Florida Senate - 2017                                     SB 420
       By Senator Brandes
       24-00096D-17                                           2017420__
    1                        A bill to be entitled                      
    2         An act relating to flood insurance; amending s.
    3         627.0628, F.S.; revising the intervals at which
    4         specified standards and guidelines for projecting
    5         certain rate filings must be revised by the Florida
    6         Commission on Hurricane Loss Projection Methodology;
    7         amending s. 627.715, F.S.; revising applicability;
    8         authorizing an insurer to issue flood insurance
    9         policies on a flexible basis; extending the last date
   10         of filing with the Office of Insurance Regulation of
   11         certain flood coverage rates that may be established
   12         and used by an insurer; specifying a condition for an
   13         eligible surplus lines insurer before a surplus lines
   14         agent may be excepted from a diligent-effort
   15         requirement when exporting flood insurance contracts
   16         or endorsements to the insurer; extending the
   17         expiration date of the exception; revising provisions
   18         related to an acknowledgment required before the
   19         procurement of a private flood insurance policy for
   20         property currently insured under the National Flood
   21         Insurance Program; providing an effective date.
   23  Be It Enacted by the Legislature of the State of Florida:
   25         Section 1. Paragraph (f) of subsection (3) of section
   26  627.0628, Florida Statutes, is amended to read:
   27         627.0628 Florida Commission on Hurricane Loss Projection
   28  Methodology; public records exemption; public meetings
   29  exemption.—
   31         (f) The commission shall revise previously adopted
   32  actuarial methods, principles, standards, models, or output
   33  ranges every odd-numbered year for hurricane loss projections.
   34  The commission shall revise previously adopted actuarial
   35  methods, principles, standards, models, or output ranges no less
   36  than every 4 years for flood loss projections.
   37         Section 2. Section 627.715, Florida Statutes, is amended to
   38  read:
   39         627.715 Flood insurance.—An authorized insurer may issue an
   40  insurance policy, contract, or endorsement providing personal
   41  lines residential coverage for the peril of flood on any
   42  structure or the contents of personal property contained
   43  therein, subject to this section. Except for subsections (3) and
   44  (4), this section does not apply to commercial lines residential
   45  or commercial lines nonresidential coverage for the peril of
   46  flood. This section also does not apply to coverage for the
   47  peril of flood that is excess coverage over any other insurance
   48  covering the peril of flood. An insurer may issue flood
   49  insurance policies, contracts, or endorsements on a standard,
   50  preferred, customized, flexible, or supplemental basis.
   51         (1)(a)1. Standard flood insurance must cover only losses
   52  from the peril of flood, as defined in paragraph (b), equivalent
   53  to that provided under a standard flood insurance policy under
   54  the National Flood Insurance Program. Standard flood insurance
   55  issued under this section must provide the same coverage,
   56  including deductibles and adjustment of losses, as that provided
   57  under a standard flood insurance policy under the National Flood
   58  Insurance Program.
   59         2. Preferred flood insurance must include the same coverage
   60  as standard flood insurance but:
   61         a. Include, within the definition of “flood,” losses from
   62  water intrusion originating from outside the structure that are
   63  not otherwise covered under the definition of “flood” provided
   64  in paragraph (b).
   65         b. Include coverage for additional living expenses.
   66         c. Require that any loss under personal property or
   67  contents coverage that is repaired or replaced be adjusted only
   68  on the basis of replacement costs up to the policy limits.
   69         3. Customized flood insurance must include coverage that is
   70  broader than the coverage provided under standard flood
   71  insurance.
   72         4. Flexible flood insurance must cover losses from the
   73  peril of flood, as defined in paragraph (b), and may also
   74  include coverage for losses from water intrusion originating
   75  from outside the structure which is not otherwise covered by the
   76  definition of flood. Flexible flood insurance must include one
   77  or more of the following provisions:
   78         a. An agreement between the insurer and the insured that
   79  the flood coverage is in a specified amount, such as coverage
   80  that is limited to the total amount of each outstanding mortgage
   81  applicable to the covered property.
   82         b. A requirement for a deductible in an amount authorized
   83  under s. 627.701, including a deductible in an amount authorized
   84  for hurricanes.
   85         c. A requirement that flood loss to a dwelling be adjusted
   86  in accordance with s. 627.7011(3) or adjusted only on the basis
   87  of the actual cash value of the property.
   88         d. A restriction limiting flood coverage to the principal
   89  building defined in the policy.
   90         e. A provision including or excluding coverage for
   91  additional living expenses.
   92         f. A provision excluding coverage for personal property or
   93  contents as to the peril of flood.
   94         5. Supplemental flood insurance may provide coverage
   95  designed to supplement a flood policy obtained from the National
   96  Flood Insurance Program or from an insurer issuing standard or
   97  preferred flood insurance pursuant to this section. Supplemental
   98  flood insurance may provide, but need not be limited to,
   99  coverage for jewelry, art, deductibles, and additional living
  100  expenses.
  101         (b) “Flood” means a general and temporary condition of
  102  partial or complete inundation of two or more acres of normally
  103  dry land area or of two or more properties, at least one of
  104  which is the policyholder’s property, from:
  105         1. Overflow of inland or tidal waters;
  106         2. Unusual and rapid accumulation or runoff of surface
  107  waters from any source;
  108         3. Mudflow; or
  109         4. Collapse or subsidence of land along the shore of a lake
  110  or similar body of water as a result of erosion or undermining
  111  caused by waves or currents of water exceeding anticipated
  112  cyclical levels that result in a flood as defined in this
  113  paragraph.
  114         (2) Flood coverage deductibles and policy limits pursuant
  115  to this section must be prominently noted on the policy
  116  declarations page or face page.
  117         (3)(a) An insurer may establish and use flood coverage
  118  rates in accordance with the rate standards provided in s.
  119  627.062.
  120         (b) For flood coverage rates filed with the office before
  121  October 1, 2025 2019, the insurer may also establish and use
  122  such rates in accordance with the rates, rating schedules, or
  123  rating manuals filed by the insurer with the office which allow
  124  the insurer a reasonable rate of return on flood coverage
  125  written in this state. Flood coverage rates established pursuant
  126  to this paragraph are not subject to s. 627.062(2)(a) and (f).
  127  An insurer shall notify the office of any change to such rates
  128  within 30 days after the effective date of the change. The
  129  notice must include the name of the insurer and the average
  130  statewide percentage change in rates. Actuarial data with regard
  131  to such rates for flood coverage must be maintained by the
  132  insurer for 2 years after the effective date of such rate change
  133  and is subject to examination by the office. The office may
  134  require the insurer to incur the costs associated with an
  135  examination. Upon examination, the office, in accordance with
  136  generally accepted and reasonable actuarial techniques, shall
  137  consider the rate factors in s. 627.062(2)(b), (c), and (d), and
  138  the standards in s. 627.062(2)(e), to determine if the rate is
  139  excessive, inadequate, or unfairly discriminatory. If the office
  140  determines that a rate is excessive or unfairly discriminatory,
  141  the office shall require the insurer to provide appropriate
  142  credit to affected insureds or an appropriate refund to affected
  143  insureds who no longer receive coverage from the insurer.
  144         (4) A surplus lines agent may export a contract or
  145  endorsement providing flood coverage to an eligible surplus
  146  lines insurer without making a diligent effort to seek such
  147  coverage from three or more authorized insurers under s.
  148  626.916(1) if the surplus lines insurer maintains a minimum of
  149  $300 million in capital and surplus s. 626.916(1)(a). This
  150  subsection expires July 1, 2025 2017.
  151         (5) In addition to any other applicable requirements, an
  152  insurer providing flood coverage in this state must:
  153         (a) Notify the office at least 30 days before writing flood
  154  insurance in this state; and
  155         (b) File a plan of operation and financial projections or
  156  revisions to such plan, as applicable, with the office.
  157         (6) Citizens Property Insurance Corporation may not provide
  158  insurance for the peril of flood.
  159         (7) The Florida Hurricane Catastrophe Fund may not provide
  160  reimbursement for losses proximately caused by the peril of
  161  flood, including losses that occur during a covered event as
  162  defined in s. 215.555(2)(b).
  163         (8) When procuring a private flood insurance policy from an
  164  authorized insurer or a surplus lines insurer for a property
  165  that is currently insured under the National Flood Insurance
  166  Program, an agent must receive an acknowledgment signed by the
  167  applicant within 20 days before the expiration date of the
  168  current coverage. The acknowledgment must notify the applicant
  169  that the full risk rate for flood insurance may apply to the
  170  property if such insurance is later obtained under the National
  171  Flood Insurance Program. If the agent does not receive the
  172  acknowledgment, the private flood insurance policy must be
  173  canceled and the premium must be remitted to a participant in
  174  the National Flood Insurance Program An agent must, upon
  175  receiving an application for flood coverage from an authorized
  176  or surplus lines insurer for a property receiving flood
  177  insurance under the National Flood Insurance Program, obtain an
  178  acknowledgment signed by the applicant before placing the
  179  coverage with the authorized or surplus lines insurer. The
  180  acknowledgment must notify the applicant that, if the applicant
  181  discontinues coverage under the National Flood Insurance Program
  182  which is provided at a subsidized rate, the full risk rate for
  183  flood insurance may apply to the property if the applicant later
  184  seeks to reinstate coverage under the program.
  185         (9) With respect to the regulation of flood coverage
  186  written in this state by authorized insurers, this section
  187  supersedes any other provision in the Florida Insurance Code in
  188  the event of a conflict.
  189         (10) If federal law or rule requires a certification by a
  190  state insurance regulatory official as a condition of qualifying
  191  for private flood insurance or disaster assistance, the
  192  Commissioner of Insurance Regulation may provide the
  193  certification, and such certification is not subject to review
  194  under chapter 120.
  195         (11)(a) An authorized insurer offering flood insurance may
  196  request the office to certify that a policy, contract, or
  197  endorsement provides coverage for the peril of flood which
  198  equals or exceeds the flood coverage offered by the National
  199  Flood Insurance Program. To be eligible for certification, such
  200  policy, contract, or endorsement must contain a provision
  201  stating that it meets the private flood insurance requirements
  202  specified in 42 U.S.C. s. 4012a(b) and may not contain any
  203  provision that is not in compliance with 42 U.S.C. s. 4012a(b).
  204         (b) The authorized insurer or its agent may reference or
  205  include a certification under paragraph (a) in advertising or
  206  communications with an agent, a lending institution, an insured,
  207  or a potential insured only for a policy, contract, or
  208  endorsement that is certified under this subsection. The
  209  authorized insurer may include a statement that notifies an
  210  insured of the certification on the declarations page or other
  211  policy documentation related to flood coverage certified under
  212  this subsection.
  213         (c) An insurer or agent who knowingly misrepresents that a
  214  flood policy, contract, or endorsement is certified under this
  215  subsection commits an unfair or deceptive act under s. 626.9541.
  216         Section 3. This act shall take effect July 1, 2017.