Florida Senate - 2017                              CS for SB 420
       By the Committee on Banking and Insurance; and Senator Brandes
       597-01936-17                                           2017420c1
    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.; authorizing certain
    8         insurers to issue insurance policies, contracts, or
    9         endorsements providing certain excess coverage for the
   10         peril of flood; revising applicability; authorizing an
   11         insurer to issue flood insurance policies on a
   12         flexible basis; extending the last date of filing with
   13         the Office of Insurance Regulation of certain flood
   14         coverage rates that may be established and used by an
   15         insurer; specifying a condition for an eligible
   16         surplus lines insurer before a surplus lines agent may
   17         be excepted from a diligent-effort requirement when
   18         exporting flood insurance contracts or endorsements to
   19         the insurer; deleting the expiration date of the
   20         exception; revising applicability of certain
   21         notification and filing requirements; revising
   22         provisions related to an acknowledgment required
   23         before the procurement of a private flood insurance
   24         policy for property currently insured under the
   25         National Flood Insurance Program; providing an
   26         effective date.
   28  Be It Enacted by the Legislature of the State of Florida:
   30         Section 1. Paragraph (f) of subsection (3) of section
   31  627.0628, Florida Statutes, is amended to read:
   32         627.0628 Florida Commission on Hurricane Loss Projection
   33  Methodology; public records exemption; public meetings
   34  exemption.—
   36         (f) The commission shall revise previously adopted
   37  actuarial methods, principles, standards, models, or output
   38  ranges every odd-numbered year for hurricane loss projections.
   39  The commission shall revise previously adopted actuarial
   40  methods, principles, standards, models, or output ranges no less
   41  than every 4 years for flood loss projections.
   42         Section 2. Section 627.715, Florida Statutes, is amended to
   43  read:
   44         627.715 Flood insurance.—An authorized insurer may issue an
   45  insurance policy, contract, or endorsement providing personal
   46  lines residential coverage for the peril of flood or excess
   47  coverage for the peril of flood on any structure or the contents
   48  of personal property contained therein, subject to this section.
   49  This section does not apply to commercial lines residential or
   50  commercial lines nonresidential coverage for the peril of flood.
   51  This section also does not apply to coverage for the peril of
   52  flood that is excess coverage over any other insurance covering
   53  the peril of flood. An insurer may issue flood insurance
   54  policies, contracts, or endorsements on a standard, preferred,
   55  customized, flexible, or supplemental basis.
   56         (1)(a) Except for excess flood insurance policies, policies
   57  issued under this section include:
   58         1. Standard flood insurance, which must cover only losses
   59  from the peril of flood, as defined in paragraph (b), equivalent
   60  to that provided under a standard flood insurance policy under
   61  the National Flood Insurance Program. Standard flood insurance
   62  issued under this section must provide the same coverage,
   63  including deductibles and adjustment of losses, as that provided
   64  under a standard flood insurance policy under the National Flood
   65  Insurance Program.
   66         2. Preferred flood insurance, which must include the same
   67  coverage as standard flood insurance but:
   68         a. Include, within the definition of “flood,” losses from
   69  water intrusion originating from outside the structure that are
   70  not otherwise covered under the definition of “flood” provided
   71  in paragraph (b).
   72         b. Include coverage for additional living expenses.
   73         c. Require that any loss under personal property or
   74  contents coverage that is repaired or replaced be adjusted only
   75  on the basis of replacement costs up to the policy limits.
   76         3. Customized flood insurance, which must include coverage
   77  that is broader than the coverage provided under standard flood
   78  insurance.
   79         4. Flexible flood insurance, which must cover losses from
   80  the peril of flood, as defined in paragraph (b), and may also
   81  include coverage for losses from water intrusion originating
   82  from outside the structure which is not otherwise covered by the
   83  definition of flood. Flexible flood insurance must include one
   84  or more of the following provisions:
   85         a. An agreement between the insurer and the insured that
   86  the flood coverage is in a specified amount, such as coverage
   87  that is limited to the total amount of each outstanding mortgage
   88  applicable to the covered property.
   89         b. A requirement for a deductible in an amount authorized
   90  under s. 627.701, including a deductible in an amount authorized
   91  for hurricanes.
   92         c. A requirement that flood loss to a dwelling be adjusted
   93  in accordance with s. 627.7011(3) or adjusted only on the basis
   94  of the actual cash value of the property.
   95         d. A restriction limiting flood coverage to the principal
   96  building defined in the policy.
   97         e. A provision including or excluding coverage for
   98  additional living expenses.
   99         f. A provision excluding coverage for personal property or
  100  contents as to the peril of flood.
  101         5. Supplemental flood insurance, which may provide coverage
  102  designed to supplement a flood policy obtained from the National
  103  Flood Insurance Program or from an insurer issuing standard or
  104  preferred flood insurance pursuant to this section. Supplemental
  105  flood insurance may provide, but need not be limited to,
  106  coverage for jewelry, art, deductibles, and additional living
  107  expenses.
  108         (b) “Flood” means a general and temporary condition of
  109  partial or complete inundation of two or more acres of normally
  110  dry land area or of two or more properties, at least one of
  111  which is the policyholder’s property, from:
  112         1. Overflow of inland or tidal waters;
  113         2. Unusual and rapid accumulation or runoff of surface
  114  waters from any source;
  115         3. Mudflow; or
  116         4. Collapse or subsidence of land along the shore of a lake
  117  or similar body of water as a result of erosion or undermining
  118  caused by waves or currents of water exceeding anticipated
  119  cyclical levels that result in a flood as defined in this
  120  paragraph.
  121         (2) Flood coverage deductibles and policy limits pursuant
  122  to this section must be prominently noted on the policy
  123  declarations page or face page.
  124         (3)(a) An insurer may establish and use flood coverage
  125  rates in accordance with the rate standards provided in s.
  126  627.062.
  127         (b) For flood coverage rates filed with the office before
  128  October 1, 2025 2019, the insurer may also establish and use
  129  such rates in accordance with the rates, rating schedules, or
  130  rating manuals filed by the insurer with the office which allow
  131  the insurer a reasonable rate of return on flood coverage
  132  written in this state. Flood coverage rates established pursuant
  133  to this paragraph are not subject to s. 627.062(2)(a) and (f).
  134  An insurer shall notify the office of any change to such rates
  135  within 30 days after the effective date of the change. The
  136  notice must include the name of the insurer and the average
  137  statewide percentage change in rates. Actuarial data with regard
  138  to such rates for flood coverage must be maintained by the
  139  insurer for 2 years after the effective date of such rate change
  140  and is subject to examination by the office. The office may
  141  require the insurer to incur the costs associated with an
  142  examination. Upon examination, the office, in accordance with
  143  generally accepted and reasonable actuarial techniques, shall
  144  consider the rate factors in s. 627.062(2)(b), (c), and (d), and
  145  the standards in s. 627.062(2)(e), to determine if the rate is
  146  excessive, inadequate, or unfairly discriminatory. If the office
  147  determines that a rate is excessive or unfairly discriminatory,
  148  the office shall require the insurer to provide appropriate
  149  credit to affected insureds or an appropriate refund to affected
  150  insureds who no longer receive coverage from the insurer.
  151  (4) A surplus lines agent may export a contract or endorsement
  152  providing flood coverage to an eligible surplus lines insurer
  153  without making a diligent effort to seek such coverage from
  154  three or more authorized insurers under s. 626.916(1) if the
  155  surplus lines insurer maintains a superior, excellent,
  156  exceptional, or equivalent financial strength rating by a rating
  157  agency acceptable to the office s. 626.916(1)(a). This
  158  subsection expires July 1, 2017.
  159         (5) In addition to any other applicable requirements, an
  160  insurer providing flood coverage that is not excess coverage in
  161  this state must:
  162         (a) Notify the office at least 30 days before writing flood
  163  insurance in this state; and
  164         (b) File a plan of operation and financial projections or
  165  revisions to such plan, as applicable, with the office.
  166         (6) Citizens Property Insurance Corporation may not provide
  167  insurance for the peril of flood.
  168         (7) The Florida Hurricane Catastrophe Fund may not provide
  169  reimbursement for losses proximately caused by the peril of
  170  flood, including losses that occur during a covered event as
  171  defined in s. 215.555(2)(b).
  172         (8) When procuring a private flood insurance policy from an
  173  authorized insurer or a surplus lines insurer for a property
  174  that is currently insured under the National Flood Insurance
  175  Program, an agent must receive an acknowledgment signed by the
  176  applicant within 20 days before the expiration date of the
  177  current coverage. The acknowledgment must notify the applicant
  178  that the full risk rate for flood insurance may apply to the
  179  property if such insurance is later obtained under the National
  180  Flood Insurance Program. If the agent does not receive the
  181  acknowledgment, the private flood insurance policy must be
  182  canceled and the premium must be remitted to a participant in
  183  the National Flood Insurance Program An agent must, upon
  184  receiving an application for flood coverage from an authorized
  185  or surplus lines insurer for a property receiving flood
  186  insurance under the National Flood Insurance Program, obtain an
  187  acknowledgment signed by the applicant before placing the
  188  coverage with the authorized or surplus lines insurer. The
  189  acknowledgment must notify the applicant that, if the applicant
  190  discontinues coverage under the National Flood Insurance Program
  191  which is provided at a subsidized rate, the full risk rate for
  192  flood insurance may apply to the property if the applicant later
  193  seeks to reinstate coverage under the program.
  194         (9) With respect to the regulation of flood coverage
  195  written in this state by authorized insurers, this section
  196  supersedes any other provision in the Florida Insurance Code in
  197  the event of a conflict.
  198         (10) If federal law or rule requires a certification by a
  199  state insurance regulatory official as a condition of qualifying
  200  for private flood insurance or disaster assistance, the
  201  Commissioner of Insurance Regulation may provide the
  202  certification, and such certification is not subject to review
  203  under chapter 120.
  204         (11)(a) An authorized insurer offering flood insurance may
  205  request the office to certify that a policy, contract, or
  206  endorsement provides coverage for the peril of flood which
  207  equals or exceeds the flood coverage offered by the National
  208  Flood Insurance Program. To be eligible for certification, such
  209  policy, contract, or endorsement must contain a provision
  210  stating that it meets the private flood insurance requirements
  211  specified in 42 U.S.C. s. 4012a(b) and may not contain any
  212  provision that is not in compliance with 42 U.S.C. s. 4012a(b).
  213         (b) The authorized insurer or its agent may reference or
  214  include a certification under paragraph (a) in advertising or
  215  communications with an agent, a lending institution, an insured,
  216  or a potential insured only for a policy, contract, or
  217  endorsement that is certified under this subsection. The
  218  authorized insurer may include a statement that notifies an
  219  insured of the certification on the declarations page or other
  220  policy documentation related to flood coverage certified under
  221  this subsection.
  222         (c) An insurer or agent who knowingly misrepresents that a
  223  flood policy, contract, or endorsement is certified under this
  224  subsection commits an unfair or deceptive act under s. 626.9541.
  225         Section 3. This act shall take effect July 1, 2017.