   82         (III)The stabilization repair contractor must demonstrate
   83  capacity to be bonded and provide performance, surety, or other
   84  bonds as described in this section, which may be supplemented by
   85  additional requirements as determined by the corporation.
   86         (IV)The stabilization repair contractor must demonstrate
   87  that it meets insurance coverage requirements, including, but
   88  not limited to, commercial general liability and workers’
   89  compensation, established by the corporation.
   90         (V)The stabilization repair contractor must maintain a
   91  valid drug-free workplace program.
   92         (VI)Such other requirements as may be established by the
   93  corporation.
   94         c. Stabilization repair contractors selected from the
   95  approved stabilization repair contractor pool shall conduct
   96  stabilization repairs pursuant to a contract between the
   97  contractor and the corporation. Such contract is not subject to
   98  paragraph (e) or s. 287.057. Pursuant to the terms of the
   99  contract, the selected contractor is solely responsible for the
  100  performance of all necessary stabilization repairs specified in
  101  the engineering report and the recommendations of the engineer.
  102         d. The corporation shall develop a standard stabilization
  103  repair contract for the purpose of conducting stabilization
  104  repairs on all properties within the repair program. At a
  105  minimum, the contract must require:
  106         (I) The assigned stabilization repair contractor to
  107  complete all stabilization repairs identified in the engineering
  108  report based on line-item prices developed by the corporation
  109  which reasonably reflect actual market prices for sinkhole
  110  stabilization activities.
  111         (II)Each stabilization repair contractor to post a payment
  112  bond in favor of the corporation as obligee for each project
  113  assigned and to post a performance bond, secured by a third
  114  party surety, in favor of the corporation as obligee, in a
  115  principal amount equal to the total cost of all contracts
  116  annually awarded to that contractor.
  117         (III)The stabilization repair contractor to provide a
  118  warranty to the policyholder which covers all repairs provided
  119  by the stabilization repair contractor for at least 5 years
  120  after completion of the stabilization repairs. The corporation
  121  shall also provide a warranty to the policyholder which covers
  122  all repairs provided by the stabilization repair contractor for
  123  at least 5 years if the stabilization repair contractor is
  124  unable to provide a remedy required under the warranty it
  125  provided to the policyholder.
  126         (IV)That, throughout the course of the stabilization
  127  repairs performed by the contractor, the engineer monitor the
  128  property and confirm that stabilization has been satisfactorily
  129  completed and that no further stabilization is necessary to
  130  remedy the damage identified in the engineering report and the
  131  recommendations of the engineer.
  132         (V)That the stabilization repair contractor notify the
  133  corporation if the engineer concludes that additional
  134  stabilization repairs are necessary to complete the repairs
  135  specified in the engineering report and the recommendations of
  136  the engineer. If repairs can be completed within policy limits,
  137  the stabilization repair contractor shall complete the
  138  additional repairs based on the line-item prices developed by
  139  the corporation. The contract must also contain provisions
  140  specifying the remedy and sanctions for failing to perform the
  141  additional repairs.
  142         e.The corporation shall enter into contracts with
  143  qualified stabilization repair contractors to perform repairs
  144  pursuant to a process that requires all of the following
  145  components:
  146         (I)Within 30 days after the completion of the engineering
  147  report, the report must be posted on a list that is made
  148  available to all stabilization repair contractors within the
  149  pool.
  150         (II)The corporation shall select a stabilization repair
  151  contractor from the pool pursuant to a selection process
  152  established by the corporation for assigning a stabilization
  153  repair contractor to perform stabilization repairs for each
  154  property within the program. The selection process must include
  155  all of the following:
  156         (A) All stabilization repair contractors within the pool
  157  are provided an opportunity to submit an offer to perform the
  158  stabilization repairs recommended in the engineering report.
  159  Such offer must include an itemized statement of work based on
  160  line-item prices developed by the corporation.
  161         (B)The corporation shall review the offers and provide the
  162  policyholder with a list of all stabilization repair contractors
  163  that submit an offer under sub-sub-sub-subparagraph (A).
  164         (C)The policyholder has up to 30 days to select a
  165  stabilization repair contractor from the list. If the
  166  policyholder fails to make a selection within 30 days, the
  167  corporation shall make the selection. The corporation may
  168  reserve the right to select a stabilization repair contractor on
  169  the list based upon quality, cost-effectiveness, and such other
  170  criteria as the corporation determines appropriate.
  171         (D)If no stabilization repair contractor submits an offer
  172  to perform the stabilization repairs for a property within the
  173  program or if all offers are above the policyholder’s policy
  174  limit, the corporation may enter the property into the selection
  175  process again or may pay the policyholder an amount up to the
  176  policy limits on the structure. If the property is entered into
  177  the selection process three times and no stabilization repair
  178  contractor submits an offer to repair the property or all offers
  179  are above the policyholder’s policy limit, the corporation shall
  180  elect to pay for stabilization repairs above the policyholder’s
  181  policy limit or pay the policyholder an amount up to the policy
  182  limits on the structure.
  183         3.The corporation is not responsible for serving as a
  184  stabilization repair contractor. The corporation’s obligations
  185  under the repair program are not an election to repair by the
  186  corporation and therefore do not imply or create a new
  187  contractual relationship with the policyholder.
  188         4.The corporation’s liability related to stabilization
  189  repair activity pursuant to the repair program and all other
  190  repairs to the structure conducted in accordance with the terms
  191  of the policy may not be greater than the policy limits on the
  192  structure.
  193         5. The corporation shall pay for other repairs to the
  194  structure and contents in accordance with the terms of the
  195  policy.
  196         6.If the professional engineer engaged by the corporation
  197  determines that the stabilization repair cannot be completed
  198  within policy limits, the corporation must pay to complete the
  199  stabilization repair recommended by the corporation’s
  200  professional engineer or tender the policy limits to the
  201  policyholder.
  202         7.If a dispute arises between the corporation and the
  203  policyholder under this paragraph, under the policy, or under s.
  204  627.707 relating to the nature or extent of stabilization
  205  repairs to be conducted under the repair program, the sole
  206  remedy for resolving such dispute shall be to proceed with the
  207  necessary stabilization repairs through the repair program
  208  established under this paragraph, regardless of whether the
  209  claim, judgment, or decree is for breach of contract,
  210  declaratory relief, or specific performance.
  211         8. If the corporation denies a policyholder’s claim for
  212  sinkhole loss, the corporation or the policyholder may invoke
  213  neutral evaluation by filing a request with the department
  214  pursuant to s. 627.7074(7). Neutral evaluation is mandatory if
  215  requested by the corporation or the policyholder.
  216         a. The neutral evaluator may not directly or indirectly
  217  participate in the remediation, repair, or restoration of the
  218  damaged property that is the subject of the claim, have a
  219  financial interest in the remediation, repair, or restoration of
  220  the damaged property that is the subject of the claim, or have a
  221  financial interest in any business entity that is involved in
  222  the remediation, repair, or restoration of the damaged property
  223  that is the subject of the claim.
  224         b. The only issues to be determined by the neutral
  225  evaluator, pursuant to state law and the applicable policy, are
  226  whether there is sinkhole activity present as determined by a
  227  qualified professional geologist and, if so, whether there is
  228  sinkhole loss as determined by a qualified professional
  229  engineer. The neutral evaluator’s conclusion is binding on the
  230  corporation and the policyholder. If the neutral evaluator
  231  determines that sinkhole loss exists, the sinkhole damage shall
  232  be included in and governed by the repair program.
  233         c. Filing a request for neutral evaluation tolls the
  234  applicable time requirements for filing suit for 60 days
  235  following the conclusion of the neutral evaluation process or
  236  the time prescribed in s. 95.11, whichever is later.
  237         9.This paragraph does not prohibit the corporation from
  238  establishing a managed repair program for other repairs to the
  239  structure in accordance with the terms of the policy.
  240         10. This paragraph supersedes s. 627.7074(4) and applies
  241  only to the corporation and its policyholders and does not apply
  242  to any other insurer.
  243         11. This paragraph supersedes s. 627.707(5)(a)-(d).
  244         Section 3. By January 1, 2017, the Office of Program Policy
  245  Analysis and Government Accountability shall review the Citizens
  246  Sinkhole Stabilization Repair Program and submit a report to the
  247  Governor, the Chief Financial Officer, the President of the
  248  Senate, and the Speaker of the House of Representatives. The
  249  report must:
  250         (1) Analyze policyholder satisfaction with stabilization
  251  repairs received through the program and the sufficiency of
  252  consumer protections provided by the program.
  253         (2) Analyze the timeliness of stabilization repairs, in
  254  comparison with industry averages and practices. The report
  255  shall evaluate the loss costs associated with sinkhole claims
  256  under the program, comparing them with corporation’s loss costs
  257  before the program’s creation.
  258         (3) Evaluate whether disputes between stabilization repair
  259  contractors and policyholders are resolved in an effective and
  260  timely manner.
  261         (4) Evaluate whether litigation of sinkhole claims and
  262  associated costs are increasing or decreasing under the program,
  263  and the causes of such litigation.
  264         (5) Evaluate the cost-effectiveness of allowing the program
  265  to be managed by a third-party administrator.
  266         Section 4. This act shall take effect July 1, 2014.
  268  ================= T I T L E  A M E N D M E N T ================
  269  And the title is amended as follows:
  270         Delete everything before the enacting clause
  271  and insert:
  272                        A bill to be entitled                      
  273         An act relating to sinkhole coverage; amending s.
  274         627.351, F.S.; requiring Citizens Property Insurance
  275         Corporation to submit a biannual report on the number
  276         of residential sinkhole policies requested, issued,
  277         and declined; providing legislative intent and
  278         establishing a Citizens Sinkhole Stabilization Repair
  279         Program for sinkhole claims; defining terms;
  280         prohibiting the corporation from requiring a
  281         policyholder to advance payment for stabilization
  282         repairs provided under the program; providing
  283         requirements and procedures for selecting
  284         stabilization repair contractors to conduct
  285         stabilization repairs; providing requirements and
  286         terms for contracts between the corporation and such
  287         contractors; specifying additional parameters with
  288         respect to the program, including provision for
  289         resolving disputes between the corporation and a
  290         policyholder; providing applicability; requiring the
  291         Office of Program Policy Analysis and Government
  292         Accountability to conduct a study of the program and
  293         submit a report to the Governor, the Chief Financial
  294         Officer, and the Legislature; providing an effective
  295         date.