Florida Senate - 2017                       CS for CS for SB 420
       By the Committees on Community Affairs; and Banking and
       Insurance; and Senator Brandes
       578-03388-17                                           2017420c2
    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; extending the expiration date of the
   20         exception; revising applicability of certain
   21         notification and filing requirements; revising a
   22         provision relating to a specified notice 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         expiration date for the provision; providing an
   27         effective date.
   29  Be It Enacted by the Legislature of the State of Florida:
   31         Section 1. Paragraph (f) of subsection (3) of section
   32  627.0628, Florida Statutes, is amended to read:
   33         627.0628 Florida Commission on Hurricane Loss Projection
   34  Methodology; public records exemption; public meetings
   35  exemption.—
   37         (f) The commission shall revise previously adopted
   38  actuarial methods, principles, standards, models, or output
   39  ranges every odd-numbered year for hurricane loss projections.
   40  The commission shall revise previously adopted actuarial
   41  methods, principles, standards, models, or output ranges no less
   42  than every 4 years for flood loss projections.
   43         Section 2. Section 627.715, Florida Statutes, is amended to
   44  read:
   45         627.715 Flood insurance.—An authorized insurer may issue an
   46  insurance policy, contract, or endorsement providing personal
   47  lines residential coverage for the peril of flood or excess
   48  coverage for the peril of flood on any structure or the contents
   49  of personal property contained therein, subject to this section.
   50  This section does not apply to commercial lines residential or
   51  commercial lines nonresidential coverage for the peril of flood.
   52  This section also does not apply to coverage for the peril of
   53  flood that is excess coverage over any other insurance covering
   54  the peril of flood. An insurer may issue flood insurance
   55  policies, contracts, or endorsements on a standard, preferred,
   56  customized, flexible, or supplemental basis.
   57         (1)(a) Except for excess flood insurance policies, policies
   58  issued under this section include:
   59         1. Standard flood insurance, which must cover only losses
   60  from the peril of flood, as defined in paragraph (b), equivalent
   61  to that provided under a standard flood insurance policy under
   62  the National Flood Insurance Program. Standard flood insurance
   63  issued under this section must provide the same coverage,
   64  including deductibles and adjustment of losses, as that provided
   65  under a standard flood insurance policy under the National Flood
   66  Insurance Program.
   67         2. Preferred flood insurance, which must include the same
   68  coverage as standard flood insurance but:
   69         a. Include, within the definition of “flood,” losses from
   70  water intrusion originating from outside the structure that are
   71  not otherwise covered under the definition of “flood” provided
   72  in paragraph (b).
   73         b. Include coverage for additional living expenses.
   74         c. Require that any loss under personal property or
   75  contents coverage that is repaired or replaced be adjusted only
   76  on the basis of replacement costs up to the policy limits.
   77         3. Customized flood insurance, which must include coverage
   78  that is broader than the coverage provided under standard flood
   79  insurance.
   80         4. Flexible flood insurance, which must cover losses from
   81  the peril of flood, as defined in paragraph (b), and may also
   82  include coverage for losses from water intrusion originating
   83  from outside the structure which is not otherwise covered by the
   84  definition of flood. Flexible flood insurance must include one
   85  or more of the following provisions:
   86         a. An agreement between the insurer and the insured that
   87  the flood coverage is in a specified amount, such as coverage
   88  that is limited to the total amount of each outstanding mortgage
   89  applicable to the covered property.
   90         b. A requirement for a deductible in an amount authorized
   91  under s. 627.701, including a deductible in an amount authorized
   92  for hurricanes.
   93         c. A requirement that flood loss to a dwelling be adjusted
   94  in accordance with s. 627.7011(3) or adjusted only on the basis
   95  of the actual cash value of the property.
   96         d. A restriction limiting flood coverage to the principal
   97  building defined in the policy.
   98         e. A provision including or excluding coverage for
   99  additional living expenses.
  100         f. A provision excluding coverage for personal property or
  101  contents as to the peril of flood.
  102         5. Supplemental flood insurance, which may provide coverage
  103  designed to supplement a flood policy obtained from the National
  104  Flood Insurance Program or from an insurer issuing standard or
  105  preferred flood insurance pursuant to this section. Supplemental
  106  flood insurance may provide, but need not be limited to,
  107  coverage for jewelry, art, deductibles, and additional living
  108  expenses.
  109         (b) “Flood” means a general and temporary condition of
  110  partial or complete inundation of two or more acres of normally
  111  dry land area or of two or more properties, at least one of
  112  which is the policyholder’s property, from:
  113         1. Overflow of inland or tidal waters;
  114         2. Unusual and rapid accumulation or runoff of surface
  115  waters from any source;
  116         3. Mudflow; or
  117         4. Collapse or subsidence of land along the shore of a lake
  118  or similar body of water as a result of erosion or undermining
  119  caused by waves or currents of water exceeding anticipated
  120  cyclical levels that result in a flood as defined in this
  121  paragraph.
  122         (2) Flood coverage deductibles and policy limits pursuant
  123  to this section must be prominently noted on the policy
  124  declarations page or face page.
  125         (3)(a) An insurer may establish and use flood coverage
  126  rates in accordance with the rate standards provided in s.
  127  627.062.
  128         (b) For flood coverage rates filed with the office before
  129  October 1, 2025 2019, the insurer may also establish and use
  130  such rates in accordance with the rates, rating schedules, or
  131  rating manuals filed by the insurer with the office which allow
  132  the insurer a reasonable rate of return on flood coverage
  133  written in this state. Flood coverage rates established pursuant
  134  to this paragraph are not subject to s. 627.062(2)(a) and (f).
  135  An insurer shall notify the office of any change to such rates
  136  within 30 days after the effective date of the change. The
  137  notice must include the name of the insurer and the average
  138  statewide percentage change in rates. Actuarial data with regard
  139  to such rates for flood coverage must be maintained by the
  140  insurer for 2 years after the effective date of such rate change
  141  and is subject to examination by the office. The office may
  142  require the insurer to incur the costs associated with an
  143  examination. Upon examination, the office, in accordance with
  144  generally accepted and reasonable actuarial techniques, shall
  145  consider the rate factors in s. 627.062(2)(b), (c), and (d), and
  146  the standards in s. 627.062(2)(e), to determine if the rate is
  147  excessive, inadequate, or unfairly discriminatory. If the office
  148  determines that a rate is excessive or unfairly discriminatory,
  149  the office shall require the insurer to provide appropriate
  150  credit to affected insureds or an appropriate refund to affected
  151  insureds who no longer receive coverage from the insurer.
  152         (4) A surplus lines agent may export a contract or
  153  endorsement providing flood coverage to an eligible surplus
  154  lines insurer without making a diligent effort to seek such
  155  coverage from three or more authorized insurers under s.
  156  626.916(1) if the surplus lines insurer maintains a superior,
  157  excellent, exceptional, or equivalent financial strength rating
  158  by a rating agency acceptable to the office s. 626.916(1)(a).
  159  This subsection expires July 1, 2022 2017.
  160         (5) In addition to any other applicable requirements, an
  161  insurer providing flood coverage that is not excess coverage in
  162  this state must:
  163         (a) Notify the office at least 30 days before writing flood
  164  insurance in this state; and
  165         (b) File a plan of operation and financial projections or
  166  revisions to such plan, as applicable, with the office.
  167         (6) Citizens Property Insurance Corporation may not provide
  168  insurance for the peril of flood.
  169         (7) The Florida Hurricane Catastrophe Fund may not provide
  170  reimbursement for losses proximately caused by the peril of
  171  flood, including losses that occur during a covered event as
  172  defined in s. 215.555(2)(b).
  173         (8) When procuring a private flood insurance policy from an
  174  authorized insurer or a surplus lines insurer for a property
  175  currently insured under the National Flood Insurance Program, an
  176  agent must, at the time of expiration of the current policy,
  177  provide a written notice to be signed by the applicant,
  178  informing the applicant that the National Flood Insurance
  179  Program could apply the full risk rate to the property if flood
  180  insurance is later obtained under the National Flood Insurance
  181  Program. The agent must receive the signed notice from the
  182  applicant within 21 days after expiration of the policy under
  183  the National Flood Insurance Program; otherwise, the private
  184  flood insurance policy must be canceled and the National Flood
  185  Insurance Program policy renewed. This subsection expires
  186  January 1, 2020 An agent must, upon receiving an application for
  187  flood coverage from an authorized or surplus lines insurer for a
  188  property receiving flood insurance under the National Flood
  189  Insurance Program, obtain an acknowledgment signed by the
  190  applicant before placing the coverage with the authorized or
  191  surplus lines insurer. The acknowledgment must notify the
  192  applicant that, if the applicant discontinues coverage under the
  193  National Flood Insurance Program which is provided at a
  194  subsidized rate, the full risk rate for flood insurance may
  195  apply to the property if the applicant later seeks to reinstate
  196  coverage under the program.
  197         (9) With respect to the regulation of flood coverage
  198  written in this state by authorized insurers, this section
  199  supersedes any other provision in the Florida Insurance Code in
  200  the event of a conflict.
  201         (10) If federal law or rule requires a certification by a
  202  state insurance regulatory official as a condition of qualifying
  203  for private flood insurance or disaster assistance, the
  204  Commissioner of Insurance Regulation may provide the
  205  certification, and such certification is not subject to review
  206  under chapter 120.
  207         (11)(a) An authorized insurer offering flood insurance may
  208  request the office to certify that a policy, contract, or
  209  endorsement provides coverage for the peril of flood which
  210  equals or exceeds the flood coverage offered by the National
  211  Flood Insurance Program. To be eligible for certification, such
  212  policy, contract, or endorsement must contain a provision
  213  stating that it meets the private flood insurance requirements
  214  specified in 42 U.S.C. s. 4012a(b) and may not contain any
  215  provision that is not in compliance with 42 U.S.C. s. 4012a(b).
  216         (b) The authorized insurer or its agent may reference or
  217  include a certification under paragraph (a) in advertising or
  218  communications with an agent, a lending institution, an insured,
  219  or a potential insured only for a policy, contract, or
  220  endorsement that is certified under this subsection. The
  221  authorized insurer may include a statement that notifies an
  222  insured of the certification on the declarations page or other
  223  policy documentation related to flood coverage certified under
  224  this subsection.
  225         (c) An insurer or agent who knowingly misrepresents that a
  226  flood policy, contract, or endorsement is certified under this
  227  subsection commits an unfair or deceptive act under s. 626.9541.
  228         Section 3. This act shall take effect July 1, 2017.