Florida Senate - 2017                                    SB 1772
       
       
        
       By Senator Lee
       
       
       
       
       
       20-00594B-17                                          20171772__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Hurricane Catastrophe
    3         Fund; amending s. 215.555, F.S.; revising the term
    4         “retention”; adding specified coverage level options
    5         required in reimbursement contracts between the State
    6         Board of Administration and insurers writing policies
    7         in this state; revising, beginning with a specified
    8         timeframe, the obligation limits of the board with
    9         respect to all contracts covering a particular
   10         contract year; revising, beginning with a specified
   11         timeframe, the calculation of the cash build-up factor
   12         used in the formula for determining reimbursement
   13         premiums paid to the fund; revising provisions
   14         relating to optional coverage offered by the board;
   15         defining terms; requiring the board to offer such
   16         optional coverage beginning with a specified
   17         timeframe; specifying Flexible Layered Options (FLO)
   18         coverage multiples; specifying requirements for FLO
   19         reimbursement premiums and FLO options addendums;
   20         providing construction relating to the optional
   21         coverage’s effect on the fund’s claims-paying
   22         capacity; amending s. 627.062, F.S.; deleting the
   23         actual costs paid due to applying the cash build-up
   24         factor as a basis for certain separate rate filings
   25         under certain circumstances by residential property
   26         insurers; amending s. 627.0629, F.S.; conforming a
   27         provision to changes made by the act; amending s.
   28         627.351, F.S.; deleting a provision authorizing
   29         Citizens Property Insurance Corporation to implement
   30         rate increases to reflect the effect of the cash
   31         build-up factor; providing an effective date.
   32          
   33  Be It Enacted by the Legislature of the State of Florida:
   34  
   35         Section 1. Paragraph (e) of subsection (2), paragraphs (b)
   36  and (c) of subsection (4), paragraph (b) of subsection (5), and
   37  subsection (16) of section 215.555, Florida Statutes, are
   38  amended, and paragraph (a) of subsection (4) is republished, to
   39  read:
   40         215.555 Florida Hurricane Catastrophe Fund.—
   41         (2) DEFINITIONS.—As used in this section:
   42         (e) “Retention” means the amount of losses below which an
   43  insurer is not entitled to reimbursement from the fund. An
   44  insurer’s retention shall be calculated as follows:
   45         1. The board shall calculate and report to each insurer the
   46  retention multiples for that year. For the contract year
   47  beginning June 1, 2005, the retention multiple shall be equal to
   48  $4.5 billion divided by the total estimated reimbursement
   49  premium for the contract year; for subsequent years, the
   50  retention multiple shall be equal to $4.5 billion, adjusted
   51  based upon the reported exposure for the contract year occurring
   52  2 years before the particular contract year to reflect the
   53  percentage growth in exposure to the fund for covered policies
   54  since 2004, divided by the total estimated reimbursement premium
   55  for the contract year. Total reimbursement premium for purposes
   56  of the calculation under this subparagraph shall be estimated
   57  using the assumption that all insurers have selected the 90
   58  percent coverage level.
   59         2. The retention multiple as determined under subparagraph
   60  1. shall be adjusted to reflect the coverage level elected by
   61  the insurer.
   62         a. For insurers electing the 90-percent coverage level, the
   63  adjusted retention multiple is 100 percent of the amount
   64  determined under subparagraph 1.
   65         b. For insurers electing the 75-percent coverage level, the
   66  retention multiple is 120 percent of the amount determined under
   67  subparagraph 1.
   68         c. For insurers electing the 60-percent coverage level, the
   69  adjusted retention multiple is 150 percent of the amount
   70  determined under subparagraph 1.
   71         d. For insurers electing the 45-percent coverage level, the
   72  adjusted retention multiple is 200 percent of the amount
   73  determined under subparagraph 1.
   74         e. For insurers electing the 25-percent coverage level, the
   75  adjusted retention multiple is 360 percent of the amount
   76  determined under subparagraph 1.
   77         3. An insurer shall determine its provisional retention by
   78  multiplying its provisional reimbursement premium by the
   79  applicable adjusted retention multiple and shall determine its
   80  actual retention by multiplying its actual reimbursement premium
   81  by the applicable adjusted retention multiple.
   82         4. For insurers who experience multiple covered events
   83  causing loss during the contract year, beginning June 1, 2005,
   84  each insurer’s full retention shall be applied to each of the
   85  covered events causing the two largest losses for that insurer.
   86  For each other covered event resulting in losses, the insurer’s
   87  retention shall be reduced to one-third of the full retention.
   88  The reimbursement contract shall provide for the reimbursement
   89  of losses for each covered event based on the full retention
   90  with adjustments made to reflect the reduced retentions on or
   91  after January 1 of the contract year provided the insurer
   92  reports its losses as specified in the reimbursement contract.
   93         (4) REIMBURSEMENT CONTRACTS.—
   94         (a) The board shall enter into a contract with each insurer
   95  writing covered policies in this state to provide to the insurer
   96  the reimbursement described in paragraphs (b) and (d), in
   97  exchange for the reimbursement premium paid into the fund under
   98  subsection (5). As a condition of doing business in this state,
   99  each such insurer shall enter into such a contract.
  100         (b)1. The contract must shall contain a promise by the
  101  board to reimburse the insurer for 25 percent, 45 percent, 60
  102  percent, 75 percent, or 90 percent of its losses from each
  103  covered event in excess of the insurer’s retention, plus 5
  104  percent of the reimbursed losses to cover loss adjustment
  105  expenses.
  106         2. The insurer must elect one of the percentage coverage
  107  levels specified in this paragraph and may, upon renewal of a
  108  reimbursement contract, elect a lower percentage coverage level
  109  if no revenue bonds issued under subsection (6) after a covered
  110  event are outstanding, or elect a higher percentage coverage
  111  level, regardless of whether or not revenue bonds are
  112  outstanding. All members of an insurer group must elect the same
  113  percentage coverage level. Any joint underwriting association,
  114  risk apportionment plan, or other entity created under s.
  115  627.351 must elect the 90-percent coverage level.
  116         3. The contract shall provide that reimbursement amounts
  117  shall not be reduced by reinsurance paid or payable to the
  118  insurer from other sources.
  119         (c)1. Beginning in the 2018-2019 contract year, the
  120  contract must shall also provide that the obligation of the
  121  board with respect to all contracts covering a particular
  122  contract year may shall not exceed the actual claims-paying
  123  capacity of the fund up to a limit of $14 $17 billion for that
  124  contract year, unless the board determines that there is
  125  sufficient estimated claims-paying capacity to provide $14 $17
  126  billion of capacity for the current contract year and an
  127  additional $14 $17 billion of capacity for subsequent contract
  128  years. If the board makes such a determination, the estimated
  129  claims-paying capacity for the particular contract year must
  130  shall be determined by adding to the $14 $17 billion limit one
  131  half of the fund’s estimated claims-paying capacity in excess of
  132  $28 $34 billion. However, the dollar growth in the limit may not
  133  increase in any year by an amount greater than the dollar growth
  134  of the balance of the fund as of December 31, less any premiums
  135  or interest attributable to optional coverage, as defined by
  136  rule which occurred over the prior calendar year.
  137         2. In May and October of the contract year, the board shall
  138  publish in the Florida Administrative Register a statement of
  139  the fund’s estimated borrowing capacity, the fund’s estimated
  140  claims-paying capacity, and the projected balance of the fund as
  141  of December 31. After the end of each calendar year, the board
  142  shall notify insurers of the estimated borrowing capacity, the
  143  estimated claims-paying capacity, and the balance of the fund as
  144  of December 31 to provide insurers with data necessary to assist
  145  them in determining their retention and projected payout from
  146  the fund for loss reimbursement purposes. In conjunction with
  147  the development of the premium formula, as provided for in
  148  subsection (5), the board shall publish factors or multiples
  149  that assist insurers in determining their retention and
  150  projected payout for the next contract year. For all regulatory
  151  and reinsurance purposes, an insurer may calculate its projected
  152  payout from the fund as its share of the total fund premium for
  153  the current contract year multiplied by the sum of the projected
  154  balance of the fund as of December 31 and the estimated
  155  borrowing capacity for that contract year as reported under this
  156  subparagraph.
  157         (5) REIMBURSEMENT PREMIUMS.—
  158         (b) The State Board of Administration shall select an
  159  independent consultant to develop a formula for determining the
  160  actuarially indicated premium to be paid to the fund. The
  161  formula shall specify, for each zip code or other limited
  162  geographical area, the amount of premium to be paid by an
  163  insurer for each $1,000 of insured value under covered policies
  164  in that zip code or other area. In establishing premiums, the
  165  board shall consider the coverage elected under paragraph (4)(b)
  166  and any factors that tend to enhance the actuarial
  167  sophistication of ratemaking for the fund, including
  168  deductibles, type of construction, type of coverage provided,
  169  relative concentration of risks, and other such factors deemed
  170  by the board to be appropriate. The formula must provide for a
  171  cash build-up factor. Beginning in the 2018-2019 For the 2009
  172  2010 contract year, the factor is 5 percent. For the 2010-2011
  173  contract year, the factor is 10 percent. For the 2011-2012
  174  contract year, the factor is 15 percent. For the 2012-2013
  175  contract year, the factor is 20 percent. For the 2013-2014
  176  contract year and thereafter, the factor is 10 25 percent until
  177  the fund balance before the start of a contract year is $14
  178  billion or greater, at which point the cash build-up factor may
  179  not be collected. If the fund balance is less than $14 billion
  180  after the end of a contract year, the cash build-up factor must
  181  be reinstated at 5 percent for the next contract year and
  182  increase by 5 percent each subsequent contract year until it
  183  reaches 25 percent, and must thereafter continue at 25 percent
  184  per contract year until the fund balance reaches $14 billion.
  185  The formula may provide for a procedure to determine the
  186  premiums to be paid by new insurers that begin writing covered
  187  policies after the beginning of a contract year, taking into
  188  consideration when the insurer starts writing covered policies,
  189  the potential exposure of the insurer, the potential exposure of
  190  the fund, the administrative costs to the insurer and to the
  191  fund, and any other factors deemed appropriate by the board. The
  192  formula must be approved by unanimous vote of the board. The
  193  board may, at any time, revise the formula pursuant to the
  194  procedure provided in this paragraph.
  195         (16) OPTIONAL COVERAGE.
  196         (a) Additional definitions.As used in this subsection, the
  197  term:
  198         1. “FHCF” means the Florida Hurricane Catastrophe Fund.
  199         2. “FHCF reimbursement premium” means the premium paid by
  200  an insurer for its coverage as a mandatory participant in the
  201  FHCF, but does not include additional premiums for optional
  202  coverages.
  203         3. “FLO” means Flexible Layered Options.
  204         4. “FLO coverage” means the coverage for an insurer’s
  205  losses above the insurer’s statutorily determined claims-paying
  206  capacity based on the claims-paying limit in subparagraph
  207  (4)(c)1., which an insurer selects as its increase in coverage
  208  from the fund under the FLO options selected.
  209         5. “FLO coverage multiple” means the coverage multiple that
  210  when multiplied by an insurer’s reimbursement premium defines
  211  the temporary increase in coverage limit.
  212         6. “FLO insurer” means an insurer that has opted to obtain
  213  coverage under the FLO options addendum in addition to the
  214  coverage provided to the insurer under its FHCF reimbursement
  215  contract.
  216         7.“FLO options” means the coverage options created under
  217  this subsection.
  218         8.“FLO options addendum” means an addendum to the
  219  reimbursement contract reflecting the obligations of the fund
  220  and insurers selecting an option to increase an insurer’s FHCF
  221  coverage limit.
  222         9. “FLO reimbursement premium” means the premium charged by
  223  the fund for coverage provided under the FLO option.
  224         10. “Payout multiple” means the number or multiple created
  225  by dividing the statutorily defined claims-paying capacity as
  226  determined in subparagraph (4)(c)1. by the aggregate
  227  reimbursement premiums paid by all insurers estimated or
  228  projected as of calendar year-end.
  229         (b)Effective date.For the 2018-2019 contract year and
  230  thereafter, the board shall offer the optional coverage as
  231  provided in this subsection.
  232         (c)FLO coverage multiples.The board shall calculate and
  233  report to each FLO insurer the FLO coverage multiples based on 3
  234  options for increasing the insurer’s FHCF coverage limit. Each
  235  FLO coverage multiple must be calculated by dividing $1 billion,
  236  $2 billion, or $3 billion by the total estimated aggregate FHCF
  237  reimbursement premium for the upcoming contract year.
  238         (d) FLO reimbursement premiums.Each FLO insurer shall pay
  239  to the fund, in the manner and at the time provided in the
  240  reimbursement contract for payment of reimbursement premiums, a
  241  FLO reimbursement premium determined according to subsection
  242  (5), except that a cash build-up factor does not apply to the
  243  FLO reimbursement premiums.
  244         (e) FLO options addendum.
  245         1. The FLO options addendum must provide for reimbursement
  246  of FLO insurers for covered events occurring during a contract
  247  year in exchange for the FLO reimbursement premium paid into the
  248  fund under paragraph (d), based on the FLO coverage selected for
  249  each respective contract year. An insurer writing covered
  250  policies has the option of selecting an increased limit of
  251  coverage under the FLO options addendum and must select such
  252  coverage at the time that it executes the FHCF reimbursement
  253  contract.
  254         2. The FLO addendum must contain a promise by the board to
  255  reimburse the FLO insurer for 25 percent, 45 percent, 60
  256  percent, 75 percent, or 90 percent of its losses from each
  257  covered event in excess of the insurer’s retention, plus 5
  258  percent of the reimbursed losses to cover loss adjustment
  259  expenses. The percentage must be the same as the coverage level
  260  selected by the insurer under paragraph (4)(b).
  261         3. The FLO addendum must provide that reimbursement amounts
  262  may not be reduced by reinsurance paid or payable to the insurer
  263  from other sources.
  264         4. The priorities, schedule, and method of reimbursements
  265  under the FLO addendum must be the same as provided under
  266  subsection (4).
  267         (f)Effect on claims-paying capacity of the fund.The
  268  program created by this subsection must increase the claims
  269  paying capacity of the fund as provided in subparagraph (4)(c)1.
  270  by an amount not to exceed $3 billion and must depend on the FLO
  271  coverage options selected for the specified contract year and
  272  the number of insurers that select a FLO optional coverage. The
  273  additional capacity may apply only to the additional coverage
  274  provided under the FLO options and may not otherwise affect any
  275  insurer’s reimbursement from the fund if the insurer chooses not
  276  to select the FLO option to increase its limit of coverage under
  277  the FHCF TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.—
  278         (a) Findings and intent.
  279         1. The Legislature finds that:
  280         a. Because of temporary disruptions in the market for
  281  catastrophic reinsurance, many property insurers were unable to
  282  procure sufficient amounts of reinsurance for the 2006 hurricane
  283  season or were able to procure such reinsurance only by
  284  incurring substantially higher costs than in prior years.
  285         b. The reinsurance market problems were responsible, at
  286  least in part, for substantial premium increases to many
  287  consumers and increases in the number of policies issued by
  288  Citizens Property Insurance Corporation.
  289         c. It is likely that the reinsurance market disruptions
  290  will not significantly abate prior to the 2007 hurricane season.
  291         2. It is the intent of the Legislature to create options
  292  for insurers to purchase a temporary increased coverage limit
  293  above the statutorily determined limit in subparagraph (4)(c)1.,
  294  applicable for the 2007, 2008, 2009, 2010, 2011, 2012, and 2013
  295  hurricane seasons, to address market disruptions and enable
  296  insurers, at their option, to procure additional coverage from
  297  the Florida Hurricane Catastrophe Fund.
  298         (b) Applicability of other provisions of this section.—All
  299  provisions of this section and the rules adopted under this
  300  section apply to the coverage created by this subsection unless
  301  specifically superseded by provisions in this subsection.
  302         (c) Optional coverage.—For the 2009-2010, 2010-2011, 2011
  303  2012, 2012-2013, and 2013-2014 contract years, the board shall
  304  offer, for each of such years, the optional coverage as provided
  305  in this subsection.
  306         (d) Additional definitions.—As used in this subsection, the
  307  term:
  308         1. “FHCF” means Florida Hurricane Catastrophe Fund.
  309         2. “FHCF reimbursement premium” means the premium paid by
  310  an insurer for its coverage as a mandatory participant in the
  311  FHCF, but does not include additional premiums for optional
  312  coverages.
  313         3. “Payout multiple” means the number or multiple created
  314  by dividing the statutorily defined claims-paying capacity as
  315  determined in subparagraph (4)(c)1. by the aggregate
  316  reimbursement premiums paid by all insurers estimated or
  317  projected as of calendar year-end.
  318         4. “TICL” means the temporary increase in coverage limit.
  319         5. “TICL options” means the temporary increase in coverage
  320  options created under this subsection.
  321         6. “TICL insurer” means an insurer that has opted to obtain
  322  coverage under the TICL options addendum in addition to the
  323  coverage provided to the insurer under its FHCF reimbursement
  324  contract.
  325         7. “TICL reimbursement premium” means the premium charged
  326  by the fund for coverage provided under the TICL option.
  327         8. “TICL coverage multiple” means the coverage multiple
  328  when multiplied by an insurer’s reimbursement premium that
  329  defines the temporary increase in coverage limit.
  330         9. “TICL coverage” means the coverage for an insurer’s
  331  losses above the insurer’s statutorily determined claims-paying
  332  capacity based on the claims-paying limit in subparagraph
  333  (4)(c)1., which an insurer selects as its temporary increase in
  334  coverage from the fund under the TICL options selected. A TICL
  335  insurer’s increased coverage limit options shall be calculated
  336  as follows:
  337         a. The board shall calculate and report to each TICL
  338  insurer the TICL coverage multiples based on 12 options for
  339  increasing the insurer’s FHCF coverage limit. Each TICL coverage
  340  multiple shall be calculated by dividing $1 billion, $2 billion,
  341  $3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8
  342  billion, $9 billion, $10 billion, $11 billion, or $12 billion by
  343  the total estimated aggregate FHCF reimbursement premiums for
  344  the 2007-2008 contract year, and the 2008-2009 contract year.
  345         b. For the 2009-2010 contract year, the board shall
  346  calculate and report to each TICL insurer the TICL coverage
  347  multiples based on 10 options for increasing the insurer’s FHCF
  348  coverage limit. Each TICL coverage multiple shall be calculated
  349  by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
  350  billion, $6 billion, $7 billion, $8 billion, $9 billion, and $10
  351  billion by the total estimated aggregate FHCF reimbursement
  352  premiums for the 2009-2010 contract year.
  353         c. For the 2010-2011 contract year, the board shall
  354  calculate and report to each TICL insurer the TICL coverage
  355  multiples based on eight options for increasing the insurer’s
  356  FHCF coverage limit. Each TICL coverage multiple shall be
  357  calculated by dividing $1 billion, $2 billion, $3 billion, $4
  358  billion, $5 billion, $6 billion, $7 billion, and $8 billion by
  359  the total estimated aggregate FHCF reimbursement premiums for
  360  the contract year.
  361         d. For the 2011-2012 contract year, the board shall
  362  calculate and report to each TICL insurer the TICL coverage
  363  multiples based on six options for increasing the insurer’s FHCF
  364  coverage limit. Each TICL coverage multiple shall be calculated
  365  by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
  366  billion, and $6 billion by the total estimated aggregate FHCF
  367  reimbursement premiums for the 2011-2012 contract year.
  368         e. For the 2012-2013 contract year, the board shall
  369  calculate and report to each TICL insurer the TICL coverage
  370  multiples based on four options for increasing the insurer’s
  371  FHCF coverage limit. Each TICL coverage multiple shall be
  372  calculated by dividing $1 billion, $2 billion, $3 billion, and
  373  $4 billion by the total estimated aggregate FHCF reimbursement
  374  premiums for the 2012-2013 contract year.
  375         f. For the 2013-2014 contract year, the board shall
  376  calculate and report to each TICL insurer the TICL coverage
  377  multiples based on two options for increasing the insurer’s FHCF
  378  coverage limit. Each TICL coverage multiple shall be calculated
  379  by dividing $1 billion and $2 billion by the total estimated
  380  aggregate FHCF reimbursement premiums for the 2013-2014 contract
  381  year.
  382         g. The TICL insurer’s increased coverage shall be the FHCF
  383  reimbursement premium multiplied by the TICL coverage multiple.
  384  In order to determine an insurer’s total limit of coverage, an
  385  insurer shall add its TICL coverage multiple to its payout
  386  multiple. The total shall represent a number that, when
  387  multiplied by an insurer’s FHCF reimbursement premium for a
  388  given reimbursement contract year, defines an insurer’s total
  389  limit of FHCF reimbursement coverage for that reimbursement
  390  contract year.
  391         10. “TICL options addendum” means an addendum to the
  392  reimbursement contract reflecting the obligations of the fund
  393  and insurers selecting an option to increase an insurer’s FHCF
  394  coverage limit.
  395         (e) TICL options addendum.
  396         1. The TICL options addendum shall provide for
  397  reimbursement of TICL insurers for covered events occurring
  398  during the 2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013
  399  2014 contract years in exchange for the TICL reimbursement
  400  premium paid into the fund under paragraph (f) based on the TICL
  401  coverage available and selected for each respective contract
  402  year. Any insurer writing covered policies has the option of
  403  selecting an increased limit of coverage under the TICL options
  404  addendum and shall select such coverage at the time that it
  405  executes the FHCF reimbursement contract.
  406         2. The TICL addendum shall contain a promise by the board
  407  to reimburse the TICL insurer for 45 percent, 75 percent, or 90
  408  percent of its losses from each covered event in excess of the
  409  insurer’s retention, plus 5 percent of the reimbursed losses to
  410  cover loss adjustment expenses. The percentage shall be the same
  411  as the coverage level selected by the insurer under paragraph
  412  (4)(b).
  413         3. The TICL addendum shall provide that reimbursement
  414  amounts shall not be reduced by reinsurance paid or payable to
  415  the insurer from other sources.
  416         4. The priorities, schedule, and method of reimbursements
  417  under the TICL addendum shall be the same as provided under
  418  subsection (4).
  419         (f) TICL reimbursement premiums.—Each TICL insurer shall
  420  pay to the fund, in the manner and at the time provided in the
  421  reimbursement contract for payment of reimbursement premiums, a
  422  TICL reimbursement premium determined as specified in subsection
  423  (5), except that a cash build-up factor does not apply to the
  424  TICL reimbursement premiums. However, the TICL reimbursement
  425  premium shall be increased in the 2009-2010 contract year by a
  426  factor of two, in the 2010-2011 contract year by a factor of
  427  three, in the 2011-2012 contract year by a factor of four, in
  428  the 2012-2013 contract year by a factor of five, and in the
  429  2013-2014 contract year by a factor of six.
  430         (g) Effect on claims-paying capacity of the fund.—For the
  431  2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013-2014
  432  contract years, the program created by this subsection shall
  433  increase the claims-paying capacity of the fund as provided in
  434  subparagraph (4)(c)1. by an amount not to exceed $12 billion and
  435  shall depend on the TICL coverage options available and selected
  436  for the specified contract year and the number of insurers that
  437  select the TICL optional coverage. The additional capacity shall
  438  apply only to the additional coverage provided under the TICL
  439  options and shall not otherwise affect any insurer’s
  440  reimbursement from the fund if the insurer chooses not to select
  441  the temporary option to increase its limit of coverage under the
  442  FHCF.
  443         Section 2. Paragraph (k) of subsection (2) of section
  444  627.062, Florida Statutes, is amended to read:
  445         627.062 Rate standards.—
  446         (2) As to all such classes of insurance:
  447         (k)1. A residential property insurer may make a separate
  448  filing limited solely to an adjustment of its rates for
  449  reinsurance, the cost of financing products used as a
  450  replacement for reinsurance, and financing costs incurred in the
  451  purchase of reinsurance, and the actual cost paid due to the
  452  application of the cash build-up factor pursuant to s.
  453  215.555(5)(b) if the insurer:
  454         a. Elects to purchase financing products such as a
  455  liquidity instrument or line of credit, in which case the cost
  456  included in filing for the liquidity instrument or line of
  457  credit may not result in a premium increase exceeding 3 percent
  458  for any individual policyholder. All costs contained in the
  459  filing may not result in an overall premium increase of more
  460  than 15 percent for any individual policyholder.
  461         b. Includes in the filing a copy of all of its reinsurance,
  462  liquidity instrument, or line of credit contracts; proof of the
  463  billing or payment for the contracts; and the calculation upon
  464  which the proposed rate change is based demonstrating that the
  465  costs meet the criteria of this section.
  466         2. An insurer that purchases reinsurance or financing
  467  products from an affiliated company may make a separate filing
  468  only if the costs for such reinsurance or financing products are
  469  charged at or below charges made for comparable coverage by
  470  nonaffiliated reinsurers or financial entities making such
  471  coverage or financing products available in this state.
  472         3. An insurer may make only one filing per 12-month period
  473  under this paragraph.
  474         4. An insurer that elects to implement a rate change under
  475  this paragraph must file its rate filing with the office at
  476  least 45 days before the effective date of the rate change.
  477  After an insurer submits a complete filing that meets all of the
  478  requirements of this paragraph, the office has 45 days after the
  479  date of the filing to review the rate filing and determine if
  480  the rate is excessive, inadequate, or unfairly discriminatory.
  481  
  482  The provisions of this subsection do not apply to workers’
  483  compensation, employer’s liability insurance, and motor vehicle
  484  insurance.
  485         Section 3. Subsection (5) of section 627.0629, Florida
  486  Statutes, is amended to read:
  487         627.0629 Residential property insurance; rate filings.—
  488         (5) In order to provide an appropriate transition period,
  489  an insurer may implement an approved rate filing for residential
  490  property insurance over a period of years. Such insurer must
  491  provide an informational notice to the office setting out its
  492  schedule for implementation of the phased-in rate filing. The
  493  insurer may include in its rate the actual cost of private
  494  market reinsurance that corresponds to available coverage of the
  495  Flexible Layered Options Temporary Increase in Coverage Limits,
  496  TICL, from the Florida Hurricane Catastrophe Fund. The insurer
  497  may also include the cost of reinsurance to replace the TICL
  498  reduction implemented pursuant to s. 215.555(16)(d)9. However,
  499  this cost for reinsurance may not include any expense or profit
  500  load or result in a total annual base rate increase in excess of
  501  10 percent.
  502         Section 4. Paragraph (n) of subsection (6) of section
  503  627.351, Florida Statutes, is amended to read:
  504         627.351 Insurance risk apportionment plans.—
  505         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  506         (n)1. Rates for coverage provided by the corporation must
  507  be actuarially sound and subject to s. 627.062, except as
  508  otherwise provided in this paragraph. The corporation shall file
  509  its recommended rates with the office at least annually. The
  510  corporation shall provide any additional information regarding
  511  the rates which the office requires. The office shall consider
  512  the recommendations of the board and issue a final order
  513  establishing the rates for the corporation within 45 days after
  514  the recommended rates are filed. The corporation may not pursue
  515  an administrative challenge or judicial review of the final
  516  order of the office.
  517         2. In addition to the rates otherwise determined pursuant
  518  to this paragraph, the corporation shall impose and collect an
  519  amount equal to the premium tax provided in s. 624.509 to
  520  augment the financial resources of the corporation.
  521         3. After the public hurricane loss-projection model under
  522  s. 627.06281 has been found to be accurate and reliable by the
  523  Florida Commission on Hurricane Loss Projection Methodology, the
  524  model shall be considered when establishing the windstorm
  525  portion of the corporation’s rates. The corporation may use the
  526  public model results in combination with the results of private
  527  models to calculate rates for the windstorm portion of the
  528  corporation’s rates. This subparagraph does not require or allow
  529  the corporation to adopt rates lower than the rates otherwise
  530  required or allowed by this paragraph.
  531         4. The rate filings for the corporation which were approved
  532  by the office and took effect January 1, 2007, are rescinded,
  533  except for those rates that were lowered. As soon as possible,
  534  the corporation shall begin using the lower rates that were in
  535  effect on December 31, 2006, and provide refunds to
  536  policyholders who paid higher rates as a result of that rate
  537  filing. The rates in effect on December 31, 2006, remain in
  538  effect for the 2007 and 2008 calendar years except for any rate
  539  change that results in a lower rate. The next rate change that
  540  may increase rates shall take effect pursuant to a new rate
  541  filing recommended by the corporation and established by the
  542  office, subject to this paragraph.
  543         5. Beginning on July 15, 2009, and annually thereafter, the
  544  corporation must make a recommended actuarially sound rate
  545  filing for each personal and commercial line of business it
  546  writes, to be effective no earlier than January 1, 2010.
  547         6. Beginning on or after January 1, 2010, and
  548  notwithstanding the board’s recommended rates and the office’s
  549  final order regarding the corporation’s filed rates under
  550  subparagraph 1., the corporation shall annually implement a rate
  551  increase which, except for sinkhole coverage, does not exceed 10
  552  percent for any single policy issued by the corporation,
  553  excluding coverage changes and surcharges.
  554         7. The corporation may also implement an increase to
  555  reflect the effect on the corporation of the cash buildup factor
  556  pursuant to s. 215.555(5)(b).
  557         7.8. The corporation’s implementation of rates as
  558  prescribed in subparagraph 6. shall cease for any line of
  559  business written by the corporation upon the corporation’s
  560  implementation of actuarially sound rates. Thereafter, the
  561  corporation shall annually make a recommended actuarially sound
  562  rate filing for each commercial and personal line of business
  563  the corporation writes.
  564         Section 5. This act shall take effect January 1, 2018.